Trade Talks and Protectionism

January 12, 1979

Report Outline
Action on Geneva Negotiations
Protectionism vs. Free Trade
Strategies for Enlarging Trade
Special Focus

Action on Geneva Negotiations

Carter's Notice to Congress of New Pact

Five years of tough bargaining over the future of the world trade system appears to be drawing to a close. Representatives of the 98 non-communist countries participating in the Multilateral Trade Negotiations (MTN) in Geneva have reached agreement on nearly all outstanding issues. Members of the U.S. negotiating team say they expect to have the entire package of accords “wrapped up” by mid-February.

Anticipating a successful outcome at Geneva, President Carter on Jan. 4 notified the incoming 96th Congress of his intent to sign the package of eight agreements on lowering non-tariff barriers and four agreements on farm trade, tied to an across-the-board cut in tariffs averaging 35 percent. His letter of intent, required by the 1974 Trade Act, will start a prescribed 90-day period of consultation with Congress in advance of his signing. However, it is unlikely that a protectionist-minded Congress will approve implementing legislation without a hard fight, and no one expects its approval until months after the 90 days ends on April 5.

Before the legislation is sent to Congress, a few remaining issues must be settled in Geneva, where the talks resumed Jan. 8. A spokesman for Robert S. Strauss, Carter's special trade representative, has cautioned that the next few weeks are critical. Although the United States has reached “substantially complete” agreement with Japan, it still differs with its European trading partners on two key issues — tariff levels on chemicals and textiles, and certain parts of a proposal for “safeguards” to protect domestic industries against import competition. In addition, the European Community's Council of Ministers, which holds a potential veto over the negotiated accords, has characterized Japan's offers as “inadequate.”

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