It is difficult to overstate the degree to which last week's meeting of trade ministers in Geneva was a bust, even if all the participants at the General Agreement on Tariffs and Trade are putting the best face possible on it.
The GATT result is a bitter defeat for the devotees of an open trading system, and for the Reagan administration, which initiated the call for the first ministerial session in nine years. The White House hoped to lay the foundation for a new round of global negotiations during the 1980s, and to extend the GATT rules to trade involving services (such as insurance and banking, where Americans do well), investment, and high technology.
But this required cooperation by the European Common Market, which, under the pressures of near-depression, has turned increasingly inward; and of the Third World nations, suspicious of the American initiative and more comfortable working within the sympathetic superstructure of the United Nations, rather than the GATT bureaucracy.
In addition, tensions had grown during the past year between the Reagan administration and Europe. At issue are macro-economic policy (Europe didn't like the high-interest-rate result of Reaganomics) and the ill-conceived U.S. sanctions against companies making deliveries for the Soviet gas pipeline. Although recently withdrawn, the sanctions have left many residual problems -- and a bad aftertaste.
This combination worked against success in Geneva. Bitterly, Europeans have been saying that the Reagan crowd talks free trade but practices protectionism. The Europeans cite American quotas on Japanese autos, textiles, and most recently, steel. There also has been a touchy debate between the United States and Canada on which country has been the most protectionist.
So the conferees could not even agree on a "safeguard" code to contain the protectionist actions they can legally take to protect hard-pressed industries such as steel and autos. The best that a rancorous meeting could come up with was that there might be negotiations on this tender subject beginning sometime next year. And there was the usual lip service to preserving GATT principles.
Then there was the question of agricultural subsidies. Hefty benefits are paid by the Common Market countries as part of their overall agricultural program. Under the leadership of the French, they refused to be budged on this issue.
The wishy-washy language in a final communiqu,e establishing a committee to make a two-year study of the agricultural subsidy problem has nothing specific on the critical question of export subsidies. Even so, the Europeans noted, the study involves no commitment to do anything about agricultural subsidies.
"Nothing can be done without the community and, for that reason, nothing will be done against her," concluded Tran Van-Thinh, Vietnamese- born resident commissioner for the community in Geneva. But if Congress doesn't see more progress, U.S. Trade Ambassador Bill Brock warned, "there will be a very large clamor for more direct intervention by the United States government in the market."
That seems to set out the parameters for a new U.S.-European trade war.
For the failure at Geneva, the Americans will blame the Common Market refusal to reopen the question of agricultural subsidies. And the Europeans will blame the United States for asking the impossible at a time of economic recession that they lay largely at the door of the Americans.
Perhaps the chief victims at Geneva -- and they themselves are largely to blame -- are the developing nations. They resisted the American initiative to expand the GATT to world trade in services, such as telecommunications, banking and insurance. The Third World countries, led at Geneva by India and Brazil, in effect asked: what's in it for us?
They fear that the United States and other developed countries would gain even greater power in these sectors in their countries, and argued that there was not an assured quid pro quo in terms of wider access for them in the markets of developed countries.
But many of these Third World countries have "graduated" to the point of industrial proficiency. In many cases, they are not only successful competitors in world markets, but have thrown up their own protectionist barriers--as Korea has done in the case of high technology.
The unhappy truth is that everybody has been guilty of protectionism. As a result of what GATT failed to accomplish, protectionism will now get worse instead of better.