Will the Kennedy Round Succeed? Extension of the EEC Commission’S Authorisation to Negotiate Increases Chances of Success

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Schmücker, Herr Kurt

Article — Digitized Version Will the Kennedy round succeed? Extension of the EEC Commission’s authorisation to negotiate increases chances of success

Intereconomics

Suggested Citation: Schmücker, Herr Kurt (1966) : Will the Kennedy round succeed? Extension of the EEC Commission’s authorisation to negotiate increases chances of success, Intereconomics, ISSN 0020-5346, Verlag Weltarchiv, Hamburg, Vol. 01, Iss. 5, pp. 4-10, http://dx.doi.org/10.1007/BF02923287

This Version is available at: http://hdl.handle.net/10419/137611

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Interview with the Federal Minister of Economics, Herr Kurt Schmiicker, Bonn

INTERF-CONOMICS: Minister body that this aim could only be a where special circumstances pre- Schmficker, the Kennedy Round hypothetical working basis and vail. This goes for instance for the was originally meant to liberalise that certain exemptions could not import of cotton textiles the future world trade. In the light of the ex- be avoided. No country in the of which is at present under review perience during the Dillon Round-- world is nowadays in a position to within the framework of negotia- when :there was much bargaining cut certain import duties in half tions for prolonging the Interna- over individual customs and an without endangering its own econ- tional Cotton Agreement, The average cut of import duties.by omy. On the other hand, there was question of cutting import dufi'es only 8 % was achieved--it was pro- a consensus of opinion that exemp- on them will only arise when the posed to apply to the Kennedy tions would only be justified where future of the international agree- Round the linear method of cutting a higher national interest was at ment has been clarified. Similar are tariffs. Yet, the aim of achieving in stake. the circumstances in respect of this way a general lowering of chemical products. Here the lower- In submitting its lists of excep- duties (by 50 ~ has been badly ing of the common tariff depends tions the EEC has stuck to this jeopardi,sed by the submission of on the USA modifying its Selling principle. However, within the EEC Price System which in the opinion lists of exceptions. The danger which is still in the process of of its trading partners does no therefore arises of returning to the establishing a common market it old bargaining method. In this con- longer conform with present day is, no doubt, much more difficult to nection the EEC is being accused conditions, determine the "higher national inter- of having stood out by submitting est" than ~t is in other countries Besides, no partner to the nego- particularly long lists of exception. whose economy is not subject to tiations has so far been able to Is this allegation justified? such structural changes. Despite all refute the EEC case for exemptions. Therefore I maintain that in the SCHMUCKER: Let me first deal this the Community has succeeded light of the exceptional difficulties with the starting point of your in compiling a justifiable list of ex- and the structural changes during question. It is correct to say that ceptions. It affects no more than the transition to the Common Mar- on May 6th, 1964, a GATT confer- about 20% of all EEC imports that ket the allegations that the EEC ence on ministerial level reached are subject to import duties, or, has submitted an unduly long list agreement to aim at a general cut taking total trade with third coun- of exemptions and thus endangers of customs duties on industrial tries into account, only 9% of all the success of the Kennedy Round goods by 50~ But right from imports. This calculation, it is true, is not justified. Seen from the Ger- the beginning it was clear to every- excludes some groups of imports man view we would rather have waived certain wishes for exemp- tion; but the EEC is a community where a just equalisation of the KURT SCHMUCKER interests of all partners matters. Federal Minister for Economic Affairs and the Federal Govern- INTERECONOMICS: Beyond tiffs ment's representative in the Ministerial Council of the EEC, has it is alleged that the EEC endangers contributed considerably to bringing about an extension of the the success of the Kennedy Round EEC-Commission's authorisation to negotiate. After a long period by its agrarian protectionism. The of inactivity as regards the Kennedy Round the road towards a USA is known to he interested par- worldwide tariff reduction within the framework of GATT seems ticularly in low farm prices within to be open now.--Kurt Schmficker was born at L6ningen/Oldenburg the EEC so as to be able to in- and after passing a high-class secondary school providing human- crease its own farm exports. There istic education and a commercial school he was thoroughly trained is therefore some doubt in various as a journalist and publisher. After having been a prisoner of war quarters whether the EEC really Schmficker worked in his parent's printing office which he took wants the quickest possible con- over in 1954. His political career he started as cofounder of Junge clusion of the Kennedy Round. Such. Union (Junior members of CDU) in Oldenburg. As Chairman of the doubt concerns especially the pol- Economic Committee and of the Federal Working Group "Middle icy of the German Federal Govern- Class" he became a member of the Federal Government in 1963. ment which in the negotiations between the EEC partners has been pressing for higher farm prices.

