Trade: picking up the pieces
The world's major trading nations must now bend every effort to avoid a new round of protectionism in the wake of the limited success of last week's trade conference at Geneva. Some representatives of the 88-member General Agreement on Tariffs and Trade were relieved at reaching at least a modest commitment to avoid new trade restrictions, although few specifics were agreed on. Given the current worldwide recession - and internal pressures in most nations to protect domestic industries - this in itself was an achievement.
The new pact pledges nations to make ''determined efforts'' to reverse the drift towards protectionism. It imposes special responsibilities on the European Community, the United States, and Japan, which taken together account for a substantial percentage of the $2 trillion in world trade. The EC and the US, in fact, make up roughly 50 percent of total world commerce.
Fortunately, top officials from both the EC and the US will be meeting at Brussels Dec. 10 to discuss a broad range of economic issues, including trade. US participants will include Secretary of State Shultz and US Trade Representative Brock.
Since the two sides have managed to come together on both a carbon steel pact and the Soviet-pipeline issue in recent months, there is no reason why some common position cannot also be reached on the several major trade issues separating them. This means reaching a compromise on specialty steel, which US firms maintain is being dumped in the US by European and other steel-producing nations; and on the extent to which European nations subsidize their agricultural exports. The US has threatened to dump much of its vast farm surpluses on the world market unless the Europeans begin to dismantle their subsidy program.
Although the EC nations prevented the GATT meeting from reaching any firm agreement on agricultural subsidies, the US would seem wise in exercising as much restraint as possible until upcoming bilateral meetings have taken place. What is not needed at this time would be for the US to launch into dumping while it criticizes dumping by others. Better to let quiet - though tough - diplomacy proceed first.
Meantime, the US and all other GATT-member nations need to take better stock of the fact that traditional production patterns have changed. No industrial nation can be expected to keep production in its basic industries - such as steel - up to the full capacity of past years. Rather, such industries tend to be co-opted by newer, lower-wage-level developing nations, even while the older industrial nations convert to high technology and information-service industries. And in that regard, it is to the credit of last week's GATT meeting that studies will soon commence to produce a new pact regarding trade in services.
Industries change. But the underlying importance of free trade to all the nations of the world remains as vital as ever. That must be kept in the forefront of thought by governmental leaders during the months ahead.