When the leaders of the major industrialized nations sit down together in Houston tomorrow, the revolutionary events in the world will make their agenda large even by Texas standards. The low-visibility, complex matter of the Uruguay Round, however, should be brought front and center. Only President Bush can do it.
After nearly four years of slow progress, the Uruguay Round of negotiations under the auspices of the General Agreement on Tariffs and Trade is entering its final months. The prognosis is uncertain. Representatives of more than 95 countries are negotiating in several working groups, with each group tackling an important issue such as further limits on subsidies; knocking down national barriers to foreign investment and service industries such as insurance and banking; protecting intellectual property (e.g., patents, trademarks and copyrights); and improving the system for resolving disputes.
In the closing months of a major trade negotiation, the scene must shift from drawn-out discussions about what issues are on the bargaining table to forging trade-offs and compromises. That movement has yet to begin in the Uruguay Round. This is troubling, because the plan was to have working drafts ready by the end of July. The final compromises were then to be reached by December. A major logjam now exists over the European Community's reluctance to agree to substantial reform of its large and politically sensitive subsidies to agriculture.
President Bush is the only national leader who can take the initiative. The European leaders are preoccupied with Germany, Eastern Europe and the European Community's plans for 1992. They need to be pushed harder on farm reform. Prime Minister Toshiki Kaifu is still new on the job, and he has already had to fashion difficult compromises in the recent U.S.-Japanese trade talks.
So far Bush has sat back, letting the U.S. trade representative -- Ambassador Carla Hills -- and her team of negotiators carry the ball. Bush did not even mention the Uruguay Round in his State of the Union Address last January. He has since said that the talks were his "highest trade policy priority," but this comment was buried in much less well-publicized statements.
A decision by Bush to take the initiative now is not easy. There are less complex and more visible issues to identify with. Moreover, even with Bush's leadership, the GATT talks will surely involve tough negotiations with the Europeans about farm subsidies, and the overall result might well fall short of what the United States wants.
Nevertheless, U.S. long-term interests call out for American leadership. A robust international system to open foreign markets to trade and investment is of compelling importance to reverse the U.S. economic decline relative to Japan and much of the European Community.
The likely alternative to an unsuccessful Uruguay Round is neither minor nor attractive. The 12-member European Community would have little incentive to reduce its barriers to U.S. trade, while it continued to establish free trade arrangements with other European countries (the broader area being infelicitously dubbed the European Economic Space). Japan, the emerging Asian economies such as South Korea and the developing countries of the world would be encouraged to cut bilateral deals. The United States could survive in this melee by continuing its free trade arrangement with Canada, by possibly entering into such agreements with Mexico and other Latin American countries (as Bush suggested recently) and by making other special arrangements. The overall economic benefits would be much less, however, and the inevitable economic tensions could well lead to serious political frictions.
Strong leadership by Bush, whose overseas credibility has been enhanced by his new willingness to consider tax increases, should trigger considerable support from other countries. Japan is most likely to respond quickly and favorably. With fewer than 125 million people and a low birthrate, Japan is a country whose leaders are coming to recognize that they must shed some of their protectionist practices or find themselves partly isolated by the increasingly hostile United States (with nearly 250 million people) and a resurgent Europe (with more than 320 million people in the Community and about 170 million more in the rest of non-Soviet Europe.) The Europeans have long been committed intellectually to GATT and an international system; they must be reminded of the need to avoid becoming Eurocentric.
The U.S. negotiators have ably laid the groundwork for President Bush. No major intellectual retooling is needed. Rather, Bush should emphasize the present U.S. goals -- substantial reform of farm subsidies, further limits on industrial subsidies, effective rules for reducing barriers to foreign investment and trade in services, better protection of intellectual property, more commitment by the developing countries to the trade rules, a more rational system for textile imports and a more effective system for dispute resolution.
No one should expect the U.S. negotiators to achieve all their goals. But they -- and the rest of the world -- are likely to achieve much more if Bush takes the lead now.
The writer teaches law at Georgetown University; he is currently a visiting professor of law at Stanford.