INTERECONOMICS, No. 5, 1966 SCHMUCKER: These doubts are reduction in industrial import du- whole complex of agricultural mar- not justified. We are anxious to see ties, would be practically "stripped ket regulations in the EEC coun- a successful conclusion to the naked". Others have pointed out tries. In view of these weighty Kennedy Round not only in the that such a situation would make it arguments, will not the EEC have industrial but also the agricultural impossible for the EEC to offer to make concessions, and if so, to sector. It is clear that, like in any substantial tariff concessions should what extent? other country, we cannot simply there be a later round of customs SCHMUCKER: I referred to the put aside the interests of our own reductions within GATT. Could this American Selling Price System al- agriculture. But it would be wrong be the reason why--as some people ready earlier. It probably had its to assume that by our farm policy suspect--the EEC is now being justification in 1922 when the Ame- we are trying to block the negotia- very cautious over customs con- rican dye-stuff industry was only tions in the Kennedy Round. cessions? beginning to be developed; but it On the other hand, I do not wish SCHMUCKER: It is very difficult certainly is no longer justified at a to belittle the difficulties arising to draw a comparison between the time when the US chemical indus- from the fact that there are simul- customs level of the USA and that try is the most powerful in the taneous negotiations on establish- of the EEC. This is because the world. Under this system of valua- ing a Common Market for farm common tariff as a whole has its tion a tariff protection is being products and on offers being made origin in the arithmetical average reached sometimes which is far in to the Kennedy Round. Yet it would of the national customs duties of excess of 100 ~ of the value of the be a crude simplification to regard the EEC member countries. This imported goods. In most cases this these difficulties as solely due to has meant the automatic removal American system is classed as one the EEC farm prices. Though I do of extremely high as well as of of the non-tariff trade barriers. But not overlook the importance of the extremely low tariff rates. At pres- in fact it is so closely linked with question of farm prices, this is only ent the EEC rates centre round an the tariff system .that it cannot be one factor in the negotietions. The arithmetical average of about compared with other measures such various subsidies and other pro- 11.7 o/0. The American tariff, on the as taxes on motor vehicles which, tective measures applied by many other hand, comprises both many though they also interfere with in- countries--not least by the USA-- very low customs duties and quite ternational trade, are not directly also play an important part. It is a number of very high ones; the connected with imports. We must, really not quite correct to draw American tariff therefore contains therefore, distinguish very care- general conclusions about a link much greater variations than the fully between these matters if we between low farm prices and a suc- EEC tariff. Using the same method want to reach sound decisions. And cess of the Kennedy Round. It is of calculation as for the above EEC so I would welcome if the Ameri- rather decisive--and this also the figure, the arithmetical average of cans, too, accepted this and if they USA admits--what impact the com- the American tariff rates is about asked only for customs concessions mon agricultural policy of the EEC 17.8%. This situation has created and not for taxation or quota meas- as a whole has on the international so-called disparities, i.e. customs ures as a response to their abolish- agricultural situation. tariff differences between individ- ing the Selling Price System. ual countries with regard to identi- In this connection I think it im- cal goods. When there are striking The same applies to the anti- portant to point out that the agree- disparities a country with high dumping practices of various coun- ment on common grain prices has customs duties will undoubtedly, be tries. These should be scrutinised enabled the EEC to submit to the better protected against imports-- separately and not be mixed up Kennedy Round comprehensive pro- even if these duties are halved-- with other issues. Especially in this posals for a world wide readjust- than a country whose customs are field the EEC countries have thor- ment of what is probably the most already lower. Where there are oughly justified requests to the important market for farm pro- substantial disparities the EEC, USA and Canada. ducts, and this is the grain market. therefore, in general rejects a 50 % As to EEC's agricultural market The decision on grain prices within cut in its customs duties and offers regulations, these will have to be the EEC has thus created an im- only a smaller reduction. This pro- examined in detail in the context portant starting point for any pro- cedure conforms to a resolution of ofoffers and counter-offers in the gress in the talks on agriculture the Ministerial Conference of GATT agricultural sector. I think, how- within the Kennedy Round. We of 1963 which reads that in the case ever, one should not make al- seriously hope that on the other of substantial disparities, i.e. such ready difficult agricultural prob- sectors of the market for farm prod- as are liable to affect trade, reduc- lems even more difficult by asking ucts, too, we shall find early and tions in customs duties shall not be that the EEC should, in exchange constructive solutions which will linear but shall be made in accord- for American good will in the in- facilitate the Kennedy Round nego- ance w~th special rules. dustrial field, make agricultural tiations. INTERECONOMICS: In reply to concessions as well. INTERECONOMICS: Some people objections to the American Selling INTERECONOMICS: Both the have said that despite a 50% cut Price System, the "Buy American" Americans and the Secretariat of in customs duties on industrial Act and anti-dumping practices the GATT have repeatedly said .that goods the Americans would still United States has pointed out that maintain customs so high as to the EEC has similar non-tariff trade the Kennedy Round must be suc- keep the protection of their own barriers. In this context they have cessfully concluded by the 30th industries virtually intact even mentioned taxation on motor ve- June, 1967, because that is when after a successful Kennedy Round, hicles, coal quotas, tobacco monop- the authority conferred by the whereas EEC, in the case of a 50 % olies, and last but not least the United States Congress on the

