TFR 4 – Directions for World Trade in the Nineteen-Seventies

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A major multilateral trade negotiation, as called for by some 100 countries in last year's Tokyo Declaration, is the one most hopeful prospect on the international economic horizon.

This is a time of troubles, when inflation, energy crises, and unprecedented balance of payments problems afflict nearly all nations. The structure of international economic cooperation has already been weakened. It could be pulled down in an ultimately pointless scramble for national advantage. A new GATT round offers the possibility of restoring a sense of common purpose and of strengthening the system of rule and order in world trade.

The backlog of issues for negotiation runs from industrial tariffs, which are by no means irrelevant in spite of progress in reducing them, through agricultural trade, non-tariff distortions, export restrictions, Safeguards against import disruption, and reform of the General Agreement itself, to trade relations with the third world.

A major reduction in industrial tariffs is needed, both to bring down obstacles to world trade and also to moderate the discriminatory effect of the emerging Western European free trade area. Pending United States trade legislation would provide the basis to achieve deep reciprocal cuts in outstanding levels of tariffs.

For agricultural trade, which has been neglected in earlier negotiations, the need is to reach a bargain which gives the efficient producers greater access to commercial markets abroad and gives importing nations adequate assurance as to future supplies of key commodities. This means an agreement on holding and managing stocks of cereals as well as on improved conditions of commercial trade. It will require commitments to make gradual but important changes in domestic farm policies. A successful bargain here would have far-reaching implications for international cooperation.

Non-tariff distortions in most cases most be dealt with by revising and tightening international rules of conduct, rather than by straight trade-offs. Since few third world countries can be expected to accept stronger GATT rules, many non-tariff agreements will have to be made on a conditional most-favored-nation basis.

Restrictions on exports, the latest of the non-tariff distortions, must be put under rule. At a minimum, advance consultation and the principle of sharing short supplies should be written into GATT. Even if agreement on this is possible only among the industrial countries, it will be a significant step forward.

The question of new safeguards against disruptive imports can best be answered by introducing into the GATT a mediation procedure, based on specific guidelines. This would leave open the possibility of emergency protection, but it would put restraints on arbitrary or unfounded national actions.

Successful negotiations on agriculture, non-tariff distortions and safeguards would call for substantial revisions in and additions to the General Agreement on Tariffs and Trade. Given that the industrial countries probably will be the only ones ready to assume new commitments, it would be desirable to incorporate these into a supplementary Code which would be open to every nation but which would be operated by those subscribing to it rather than by all 80 contracting parties.

The trade interests of the developing countries will have to be given special attention. An effort should be made to identify third world products for tariff reductions; the General Preference schemes should be improved and the United States and Canada should join Japan and the Western European countries in them; commodity price stabilization agreement possibilities need to be explored afresh; and food reserves against potential famine in developing countries must be created.

This mix of new and old questions foreshadows a lengthy and complex negotiation. Its outcome, nonetheless, could go to make the inescapable fact of economic interdependence far less worrisome and far more tolerable than it seems in 1974.

Authors

Guido Colonna Di Paliano, former Member of the European Community Commission
Philip H. Trezise, Senior Fellow, The Brookings Institution, Washington
Nobuhiko Ushiba, former Ambassador of Japan to the United States

Table of Contents

Summary of the Report
I. Why a Trade Negotiation
II. The Negotiating Issues
III. Do Tariffs Still Matter?
IV. The Elements of an Agricultural Bargain
V. Non-Tariff Distortions of Trade
VI. Export Controls and Scarce Supplies
VII. Safeguards Against Import Disruption
VIII. GATT Reform
IX. Trade Negotiations and the Developing Countries

  • Topics: Trade
  • Region:  North America, Europe, Middle East, Africa, Pacific Asia
  • Publisher:  The Trilateral Commission
  • Publication Date:  © 1974
  • ISBN:  0-930503-59-7
  • Pages:  36
  • Complete Text: Click here to download
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