Toward the Kennedy Round

In Geneva's Palais des Nations, the site of many grand scenes and grander disappointments, the U.S., Britain and the Common Market Six have been bickering for nine months over an ambitious plan to lower world tariffs. Bogged down in technicalities, fragmented by chauvinism, they have made little progress. Last week the U.S. took a long step toward resolving the debate, hoping thereby to clear the way at last for the "Kennedy Round" of tariff talks that is scheduled to begin in May.

Compromise. The debate stems from the U.S. Trade Expansion Act, passed under President Kennedy, which per mits the U.S. to bargain for sharply lower tariffs on whole families of prod ucts instead of negotiating by item. As a result, the Western industrial powers planned the impending round of tariff negotiations, and whatever cuts they agree upon will be extended to all 58 members of the General Agreement on Tariffs and Trade (GATT).

The U.S. wants to slash almost all tariffs in half, but the Common Marketeers complain that such a cut would discriminate against them. Since their own external tariffs on average are already lower than the U.S.'s and Britain's (12% v. 18%), equal cuts of 50% would be much more severe for the Six than for the U.S. The Six have stubbornly held out for special treatment for their tariff "disparities." In cases where the Common Market tariffs are much smaller than the others, they want to reduce their own duties by 25%, while the U.S. and Britain drop theirs by one-half. Last week the U.S. negotiator, W. Michael Blumenthal, 38, proposed a compromise: the U.S. would accept the principle of unequal cuts for disparities if the Common Market would agree to reduce the number of disparity cases from about 900 to 450 out of the 5,000 products to be discussed in the Kennedy Round.

Disappointment. The U.S. proposal raised hopes on all sides, but it left unanswered a deeper question that must be settled at the Kennedy Round: Will the Common Market develop into a closed corporation under French leadership, or into a free-trading force with intimate business ties to the U.S. and Britain? The Six lately have been re treating to protectionism. They have raised barriers against U.S. shipments of chickens, eggs and steel; German customs officers have been holding up imports of U.S. pumps that they claim are unsafe, and French inspectors have been blocking U.S. apples and pears.

For such reasons, the negotiations that begin at Geneva in May will almost certainly take a different course from the one the U.S. anticipated after the passage of the Trade Expansion Act:

>-The Kennedy Round, which was originally expected to wind up its business this year, will run into 1965 or even 1966, and many issues may be left over for separate negotiations.

> The most troubling problem -- farm tariffs -- will probably not be solved because of the Common Market's refusal to give in to the U.S. demand for lower agricultural duties.

>Such nontariff trade restric tions as import quotas, indirect taxes and antidumping laws, which GATT members are also committed to consider, have little chance of being negotiated amid the complexities and confusion of the tariff debate.

> Though the U.S. is still pressing to reduce most tariffs by 50%, it will probably have to settle for cuts closer to 30%.

Even a 30% reduction would be significant and unprecedented. With it, according to U.S. Commerce Department estimates, global trade would expand by 5% a year beyond its normal growth, rising from $140 billion last year to $200 billion by 1969. The U.S. would be able to boost its exports of computers, autos and other items on which productivity is sufficiently advanced to surmount Europe's lower labor costs. Depending on how broad the cuts are, Europe in turn could ship more steel, chemicals, machine tools, cameras, cosmetics and other goods to the U.S. This week three top Common Market policymakers--Sicco Mansholt, Robert Marjolin and Jean Rey--jet to Washington with their response to the U.S. plan. Washington is eager to see if they mean business.

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