INTERECONOMICS, No. 5, 1966 American President expires. With agricultural negotiations proper of June 30th, 1967. But it would mean this time limit the EEC is being the Kennedy Round have not even some success if certain basic prin- urged to speed up its action. Do started. ciples could be settled and details you see any chance of negotiations were then further discussed after The outcome of the EEC Council even after that date, and what sig- the conclusion of the Kennedy meeting of 9th to llth of May, 1966, nificance should one attribute to Round. As to the question whether suggests that within the near future American interest in a success of and within which framework any the negotiating authority of the the Kennedy Round in connection further negotiations might take EEC Commission will be extended with this question? place even after 30th June, 1967, also in the industrial sector. This we need not worry over details will have a substantial influence SCHMUCKER: First of all, we at this stage. My view is that we on the further course of trade nego- shall do everything in our power should now do everything to speed tiations in Geneva. to settle matters by that time limit up the current talks and reach which indeed does play a major The plan for a world-wide reg- some decisions. But suppose we do part. As regards the I~EC, this ulation of agricultural marketing not finish in time: with good will means that we have to hurry up to represents a very ambitious target among all EEC members and the reach decisions on a number of for the Kennedy Round. Some in- special interest of the United questions which in any case must dividual questions--I would men- States in a success of the Kennedy be decided sooner or later during tion that of an International Wheat Round, ways will be found to make the formation of a Common Market. Agreement--have already been the the preparatory work done up to Given good will, it should be per- subject of negotiations for a num- that point a complete success. I fectIy feasible to reach joint con- ber of years without any concrete know that American economic cir- clusions within the available time results having been achieved. Con- cles seriously desire that the discus- in the industrial sector; but we sidering the multitude of agricul- sions which have begun should in cannot yet say whether this will tural problems it will be extremely no circumstances be allowed to be also be possible in respect of all difficult to come to satisfactory broken off for good because of the agricultural questions because the conclusions in every sector by expiry of a set time limit.

The Kennedy Round Can Succeed Interview with the American Deputy Special Representative for Trade Negotiations in Geneva, Ambassador IV. Michael Blumenthal

INTERECONOMICS: Mr. Ambas- the volume of trade, whereas in nedy Round? The developing coun- sador, there are at least two theo- trade negotiations, which are what tries have said very often that ries about the Kennedy Round: on the Kennedy Round is, we are try- they feel themselves at a disad- the one hand, it is said to be a ing to create the conditions for a vantage vis-&-vis the "industrial trade war between the Common fruitful increase without difficul- club" represented in GATT. What Market and the USA. On the other ties between the parties. You are do you think is the role of these hand, you yourself, in particular, right that it is on the one hand countries? have said that it is impossible multilateral ,negotiation with many BLUMENTHAL: Well, I think the that this should have been the orig- countries. At the same time three developing countries do have some inal meaning of the Kennedy or four countries, the EEC, the US, very serious trade problems. Some Round. You have said repeatedly the British and the Japanese, are of those problems relate to the in- that the Kennedy Round is a world- the most important partners, and stability of the prices for their raw wide project. Therefore our ques- you are also right that at the same materials and the imbalance be- tion is: does this second theory time in a negotiation there are tween raw material production and really exclude the first? It could many firmly held differences in their need for capital goods. These be that whilst being a worldwide point of view which have to be are things that we are not really project, because the USA and negotiated. That is what a ,nego- able to cope with in the Kennedy the Commcm Market are the most tiation is for. But that is not a Round. important partners and this is trade war. So we have both of where the worst problems arise, those things: we have a multilater- These are the sorts of things there is the everlasting threat of a al negotiation, a few big partners that have to be dealt with in com- trade war. negotiating very hard together and modity agreements dealing with having differences. But they have particular commodities. On the BLUMENTHAL: A trade war is, one thing in common, and that is other hand in the Kennedy Round I think, the worst possible way and the desire to make a success of the there is an opportunity which, I the least applicable way of ex- negotiation, with significant liber- think, these countries are increas- pressing what we are doing here alization in industry and in agri- ingly recognizing and which will in Geneva. In a trade war people culture. afford them some real benefits. are competitively raising tariffs, That is why so many of them (over dumping products, doing all the INTERECONOMICS: What about 20) are actively participating. To things that do not lead to fruitful, the developing countries, which give an example: The United States mutually beneficial increases in are also taking part in the Ken- has made offers to these countries

