Share this story
Close X
Switch to Desktop Site

GATT Produces Benefits And Seeds of Discontent

Trade war avoided, but developing nations worry over market access

ECONOMIC experts will argue endlessly about who wins and loses in this Uruguay Round of the 117-nation General Agreement on Tariffs and Trade (GATT), and the amount of growth it will mean for the world economy. But many observers say the most crucial accomplishment is this: In a context of threatening protectionism, trade-bloc building, and regional recession, the world said ``yes'' to global economic cooperation.

``The miracle of the Uruguay Round is its conclusion,'' says Vincent Cable, economic program director at the Royal Institute of International Affairs in London. ``I'm a bit skeptical of some of the grander claims for economic growth, but what is certain is that by reaching agreement we've avoided the disaster of a collapse, which very quickly would have meant trade recriminations and descent into disruptive and dangerous global trade conflict.''

About these ads

Carla Hills, US Trade Representative in the Bush administration, says failure to reach an agreement would have fanned certain trade disputes ``that [would have added] up to heightened tension and trade wars.''

The accord, she adds, will be a significant foreign policy tool for Western governments in dealing with countries in the former communist world or the developing South that are opening their economies. Without promise of better market access, she says, domestic pressure could grow for return to centralized governments.

But the accord is also a sign that the developed world has resisted the sirens of retrenchment.

A Europe mired in recession and fears of competition from the newly industrialized countries of Southeast Asia held firm to the international trading system at the root of its postwar prosperity. ``[Conclusion] is important for Europe because it means we will continue building competitiveness, opening markets, and restructuring so that [industrial] displacement is not necessary,'' says Caroline Walcot, assistant secretary-general of the European Roundtable of Industrialists.

France in particular rejected a temptation to embrace protectionism. Had it done otherwise, it could have split Europe and spawned a diplomatic nightmare for translatlantic ties.

The round pushed Japan to the historic decision to begin opening its rice market, a signal of global engagement from its leaders and a sign that consumers are gaining clout.

And despite the coming battle in Congress over ratification, the US now stands firmly for world economic engagement - especially after November passage of the North American Free Trade Agreement.

About these ads

``NAFTA was in fact a very important and welcome precursor,'' says Ms. Walcot, noting the crucial signal it sent about US direction as GATT talks entered their final push. NAFTA rang like an alarm for Europe that it risked turning inward alone.

IN its detail, the GATT accord leaves almost everyone dissatisfied. Some are frankly bitter about what they see as failure to deliver fully on the original promise of reciprocal North-South market access. A Brazilian delegate spoke of worries that the accord would be used to ``concentrate and preserve the technologies of a few large industrialized countries.''

The ink was barely dry on the 400-page document when some attacked it for falling short. After telecommunications were removed earlier from negotiations, sectoral agreements on financial services, maritime services, aircraft subsidies, and entertainment products fell short of original goals.

Textile-exporting countries like India were unhappy with final offers they received for lower trade barriers. The agriculture text, which failed to match hopes primarily because of pressure from European farmers, is a disappointment for little- or unsubsidized farmers of Canada, Australia, Argentina, and developing countries.

Yet these disappointments overlook the round's achievements: taking multilateral trade rules into new areas such as agriculture, textiles, services, and intellectual property including patents and copyrights, where, at best, bilateral accords existed before; and establishing a new World Trade Organization, which is to work as an impartial court for big and small trading countries alike in settling trade disputes.

Likely to take effect in January 1995 after national ratifications, the new measures will take time to work into the global system. But a nearly 50-percent reduction in tariffs worldwide and reduced subsidies to food producers should mean both lower costs to consumers and higher prices for developing-world farmers.

But such promises do not leave everyone happy with the accord and the globalization of the world economy it encourages. For some critics, it is a bad deal for developing countries whose economic future depends on a ``localization'' rather than specialization of economies.

``Under all the cheering is the reality that, with this accord, the rich get richer and the poor don't even get a look in,'' says Tim Lang, a British specialist in food standards and co-author of ``The New Protectionism.'' ``The poor won't achieve any progress if they're kept on a treadmill meeting the rich world's needs for low-cost labor.''

Pointing to last-minute adjustments by the US and the EU that reduced access for developing countries to their agriculture, clothing, and other markets, Mr. Lang says, ``This will only exacerbate ... growing inequity.''

For now, developing countries have embraced the accord - although they are expected to formulate new market-access demands in the run-up to final treaty ratification in Morroco in April.

Meanwhile, some warn that the rise in ``cultural objections'' to economic globalization and accords like the Uruguay Round are a harbinger of the growing popular resistance the global trading system is likely to face in future.

``Rice riots in Korea, the `cultural' battle over audio-visual products, and the revolt of French and Japanese farmers indicate a popular rebellion against forced and rigid globalization,'' says Cable. Citing the NAFTA ``education process'' in the US, he says: ``Governments are going to have to do a better job of explaining the benefits,'' while paying more attention to worker retraining and other elements of adjustment policy.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.