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Trade talks: America better listen!

Trade Talks: America Better Listen!

The morning papers in late September 1986 carried stories that identified five issues that the U.S. Trade Representative thought so important he would walk away from the talks if they were not on the table. These issues--agriculture, services, intellectual property, foreign investment, and dispute settlement--provide much of the focus of C. Michael Aho and Jonathan David Aronson's analysis. In general, this book demonstrates a high level of awareness of the issues, the processes of international negotiation, and the intricacies of foreign economic policymaking.

After setting the admittedly challenging economic and political context for the latest series of trade negotiations, Aho and Aronson set ambitious goals for them in terms of higher economic growth and greater discipline. The second part of the book analyzes the national goals and constraints of the three major blocs in the negotiations--the United States, other industrial countries, and the developing countries. The concluding section outlines the authors' view on negotiating strategy. The sections are of uniformly high quality; the chapters on goals, constraints, and internal policymaking of the major actors will be of value to anyone with a general interest in foreign trade policy.

The successful pursuit of accessibility and generality inevitably left gaps which various specialists will clamor to fill. For example, because the focus of Trade Talks is indeed trade talks, the discussion of labor adjustment measures was perfunctory, and perhaps not in tune with the most current thinking. Aho and Aronson concentrate their analysis on the functioning of the Trade Adjustment Assistance Act and measures to stretch out the timeframes for adjustment in selected basic industrial sectors. By comparison, a task force set up by the U.S. Secretary of Labor on economic adjustment and worker dislocation is examining policies that apply to displaced workers from all sectors of the economy, with a view toward compressing the timeframe in which an individual can make a satisfactory adjustment to economic change. One result of this approach may be to lower the profile of adjustment policy as a constraint on trade negotiations. Aho and Aronson state the problem faced by adjustment policy very succinctly: "Trade does create new jobs--probably more than it destroys--but they are entirely different jobs, requiring entirely different skills." However, they seem not to have looked closely at measures that are currently being considered to promote a more flexible, mobile, and skilled labor force.

Other, less important, misconceptions have been allowed to pass into the book. Because there is little space in a general work for detailed analysis of each and every issue, current cliches about the economy are often accepted at face value. In one case, the authors blandly assert that the pace of economic change is accelerating. This is one of the most unexamined propositions in circulation today. The scant statistical data that can be found to examine the hypothesis more closely turn out to contain a mass of contradictions. One particularly vivid example of the contrariness of the data is a table appearing in a recent business strategy textbook that indicates that the number of new products developed by a sample of 44 large firms actually fell from 133 in 1961-65 to 75 in 1971-75. At the same time, however, the percentage of those new products being produced in foreign markets within 1 year of U.S. introduction rose from 24 to 39 percent.

The authors also seem to tacitly accept the notion of a "declining industrial base" or the "deindustrialization" of the U.S. economy. Most of the evidence in favor of such an hypothesis is based on the kind of manufacturing employment data referenced briefly in the chapter, "Setting the Context." It is true that in the medium term, factory employment has fallen; however, it takes only the simplest look at the data on growing manufacturing capacity or the continuing uptrend in actual production to cast serious doubt on the notions of "declining base" or "deindustrialization." It is a shame that in a book very likely to be read by the generalist policymaker, the authors could not find the space to outline more clearly ongoing debates about contextual assumptions.

Aho and Aronson present some very interesting proposals for advancing international trade agreements. They make some very good points: Admit that trade, investment, migration, the international monetary system and so on are intimately related but that trying to put them all on one table at one time will lead to a hopeless snarl. The authors then advocate disaggregating the trade bargain. Another possibility that is not presented would be to disaggregate the negotiations themselves. The General Agreement on Tariffs and Trade (GATT) could be retained as the framework for the issues concerning trade in industrial goods. The residuum of tariffs, nontariff barriers, and dispute resolution would be at the core of that round of talks. At the same time, new general arrangements could come into being where the trade-in-goods model has proved troublesome: for trade in services (including intellectual property), GATS; for trade in agriculture and commodities, GATAC; and so on. At the completion of the negotiations of these general arrangements, preparations could begin for a technical round to coordinate the agreements. In the longer term, the administration of the separate arrangements might, by further negotiation, be consolidated into a single, broad, international trade organization, thus bringing the vision of the postwar Bretton Woods treatymakers full circle.
COPYRIGHT 1987 U.S. Bureau of Labor Statistics
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1987 Gale, Cengage Learning. All rights reserved.

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Author:Devens, Richard M., Jr.
Publication:Monthly Labor Review
Article Type:Book Review
Date:Mar 1, 1987
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