6 INTERECONOMICS, No. 5, 1966 on the products that they export countries have special arrange- INTERECONOMICS: The United to us. I have looked at the figures ments and that in these areas the States reproach the Common Mar- for countries like Brazil, like Ar- possibilities for vast increases are ket for pursuing a policy of quite gentina, some of the African coun- limited. And that is a disadvan- distinct agricultural protectionism, tries, Latin American and Far tage. Referring to cotton textiles, I and there is no doubt that this is Eastern countries and they range, think there are real possibilities. so. But, on the other hand, it can- generally, from offers to cut out You say that they will probably be not he deni.ed that the US also tariffs by 50~ on to 80, 90 and excluded. That is not necessarily support their own agriculture. even to 98% of all their dutiable true. We hope that in this field Even if their method of so doing exports to us. Of course this alone also we can reach agreements to is different from that of the Com- will not solve their economic liberalize trade restrictions signif- mon Market, this does not alter problems, but it is a very impor2 icantly, both on tariffs and on the fact that such support exists. tant factor. And they recognize it quantitative restrictions. What do you think of the ,assist- and, therefore, they are interested ance given to your domestic agri- in it. Now I assume that other INTERECONOMICS: In connec- culture in this context? countries, like the British, like the tion with agriculture, it has been EEC, like the Japanese, are mak- objected that the United States are BLUMENTHAL: First of all, I ing a comparable effort, although using the developing countries as think we must admit that in the we do not have exact figures for an excuse for placing more em- field of agriculture all of us have them. phasis upon the interests of Ameri- been at various times following can agriculture in the Kennedy policies that are not fully in ac- INTERECONOMICS: The devel- Round. What do you think of this cordance with liberal trade prin- oping countries are very often objection? ciples. You can say we are all sin- placed at a disadvantage purely ners in this field. The question is because of the range of products. BLUMENTHAL: I think that this the degree of sin and what we do The whole system of agricultural complaint does not have any basis in the future, rather than what we protectionism doubtlessly weighs in fact. I do not think anyone can have done in the past. There are very heavily upon the developing accuse us of being unwilling to ex- some very important points that countries. For example, cotton plain our own interests and defend should be remembered as we look textiles are very heavily protected them very vigorously. I have not for means to increase trade in this --the exception lists will probably really seen much comment to the area. even be accepted in the negotia- effect that anyone here in Geneva tion. In this connection it has been or in Washington has been hiding In the United States we have suggested that because of these behind the hack of the developing learned, and we have learned very factors the developing countries countries. We have spoken very painfully that a fixed price or a law would not gain the same benefits directly about our own interest cannot control agricultural produc- from a linear tariff reduction as and do so all the time. We have tion. Therefore, when we have would industrialised countries, a vital interest in agriculture. We guaranteed prices to our farmers should the Kennedy Round be a have made no secret of it at all. we have always guaranteed them success. We stand on our own feet in this for a certain quantity or a certain regard. limited production in terms of area. BLUMENTHAL: It is true that many of the developing countries are most interested in tropical products, and that the tropical products fall into the category of agriculture and therefore are not W. MICHAEL BLUMENTHAL subject to a linear cut of 500/0. It since 1963 has been the US-President's deputy Special Representa- is also true that there is a special tive for tariff negotiations resident in Geneva. As deputy to problem in the field of cotton tex- Governor Herter, the former Secretary of State, Ambassador tiles. On the other hand some Blumenthal upholds the American interests in the Kennedy Round countries are making a special of GATT. His personal willingness to serve and his intellectual effort and I hope all countries will capacity made Blumenthal one of the few or--as a rumour in do so as we proceed. We have Geneva has it--even the only expert in the most difficult matter of made a special effort; that is why those tariff negotiations. Prior to his work in Geneva--between our figure for offers of interest to 1961 and 1963--he had been chairman of the American delegations developing countries is so high. In to the negotiations on the Agreement on Cotton Textiles and on the case of the EEC we are wait- the International Coffee Agreement. In addition, he had been the ing. And we hope that they too American delegate to the UN-Commission for Raw Material Trade will make a special effort. They and to the Conference of Punta del Este creating the Alliance for have promised to do so. So, cer- Progress. Blumenthal who was born in Germany studied economics tainly, there are important bene- at Berkeley and Princeton and there took his degrees of a Bachelor fits. The developing countries have of Science in Economics (B. S.), of a Master in Public Affairs (MPA}, always told us that these reduc- and of a Doctor of Economics (PH.D.). Before joining Crown Cork tions in barriers on tropical prod- International Corporation in 1957, whose Vice-President he was ucts are very important to them, until 1961, Blumenthal had been professor of economics in Now, it is clear that there are Princeton. some agricultural commodities (meat or sugar), for which many

