Round's End

With a flourish of pens and champagne glasses, delegates of 49 non-Communist nations gathered in Geneva's Palais des Nations last week to sign final agreement to the most sweeping tariff reductions in the history of international trade. The meeting climaxed four years of bargaining, sponsored by the General Agreement on Tariffs and Trade, in the oft-troubled but ultimately triumphant Kennedy Round negotiations.

The final package included a massive list of 60,000 items on which tariffs are to be pulled down an average 35% by 1972, a special agreement on the thorny issue of chemical duties, a plan to provide grain for underdeveloped nations, and a code to curb below-cost "dumping" of products in world markets. Clearly reflected was the fact that there had been plenty of room for economic maneuver even after the weary Geneva negotiators, under firm prodding by GATT's British Director General, Eric Wyndham White, came to a basic agreement seven weeks ago (TIME, May 26).

Hurried Horse-Trading. The Japanese, for instance, managed a "deft switch in the important grain-aid plan, under which the industrial powers will give 4.5 million tons of grain a year to hungry nations. The plan, in itself a concession to the U.S. and other big grain producers that failed to get guaranteed access to Common Market grain markets during the negotiations, would have required Japan to purchase much of its 5% share of the total grain commitment. Loath to spend cash on that, the Japanese got eleventh-hour permission to substitute a mix of home-grown coarse grains, rice, fertilizer and tractors. Argentina, which fondly expected to sell Japan some of the needed grain, was incensed at the change, only grudgingly signed the final agreement.

The horse-trading went on almost until the moment of the signing. At one point, the delegates of the six-nation Common Market team excitedly telephoned the U.S. negotiators, sputtered that printed tariff rates on some items, mostly wool products, worth $250 million in annual trade, were not so sweet as those talked about over the bargaining table. A mistake? Not at all. The wool-product rate, the U.S. reminded them, was tied to the rate for raw wool --and the U.S. agreement to slash raw-wool tariffs was contingent on wool-producing Australia's agreement to lower its customs barriers against U.S. tobacco. The tobacco deal, as it turned out, went up in smoke--and with it, the U.S. concessions on Common Market wool products.

And so it went. Yielding to Common Market cries about a raw deal on a number of items totaling $50 million in annual trade, the U.S. further trimmed its rates on semifinished aluminum products, tomato paste, small tobacco items and eyeglass frames, got lower tariffs for U.S.-made TV tubes in return. The Danes' dander rose over the tariff on live beef, which is an important Danish export. In retaliation, Danish negotiators tacked "reservations" onto their commitment to cut passenger-car tariffs 50%, will likely stand fast on a token 20% reduction.

Time for a Fix. Finally, the crescendo of bargaining-table bluff, bravado and compromise came to an end. U.S. Chief Negotiator William M. Roth said in Washington, while Deputy W. Michael Blumenthal handled the signing, that under the new deal the industrial nations of the Kennedy Round would come out pretty much "in balance." The Common Market, long under fire for its unconscionably discriminatory duties, will gradually revert to the low tariff level of Germany in pre-Common Market days. Still, the Six would not tinker at all with high rates on electronic computers, automated machine tools, helicopters and other items vulnerable to technologically superior outside competition. The U.S. reduced duties on 6,000 imports. The maximum 50% tariff cuts should please foreign manufacturers in many areas, including aircraft (chiefly Britain), still cameras (Common Market and Japan) and wood pulp (Canada). In industries already under heavy pressure from foreign competition, notably steel and textiles, the U.S. and other producers made only a few nominal concessions.

When the annual step-by-step reductions begin next Jan. 1, U.S. consumers stand to pay lower prices for many imports--if inflation and middlemen do not soak up the tariff savings. The wholesale price of a $300 Japanese motorcycle will decline to $297 in 1968, finally level out at $286 in 1972. Other reductions will be substantial. Tariffs will fall from 1210 to 60 a gallon for beer, from $1.02 to 510 a gallon for Irish and Scotch whisky. Duties will come down 50% or more on such items as silk scarves (to 16%), diamonds over 1 carat (5%), bone chinaware 17 1/2%, phonographs (5.5%) and nonreptile leather luggage (10%). For budget-minded swingers, duties on yachts over $15,000 will be cut from 10% to 5%, while wig and toupee tariffs will recede from 14% to 7%.

It may be some time before businessmen can get an accurate fix on how individual industries and companies come off under the new rules. Negotiator Roth's Washington office has set up a special phone number (202-395-3044) for specifics on the new U.S. duties, which cover imports worth $8 billion a year. But details on the revised tariffs of each of the 49 Kennedy Round nations, which affect $40 billion in annual trade, may be some time in getting around: covering thousands of farm and factory items in painstaking detail, the entire list runs to 4,000 pages.

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