Reinhard Rode - Gatt and Conflict Management: A Transatlantic Strategy for a Stronger Regime

GATT and Conflict Management

Published in cooperation with the Peace Research Institute Frankfurt, Federal Republic of Germany

A Transatlantic Strategy for a Stronger Regime

Edited by
Reinhard Rode

First published 1990 by Westview Press, Inc.

Published 2018 by Routledge
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Library of Congress Cataloging-in-Publication Data
GATT and conflict management : a transatlantic strategy for a stronger regime/edited by Reinhard Rode.
p. cm.
ISBN 0-8133-7967-9
1. General Agreement on Tariffs and Trade (Organization). 2. Conflict management. I. Rode, Reinhard, 1947
HF1721.G35 1990
382'.92dc20

90-12498
CIP

ISBN 13: 978-0-367-01543-5 (hbk)

This volume grew out of an October 1988 conference on GATT issues held at the Peace Research Institute Frankfurt (PRIF), Federal Republic of Germany, The lively debate at this international meeting is reflected in the articles published in this volume. The conclusions of the editor, particularly his strong recommendation for a new transatlantic leadership effort for the GATT, are his own responsibility and are not the outcome of a consensus among the contributors.

The editor is grateful to the Volkswagen Foundation for having granted funds for the conference and the John D. and Catherine T. MacArthur Foundation for its support for the publication. We would like to thank the staff at Westview Press for their help in moving the project forward on their publishing schedule.

Reinhard Rode

Reinhard Rode

The 1960s, and to a lesser degree the 1970s, were generally perceived as a successful period for the General Agreement on Tariffs and Trade (GATT). There is no question that it greatly contributed to the expansion of world trade and hence to peace and prosperity. Not only did it help intra-Western trade recover and stabilize but, by refraining from injecting too high a dose of politics into trade conflicts, it had a favorable impact on the Atlantic alliance, too. As for the 1980s, they have turned out to be a frustrating decade for GATT. Trade questions have become heavily politicized and have generated new and severe conflicts. After tremendous initial progress in tariff reductions, the GATT momentum has slowed down dramatically as the new non-tariff barriers, or NTBs, are proving very difficult to eliminate. But since they are of an extremely complex nature, it can be argued that GATT is a victim of its own earlier success. NTBs are deeply rooted in the domestic structures of the respective contracting parties, thus bringing into stark relief the tensions that arise when international cooperation supplants national interests, i.e., once independent nations have to relinquish some of their sovereignty in economic matters. But since this is a widespread phenomenon, GATT does not stand alone. Compared with the IMF, however, it may suffer more because of its limited character as an international agreement.

The limits of GATT, a remnant of what had been envisioned as something called the International Trade Organization (whose charter was never ratified by the U.S. Congress), were less obvious as long as U.S. leadership remained strong. Looking back, one can say that by and large the period of U.S. hegemony benefited the GATT. American pressure for free trade became weaker the more the United States turned out to be a relative loser in the wake of trade liberalization. The huge trade deficits of the United States in the 1980s bear witness to this. American national trade interests and liberal trade principles no longer automatically .

Declining American leadership in GATT, the U.S.-initiated current Uruguay Round notwithstanding, focused attention on the hegemonic stability theory. American scholars like Steven Krasner and Robert Gilpin argue that a system like GATT needs a hegemon, or leader, to guarantee stable cooperation. The Europeans, and probably the Japanese as well, dislike this perspective, perceiving it as a claim for U.S. neohegemony. Institutionalists such as Robert Keohane offer a more sanguine alternative: stable cooperation after hegemony. After Hegemony also happens to be the title of a book by Mr. Keohane.

The basic assumption is that a regime like GATTwith its principle, norms, rules and decision-making proceduresis viable and can prevail without a leader. The advantages flowing from a GATT reorganized along these lines would benefit all participants; they would also help stabilize the system, if only because the sole alternative would be complete trade anarchy, an orgy of bilateralism. And GATT, so the idea, has an embedded strength: it lies in its being able to last only as a multilateral trade agreement. The open question, however, is whether GATT will be capable of developing further and of initiating new liberalization efforts by itself. To be sure, the GATT bureaucracy could do itthe paperwork it generates in terms of proposals is impressive enough. But would such bureaucratic politics prove sufficient? I, for one, doubt it. What I think we need are new initiators of regime development to pursue trade liberalization efforts, to assist the weakened former leader and pick up the flag of the free trade ideal, i.e., GATT's free trade principle.

Who else but the European Community and Japan could perform this task? Unfortunately, neither has volunteered so far. The European Community has turned sharply inward, seemingly preoccupied with the overriding idea of bringing about its single market. Outsiders fear the emergence of a "Fortress Europe." As for Japan, it just keeps on smiling and relentlessly goes on exporting (while importing only reluctantly) and thus does not seem ready to assume the role of promoter of liberal trade practices. Since neither the United States nor the European Community nor Japan seem ready, willing or capable to take up that role individually, why don't they assume it jointly? For quite some time, the Trilateral Commission fostered the idea of such a triumvirate to steer GATT around the treacherous shoals of bilateralism toward the more rewarding shores of multilateralism. But the enthusiasm generated during the meetings of this trilateral elite was never contagious enough to sway the governments of the three trading blocs, which seemed intent on pursuing their bilateral quarrels within GATT and, in my view, even more so outside of it. Such behavior was not made to inject any new strength into the flagging GATT regime; it only precipitated its neglect.