GATT: Impasse and Bombast

December 26, 1990

Jacques Delors, president of the European Commission, warns the United States "to stop insulting us" and "telling us how to run our farms." U.S. Trade Representative Carla Hills compares European Community farm policies to the dropping of bombs on Argentine soya fields. Japan's trade minister accuses the "rigid" and "self-righteous" Americans of using trade negotiations "to make the rest of the world more like America." U.S. Agriculture Secretary Clayton Yeutter says if it comes to a farm trade war, the United States is prepared to fight.

Such is the world after the breakdown of ministerial negotiations to broaden and update the 107-nation General Agreement on Tariffs and Trade. GATT will reassemble Jan. 15 at a lower level to try again, but the prospects are as uncertain as the United Nations deadline for Iraqi withdrawal from Kuwait on that same date.

Much depends on whether the European Community belatedly reforms its Common Agricultural Policy -- the highly protectionist system of subsidies and trade barriers that emerged as the primary obstacle to agreement. Mr. Yeutter believes the EC "suffered a major geopolitical defeat" at the showdown GATT meeting in Brussels early this month. If the community remains "intransigent," he warns, he wants the Europeans to be "a bit frightened by the potential" of the U.S. response.

If this sounds like the rhetorical blasts heard in the Gulf crisis, the resemblance is not coincidental. There is a great deal of psychological warfare in high-stakes world trade negotiations. European leaders thought the Bush administration would blink jTC rather than risk a GATT impasse. When it did not, the reaction was intense.

Britain, a minority voice in EC affairs, warned that the community now would have to make concessions to restart negotiations and more concessions to get an agreement. Japan has ended up with its old obsession of protecting its rice growers from international competition. Third World countries see their hopes of gaining access in industrialized countries for textiles and farm products go a-glimmering. Bilateral trade deals and spats seem the order of the day, perhaps the vision of the future.

We believe an extension of the liberalized merchandise trade system to services, intellectual property and financial transactions is essential to global economic growth. If European political leaders finally find the courage to defy the exaggerated power of their farm blocs, the United States should seek a quick agreement before procedures permitting "fast-track" congressional approval expire. GATT is worth saving.

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