Restricted Markets
LEVINSON, MARC
Restricted Markets Hard Bargaining Ahead: U.S. Trade Policy and Developing Countries Edited By Ernest H. Preeg Overseas Development Council. 211 pp. $19.95. Reviewed by Marc Levinson Senior...
...These barriers are often obscure, frequently unintentional, and sometimes inherent in a society's basic structure...
...Negotiating them away is not the sort of thing diplomats from a hundred countries can easily do around the conference table...
...Countries with only bananas to sell will not grow by trading freely in a world with too many bananas...
...The biggest obstacle to new agreements, in fact, is the number of active players...
...There is little cause for optimism in either case...
...Reviewed by Marc Levinson Senior editor, Dun's Business Month Two major sets of negotiations will assure Geneva's continued prosperity in 1986...
...Indeed, their interest is to keep them low at home, so their foreign operations can ship parts and materials freely for sale in the United States...
...Tying debt talks into trade talks will surely complicate matters, yet keeping them separate effectively leaves aside the major factor driving North-South trade today...
...No nation anywhere has industrialized without offering its new industries protection from foreign competition...
...Thanks to the Kennedy Round's success, tariffs are no longer an important impediment to world trade...
...are attributable in good part to shipments by American-owned firms, have been far less frequent...
...Anne O. Krueger, currently a vice president of the World Bank, has been one of the most influential proponents of the notion that economies open to foreign trade grow faster, a point she defends here in an essay written with Constantine Michalopou-los...
...Meanwhile, traditional markets for U. S. goods, particularly in Latin America, have virtually dried up, costing our economy an estimated 1.3 million jobs last year...
...Why are we bargaining in Geneva at all...
...Most of the Third World has been far more concerned with the attempts of the United Nations Conference on Trade and Development to stabilize prices for rubber, cocoa and other commodities than with the rules governing trade in steel, airplanes, and polyester...
...Today, with most industrial countries mired in slow growth and high unemployment, the climate is not right for proposing short-term dislocations in the name of higher long-run growth...
...In everypoor country, permitting imports means antagonizing the entrenched business groups and labor unions that wield disproportionate political influence because of their ability to bring chaos to the streets of the capital...
...The battle for access to markets has become increasingly bitter...
...Over 53 per cent of the consumer goods imported into the U.S...
...Non-tariff barriers, ranging from licensing requirements to outright subsidies, have become the primary means of controlling imports...
...One comes away from this book persuaded that, at the moment, we would do far better to work out pressing problems with our trading partners individually, and put off more talks until we find something we can agree upon...
...Companies from Union Carbide to General Motors produce happily behind protectionist walls in a number of developing countries, and have no interest in seeing their investments endangered by a lowering of barriers abroad...
...This timely volume of essays published by the Overseas Development Council shows why the situation is different now...
...But in a world where protectionist pressures continue to build, the last thing needed is a public demonstration that the world's trading nations are unable to agree on freer trade...
...The second neglected issue is foreign debt...
...For the Reagan Administration, the new gatt round is a rabbit pulled out of a hat: At least for a while, fascination with the twitching creature will distract the attention of protectionists at home...
...in 1983 were from theThirdWorld...
...The General Agreement on Tariffs and Trade (gatt) will convene, largely at the behest of the United States, to open negotiations on a new multilateral trade accord...
...The unfortunate reality is that most developing countries must export and must restrict imports if they are to meet their debt service obligations to American and European banks...
...The time is not propitious...
...In addition, the signatories of the Multifiber Agreement (mfa), the international treaty governing trade in textiles and apparel, must shape a new pact before the old one expires in July...
...For proof of this theorem, witness the righteous anger of American corporate chieftains toward imports from Japan, where relatively few of them have factories...
...Local control of the economy is almost impossible without protection, since multinational corporations alone possess the resources to fight all comers in an open market: the U.S., Europe and Japan will dominate latecomers who are silly enough to leave an open door...
...To ask developing countries to increase their imports without a guarantee of greater market access for their exports is to threaten them with trade surpluses that are too small to satisfy their obligations...
...This belief in the wonders of the Invisible Hand, however, ignores historical fact...
...And, as Nigerian economist Adebayo Adedeji correctly points out, "Economic development is diffused through trade only when the pattern of advance in the industrial countries happens to be such as to cause a rapidly rising demand for the exports of the developing countries concerned...
...Two important themes are missing iromHardBargainingAhead...
...Developing countries have emerged as large-scale exporters of manufactured goods...
...One is a discussion of the role of multinational corporations, which have fundamentally changed the dynamics of the protectionist debate...
...The eight essays in this book present an excellent perspective on some of those interests, including the displacement of workers by imports, restructuring trade in commodities, and making sure trade liberalization is a two-way street...
...Washington would do far better to cease pretending that free trade is a moral imperative and instead define and defend our national interests...
...Manufactures make up 95 per cent of South Korea's exports and half of Brazil's...
...As we renegotiate the gatt and the mfa, it is not merely the poorer nations who want something from us...
...Rather than demanding access to foreign markets in return for access to ours, theU.S...
...ThirdWorld countries frequently plead for exemptions from trade agreements so that their infant industries can develop, but they almostnever admit those "infants" have grown up enough to face foreign competition...
...has been content to preach free-market ideology, apparently assuming that the poor countries don't know what's good for them...
...Calls for protection against imports from Brazil and Canada, whose huge trade surpluses with the U.S...
...The two previous rounds of gatt negotiations, the Kennedy Round that concluded in 1967 and the Tokyo Round ending in 1979, were undertaken in periods of relative prosperity...
...Then, too, all the easy work is done...
...In the past, the gatt has been an affair of the industrialized countries, and the same countries negotiated the mfa with only a handful of developing states, such as Hong Kong and Taiwan, which have a lion's share of the textile trade...
...The United States has a long list of things it wants from them, running the gamut from open markets for trade in services to strong action against counterfeit goods...
...No government will take that risk without a forceful push from abroad...
Vol. 68 • November 1985 • No. 15
