President Carter yesterday told Congress that "we are now within sight of a successful conclusion" of a historic agreement that for the first time will break down "non-tariff barriers" to international trade.
Multi-lateral trade negotiations among some 93 nations have been taking place on these artificial barriers to trade as well as on tariff reductions running up to 35 per cent, in Geneva. The MTN talks are still in process.
The step Carter took yesterday was a formal notification, required by the Trade Act of 1974, of his "intent to enter into" the package of trade deals. On April 5, 1979, or 90 days after publication of the proposed texts in the Federal Register on January 8, Carter will sign the agreements.
But they will need specific congressional endorsement, alosg with enabling legislation -- and a bitter political fight looms on some of the the issues involved. In oroad terms, the multilateral agreement is expected to be attacked by domestic interests that fear too much import competition.
Special Trade Representative Robert S. Strauss, who has headed the American neogtiating team, said the agreement wonht "cure" all trade problems, but can assure trade will "be conducted more fairly and openly, by reducing the competitive disadvatages which increasing government intervention in world markets creates."
The agreement would end the highly controversial American Selling Price (ASP) system, under which some imported goods were not taxed at their actual value, but on the basis of equivalent, and often higher priced, American products.
Sensitive to the probable rough road that lies ahead for the trade legislation, Carter said in a letter to House Speaker Thomas P. (Tip) O'Neill and Vice President Walter F. Mondale that there would be close congressional consultation not only on the multilateral legislation, but on additional agricultural trade agreements "that we intend to enter into at about the (same) time..."
The major non-tariff-barriers (NTBs) are dealt with in a number of new codes that -- among other things -- are designed to reduce export subsidies on industrial and agricultural products, and to limit the ability of a country to retaliate in a unilateral way when it believes that imports are injuring domestic industries.
The United States was not successful in achieving all of it negotiations objectives, but claims substantial progress.
"It's the most sweeping attack on NTBs that's ever been achieved", deputy STR Alan Wolff said in an interview. "It doesn't rule out all discrimination in government procurement, all subsidies, and many other things. But for the first time, we have the ability to roll back NTBs as tools of protectionism."
One thing the U.S. would like to have obtained is a complete opening up of government procurement to foreign competition. The U.S. team is still trying to squeeze more from the others on this issue.
Carter's letter and supplemental documents summarized major proposed agreements on NTBs as follows:
Subsidies and countervailing duties -- This agreement limits trade-distorting subsidies, but doesn't abandon the right to counter-vail (offset subsidies). Export subsidies on non-primary products and on primary mineral products are flatly prohibited.
Safeguards -- In response to a specific congressional directive, this agreement, Carter said, "will ensure that countries observe international trading rules" when limiting imports. But where present GATT (General Agreement of Trade and Tariffs) rules permit safeguard actions only on a non-discriminatory basis, the new code would permit some scope for selective action, subject to certain conditions. This was insisted upon by the European Common Market. How to deal with voluntary restraining agreements or formation of international cartels has not been settled at the present stage of negotiations.
Standards -- This agreement deals with product standards that can be disguised or manipulated so as to become barriers to trade. The plan of the agreement is to require the adoption of fair procedures and practices.
Government procurement -- Some countries discriminate by giving domestic suppliers percentage preferences in bidding. There are other sophisticated devices for cutting out foreign competion. The code will attempt to set out rules -- which for the most part now don't exist. But there will still be many exclusions from totally open procurement, including services, national security goods, and those being bought under agricultural support programs. The U.S. is still fighting as a way to avoid some of the most blatant dodges -- to get the name of the winning bidder and the amount of the award published.
Customs valuation -- Here the design of the code is to encourage more uniform methods of appraising imports for the purpose of applying import duties. For example, a controversial American practice has been the American Selling Price (ASP) system. In the absence of ASP, tariffs on some products may be raised to maintain roughly equivalent protection.
A new code would set out a Customs Valuation Agreement with a primary method and four secondary methods of determining value. The primary method specifies that customs value shall be the actual transaction price of the imported goods. If the primary method can't be used, the four alternatives are resorted to, in descending order. For example, the second method would compute the value in terms of the transactions prices of identical goods being imported from another country at the same time.