[page 14]
Economic Focus GATT in trouble SUTHERLAND Preciod enrat be the BIER director-general of the General Agreement on Tariffs and Trade (GATT) he is currently stomping around the world trying to conclude the current round of the agreement.
It is not an easy task. This round of negotiations is called the Uruguay round' because it began all of seven years ago in 1986 in Punta del Esta in Uruguay. Sutherland now faces the unravelling of the whole deal if it cannot be signed by December 15th. The current negotiations on world trade propose the elimination of tariff and non-tariff trade barriers between the 116 countries involved. It covers eight categories of manufactured goods, the harmonisation of tarifis on chemical products at low rates, and across the board tariff cuts of one third to a half on products. Tariffs are duties put on imports into a country. The key question for capitalism is whether goods can be produced and sold at a profit. Nevertheless, reduction of barriers between countries can make world trade easier and cheaper, improving the chances of the distribution and sale of goods around the world. Commentators have fallen over each other to declare the benefits of such an agreement. Two million new jobs created world-wide in five years was one estimate, an extra $213bn extra on world income per year another.
Even if these predictions were true they are fairly modest conzuerst die und Farmers protest at GATT talks. sidering the chronic stagnation of world production. What is clear is that a failure to conclude the Uruguay round will lead to increasing rivalry and tension between the main capitalist powers. the main players sign? GATI was first supported by a total of 23 countries in 1947. At that time it had three parts. The first has an important article that deals with the 'mostfavoured nation' principle: any trading adshould be granted to all. Part make sure that the value of tariff reductions are not altered by government action. Part three contains 12 articles dealing with enforcement, amendments and other matters. At a later date a part four was added that sought to reduce trade barriers against developing countries.
The GATT agreement gives the impression on paper that liberal lawyers had come together in 1947 and created harmony in the world economy where before there was only world war. But the economic root of GATT lies nearer the heart of the capitalist class: profit, and more particu- By Pete Watson Opfer BAUERN 000 larly, US profit.
The USA emerged from world war two enormously strengthened. In 1946 it produced two thirds of the world's mining and industrial output and had 66% of the public gold reserves. With this crushing economic might it sought to bring some harmony to world finance and trade so that US capital could find a profitable and peaceful home around the globe. Other imperialist powers such as Britain and France stood to gain by exploiting the colonial world. In 1944 therefore, the International Monetary Fund and the World Bank were established at Bretton Woods.
Under capitalism however rivalry between countries is quite natural. And tensions between the GATT 'partners' started even at this early stage of discussion. The original idea was for the creation of a more binding International Trade Organisation (ITO) which was to have the goal of achieving and maintaining "full and productive employment and large steadily growing demand". But 602 amendments were put to the ITO proposals. The idea was badly holed below the waterline and sank without a Economic Focus • 13
[page 15]
trace by 1948. What followed was a series of GATT 'rounds' which reduced tarifi barriers between countries. The Uruguay round is the eighth.
Rising profit levels during the long upswing of 1950 to 1973 meant that the main imperialist powers could afford some harmony. The Kennedy round, 1964 1967, was the greatest achievement for GATT where a 50% cut in tariffs were achieved in many areas. All this helped capitalism exploit the working class of the world. Between 1953 and 1963 world trade grew by over 6% per year. The world became more integrated, under the control of giant multinational monopolies.
With the end of the upswing in 1973 trading rivalry became sharper. With falling profit rates imperialist countries fought furiously to maintain their existing markets.
A new de-stabilising factor developed. The USA was able to impose its solution on the world in 1947. Since then there has been a relative decline of the USA. In 1950 the US produced 40% of the world gross domestic product. By 1980 this had declined to 22%. The powers of Japan and Germany emerged to compete with the US. While the Japanese and German economies together do not equal the US economy, production per head ig now higher in both Germany and Japan.
This rivalry has led to trading clashes and the creation of trading blocs': 58% of the exports of EC countries remain within the EC, 40% of Japanese exports go to Asia. The US, Canada and Mexico are seeking to establish a North American Free Trade Area (NAFTA). But even within the blocs there is tension and division.