INTER]ECONOMICS, No. 5. 1966 We have always told them that if time for one very good reason: raising these queries? What does we give them a certain price guar- the EEC, for reasons that you the United States require in return antee they must cut their produc- know about, is the onty major for making concessions in this tion, they must limit the acreage on trader which has not yet made any field? which they grow their production, offers in agriculture. If you do not BLUMENTHAL: I think you really they must undertake certain obli- have concrete offers it is very are asking two questions in one gations to take land out of pro- hard to tell what more you want and I will try to answer both of duction. or whether what you get is suffi- them, one after the other. The first cient. But t can give you a general What we are worried about in one is: are we liberal or more lib- comment: We would like to have the Community is that the com- eral, generally speaking, than other a result in agriculture, whereby mon agricultural policy in many countries in the industrial field and we can see two things. First, areas does not have this element. if net, what are we prepared to do we would like to see limits on the It has a relatively high price pol- about it? And the second question degree of subsidization and pro- icy which is guaranteed to all farm- is specifically about the American tectionism around the world on ers, for any production they can Selling Price. the part of a 11 countries. Not just grow. And it has that guarantee by the EEC, but the British, the Japa- On the first question I think that means of what we consider to be nese, and we ourselves might we have some areas in which our an absolute protection at the bor- make similar commitments. S e c- protection is quite high, and we der, namely the variable levy, ondly, we want to have an op- have some practices which could which does not really allow others portunity to maintain our present not be characterized as liberal. We, to compete on a price basis. And share of third-country markets and however, feel that other countri,es furthermore it has in it the possi- to compete (not a guarantee, are not entirely innocent either. bility for what is catted restitution we do not want any guarantees, And that there are .similar areas payments and what we consider to but an opportunity to compete) for of relatively high protection or be export subsidies, whereby sur- a share of the growth, because we similar instances of illiberal prac- pluses created through a high think we are efficient producers tices in the case of other countries. price cart be sold in third markets without subsidies. It is very im- That is normal because some in- in competition with other efficient portant for the United States, be- dustries are less efficient. There producers. cause about 20 -- 25 ~ (involving are historical reasons for it, there That is what worries us, because some five or six billion dollars are political reasons and social rea- we feel that with high prices each year) of our exports is in sons for it; it would be very sur- in the Community guaranteed agricultural commodities. It is of prising if that were not the case. for whatever the farmer can de- course even more important to That is what the Kennedy Round liver it will certainly mean that countries like New Zealand where is for. And of course we are ready you will have surpluses. And this perhaps 90 ~ of exports is in agri- to negotiate. In fact, when you look will mea.n not only that we do not cultural products, or for Australia, at the comparison of average tariff have a chance to compete in your or for such European countries as levels, where yon have to be very market, because of the variable Denmark, or for such developing careful about what figures you use, levy, but also that there is a dan- countries as Argentina. This is what you find that, generally speaking, ger in third markets. we hope to accomplish. We will on an average basis the tariff levets certainly be prepared to make sim- of the EEC and of the United States I will give you one example: ilar offers about our market and are not so different. It is true that that is what has now happened in to undertake commitments similar there are some areas in which we the famous case of poultry. We to those we are asking others to are very much higher. On the other not only have lost our market for undertake. Now, we have put our hand in others we are quite low. broilers in the EEC including Ger- offers on the table. We are ready. But on the average we are about many particularly, but the high We hope, now, particularly after the same. price and the variable levy has the Brussels agreement, that the resulted in a situation in the Com- INTERECONOMICS: Yes this EEC will soon be ready, and then point is often examined from a mon Market whereby there have a little later perhaps we can come been exports with a heavy subsidy different point of view. Here is a back to your question and give you table put together by Prof. Bela from EEC countries into such other an answer, wh.en we know these countries as Switzerland, Austria, Balassa. which shows both nominal facts. even as far away as Japan. That is and effective tariffs. This table sup- the probl,em. Now, one of the points INTERECONOMfCS: You have ports your thesis strongly. that we must discuss in the Ken- just introduced the word "compe- BLUMENTHAL: The best thing I nedy Round and that we are dis- tition" into the discussion. It has can do is to cite what we think is cussing is how to make commit- often been said that what agricul- a very fair, objective analysis ~ ments about internal policies, be- ture is to the US, industry is to made by the Committee for Eco- cause in cases Iike this internal the Common Market. There, too, omic Development, which is a pri- policies clearly have a vital effect the competition argument is used vate organization in the USA. This on trade. --and, therefore, it can be said analysis shows a number of differ- over and over again: Ameri- INTERECONOMtCS: Can you tell ent ways of calculating average can import practice is, after all, us yet what concessions you ex- tariffs. We can pick a way which not really so very liberal! A per- pect from the Common Market? makes us look very good, some- tinent example: the American Sel- t Committee for Economic Development: BLUMENTHAL: I do not think ling Price System for chemical Trade Negotiations for a Better Free World that you can quantify this at this products. Surely one is justified in Economy. New York 1964.

