
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, July 10, 1990                   TAG: 9007100458
SECTION: EDITORIAL                    PAGE: A6   EDITION: METRO 
SOURCE: 
DATELINE:                                 LENGTH: Medium

THE SUMMIT/ BUSH HAS RIGHT PRIORITY IN HOUSTON

LEADERS of the seven major industrial democracies meeting this week in Houston face a long and daunting agenda in their first of the post-Cold War economic summits. To his credit, President Bush has proclaimed as his top priority precisely the right one: to head off collapse of international negotiations aimed at revising the General Agreement on Tariffs and Trade.

After four years of debate among GATT's 97 member countries, the Uruguay Round of talks - named after the nation where they began - are nearing their December closing deadline. Without strong leadership from the Houston summit, the talks could founder on the issue of agricultural protectionism.

GATT requires revision and updating to bring it in line with an expanded world trade and a more complex global economy. Negotiators are trying to extend the treaty to cover the one-third of world commerce, about $1 trillion worth, that now does not fall under the agreement. They would have GATT cover previously unregulated products including intellectual property (such as software) and services (such as insurance and banking). They would also bolster procedures for resolving disputes and enforcing GATT rules.

The ultimate goal is to boost free trade and reverse the slide toward protectionism and trade war. The significance of these objectives, and their importance to prospects for prosperity and peace, can hardly be overemphasized.

As the Soviet threat recedes, political ties binding the industrial democracies will naturally loosen, and economic forces may increasingly drive the allies apart. The global trading system seems to be fragmenting into regional blocs - American, European and Japanese. The issue is whether relations among the blocs will be benign or belligerent, and whether trade among them will be free.

A system of regional blocs could offer a steppingstone toward freer world trade. But such trading zones would not be compatible with the globalization of industries and of trade patterns now under way if they were free only internally and protectionist toward each other.

If GATT rules are not expanded and updated, trade disputes will tend to escalate into destructive rounds of retaliation, whether between individual nations or trading blocs. That would hamper world economic growth and all the progress that depends on it, and would produce political frictions that eventually end in war.

So now is the time for President Bush to pressure European leaders to remove the principal stumbling block to a successful outcome of the GATT talks - agricultural export subsidies. The European Community annually provides more than $50 billion in such subsidies to its 10 million farmers.

Europeans have resisted placing these on the negotiating table at the Uruguay Round. Perhaps they can be brought around if the United States were to agree not only to cut American farm subsidies, but also to reduce trade protection of its textile industries.

A boost for GATT may seem more mundane than other items on the agenda in Houston, such as German reunification and a Western bailout of Mikhail Gorbachev and the Soviet economy. But it is no less important. A practical opportunity for a far-reaching achievement is at hand. The West's leaders need not negotiate details of a pact on farm goods now. But they do need to signal their Uruguay Round representatives that an agreement is wanted.

by CNB