A holiday party-goer in Washington who caps off a celebration with French cognac may not realize it, but the sips he takes cost more because of the price of chickens in Denmark.
As any trade negotiator at the current international trade talks here can explain, this seemingly bizarre tidbit is simply a logical outgrowth of a maze of national policies which create both trade barriers and retaliations like the celebrated "chicken war" during which the U.S. raised its duties on certain European imports, including cognac, after the Europeans raised their duties on poultry as part of their program to maintain domestic agricultural prices at high levels to help their farmers.
As trade barriers go, however, the "chicken war" was relatively clear-cut - both sides agreed that bound tariffs had been raised and compensation under the General Agreement on Tariffs and Trade rules was due. And as negotiators here are proving, it is even more difficult to resolve dispute and reform the often abused GATT trade rules when the techniques keeping up a domestic industry's prices are not tariffs but rather such "nontariff" methods as tax breaks, soft government loans or direct payments to industries.
At the present Tokyo round trade talks. European and American negotiators are still deadlocked over two key nontariff barriers to free trade.
The European Community or Common Market complains that the U.S. imposes retaliatory, or "countervailing," taxes on imports which receive foreign government tax concessions or other subsidies without showing that American industry is being hurt by the imports. The Americans reply that the Europeans must tighten their uses of subsidies, insisting that the new trade accord should define subsidies more strictly than the GATT presently does.
The other impasse at this point in the talks is over the so-called "safe-guard" clause of the GATT, which permits a country to temporarily impose limits on the quantity of imports causing damage to domestic industry.
The Europeans wish to apply the clause selectively to restrict the imports of the countries found to be causing the injury. Japan and the developing countries are afraid that they would become the targets of such a tactic. Since the U.S. and the Common Market have failed to find a compromise on either issue, they recently prsented to Olivier long, Director-General of GATT, confidential and "anonymous" drafts on both subjects which spells out their different positions as "an approach for further discussion," according to negotiator.
Long will circulate the drafts when the talks begin again in January.
Despite the difficulties in certain sensitive areas, some progress has been made here in the first concentrated effort in the 30-year history of GATT negotiations to unravel and reform the intricate maze of non-tariff techniques, like subsidies to domestic producers, which serve to cut down on the flow of trade more effectively sometimes than tariffs themselves.
"A tariff is a wall, but at least one can get over it even if he needs a polevault," a trade negotiator here explains, "but a nontariff barrier is a closed door."
As negotiating items nontariff barriers are particularly difficult because often they are deeply tied into a nation's economic or social objectives, such as promoting employment in depressed areas through subsidies, or protecting consumers through various product standards, or even preserving religious morals. Libya, for example, will only import meat slaughtered in accordance with Islamic law.
Negotiating through the maze of these trade obstacles is further complicated for trade diplomats who due to political realities have "gotten into the mindset of horse-trading" over trade concessions as one negotiator puts it. "Just trying to quantify them (nontariff barriers) is next to impossible" a trade expert explains. While the effects of tariff cuts can be calculated at least in theory, "we can't put a dollar figure on changes in the nontariff area.
These nontariff techniques range from blunt restrictions on imports (quotas) to seemingly unassailable health standards for imports which can be subtley manipulated to keep unwanted foreign competition away.