Protectionism: Trade Policy in Democratic Societies

By Jan Tumlir | Go to book overview

4 A Systemic Solution

Agreement on Negotiations

Governments of the major countries are in favor of new trade negotiations. Although the agenda and technical modalities are still disputed, a common approach to the negotiations seems already to exist. It can be summarized as follows. The main issues that generate trade policy conflicts are known, say the policy makers: agriculture, subsidies, safeguards, North-South trade, and what are called the new issues--services, trade obligations of subsidiaries of foreign firms, and problems related to new technologies. Each has perhaps an ideal solution of its own, but governments have already taken positions, declaring particular and conflicting ways of handling each of them to be in their national interest. Governments must not lose face. The only thing we can do, therefore, is to put all the issues on the negotiating table; that will make it possible for each government to make concessions on some issues and receive concessions on others. Thus we can arrive at a package that will be balanced for each participant and overall. It may not contain the ideal solution to any particular problem, but as a package it will be an improvement on the status quo.

In other words the prospective participants, conditioned by the long tradition of commercial diplomacy, are thinking in terms of bargaining about specific substantive issues on the basis of reciprocity. Although the economic rationality of such bargaining about tariffs could be disputed, it has generally led to satisfactory results in the past. In a tariff negotiation governments bargain about technically defined, to some extent even quantifiable, reciprocal concessions within a framework of general rules that they all accept. "We shall reduce by 10 percent our tariff on these imports from you, worth $7 million, if you reduce by 7 percent your tariff on these imports from us, worth $10 million." Experience shows, however, that only tariffs lend themselves to bargaining on the basis of reciprocity. Virtually no progress

-56-

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Protectionism: Trade Policy in Democratic Societies
Table of contents

Table of contents

  • Title Page i
  • Contents iii
  • Foreword v
  • Jan Tumlir - August 18, 1926-June 22, 1985 vii
  • 1 - The Economic and Political Aspects of Protection 1
  • 2 - The Historical Aspects of Protection 19
  • Notes 36
  • 3 - The New Protectionism 38
  • Notes 55
  • 4 - A Systemic Solution 56
  • Notes 72
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