INTERECONOMICS, No. 5, 1966 body else can pick a way which effect on the sale of Whiskey as INTERECONOMICS: The United makes us look very bad. But the compared to other competing spirits States is putting a great deal of conclusion of this committee is that in certain countries of the Commu- emphasis upon June 30, 1967. This, if you look at the different ways nity. I can give you similar ex- of course, is when the President's of calculating these things, if you amples for the United Kingdom, or special powers expire. We might take simple averages, if you take similar examples for Japan or for weli ask ourselves this question: weighted averages, if you take ef- the EFTA countries. What I am If, on the one hand, the United fective ones, if you weight them by trying to say is that there are cer- States have such an interest in the your own trade, by somebody else's tain areas in which each country success of the Kennedy Round and trade, all sort of different ways, has practices of this kind, and we if, on the other hand, the technical generally speaking the levels are also do. And one of them is difficulties are so great that this about tire same. American Selling Price. Now, we cannot be accomplished by that agreed in the Kennedy Round that date, would not Congress have to Secondly, we have particular we must deal not only with tariffs, agree to an extension of the special areas where we have some non- but also with these non-tariff prob- negotiating powers? Is this wrong? tariff barriers. American Selling lems. In these matters no country Or what are the crucial factors Price is one example. Other coun- will unilaterally make concessions. here? tries have other examples. Let me There have to be concessions of give you cases in point: You can- BLUMENTHAL: I think it is very the other side. And that is now not import, except under quota, difficult to say what the Congress under active negotiation. So, we any coal from the United States would do in 1967 if the President are certainly prepared to consider into certain areas of the Commu- would have to ask for a renewal the concerns of other countries nity. Let me give you another ex- of the powers. Therein lies the prob- and to make an effort in the case ample: There is a tax system in lem: We do not know. But we of American Selling Price. But now effect for automobiles in certain must not close our eyes to the fact we also hope that our partners, countries of the Communi.ty which that the uncertainty is very great has a highly restrictive effect. Let including the EEC, will give simi- and that the dang,ers of having to me give you a third example: There lar evidence of their willingness to go to the Congress are substantial. are restrictions on advertising of provide a full quid pro quo for 1967 is a different year from 1962. certain products. I am thinking of what we might be able to do in And in 1962 the Congress gave un- Whiskey as an example; advertising this area and in the other areas precedented powers in the Trade restrictions have a very protective where they have some problems, Expansion Act, powers greater than

Nominal and Effective Tariff Rates of Major Industrial Countries (1962)

United States i Common Market United Kingdom [ Sweden ! Japan nominal effective i nominal effective nominal effective nominal effective ' nominal! effective

