As we enter the final, decisive weeks of the Uruguay Round of General Agreement on Tariffs and Trade negotiations, leaders of the triad -- the United States, the European Community and Japan -- are failing crucial tests of leadership through a craven bowing to the demands of narrow special interest groups that care little about the success of the trade talks or even their nation's true economic interest. Unless there is a stiffening of resolve soon, the bold vision and ambitious agenda that characterized the launching of the talks may well give way to stalemate and a protectionist regression.
It is not that the stakes are not clear and the numbers not decisive. Calculations by the U.S. Office of the Trade Representative show that successful conclusion of the Uruguay Round (defined as a reduction by one-third of tariff and non-tariff barriers for manufactured products and not including service trade benefits) would result in a cumulative increase through the year 2000 of $4 trillion for the combined GNPs of the United States, Japan, the EC and Canada (U.S. share: $1.1 trillion). Even assuming -- which is almost certainly not the case -- that these numbers are off by as much as 50 percent, the total gains through increased competition and more open markets are still immense.
Yet in the face of these prospects, each of the members of the triad has either hardened old positions or taken new stances that place in jeopardy genuine breakthroughs on some of the central issues tackled by the negotiators in Geneva. In each case the particular issue symbolizes a larger failure in the individual trade policy systems of the triad.
Take the example of the position of the European Community on agricultural subsidies. The EC's Common Agricultural Policy costs European taxpayers over $125 billion each year -- about one half of the total of all farm subsidies worldwide. Yet farmers account for only 8 percent of the EC work force, and the farm sector accounts for only 5 percent of EC exports.
Despite this, EC political leaders even at this late date are offering what is in effect only a 15 percent reduction in the level of agricultural subsidies during the next 10 years -- the United States has demanded a 75 percent reduction in farm support programs over the same period, and most observers believe that at least a 50 percent reduction will be necessary to persuade developing nations to accept other parts of a total GATT package.
Ten days ago, in an act of surpassing spinelessness, Chancellor Helmut Kohl, who is heading for an overwhelming victory in German national elections in December and thus has substantial political breathing space, publicly backed his agricultural minister in demanding that the EC hold the line against further subsidy reductions. Beyond Kohl's unnecessary statement, the history of the EC stance on agricultural symbolizes the larger weakness of the EC trade policy process, which is characterized by paralysis and often a narrow-minded, lowest-common-denominator result.
Meanwhile, U.S. negotiators, who have proclaimed from the beginning that a strong agreement on services must be part of any Uruguay Round package, have knuckled under to U.S. service sectors with political clout and are demanding special treatment (read "protection") for the telecommunications, aviation and shipping sectors. This has inevitably resulted in demands for concessions from other nations and has opened a path for exceptions to GATT service rules on a large scale.
The sudden reversal of the U.S. position also reveals a systemic flaw in the U.S. policy-making process -- that is, the excessive dependence upon, and influence of, individual corporations and lobbies on U.S. trade policy. U.S. corporations have every right to have their views factored into every element of the negotiations, but as things now stand, in key areas no one represents and speaks to the national interest.
Finally, there are the Japanese. Not to be outdone by the EC and the United States, Prime Minister Toshiki Kaifu announced several weeks ago that, despite strong and united pressure from other trading nations, the Japanese market would remain closed to rice imports. In the face of numerous offers for compromise, Kaifu, bowing to the parochial interests of a few thousand rice growers, has clung to the duplicitous fiction that 100 percent homegrown rice is necessary to afford Japan "food security."
Japan's obdurate refusal to compromise on rice is part of a larger failure that has characterized Japanese negotiating diplomacy throughout the Uruguay Round. Japan is both the world's leading trading nation and the nation most often censured and retaliated against for allegedly unfair trading practices. No one has more riding on a successful outcome in Geneva, and yet Japan has persistently refused to take a leadership role -- no bold proposal in any area of negotiations has come from Tokyo. Indeed, Japan has acted as if it were merely a Third-World, third-rate economy somewhere in Africa or South America.
If the numbers that result from a successful GATT round are clear, so are the political dynamics that will produce success or failure. Success is dependent upon the construction of a large package of agreements that will produce the trade-offs to accommodate the major demands of both the developed and developing countries. Leaders of individual nations then will have solid achievements to point to as they defend the package against politically powerful, protected sectors and interests in their home markets.
Even at this late date, there is time for leaders of the triad to summon the political will to construct such a package -- one can only hope in the final sessions George Bush's "vision thing" will belatedly come into focus, and the triad will provide the indispensable leadership for a successful outcome to the Uruguay Round.
The writer is a resident fellow at the American Enterprise Institute.