As had been feared, negotiations among 107 nations to create a more free and reliable global trade pact ended in failure last week. That's ominous news for the world's economy.
The talks in Brussels, Belgium, collapsed over the issue of agricultural subsidies - the sticking point from the very beginning. It may seem like a remote subject, but the failure is bad news for ordinary Americans.Goal of the long-running talks had been to modernize and expand free trade rules and lower tariffs between nations. This would bring cheaper prices to consumers everywhere, help Third World farm exports, and at least double world trade over the next decade.
Unfortunately, all of these admirable objectives foundered in the face of stubborn resistance by European leaders against the necessary step of reducing subsidies to their farmers. European taxpayers shell out $100 billion a year to some 11 million farmers. This support allows the farmers to dump their products on foreign markets at artificially low prices.
In turn, this means that U.S. farmers are squeezed out of the agricultural export market by such subsidies and by trade barriers. These same American farmers must then receive their own government subsidies, putting a double load on U.S. citizens in the form of more taxes and higher consumer prices.
U.S. negotiators had asked for cuts of 75 percent in internal farm supports and 90 percent reductions in export subsidies over the next 10 years. That request was rejected by the 12-member European Community. A compromise offered by Sweden of 30 percent across-the-board cuts over five years also was turned down.
Japan and Korean voted against fewer subsidies and freer trade. Under the proposed pact, Japan would have been forced to open its subsidized and tightly-closed rice market to foreign imports.
The negotiations were so bitter that some analysts fear the outcome may be worsening relations between the United States and the European Community. The collapse also will make it more difficult to unify the economies of the European Communities by 1993 as had been scheduled.
Failure of the lengthy trade negotiations is a reversal of recent trends toward freer trade as typified by agreements between the United States and its neighbors of Canada and Mexico. This drawing inward by the Europeans also is in stark contrast to the opening of borders of former East states and the acknowledgment of the need for free markets in those once tightly-controlled Marxist economies.
There were other casualties in the failed talks. More than a dozen reforms, including better patent and copyright protections around the world, were among the ruins.
Trade wars and growing protectionism are the wrong ways to go; everybody gets hurt by them ultimately. But the world cannot expect the United States to be one vast open market to be exploited while individual nations close their own doors to American goods and heavily subsidize their own products.
The trade talks will be resumed at lower levels sometime next year, but the outlook for significant progress is not optimistic.
Let's hope this week's dismal failure does not signal a global turning inward to narrow national self-interests and selfishness - just at the time when the Cold War has ended and old antagonisms are fading.