A whole series of exceptions have been created to "dodge' GATT rules. The Multi-Fibre Arrangement allows countries to block the textile exports of ex-colonial countries. Article 24 of the GATT allows customs unions so that the EC, NAFTA and so on can flout the 'most favoured nation' principle. And that puts aside non-tariff barriers such as quotas 14 • Economic Focus
Tensions in the EC.
of imports, 'orderly marketing agreements', 'voluntary restraints' and so on that are slapped on imports and exports.
This is the background to the present GATT negotiations.
In July the group of seven richest countries (G7) declared the Uruguay round all but signed. Negotiators then had August on holiday. Since then negotiations again look close to collapse. The Blair House accord was supposed to wrap up negotiations on farm trade subsidies but has been rejected by France. They want agriculture and audio-visual trade to be taken out of GATT. The right-wing government of Balladur has been looking to future elections and the powerful farmers' lobby. Now both Germany and Britain are pressurising France into signing by threatening internal EC strife.
A new
-stabilising factor developed.
December 15 is when President Clinton's fast track' authority expires. This gives him the right to present the agreement as a single package to Congress. Without that the Uruguay round could be broken up by Congress amendments and deletions. A new GATT agreement hangs in the balance. If a deal cannot be patched up a period of even sharper trade
rivalry develop.
protectionism
Studies
boint to
ture
WO RECENT STUDIES re-
veal the real nature of capi-
talism. One refers to Karoshi, death from overwork, due to the large amounts of unpaid overtime worked by Japanese workers. The other deals with long-term structural unemployment embedded into the capitalist system. World capitalism decrees that millions stay unemployed while others work themselves to death.
What is common between the two studies is not only their gloom but also the bosses' fear of future social explosions. The Organisation for Economic Co operation and Development (OECD) half-yearly forecast predicts rising unemployment for the next 18 months in the 24 richest countries. They predict it to reach a rate of 8.6% by 1994, a post-war high.
This means 35m unemployed this year and 36m in 1994. Europe will account for 22m and 23m of these totals. European
[page 16]
Japanese workers at morning assembly. unemployment is expected to rise from 9.9% in 1992 to 11.9% in 1994. The deep German recession is being blamed for European problems. But the report makes clear that predicted average growth for all the OECD countries in 1994 of 2.7% will only make a slight dent in unemployment. The OECD warn that rising unemployment is putting 'social cohesion' in jeopardy.
In the same way a report by the 'Industrial Relations Services' indicates that the bosses may reap the consequences of 'Japanese-style' changes to working practises.
The philosophy of working as hard as humanly possible' builds resentment against the employer. The practice of keeping materials stocks to a minimum to reduce costs ('Just in Time' production methods) makes companies vulnerable to strike action. The report warns: "If there is a great deal of pent-up resentment against Japanese-style working practices, and the fragility of Subscribe to the Militant International Review for £5 for four issues, UK/Ireland, or £6 Overseas. Write to us with your name and address and a cheque or postal order made payable to World Socialist Books, at 3/13 Hepscott Road, London E9 5HB. production stystems has been increased... worker disatisfaction leading to industrial action could have a devasting effect. End of the Japanese 'miracle'?
SENIOR EXECUTIVE in A a leading Japanese securities firm explained the problems that the Japanese economy faces. In previous slowdowns he likened it to breaking an arm: the pain was intense but the body remained healthy for a quick recovery. Now the body Subscription rates of the Japanese economy has a / severe circulatory disorder from external shocks and internal weakness. Gross national product (GNP) fell by 2% at an annualised rate for a second quarter this year.
This means that the Japanese economy has moved from slowdown to recession after four years of slackening growth. August saw a 2% fall in industrial output, down for the 23rd consecutive month. The Long-Term Credit Bank of Japan predicts a cut in capital investment for the fourth year in a row.
Countries that received Japanese capital are also suffering. Taiwan still has high growth at 6.6% this year but down from an average of 8.6% between 1984 and 1991. 300,000 manufacturing jobs have been lost since 1989. South Korean growth stands at 4%, the lowest from 1980. With wages in these Tiger' economies standing at the highest in Asia outside Japan, investment is moving on to China, Thailand and Malaysia.
The shift of manufacturing capacity out of Japan has not been replaced with anything new. The jobs for life' idea in Japan is on the way out. NTT wants to shed 10,000 jobs next year through voluntary retirement. Toshiba, 5,000 jobs, Honda, 3,000 jobs, and Kawasaki Steel, 3,200 jobs, are all going down the same road.
Economic Focus • 15