Path: bloom-picayune.mit.edu!snorkelwacker.mit.edu!americast.com!americast.com!americast-post Newsgroups: americast.twt.comment From: americast-post@AmeriCast.Com Organization: American Cybercasting Approved: americast-post@AmeriCast.com Subject: Trading volleys at the trade frontier Date: Sun, 15 Nov 92 16:56:27 EST Message-ID: \SE B;COMMENTARY \SS (WS) \HD Trading volleys at the trade frontier \BY Stephen Farrar Relationships in international trade are built on an exchange of benefits between nations; you give us fair access to your market and we will return the favor. But when one country reimposes barriers, the other is left with a real inequity. Five years ago, American soybean farmers petitioned for help under the international agreement that regulates global trade, the General Agreement on Tariffs and Trade, or GATT. Our farmers charged that the 12-nation European Community had in effect reneged on an agreement to open up its markets for oilseeds. That effectively denied U.S. farmers, and those from other countries, access to a large portion of the European market and billions of dollars in sales. Two GATT panels - the courts of justice for international trade disputes - ruled in America's favor. Europe, the panels said, must make its subsidy programs comply with GATT rules or else compensate the United States. After five years of negotiating, cajoling and coaxing, the Europeans can't agree what to do. They have neither altered their subsidies, as called for by the GATT, nor offered adequate compensation. Meanwhile, the cost to the world's farmers of the EC's policies totals about $2 billion a year. Half of that comes out of the pockets of U.S. farmers. This month, American patience and flexibility reached their limits. We announced that on Dec. 5, the United States will impose 200 percent import duties on white wine, rapeseed oil and wheat gluten from the EC. That means, for example, that a $5 bottle of wine from Europe could cost $15 when the increased duty is applied. The European products we identified have an annual average U.S. import value of about $300 million. We also identified an additional $1.7 billion worth of EC products. From that list, we could select another $700 million of imports for increased duties if negotiations fail to result in agreement. The problem of oilseed subsidies is a serious one. But it is symptomatic of a bigger issue. That is the threat to the global trading system itself, the system with which the Europeans have failed to comply and risk destroying with their agricultural subsidies. Under GATT sponsorship, the world's trading nations have held seven successful rounds of negotiations since World War II in which tariff rates were slashed by more than 75 percent. As a result, trade exploded from just $60 billion in 1950 to more than $4 trillion this year. The GATT has opened new markets for business, increased choices and lowered prices for consumers and led to higher incomes and more jobs for workers. But just as a thriving family outgrows its first house, so too has the family of 108 nations, who make up the GATT and account for 90 percent of world trade, outgrown the rules that have served us so well for so long. Today a third of world trade - more than $1 trillion of international commerce a year - is not adequately covered by internationally agreed rules: trade in services, investment, intellectual property and agriculture. The United Sates and its GATT partners have been enmeshed in global trade talks to reform the GATT since 1986. These talks, called the Uruguay Round, were to have culminated with an agreement in December 1990. Instead they have been stalled by Europe's inability to agree on reforms to its agricultural subsidy regime for more than two years. If the European Community fails to reach an equitable solution, not just with the United States, but with the world, the talks could collapse. The global economic effects of such an event would be staggering. Hanging in the balance is a global trade agreement that could increase world output by more than $5 trillion over the next decade. The U.S. share of that growth would be $1.2 trillion - more than $17,000 for every American family of four over the next 10 years. The United States is hopeful that the European Community will understand from our actions that it must restore equity in trade in oilseeds. But further, it must diminish its subsidy regime in agriculture lest it risk much more than soybeans. Stephen P. Farrar is chief of staff and counselor to U.S. Trade Representative Carla Hills. This article written for Scripps Howard News Service. This article is copyright 1992 The Washington Times. Redistribution to other sites is not permitted except by arrangement with American Cybercasting Corporation. For more information, send-email to usa@AmeriCast.COM