The General Agreement on Tariffs and Trade ministerial meeting in Uruguay last month created a perfect climate for those of us who would like to take some shots at the GATT, our trading partners and the administration's trade strategy.
The targets are particularly vulnerable due to the alarming tenacity of our country's trade deficit, the continuing disregard by our trading partners for reciprocal trade relations and the easy target the administration seems to be making of itself in the thick of all this.Watching the United States cajole, plead, threaten, posture and deal to make this next trade negotiating round a reality has been enervating. Why should it require such agony for our trading partners to agree to discuss subjects that are clearly important to us as well as to the world economy? Particularly when our market has served as a major consumer for so much of their domestic production.
This tortuous effort to simply negotiate is strong evidence that the multilateral system, as well as many key trade partners, is simply unprepared to address contemporary trade problems.
When the GATT was finalized in 1948, it was a clear statement of trade and economic principles espoused by the United States. Non-discrimination, unconditional most-favored-nation policy, regulation of trade only through tariffs. These were (and still are) worthwhile principles and policies by which to conduct international economic relations. And who could argue with us? The United States had all the marbles.
Ironically the success of our policies now undermines the regime we fostered. Our trading partners have viable economies, developed and developing countries are selling their goods and services worldwide, we are economically interdependent. Unfortunately, in the midst of these successes, countries (or their governments) have decided to protect what they have and exploit the open markets of their trading partners. This characterization is admittedly sensational, but it is more accurate than to say that the principles of the GATT and free, non-discriminatory international trade are the popular trends.
Can the GATT, which served us so well for at least three decades following 1948, do the job in 1986? Yes, but only with respect to tariff negotiations. Tariffs are numbers, they are quantifiable, identifiable and negotiable on a multilateral basis. The GATT, as has been proven in the seven trade negotiating rounds since 1948, is well-equipped to provide an effective means for further tariff reductions. But it seems painfully evident that our trading partners are not prepared to let the GATT serve the same useful function with respect to non-tariff barriers.
In 1979, after five years of arduous negotiations, the United States, as well as most of our major GATT trading partners, signed several "codes of conduct," that attempted to expand upon original GATT principles and set forth procedures by which the use of non-tariff barriers would be restrained.
The codes were a great way to get around amending the GATT, looked good on paper and generally have amounted to no more than a hill of principled beans in practice. These multilateral solutions to non-tariff barriers either state the obvious or, by their vague terms, enshrine the fact that certain trade problems shall remain unresolved.
Moreover, requiring a multipartite review of disputes arising from alleged breaches of these agreements makes enforcement of their terms a political battle as well as untimely from the complainant's perspective. Now we want to continue this exercise for seven or more years and it is taking every ounce of diplomatic strength to pull the GATT members to the bargaining table.
I think it is time for a new game plan.
Rather than diminish our resources and bargaining power on over- generalized, non-tariff trade barrier negotiations in the GATT, the United States should focus its efforts for the next few years on bilateral discussions addressing specific problems with specific countries.
The Reagan administration had the right idea at the end of 1985 when it initiated a rifle-shot approach to some egregious trade problems with a few of our larger trading partners. The results of that offensive, conducted pursuant to Section 301 of the Trade Act of 1974, were important, both economically and politically.
Specific problems with Japan, South Korea, the European Community and Taiwan have been resolved. Given our abysmal track record in trade disputes conducted under GATT auspices, these Section 301 proceedings are welcome indications that trade problems can be resolved in a timely and mutually acceptable manner.
A problem-oriented, country-specific approach may seem to be a terribly arduous method for conducting trade negotiations. But events seem to require this back-to-basics approach. Moreover, although such negotiation is country- specific, the result can serve as a precedent to which other U.S. trading partners will be held. History teaches that from such precedents meaningful multilateral agreements can arise.
Given the trends of U.S. trade relations, this country cannot afford seven or more years of negotiations that result only in multilateral statements of principle, subject thereafter to multilateral dispute resolution proceedings.
If this country's electorate and business community are to continue to underwrite a free trade policy, immediate and tangible action must be taken to demonstrate that free trade is a standard to which not only this country but also our trading partners will adhere.