Fair Trade, Free Trade

WILLIAM E. BROCK

December 09, 1992|By WILLIAM E. BROCK

Washington. -- In less than a decade, Europe moved from being the largest importer of sugar in the world to become the largest exporter -- thanks to the world's biggest subsidy to its sugar farmers. European policies cost us sales at home and markets abroad, so we retaliated.

Over the next decade, Congress granted huge new subsidies to U.S. sugar refineries and sugar growers and imposed strict limits on sugar imports from dozens of poor small nations. The result: much higher U.S. consumer prices, bigger federal deficits, more taxes on families, all in the noble name of ''retaliation.'' Politicians pound their chests, and people pay. Such hypocrisy.

This is but one example of how stupid and self-defeating protectionist trade policies can become. It is also a clear example of how important the present world trade talks are to every American. The stakes are enormous for this nation and, in particular, for export-oriented states like Maryland. In a global economy, each trade barrier takes away jobs and growth, and governments have shown an awesome capacity to invent new roadblocks.

Every year this nation loses more than $60 billion due to theft of our intellectual property (ideas and processes protected under U.S. patent, copyright or trademark laws within this land, but in far too few nations elsewhere). Every year U.S. firms engage in shipping, engineering, construction, accounting, insurance, telecommunications, travel and countless other ''service'' fields are denied a right to compete in much of the world.

Early in the 1980s our government insisted on a new round of trade negotiations. As the U.S. trade representative at the time, I told President Reagan that negotiating product by product, country by country, would take centuries. We had to seek a new and different ''constitution'' for the trading system, one that would help open markets around the world. Fair trade and free trade were the goal.

Thus the United States launched and led the monumental effort for a new world trade negotiation -- the Uruguay Round. Its intent was to further lower traditional trade barriers such as tariffs on goods, as well as to introduce new areas to a multilateral trade regime -- areas such as intellectual property, trade in services and trade-related investment.

The Uruguay Round has been the most ambitious trade negotiation in history, and probably the most contentious. While the rest of the world waited for the past two years, the U.S. and Europe have been at odds over agriculture, with the U.S. continuing to insist on the reduction of trade-distorting agricultural subsidies.

Yet we had much more in mind than just reducing the damage done by some inexcusable European farm subsidies. For the first time ever, dozens of developing nations had come to the bargaining table willing to reduce their barriers to our products, but they had a quid pro quo. Since agriculture is still a major foundation of their economies, they wanted Europe and the U.S. to stop destroying their markets with our farm subsidies -- a fair request.

If we and the European Community could agree to end our trade battles on these products, a whole new opportunity could be created for world trade growth in those goods and services where we are the best. World trade would increase by at least $200 billion every year. That's real money -- and real jobs here at home.

The ''winners'' in the game of world trade will be those nations that are the most productive at home. By any measure the U.S. is the most productive nation in the world; thus we have the most to gain from a more open system with strong rules against abuse.

It is also true that our economy is inextricably tied to that of the world, and the rest of the world is virtually stagnant. Most countries are registering zero or negative growth. Germany is expected to have no growth. Japan is near zero. The United States may end up with about 2 percent growth this year -- insufficient for revitalizing our domestic economy and certainly insufficient for the U.S. to continue as the locomotive for the world economy.

Following the recent breakthrough on the six-year stalemate between the U.S. and the EC on farm subsidies, the opportunity for a complete breakthrough and successful completion of the broader multilateral trade negotiations is at hand -- possibly within weeks. The Bush administration's trade team, led by Ambassador Carla Hills, continues doing what her job requires: going full steam ahead negotiating an agreement in the U.S. economic interest as quickly as possible.

To date, she has done a spectacular job for America -- and is on the verge of giving President-elect Bill Clinton a fantastic Christmas present on which to build his new administration. We must not let this opportunity slip through our grasp.

William E. Brock, former U.S. Senator from Tennessee and U.S. trade representative, is president of The Brock Group, a consulting firm.

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