U.S. Trade Representative William E. Brock has served notice that neither the Reagan administration nor Congress will "continue to tolerate unfair trading practices which adversely affect either our domestic market or our opportunity to trade elsewhere."
In a major policy speech delivered this morning in Europe, Brock moved close to an endorsement of the controversial concept of trade "reciprocity," which its advocates say will enforce an element of fairness in international trade. Under a reciprocity rule, an importing nation would allow foreign goods access to its domestic markets only on the same terms and conditions as its goods are permitted access to the exporting nation's markets. Advocates of the concept say it would enforce fairness in international trade.
Last week, Commerce Secretary Malcolm Baldrige--speaking for himself--said he would support a current groundswell in Congress for reciprocity unless the Japanese opened their markets to American products, including the high-technology items with which the Japanese are giving American companies intense competition here at home.
But U.S. trading partners are worried that "reciprocity" will degenerate into protectionism by another name. On Thursday, Canada's ambassador to the United States, Allan Gotlieb, said in a New York speech that legislation being debated in Congress incorporating a reciprocity principle "raises serious questions about the future direction of U.S. trade policy."
Japan's concern about the possibility of a trend toward protectionism was reflected last week in a series of steps to ease what its trading partners in the United States and Europe regard as overly stringent customs and standards for a variety of imported items. The changes, however, fell far short of those requested by U.S. officials.
In his speech, before the European Management Forum in Davos, Switzerland, Brock said:
"I understand the concern expressed about the current discussion of reciprocity in the United States. I am confident that, under this president, reciprocity will not become a code word for protectionism, but it will be used to state clearly our insistence on equity."
It was Brock's first public mention of reciprocity, and aides took pains to say that he was not articulating an administration position. A study of reciprocity originated by Brock's office has not yet cleared through an interagency committee, nor has there been discussion of it in the Cabinet council on trade issues.
But Brock is known to feel that a carefully crafted reciprocity statute would be useful as a trade bargaining tool, even though Gotlieb and others have warned that bilateral trade retaliation can erode the prospects for successful multilateral negotiations.
"We are just unequipped to protect ourselves in a world more ingenious than we are in setting up non-tariff barriers," an American official said in an interview. This year, the United States expects to run a trade deficit of more than $20 billion with Japan, which it blames in part on Japan's well-honed techniques of special rules or "standards" to keep goods out.
Administration policy-makers are aware of the fine line that may exist between "reciprocity" and overt protectionist barriers. Thus, Brock and others will give no blanket approval, in advance, before seeing the language of reciprocity legislation as it develops.
Nonetheless, the implication of Brock's speech in Davos this morning was that some reciprocity language will find its way into law, hence his commitment to use the concept "to state clearly our insistence on equity."
Brock said that those who believe--as he does--in free trade can make no contribution to it unless the public believes that "there is equity for them in the application of that policy."
He said that the world needs to create "a renewed and revitalized trading system" designed to deal with some of the more inventive non-tariff barriers that undermine past tariff negotiations.
Brock insisted that a scheduled ministerial meeting of the General Agreement on Tariffs and Trade (GATT) scheduled for Geneva in late November, the first such gathering since 1973, must produce a definite work plan, not an exchange of "platitudes and pleasantries."
The United States has long insisted that rules be agreed on that will handle its complaint that other nations discriminate against American investment and export of services. Brock said also that "we must perfect arrangements for trade in agriculture," a tender area in U.S.-Common Market trade relationships.
"One formula for the destruction of the world trading system begins with the self-serving view that each of us is as pure as the driven snow, and the problem is the other guy," Brock said. "The United States is not completely pure, and neither is anyone else."