GATT: a battle in the
GATT struggle for markets between these two giants. Whatever the outcome of the current GATT negotiations, the competition will continue, since the interests involved are too powerful.
This is not, as commentators (and American propaganda) are suggesting, a debate
ON NOVEMBER 20, 1992, European and American leaders reached agreement on cuts in farm subsidies, opening the way for the conclusion of the current round of GATT (General
Agreement on Tariffs and Trade) negotiations. However, the deal has run into resistance from the French government, under pressure from its hard pressed farmers.
In any case, the spectacular claims about the benefits of a
GATT agreement for the world economy are unjustified.
NICOLAS BENIES
HE current GATT negotiations
T are known as the Uruguay Round since they started in Punta del
Este in Uruguay on September 15,
1986. This round involves comprehensive negotiations aimed at liberalizing world trade, and reducing customs' duties and import quotas in two areas: agriculture and services.
The conclusion of these negotiations has been postponed several times. Now the deadline is the end of this year. At the moment attention is focussed on agriculture and in particular on the stance adopted by France whose Socialist government wants at all costs to avoid provoking the country's farmers a few months before elections. However, in fact, over services it is the United States that is being recalci-
The GATT agreement was signed by 28 countries in 1948 with the aim of achieving free trade. It is often believed that the
GATT is a structured international organization, but in fact it is more a sort of pledge of good behaviour. Now there are 102 signatories among them Hungary, Poland
Czechoslovakia and even Cuba.
Round and round they go
The first "round" was the Kennedy
Round (1964-67): in this 50 countries decided, on the initiative of the US, to lower their customs duties by an average of 35%.
This was followed by the Tokyo Round
(1973-79) (initially known as the Nixon
Round), which brought together 97 countries who decided to lower subsidies on exports of industrial products, work out a
"code of norms" (needed to avoid so-called qualitative limits) - which is still to see the light of day - and open public markets to foreign competition - which is being carried through in slow stages.
Thus the rounds have always taken a long time and their decisions have not necessarily taken effect. The onset of economic crisis in 1974 knocked the Tokyo Round off course and involved a certain revival of protectionism.
In the present round, whose conclusion has also been postponed, there is a conflict between the European Community (EC) and the US over agriculture - Japan having no special interest to defend on this point - which became particularly sharp in October and November.
The American government wants to make the EC reduce agricultural output, and in particular that of vegetable oils. They are calling for a cut of three million tonnes which would "mean taking more than a million hectares out of production or turning them over to further grain production".! The result would be either an increase in the amount of unused land (already on the rise in Europe) or an increase in the grain surplus, which the current reform of the European Common Agricultural Policy (CAP) is aimed at
The European countries most likely to be affected by the proposal - France, Italy and Belgium - resisted it, while Germany, a big producer of Colza, was reluctant. As a result the US decided to impose rises in customs' duties of 200% on a a number of European agricultural products, including French white wine. The European side contemplated counter-measures and suddenly everyone was talking about a
In fact, the war has already started. The agricultural market is saturated; the only outlet for its expansion is the Third World, which cannot pay. Given this, the only solution is for the the US and the EC countries to divide up the market. Increases in agricultural productivity and good harvests have triggered the crisis and sharpened competition. The world's biggest agricultural exporter is the US which had 11.8% of the market in 1991 followed closely by the EC with 11%. There is inevitably a between liberals and protectionists but between two exporting interests.
Behind the argument over oilseeds there is another, perhaps more important debate on the future of agriculture, concerning subsidies. All the developed capitalist countries subsidize their agriculture since world market prices are not high enough for farmers to survive. However subsidies take different forms in different countries. The US government provides "deficiency payments" to make up the difference between domestic prices and world market prices while the CAP pays a guaranteed minimum price to the farmer (the "intervention price") which is passed on to the consumer in higher prices. The CAP takes up about 70% of the Community's budget; it is thus highly expensive and leads to sur-
The EC has therefore decided to start dismantling the CAP next year. This means changing the way in which subsidies are calculated and moving to the American system. In France, and only in France, this reform has been presented as connected to the GATT negotiations and as a result of American pressure. This is completely untrue. The reform of the CAP is not a European concession to outsiders. The Americans are in fact only demanding something the Europeans have already decided on - a unilateral reduction in EC agricultural subsidies.
### Rural exodus
The result of the reform of the CAP will be to bring European prices — in particular of cereals - into line with world market prices by 1995 or 1996. It will mean an acceleration of changes in farming patterns and thus a rural exodus. The editor of the economic weekly L'Expansion (June 4, 1992), Jean Boissonat, has coolly noted that "about 300,000 of the existing million farms will disappear".
