Due to a breakdown in leadership by the very nations that have the most to gain from an expanding world trading system, prospects for a landmark global agreement four years in the making are at the breaking point. Unless the United States, the European Community and Japan mend their destructive ways, talks on reforming the General Agreement on Tariffs and Trade could end in failure, delay or minimal adjustments.
The deadline is a long-scheduled ministerial meeting Dec. 3 to 7 in Brussels, which gives President Bush and his counterparts just three weeks to end a deadlock that has many grain-exporting countries and Third World nations threatening for good reason to take a walk. Perhaps, just perhaps, an opening will develop during the president's European visit starting Friday.
At the Houston summit in July, the government chiefs of the seven top industrial nations assigned "highest priority on the international economic agenda" to successful completion of the so-called Uruguay Round of trade negotiations. Despite these brave words, an outbreak of spinelessness has led to what GATT director-general Arthur Dunkel calls a "very grave situation."
The main culprits, by far, are the French (by force of habit) and the Germans (through crass political calculation in advance of Dec. 2 elections). Together, they have thwarted efforts to promote freer trade in farm products by offering a mere 15 percent cut in export subsidies, price supports, quotas and other hindrances to agricultural trade. The United States and the Australia-led Cairns Group of farm exporting nations, which have proposed cuts of 75 percent, have given the EC proposal the rejection it deserves.
Unfortunately, the United States and Japan have weakened their own negotiating position. Tokyo's subservience to its inefficient rice farmers is well-known. Less noted has been the Bush administration's sabotage of its own plan to bring service industries under the GATT umbrella by knuckling under to special-treatment demands from the telecommunications, shipping and aviation sectors. When combined with the drumbeat for textile protection, it's no wonder other nations grow suspicious of U.S. bona fides.
If the GATT meeting in December is a full or partial failure, it will be difficult to regain momentum. On March 1, President Bush's authority to obtain congressional approval of new trading arrangements will fall off a "fast track" and give protectionists manifold opportunities for mischief. The result could be a global depression in trade.