Uruguay Round: No time for celebrations yet, economists say

By Jan Kristiansen

PARIS (AFP): Four months after the conclusion of the long- awaited GATT world trade pact, to be signed in Marrakesh next week, international economists are taking a more realistic view of its immediate impact.

They say the latest developments in the continuing trade dispute between Japan and the United States show that "things have not really changed" as yet.

Officials of international economic bodies, speaking in private, also seem less convinced that wrapping up the Uruguay Round of trade talks under the General Agreement on Tariffs and Trade (GATT) will contribute much to early recovery in Japan, Europe and elsewhere.

They still agree that the hard-fought agreement to further free up trade in goods and extend liberalization to new areas including the dynamic service sector will "over time" significantly improve world economic conditions, stimulating growth and job creation.

The immediate result was that key countries, faced with economic crisis, managed to avert a collapse in the trade talks, which could have produced world economic disaster, according to some of these economists.

But they now fear that the interim period, until the Uruguay Round accord takes effect -- GATT officials now see Jan. 1, 1995, as the target date -- may be a difficult one despite solid growth in the United States and signs of an upturn in Europe.

For ratification by some key trading powers of the Round's final package may not be quite as "smooth" as hoped for, one senior official said.

"We have seen in the past four months that within weeks of the frantic final negotiating effort, protectionist pressures have again taken the upper hand," he said.

He and other officials cited the reactivation by the United States of the "super-301" clause in its foreign trade legislation, authorizing unilateral U.S. measures against trading partners.

They also pointed to last-minute difficulties in GATT negotiations on market access and a surprise U.S. move to raise labor rights in the final round of preparatory talks ahead of the Marrakesh ministerial meeting.

This clearly had a negative psychological impact on some trading partners, especially in Asia, and showed that potential gains from the Uruguay Round "are not yet in the bag," an official said.

"Self-restraint by major trading powers in the months ahead will be essential," he added.

As a result of these developments, international economists said, it was no longer obvious that the successful outcome to the Uruguay Round would by itself decisively improve business and consumer confidence.

Rather, they tended to agree with an assessment by Kumi Shigehara, chief economist of the Organization for Economic Cooperation and Development (OECD), in the wake of the Dec. 15 agreement.

He stressed that tariff cuts and other liberalization measures would be "implemented gradually" and so would produce a concrete effect "gradually."

Shigehara also warned against a continued drift towards "managed trade," or "results-oriented" bilateral approaches to "guarantee market shares or specific changes in bilateral trade balances."

Other senior trade experts stressed that the Marrakesh conference is likely to mark a turning point in world trade in at least one important respect.

It will formalize the creation of a World Trade Organization (WTO) to take over from the GATT as the arbiter of the multilateral trading system.

Even if the Uruguay Round agreement left much unfinished business, this will strengthen the multilateral framework for world trade, creating more predictable trading conditions and a more level playing field, especially for smaller countries. That will be a vital gain for the world economy, they said.

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