Deadline for Trade Accord Passes Again

April 26, 1992|By GILBERT LEWTHWAITE | GILBERT LEWTHWAITE,Gilbert Lewthwaite, a Washington correspondent for The Baltimore Sun, writes about economic issues.

About now, the world was supposed to be entering a new phase of freer international trade, to the benefit of almost every man, woman and child.

Mid-April was to have brought the culmination of five years of intense negotiation between 108 nations to make buying and selling on a global scale easier and more rewarding.

Now, we must live a little longer in the clamor of disagreement, with mounting pressure for protectionism and under the threat of trade war.

President Bush and top European leaders met last week to seek a crucial break-through. They ended up agreeing only to differ over how much governments should pay their farmers to grow -- and, sometimes, not to grow -- their crops. The informal deadline for accord slipped dangerously by, once more.

Almost every government subsidizes agriculture. The Organization of Economic Co-operation and Development (OECD) estimates that $360 billion was spent worldwide last year to support and protect farming, an outlay it judged to be "inefficient."

The Europeans -- particularly the French -- are simply more "inefficient" than anyone else. One stimulus for their continuing "inefficiency," of course, is the readiness of farmers -- again, particularly the French -- to drive their tractors and livestock into the centers of government power. The Champs Elysee turned into a farmyard is not a pretty sight.

With governments throughout Europe already reeling from recent and repeated electoral shock waves, the prospect of alienating the vociferous and sometimes violent six million farmers on the continent by taking away or weakening their support systems has little immediate political appeal.

That was the basic message delivered last week to the White House by Portuguese Prime Minister Anibal Cavaco Silva, who currently occupies the rotating presidency of the 12-nation European Community's leadership council, and Jacques Delors, president of the EC's executive commission. Mr. Delors said bluntly that Europe was not willing to buy trade accord "at any price."

It was bound to anger President Bush, who, election year or not, has vigorously pursued freer international trade, even as recession-racked American workers have called increasingly loudly for protectionism.

The advent of the U.S. election season was one of the reasons for the mid-April deadline. Unless agreement was reached by now, it was reasoned, the election, with all its mounting political pressures, would get in the way of negotiations.

The crux and enduring issue: fair competition. U.S. farmers say they are undercut by Europeans who are able to "dump" their grain and butter mountains on world markets at near give-away prices because of the subsidies they receive from their governments.

The row over agriculture is stalling progress on the entire trade liberalization package, which includes market access, subsidy reductions and trade in services.

Officially, the current negotiations are called the Uruguay Round of the General Agreement on Tariffs and Trade. It is the eighth so-called "round" since the agreement was first crafted in 1948 as the foundation for development of world free trade.

At stake now is nothing less than the pace of global economic growth. The OECD, in a report issued last week, said if measures under consideration by the GATT were adopted, world sales in goods and services would increase by $195 billion a year within a decade.

It has to be remembered that unless someone sells something -- goods, services, information -- to someone else, no one makes an honest buck. The agreement recognizes that simple fact. This is its kernel truth.

As Michel Camdessus, managing director of the International Monetary Fund, said recently: "The experience of the entire postwar era offers conclusive evidence that foreign trade and economic progress are closely linked.

"There is now a clear consensus that all countries can benefit from policies that expose the economy to greater domestic and international competition. . . . I think everyone knows in principle that protectionism is harmful, both to the country that imposes such measures and to its trade partners; it is costly to consumers; it reduces the pressure on inefficient or uncompetitive firms to adapt to market forces; and, ultimately, it undermines the economic performance of the country as a whole."

International exports totaled a colossal $3.3 trillion in 1990, according to the International Monetary Fund. The United States share of that was $393 billion, or just under 12 percent. The problem for the United States is that it usually buys more than it sells. It's trade imbalance in 1991 was $82.2 billion.

Greater and fairer access to world markets could improve the opportunities for correcting that imbalance abroad and boosting economic activity at home. Thus the pressure on Japan, for example, to open its markets to more U.S. goods.

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