A July Deadline

The issues are aired, and the bargaining begins

"Should we fail, the cost to each of our nations and to the world as a whole will be incalculable. Our markets would close, unemployment would become endemic and governments would fall."

Thus did Robert S. Strauss, Jimmy Carter's chief trade negotiator, size up the importance of last week's Geneva session in the 98-nation trade talks sponsored by the General Agreement on Tariffs and Trade (GATT). Started in Japan more than four years ago to lower international tariff walls, the so-called Tokyo Round talks have proceeded at a snail's pace--mostly as a result of U.S. preoccupation with Watergate, the Viet Nam pullout and the 1976 presidential elections. Last week the negotiations entered a new and decisive phase, when the U.S. followed Japan and the European Community in presenting its formal negotiating offer. Now that the Big Three have spoken, hard bargaining can begin, and participants have set themselves a July deadline for completion of the talks. Final written agreements would be signed by year's end.

The Big Three now propose that tariffs should be cut by an average of 40%. The real reduction, however, will be less than 40% because every one of the 98 countries has a long list of industries and products that it wants exempted from the new foreign competition that tariff cuts would bring. The U.S. list includes color television sets, chemicals, shoes and special steels. The Europeans want to protect agriculture, cars, electronics and. like the U.S., shoes and steel. Also, the Europeans demand that the U.S. cut its comparatively high tariffs of 25% to as much as 108% on certain goods--orange juice, men's wool suits and watch bracelets among them.

Anyway, tariff cuts are no longer the only key to liberalizing trade. The Geneva negotiators will also try to dismantle many of the 800 to 850 NTMs (for "nontariff measures"), which are often deemed to be much more restrictive for international trade than tariffs themselves. NTMs range from straightforward quotas, to subtle and not-so-subtle local labeling requirements, to health, technical and environmental standards that can stop foreigners from freely entering another country's domestic market.

Unfortunately, any eventual pact could easily be scuttled if the leftists, who bitterly oppose dismantling tariff walls, win the forthcoming French elections. Furthermore, the Congress, which faces fall elections, could also refuse to ratify any agreement. Strauss does have the wholehearted support of President Carter, but this Congress has shown itself to be well aware that protecting home industries is an easy way to win votes. Indeed, protectionism has developed global momentum: GATT studies suggest that trade-restricting moves by various countries cost the world $30 billion to $50 billion in potential international commerce over the past three years. Noting the political pressures, one Geneva negotiator fears that the meeting could end by simply "defining gentlemanly rules for conducting a trade war." Strauss does not accept this. Said he: "Not everyone is going to get what he wants, but everyone is going to get what he needs."

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