GATT Paralysis

The paralysis afflicting the current Uruguay Round of the General Agreement on Tariffs and Trade (GATT), the most ambitious of the eight rounds since the talks began in 1947, may be a sign of the Clinton administration's ambivalence toward free trade. The unwillingness of the United States to commit itself to the multilateral trade talks, its labyrinthine administrative procedures and its inefficient mechanisms for gaining consensus all contribute to the need for a drastic overhaul of the system. Regional alternatives to the multilateral negotiations such as the North American Free Trade Agreement and the European Community are being presented as alternative trade policy choices. But these should be regarded as complements, not alternatives, to the GATT.

Is the GATT really necessary? Its primary function is to serve as a vehicle for the resolution of international trade disputes and to draft an accord which would appease the 109 contracting parties. The current round also seeks to formulate international rules governing trade in services, trade-related investment measures and trade-related intellectual property rights.

The GATT was originally conceived as an interim organization, hence its numerous structural inadequacies. There is indisputably a need for the substantive restructuring and renegotiating of aims and the need for the expansion of issues to be addressed.

Although the current Uruguay Round is ambitious in scope (it now attempts to cover issues such as trade in services and investment as well as intellectual property), agriculture remains an intractable problem, one which must be addressed if the GATT is to regain and maintain credibility.

The benefits of the GATT have been widely acknowledged. It will help to reinvigorate a stagnant global economy. This translates into a profit of about $120 billion, one half of one percent of today's gross world product. Since its inception, the GATT has proved remarkably successful in orchestrating the reduction of world tariff rates, which have fallen from an average of 40 percent in 1947, to four percent today.

The GATT provides legitimacy and an areha for the resolution of trading conflicts. Because it is an international institution, it is not usually held hostage to parochial constituency demands, as might Congress or other national parliaments.

The GATT has helped to foster pro-trade policies in many developing countries, and serves an important function in providing these countries with a seat at the table and, in accordance with one of its underlying legal principles, provides a voice for each of the contracting parties.

The GATT has, in the past, thwarted a distressing revival of unilateralism. I do not mean to provide a surreally optimistic picture of the GATT and its potential, but as it is currently constructed, it is seriously flawed.

Its complex architecture and unwieldy administrative machinery disguise the fact that its current provisional status leaves it ill-equipped to deal with many of the challenges now facing it.

At this point in its evolution, a new set of dynamics must be introduced. The GATT must be qualitatively improved, not just procedurally tinkered with. It must become more in tune with current policy and practices.

Its mechanisms for dispute resolution are clearly inadequate. For international trade agreements to be meaningful, they must have workable enforcement mechanisms. In the absence of these mechanisms, countries resort to unilateral actions which undercut the trading system. There must be, in any reconstitution of the GATT and in subsequent rounds, provision for the formation and operation of dispute resolution panels, adoption of panel recommendations and generous provisions for substantive retaliation, if the panel's recommendations are ignored.

Unilateral retaliation is a threat used most often by the United States and the European Community which, while claiming to have adopted a liberal trading posture, are really engaging in neo-mercantilism.

There is also the very serious difficulty of rule implementation and inadequate standards for protecting intellectual property, an issue which is heatedly debated.

Accusations of a democratic deficit also plague the GATT. The opacity of the administrative machinery admittedly is frustrating, substantiating charges of managerial absolutism. It is debatable, though, whether a greater public understanding of what is involved in GATT negotiations would be desirable.

There is also the troubling issue of subsidiarity. Too often, a country's implicit opposition to international rules stems from perceived threats to independence and a de facto ceding of sovereignty.

Now that the grotesque polarities of the Cold War no longer exist, economic relations are at the locus of international relations. At this critical hour, the Clinton Administration needs to send clear signs of its support for the GATT negotiations and should move decisively toward breaking this impasse. There is a compelling economic interest in resolving this issue. Clearly, the institution has to be strengthened or there has to be a more efficient replacement. Multilateral and regional approaches are not inherently incompatible--they can be complementary. The United States has to utter a less tremulous yes to GATT and to free trade.

The Uruguay Round marks a critical hour for the free trade talks...

...and the Clinton Administration should demonstrate its support