Getting the GATT Talks Back on Track

By Reynolds, Larry | Management Review, July 1991 | Go to article overview

Getting the GATT Talks Back on Track


Reynolds, Larry, Management Review


Getting the GATT Talks Back on Track

Last December 7, free trade advocates suffered their own mini-Pearl Harbor when the Uruguay Round of the world trade talks broke down after four years of negotiations. Since then, the 100-member-nation GATT (General Agreement on Trade and Tariffs) has scrambled to get the talks back on track. With free trade in services - along with agriculture - being a top agenda item, the United States wants the GATT talks to continue, hoping they will open up new opportunities for American banking, insurance, consulting and other service-related businesses abroad.

However, in their zeal to secure more overseas clients for American service firms, some manufacturers and members of Congress worry that U.S. trade negotiators may be tempted to give up too much to cut a GATT accord. This could harm key portions of the manufacturing base, leaving it naked to unfair and anti-competitive trade practices by foreign firms operating in the United States.

"The emphasis on agriculture and services at the GATT talks has put the United States on the defensive when it comes to manufacturing," admits Rep. Sander Levin (D-Mich.), chairman of a Democratic House task force monitoring the progress of the Uruguay Round - a concern also shared by Republicans in Congress. "If we don't come out of the negotiations with a good agreement, it's going to have a debilitating impact on manufacturing," says Rep. Ralph Regula (R-Ohio), who is following GATT talks for the GOP.

Most major manufacturers feel the GATT talks should continue, but they are watching the discussions very closely. "Is there a possibility that manufacturing could get sold out to get an agreement? Sure there is," maintains Howard Lewis, vice president of international economic affairs at the National Association of Manufacturers (NAM).

FARMERS AND MOVIE STARS

American service companies were the major driving force behind launching the latest installment of world trade negotiations begun in 1986 at a GATT meeting in Punta del Este, Uruguay. Expanding globally to service existing - and find new - clients, many professional firms are running into trade barriers similar to those experienced by more traditional industrial companies. For instance, Arthur Andersen, an accounting and consulting firm, now has offices in 54 countries and generates 40 percent of its $3.4 billion in annual billings overseas. "Most of our problems boil down to being able to transfer money, people or technology" from one country to another, says Charles Heeter, a principal in Andersen's Washington office.

This is the first time the GATT talks have tackled the topic of trade in services. Also new on its agenda are trade-related investments and intellectual property rights. Besides business consultants, U.S. banks and insurance companies are hoping these talks will give them freer access to lucrative foreign markets. American computer companies want to protect their software from being pirated by foreign competitors, while U.S. pharmaceutical concerns are looking to protect patents against compulsory licensing by Third World governments. Also, Hollywood movie-makers want European countries to lift quotas on the number of American films that can be shown on their television networks.

"I think we stand a pretty good chance of getting a services agreement that sets down some basic principles," says Richard Self of the Office of the United States Trade Representative, which is handling the U.S. end of the GATT negotiations. "But, I am concerned about the size of the downpayment we may receive from other countries in the way of initial commitments to liberalize their services trade barriers." Meaning: There's some fear we could get a services agreement that has so many loopholes that it really does little to remove existing trade barriers.

To get the lesser-developed countries to support putting services on the GATT bargaining table, the United States had to agree to include agriculture on the agenda. …

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