Thread and yarn 11.7 31.8 2.9 3,6 10.5 27.9 2,2 4.3 2.7 1.4 Textile fabrics 24.1 50.6 17.6 44.4 20.7 42.2 12.7 33.4 19.7 48.8 Hosiery 25.6 48.7 I8.6 41,3 25.4 49.7 17.6 42.4 26.0 60.8 Clothing 25.1 35.9 18.5 25.1 25.5 40.5 14.0 21.1 25,2 42,4 Other textile articles 19.0 22.7 22.0 38.8 24.5 42.4 13.0 21.2 14.8 13.0 Shoes 16.6 25.3 19,9 33.0 24.0 36.2 14.0 22.8 29.5 45,1 Wood products including furniture 12.8 26.4 15.1 28.6 14.8 25.5 6.8 14.5 19.5 33.9 Paper and paper products 3.1 0,7 10.3 13,3 6.6 8,1 2.0 --0.7 10,5 12.9 Printed matter 2.5 2.2 3.3 --0,7 2.7 0.2 0,7 0.0 1.6 --4.2 Leather 9.6 25,7 7.3 18.3 14.9 34.3 7.0 21.7 19.9 59.0 Leather goods other than shoes 15.5 24.5 147 24.3 I8.7 26.4 12.2 20.7 23.6 33.6 Rubber goods 9.3 16.1 15,1 33.6 20.2 43.9 10,8 26.1 12.9 23.6 Plastic articles 21.0 27.0 20,6 30.0 17.9 30.1 15.0 25.5 24.9 35.5 Synthetic materials 18.6 33.5 12.0 I7.6 12,7 17.1 7.2 12,9 t9.1 32.1 Other chemical material I2.3 26.6 It,3 20.5 19.4 39.2 4.5 9.7 12.2 22.6 Cleaning agents and perfumes i1.2 18,8 13.8 26.7 11.1 11.2 10.9 27.9 26.2 61.5 Miscellaneous chemical products 12.6 15,6 11.6 I3.1 15.4 16.7 2.5 0.0 16.8 22.9 Non-metallic mineral products 18.2 30.4 13.3 19.8 13.6 20.9 6.0 10.0 I3,5 20.8 Glass and glass products 18.8 29,3 14.4 20,0 18.5 26.2 13.8 22.6 19,5 27.4 Pig iron and ferromanganese 1.8 9.3 4.0 --13.8 3.3 17,9 0.0 --0.7 lO.0 54,3 Ingots and other primary steel forms 10.6 106.7 6.4 28.9 11.1 98,9 3.8 40.0 13.0 58.9 Rolling-miI1 products 7.1 --2.2 7.2 10,5 9.5 7.4 5.2 13,2 15.4 29,5 Other steel products 5.1 0.5 9.9 20.9 17.0 46.8 5,4 9.5 13.4 14.1 Non-ferrous metals 5,0 I0,6 2.4 5,0 6.6 19.4 0.4 0.6 9,3 27,5 Metal castings 6.6 10.0 12.4 21.0 16.0 26,9 8.0 34.7 20.0 32.5 Metal manufactures 14.4 28.5 I4.0 25.6 19,0 35.9 8.4 16,2 18.1 27.7 Agricultural machinery 0.4 --6.9 13,4 19.6 15.4 21.3 10,0 16.0 20.0 29.2 Non-electrical machinery 11.0 161 10.3 12.2 16.1 21.2 8.8 11.6 16.8 21,4 Electrical machinery 12.2 18.1 I4.5 215 19,7 30.0 10,7 17.7 18.1 25.3 Ships 5.5 2.1 0.4 --13.2 2.9 --10.2 0.9 --5.8 13.1 12, I Railway vehicles 7.0 7.3 11.1 -- 0.2 21.1 33.3 8,7 13.8 15.0 18.5 Automobiles 6,8 5.1 19,5 36.8 23.1 41.4 14.7 30.5 35.9 75.7 Bicycles and motorcycles 14.4 26.1 20.9 39.7 22.4 39,2 17.1 35.8 25.0 45,0 Airplanes 9.2 8.8 10.5 10,8 15.6 t6.7 37 30 15.0 15.9 Precision instruments 21.4 32.2 13.5 24.2 25.7 44,2 6.6 14.9 23.2 38.5 Sport goods, toys, jeweIry, etc. 25.0 41.8 17,9 26.6 22.3 35,6 10.6 16,6 21.6 31.2 S o u r c e : Bela B a 1 a s s a : Tariff Protection in Industrial Cotlntrics. An Evaluation. In: The Journal of PoliticaI Economy, Vol, LXXIII (1965}, pp. 573.

