World Trade: A Disappointing Start

It was heralded as the greatest and most important tariff-cutting meeting in the history of world trade, but it began with the style and promise of a shotgun wedding. As 300 delegates from 66 nations gathered in Geneva last week for the long-awaited trade talks under the General Agreement on Tariff and Trade (GATT)— labeled the Kennedy Round because the late President gave them impetus —the air was heavy with torpor and reluctance. After more than a year of preliminary parleys that tried to lay a groundwork on which the conference could proceed, all the delegates had really agreed on was that they still have monumental disagreements to over come. GATT Executive Secretary Eric Wyndham White, whose job was to open the conference with a ringing keynote, had to admit the seriousness of the fail ure to set so much as the terms for negotiating. "This is disappointing," he said, "and it would be foolish to pretend otherwise."

Even the setting was unsettling. Because the United Nations trade conference had pre-empted the grandiose Palais des Nations, the GATT delegates had to forgo the peacock lawns and lakeside vistas to meet amid six scraggly potted palms in the salon of the Batiment Electoral, where the Swiss hold cantonal elections. On a floor below, the brass band of the Geneva Landwehr could be heard holding its rehearsals. The remarks of Chief U.S. Negotiator Christian A. Herter were punctuated by the faint oom-pah-pahs of the Landwehr as he warned: "The longer we procrastinate in setting the formulas by which these negotiations will proceed, the more we risk the success of the entire negotiations."

Disparities Despair. Fundamental to the lack of progress so far is that the U.S. Congress passed the Trade Expansion Act that inspired the Geneva talks for the express purpose of breaking down Common Market trade barriers to expand U.S. exports. The U.S. thus wants to negotiate a flat across-the-board percentage cut on 5,000 items in international trade. The Six, understandably, want to open up world markets for their own industry and farmers. Since their tariff walls are already generally lower than the U.S.'s, they reject a flat cut that would only perpetuate the disparities, prefer instead a selective approach that would make progress to ward equalizing all trade barriers. Further complicating the talks is the failure of the Eurocrats to set a Common Market farm pricing policy, without which it is impossible to discuss agricultural tariffs—an issue vital to the U.S. be cause it sends $1.2 billion worth of farm exports to Europe yearly.

The world economic situation has changed since the Trade Act was passed. Then it looked as if the Common Market, with its lower labor costs, would chop away U.S. world markets; instead, inflation is now racking most of the Six, while U.S. prices have remained relatively stable. Result: U.S. trade and payments balances are improving against the Common Market's, a fact that makes the Six all the more wary of dismantling their trade barriers.