Is Seven Years Too Long To Draft a GATT Accord?
Some analysts call for a faster, more creative approach in the future
WHEN Clayton Yeutter, former United States trade representative, was negotiating the start of world trade negotiations in Punta del Este, Uruguay, he never dreamed negotiations would drag on for more than seven years.
Now, Mr. Yeutter says, ``It's time we did something more creative in the future.''
He is not alone. As the trade negotiations, under the auspices of the General Agreement on Tariffs and Trade (GATT), head toward their final moment, some trade analysts say there has to be a better or more efficient way to negotiate trade issues. ``The rounds have outlived their usefulness,'' says Michael Aho, a senior economist and trade expert at Prudential Securities.
``Yes, they have outlived their usefulness, and there is not likely to be one again soon,'' says Robert Hormats, who organized many of the Group of Seven meetings during the Reagan years. He is now a partner at Goldman Sachs & Co.
Carla Hills, the US trade representative in the Bush administration, disagrees, saying the long negotiations are the best way to settle problems. ``You simply have to sit down, be persistent about it, and make a good analytical case,'' says Mrs. Hills, who is now head of Hills & Company, an international consulting firm.
Critics of the GATT process say the negotiations not only take too long but also are too concerned about yesterday's issues. ``Tomorrow's issues are about competitive policy and the environment; today's issues are about services and intellectual property,'' says Mr. Aho, who has written a book about the GATT. ``People are pretty disappointed because they didn't even deal with today's issues very effectively.''
In a speech delivered in Tokyo on Dec. 13, Yeutter argues that the world cannot afford to wait for trade negotiations every decade. ``Trade problems will not wait 10 years for a solution, which is often convoluted at best,'' Yeutter says.
Instead, he suggests that there be future negotiations ``whenever needed, whatever the issue; whatever the mix of goods, services, or both; and with whatever countries are relevant.''
Mr. Hormats says the next wave of trade liberalization will be the result of regional discussions, such as the expansion of the North American Free Trade Agreement (NAFTA) or the European Union.
If there is another round, Hills says it may deal with environmental issues. ``These are the issues crowding in around us for the decade of the '90s,'' she explains.
For example, the US passed legislation in 1992 protecting marine mammals, such as dolphins, which swim above schools of tuna. Fishermen often spot tuna by watching for the dolphins that swim on the surface. They catch the dolphins in their nets, as well as the tuna. The law prohibits the purchase of tuna from any country using this process to catch the fish.
``A GATT panel ruled we didn't have the right to go into international waters and determine how the fishing was done to restrict trade,'' Hills says.
It is also likely that any new round will have to deal with issues unresolved this time around. The US is likely to want to continue to open up financial services. And, Hormats says, ``virtually nothing'' was accomplished in setting up rules to protect private investment.
If an agreement is reached today, the negotiators will have missed their initial deadline by three years. One reason is that this round of negotiations is more ambitious than most of the others, which mainly dealt with tariff reductions.
In 1986, the US went to the talks with the objective of trying to open up world markets in agriculture, services, investment, and to provide protection for intellectual property.
When the first deadline arrived at the end of 1990, the Latin and Asian countries said they would not endorse any agreement that did not liberalize agricultural trade. ``When you have a round with more than 100 countries, a larger number of them only care about agriculture,'' Hills says. ``So if you don't deal with [it], they won't deal with services, investment, and protection of intellectual property.''
About two years later, in January 1993, Hills believed she was close to closing a deal, a month after Sir Leon Brittan became the lead negotiator for the European Community. ``I flew over to Europe to meet with Sir Leon on the first of January, and it was perfectly clear that we could strike a deal,'' she recalls. ``There were just a handful of issues remaining.''
Hills says Sir Leon had tentatively accepted the US proposal. But he called her when she arrived home. ``He told me, `I just don't have enough data to move forward at this moment,' '' Hills says. Within days, Hills was out of office and Mickey Kantor began boning up on the issues. By the time Mr. Kantor, President Clinton's nominee, was up to speed, the French were actively trying to destroy an agreement reached earlier and to end export subsidies on agricultural products. It took nine more months of negotiations to get close to signing an agreement.