World Trade Talks 123 NATIONS WILL JOURNEY TO GENEVA

Press, Volume CIII, Issue 30396, 21 March 1964, Page 12

World Trade Talks 123 NATIONS WILL JOURNEY TO GENEVA

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(From the "Economirt” Intelligence Unit)

The gathering of Trade Ministers which is to take place in Geneva on March 23 will certainly be the largest since the war, and probably the largest of all time. One hundred and twenty-three nations will be represented: members of the Western alliance and of the Communist bloc, the under-developed world and the neutrals, the highly industrialised countries and the great temporate foodstuffs producers—all will be there when the United Nations Trade and Development Conference opens.

The positive results of the conference, ihich is to last until the last week of April, are unlikely to be commensurate with the scope of the attendance. Each of the various groupings of countries participating will have its own pet interests (and also, unfortunately, its own pet propaganda platforms) to present: and these conflict with each other at many points. Communists’ Plans The Communist bloc countries want to attack the North Atlantic Treaty Organisation controls on trade in strategic goods, and also to replace the General Agreement on Tariffs and Trade with some other organisation in which they would participate. The Common Market countries will call for worldwide commodity schemes to raise the prices and control the output of foodstuffs ant raw materials. The British and the Americans want to press the Common Market countries to open their ports to a much bigger flow of low-cost manufactured goods from Asia and Africa, and also to dismantle their present system of preferential trading with the French-speaking countries of Africa. The underdeveloped countries, for whose benefit the conference has been called, want both wider access to the markets of the industrialised countries and higher and more stable commodity prices. It is to be hoped, however, that before they set off for Geneva, Ministers will have found time to study a report recently published by the Royal Institute of International Affairs in London. Last September the institute organised a conference of its own at Bellagio in Italy. It was a sort of economists’ Pugwash: the participants included eminent economists from both sides of the Iron Curtain, as well as from Japan and many of the AfroAsian countries. Gloomy Tale The Bellagio report has a gloomy tale to tell. It concludes that over the next decade food consumption in the richer countries is unlikely to grow very fast, and that an increasing • proportion of what is consumed will be produced at home; that generally these countries are tending to Switch towards the consumption of goods with a low import content; that increased efficiency in manufacturing techniques, and the development of new synthetics, will together restrict the consumption of imported raw materials. This will mean, it is calculated, that even without any further deterioration in the poorer countries’ terms of trade, the gap between their export earnings and their import requirements would soar from around 5000 million dollars in 1959 (wholly covered by aid) to between 13,000 million dollars and 18,000 million dollars by the early 19705. What can be done to avert this alarming prospect? The Bellagio report makes some suggestions which it would be difficult for anyone to quarrel with. For instance the poorer members of the G.A.T.T. should surely be excused from compliance with its ban on trade clubs which are not designed to end as customs unions or free trade areas. Again, it is high time that the wealthy countries got rid of excise

taxes on tropical foodstuffs; nor is there any convincing case for allowing some of them to enjoy preferential access to underdeveloped markets for their industrial exports. Utopian Suggestions But these suggestions would, at best, only touch the fringe of the problem. When it came to discussing the heart of the matter —the lagging prices of commodities and the inadequacy of markets for manufactured goods from the underdeveloped world—the Bellagio participants evidently found it much harder to agree. And when they did agree their suggestions sound somewhat utopian.

Thus there was a bitter argument about the probable impact of effective commodity schemes. Some of those present argued that demand was relatively unaffected by price; while others argued that higher prices would merely lead to substitution of synthetics or homeproduced substitutes in the richer countries. The strength of these respective arguments obviously varies from commodity to commodity: but it is possibly suspicious that commodity schemes find their keenest advocates in the countries with the most protectionist attitudes towards home agriculture.

Then there was the question of preferential systems, such as that between the Common Market and its associates, and the Commonwealth system. Their defenders argued, with some force, that a rapid “phasing out” of such arrangements would leave the beneficiary countries suddenly much worse off. One sensible compromise proposal is that preferences should be scaled down where they can be shown to be actively deflecting trade.

When it came to discussing markets for low cost manufactures, everybody seems to have agreed that quotas and “gentlemen’s agreements” to limit exports by the underdeveloped countries should be “phased out” over five years. This may be an admirable proposition in theory. But its chances of acceptance in countries with substantial textile industries (for instance), must, sadly, be almost non-existant. Integrity of G.A.T.T. There was, however, one suggestion from Bellagio to which the Ministers in Geneva should surely turn a deaf ear. In deference to the strictures of the Communist participants against the G.A.T.T., the report calls for the superimposition of some new international trading authority to watch over the G.A.T.T. It is difficult to see what this would achieve apart from the provision of additional employment for international civil servants. The G.A.T.T. certainly has its faults, and it has so far failed to do very much to narrow the “north-south gap.” Nevertheless it does have its rule-book, and it can put at least a moral pressure on its richer members to extend the same trading terms to the new manufacturing countries as they offer to each other. In the last analysis the United Nations Trade and Development Conference is unlikely to do more than provide a solemn reminder to the industrialised countries of their obligations. Positive action will in any case have to wait for the outcome of the “Kenendy round” in the G.A.T.T.