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Victories From Soybeans to Steel

December 24, 1989

Ambassador Carla Hills, the United States trade representative, has had remarkable success in negotiating new steel and soybean free-trade agreements with many of the world's principal producers. The arrangements give a major boost to President Bush's efforts to speed the liberalization of international trade through the current renegotiations of the General Agreement on Tariffs and Trade (GATT) in the Uruguay Round, named for the nation where the talks began.

In this area of politics, all progress is incremental. One of the new agreements is essentially restrictive, imposing "voluntary" restraints on steel shipments to the United States over the next 27 months. Fortunately, the President resisted American steel industry efforts for a 5-year extension of the restraints, so the agreement will end March 31, 1992. And he has made clear that this will be the last time he builds a protectionist wall around the American steel industry. Under the restraints agreed upon thus far, 16 nations and the 12-member European Community will have quotas totaling 19.10% of the American market, rising to 20.26% for the final phase. The European Community, Japan, South Korea, Brazil and Mexico, in that order, will have the largest quotas, representing significant increases for all but Japan compared with the 1984 quotas.

A second arrangement, with particular significance for the ongoing GATT negotiations inGeneva, is a collection of bilateral consensus accords to eliminate trade-distorting practices, including subsidies, among most of the major steel producers. As the President said, "These bilateral agreements on steel are steppingstones to a multilateral agreement in the Uruguay Round to provide comprehensive disciplines over trade-distorting practices." The 12-nation European Community--and Japan, South Korea, Brazil, Mexico, Australia and Trinidad and Tobago--have agreed to the free market policy barring future subsidies. Negotiations are under way with Austria, Finland and Yugoslavia.

In yet another victory, announced Wednesday by Hills, the European Community has agreed to an American proposal to end trade-distorting subsidies for soybeans. The United States carried the case to GATT and won its argument. The European Community has now agreed to implement the GATT finding in 1990, a response that shows a welcome respect for GATT decisions, a respect which has not always been shown by members, including the United States.

Speaking of the steel accords, Hills said that "the bilateral agreements restricting trade distorting practices are the cornerstone of the President's program to seek a consensus to address the causes rather than the symptoms affecting world trade in steel." The President is right to make that consensus his priority.

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