INTERECONOMICS, No. 5, 1966 9 we had ever had before. If the who have some tears. But it is just I want to make one final point President has to go to the Congress the process in which our laws are about why it must be done, and to request a renewal, it involves proposed and passed that creates why we must all work hard. It is legislation by both houses. There some inbuilt complications, quite not only because we happen to are 435 Congressmen in one house apart from whether protectionist have a problem with the authority and a hundred Senators in the sentiment today is higher than it from the Congress: it is also be- other. What they will do, nobody was then. cause the nego'tiation as a whole knows. has now gone on for more than INTERECONOMICS: So in any three years. We are now in the There is another point: it is not event it would be better if the Ken- fourth year. And whereas a nego- certain that the act that would nedy Round could be completed by tiation which is so ambitious does emerge would be the same liberal 1967. What do you think of the of course take a long time and re- act as we have had up to now. And prospects of completion in the light quires much patience and careful this could be a really serious prob- of .the most recent decisions in preparation, there comes a point lem. That is why we have said Brussels of 9.--11.5. 1966, by which when decisions are either made or that we must do everything pos- the Common Market countries they are not made and cannot be sible to complete the negotiation have undertaken to extend to the made later. Countries will not prior to June 30 of 1967, so that Commission the powers necessary spend ten or seven years sitting in this problem does not arise. We for the Kennedy Round negotia- Geneva to negotiate on trade mat- think it can be done.--But if we do tions? ters. The developing countries who not succeed, we will--all of us, all have been waiting for so long will who want a successful Kennedy BLUMENTHAL: I think I would not wait for ever, and this is un- Round result--face a most difficult, answer your question very clear- derstandable. There are serious uncertain and unpredictable si- ly with: yes, it is possible to get a problems in Europe, with the in- tuation. good result, a result in industry and in agriculture that goes far be- creasing discrimination between ]NTERECONOMICS: If we under- yond what has been accomplished the EFTA countries and the EEC stand you correctly, Mr. Ambassa- in the previous negotiations. countries. By next year that .dis- dor, you are of the opinion that crimination may be aImost com- the sun of liberalism which shone But the timing is now very tight. plete, and the Kennedy Round re- upon the start of the Kennedy It requires first of all that the Com- suits would be a means of reduc- Round threatens to disappear and munity does indeed over the very ing the barriers between the that the dark clouds of protecti- next few weeks make the neces- various groups in Europe. onism are gathering--not least in sary decisions in agriculture and in All this is very important and your own country. the remaining areas of industry. For example we still do not have it has to be done now, and I think BLUMENTHAL: I do not want to any offers in the pulp and paper that the moment is rapidly being give the impression that there is field, we still do not have any firm reached where if it is not done a great wave of protectionist sen- offer in the field of aluminum. now, it will never be done. This is timent in the US. That would be These decisions and the agricultur- an appreciation of the general sit- overstating it considerably. What al decfsions must now be made uation, but we feel very much in I do want to say is that under our very quickly. If we can get that the air that the moment for deci- system :the President get,s his au- and if we then are able to negotiate sion is coming one way or the thority first and then negotiates. under really very tight time re- other. And that is why we have This differs from the system in quirements with the speed of the said before. This is the year of de- many other countries, where the negotiations very much accelerated, cision. Not to decide is to decide government negotiates first and then I do not .see any reason why to fail. gets ratification afterwards. Get- we cannot complete the negotiating the Trade Expansion Act ex- tion in good time. One can already *) Erratum :--Prof. Dr. ate $ik is tended would really mean that see in many areas the outline of Chairman of the Committee for the there would be another opportunity agreements on the horizon. One Planning and Administration of the in the light of the negotiation and can see a tiny liqht at the end of Economy in Czechoslovakia and not in the light of possible results for the tunnel. 1 .see no reason why, --as had Been published--of the the Congress to have to pronounce if we really work hard, we cannot KP(2 (Czech Communist Party). See Interview with Prof. Dr. ate ~ik: itself, and it would mean that the travel through the tunnel and be "Rapprochement of the Economic outcome would be uncertain. And out in the daylight. It is going to Systems in Eastern and Western that would be natural, becauseob- be difficult and there will be some Europe?" In: 1NTERECONOMICS, viously there would be industries tense moments. But it can be done. No. 2, February 1966, pp. 4.

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10 INTERECONOMICS, No, 5, i966