Moving Toward Freer Trade

The U.S. stands to be a major gainer from the Tokyo Round agreement

Customers in two dozen countries will soon be spending less than they ordinarily would for a wide variety of imports, ranging from cheese to autos, and that will help slow inflation. U.S. export sales should pick up for industries as diverse as hospital equipment, chemicals and data processing, creating more jobs. American farmers should get easier access for their goods abroad, helping to narrow the huge U.S. trade deficit.

These will be some of the benefits of the so-called Tokyo Round of trade talks. After 5 1/2 years of agonizing and often angry horse trading, representatives of the industrial nations last week put their initials of endorsement to a complicated trade agreement aimed at liberalizing global commerce and beating back the forces of protectionism.

Almost all the developing nations at first refused to initial the accord, complaining that it would benefit them less than it would the industrial world. Unless they do sign, the liberalizations will not apply to them. Still the other delegates were relieved and exhilarated. Said Alonzo McDonald, who patiently handled the day-to-day negotiations for the U.S.: "The agreement is the most comprehensive and significant result produced by any trade negotiations up to this time."

Some elation was justified. Since the talks began in Japan in 1973, explosive oil prices and recession have plagued many countries, and they have sought to protect their industries by raising all kinds of nontariff hurdles. Though world trade continued to expand, reaching an estimated $1.3 trillion last year, the rate of growth slowed, causing concern that the global economy would stagnate. Until about two years ago, when Robert Strauss arrived on the scene as the special U.S. representative, the trade talks were going nowhere. Strauss's closeness to President Carter gave him entree to top foreign leaders, and he used it, with McDonald's help, to get the negotiations back on track.

The agreement calls for the industrial nations to cut tariffs on thousands of imports by an average of 33% over the next eight years. Strauss also managed to win lower barriers on a large number of U.S. farm exports, including tur key parts, table grapes and canned fruit.

As usual, Japan was the most intransigent bargainer. It put up so many roadblocks that the Europeans were forced to withdraw trucks and electronic items from the list of goods that they had offered for concessions to everyone. Charged the European Community's Sir Roy Denman: "A massive Japanese [trade] surplus is difficult to accept if at the same time the Japanese market is not an open one and the Japanese exporters, like soldiers from a fortress, create havoc."

The major gain is a series of new international codes aimed at the worst of some 800 nontariff barriers. The codes seek to:

> Eliminate government subsidies for exports of manufactured goods, though farm exports still can be subsidized.

> Sweep away phony technical standards for imports, used primarily to keep foreign goods out.

> End the dozens of arbitrary methods that governments use to puff up the value of imports to calculate customs duties, thus pricing the goods out of their domestic markets.

> Open up government purchasing to international competitive bidding. Despite the new code, Japan has refused so far to allow outsiders to bid for some of its most lucrative government business. That action has incensed the U.S., as Strauss made clear in talks last week with Japanese Foreign Minister Sunao Sonoda.

All the participating governments must ratify the agreements. The package is expected to slide through Congress, probably in September, in part because the legislators committed themselves to voting only yes or no on the entire package, with no amendments. Strauss has put together a strong coalition of supporters and appeased the most powerful enemies of the agreement. Opposition to reduced tariffs by textile and garment makers, for example, has been muffled by a promise of tighter enforcement of existing import quotas, as well as Government grants to boost productivity.

The agreement comes at a time when the U.S. is poised for an export surge because the depreciated dollar makes American goods bargains in the world. After three years of almost no real growth, exports in 1978 jumped 18.5%, to $143.6 billion. More sales will be needed to help close the gap between imports and exports that last year totaled $28.5 billion. So now it is up to U.S. businessmen to take advantage of the lower barriers-and sell.

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