Trust-Busting

IN THE PAST 35 YEARS. 88 nations have committed themselves to reducing international trade barriers by signing the General Agreement on Trade and Tariffs (GATT). Haunted by the memories of the high tariff policies of the Great Depression and persuaded by the arguments of free trade economics, almost all the world's noncommunist countries have agreed that protectionism is a dirty word. But the tenuous consensus reached in Geneva last Monday by the GATT ministers fails to break down trade barriers. Instead, it just sweeps them under the rug.

After World War II, members of the victorious Alliance recognized that open trade, which creates global interdependence, would reduce the likelihood of international conflict. The world's trading partners formed GATT so that they could meet at occasional conferences to make mutual commitments to tariff reductions. Nations agreed to lower their trade barriers and to accept increased imports in exchange for the opportunity to expand exports.

GATT's power stems from the unanimous agreement of trade ministers, who have final authority to sign trade treaties for the nations they represent. Only twice before have all the GATT members met at the ministerial level to determine world-wide trade policy--the Kennedy Round of talks in the early 1960's and the Tokyo Round in 1973. At those meetings, the GATT procedure worked ideally, and trade partners rapidly agreed on remarkable reductions in tariff levels.

Yet because of disagreements on specific issues, the ministers at the recent Geneva talks knew they would be hard-pressed to repeat the success of the earlier agreement. Differences about Third World nations' protection of trade in banking and insurance services and the European Common Market's expansive subsidies for agricultural products prevented the GATT participants from reaching any consensus on the specifics. Instead the GATT signators united only on the need to deter the increasingly tempting use of protectionist measures for solving national economic woes. Consequently, they grudgingly committed their countries to "refrain from taking or maintaining" import curbs.

This sentiment is perhaps no more beneficial to global trade then a failure to reach an agreement at all. The Kennedy and Tokyo Rounds succeeded because they outlined specific reductions of tariffs on goods and set percentage guidelines for overall trade barrier reductions. Only through such concrete requirements can GATT, which has no mechanism to enforce trade pacts, insure that individual nations support free trade.

THE NEW AGREEMENT fails miserably because it is so ambiguous. As a statement issued by the Australian delegation suggests, "In most if not all the important issues, the words are vague, ambiguous and shrink from firm commitments and [consequently the agreement is] little more than a package of words that offer to all of us the license of interpretation."

The United States has already hinted that it will fulfill the Australian prophecy. With the Common Market's refusal to end agricultural price supports, U.S. Secretary of Agriculture John Block has threatened to counter the Europeans' policy. "Something must be done. I'm not going to give you a specific indication of what action we're going to take," Block intimated darkly last Monday. And William Brock, the chief U.S. negotiator at Geneva, told the assembled ministers that the Reagan Administration would have a difficult time checking trade restraints in Congress.

Maybe the only difference between the new pact and no pact at all is that the GATT accord preserves an illusion of a commitment to free trade. Had the talks failed to reach any agreement, the world's nations would have been forced to realize how much more needs to be done to better trade relations and to prevent protectionism. Now governments can impose tariffs and other restrictions and still remain loyal to the letter of the Geneva package. At the outset of the talks, U.S. Deputy Treasury Secretary R.T. McNamar declared. "The GATT ministerial decision may well set the tone of international economics, and therefore international political relations generally for the rest of the 20th century." If so, the next 18 years will offer deceptive views of a world economy, deteriorating international trust, and few hopes of improved trading relations.