The issue here is not that of defending the CAP in its existing form but to find a subsidy system that defends the environment. Paying people to take land out of production is an economic absurdity at a time of spreading famine and drought and an ecological absurdity increases the intensity of exploitation of the land still in production.
The current negotiations on the agricul1. Le Canard Enchaîné, November 11, 1992. From an article by Claude Roire which quotes projections modelled se Brushe on tha possible results of a 3 compromise with the Amencans.
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trade war
International Viewpoint # 240 • December 7, 1992
GATT/POLAND ture issue have shown up differences between the European governments. The French satirical weekly, Le Canard Enchaîné, recounts in its November 11, 1992 issue the anxiety aroused among EC Commission President Jacques Delors and the French government by the prospect of the EC's current president, British Prime Minister John Major trying to restart the GATT talks on terms favourable to the Americans. The deal reached under Major's auspices on November 20 was roundly denounced in Paris.
The British parliament has still not ratified the Maastricht Treaty on European union and the Danes have yet to hold their second referendum on the same subject, assuming that the latter will take place at all. There are big splits in Britain's ruling Conservative Party a significant part of which wants to break with the super free market policies of Margaret Thatcher and her successor John Major. Maastricht on shaky ground
Meanwhile, the arrival of Bill Clinton in the White House may signal a change of tack by the US. In these circumstances, the neo-liberal inspired Maastricht Treaty looks shaky and some have claimed that it is simply stillborn.
The Franco-German alliance which lay at the heart of the Treaty of Rome of 1957 and of all the subsequent steps towards European union is being increasingly disrupted by contradictory interests. Germany needs American markets and is willing to sacrifice French farmers to get a deal with the US, while the French government has to take those farmers into account along with a powerful food industry which, for the first time, is being affected by the recession and is searching for new markets. All the more in that the East European market has collapsed before even existing.
It is facts such as these, far more than the GATT accords, which are throwing into question the future of European construction.
To fully understand what is going on in the GATT talks we have to remember that there is a comprehensive package on the table; to bring the agreement to fruition a compromise is needed on both agricultural exports and the export of services. However, it is the USA which is refusing to open its borders to the latter.
Services (also known as "invisibles" since they involve the entrance and exit of hard currency without any visible counterpart) is aimed at forcing the Third World countries to open their markets to exports of services from the developed capitalist world. At first, Argentina, Brazil and Mexico resisted. They know that such ope4 ning up could trigger the bankruptcy of their own service sector in such fields as information technology and communications (in particular telephone technology). Protection against exports from the developed capitalist world is essential if these countries are to develop their enterprises.
The turn by these Latin American governments towards economic liberalism has facilitated the negotiations on services. They have agreed to open their frontiers at the same time as the American and Canadian governments are moving to create a zone of free exchange (the North American Free trade Agreement - NAFTA) which Brazil and Argentina are tempted
Once again the debate is between the EC and the USA. In particular, the French government wants the US to allow increased access for French telecommunication to the American market. The US has refused since it wants to protect its telephone and communication's industries from foreign competition. Compromise here
The negotiators are pretending that, if signed, the agreement will mean $200bn more in world trade. Apart from the fact that no serious study has yet been produced to corroborate this figure, it has no credibility: increased competition means that someone will drive someone else the existing market rather than the market as a whole getting bigger.
Agreement or no agreement, competition is being exacerbated by the recession. Some have claimed that this is the worst recession since the 1930s, which is true for some sectors. The main immediate cause of the recession is the fall in demand Which is seen in all the developed capitalist countries. This affects world trade, whose growth is also restricted
Furthermore, the arrival of Bill Clinton makes compromise even more distant. The Democrats are traditionally more protectionist than the Republicans and also more sensitive to pressure from the trade union bureaucracy, which sees protectionism as a means of saving American jobs. Furthermore, Clinton's job is to try to reverse the US's decline, which the Gulf War hid without truly reversing, and to this end he will take an aggressive line towards his imperialist competitors.
Revival of protectionism
Fundamentally, this revival of protectionism is itself a result of the recession which leads everyone to seek to save themselves. This protectionism is taking on new forms due to the tendency for the world market to divide up into three big zones dominated by the three big powers — the United States, Japan and Germany, but protectionism is what it is.*
Polish clergy seek to extend power
EVER more openly, the