General Agreement on Tariffs and Trade

The US is seeking to extend the duty-free status of international online
transactions to protect the development of global electronic commerce, the
Clinton administration said yesterday. Susan Esserman, deputy US trade
representative, said the US wanted the World Trade Organization to agree “at
the earliest possible date” to extend the current moratorium on customs duties
In testimony to the Senate foreign relations sub-committee on Europe, Ms
Esserman said duty-free cyberspace was particularly valuable to US software
companies that were seeking to distribute their products electronically.

The US is also looking for WTO members to affirm that electronic commerce is
subject to existing rules and agreements, and should not face “unnecessary
regulatory barriers to trade”. However Ms Esserman said “more time and work
are necessary” before electronic goods could be subject to final
Electronic commerce in the US is forecast to grow to $1,300bn by 2003, while
in India it is expected to grow by $15bn within two years. Richard Wolffe,
Protectionism, it seems, is always with us and it is useful to examine the
intermittent attempts made to establish rules for its containment. This book
is one such examination, on the conception, birth, and early years of the
General Agreement on Tariffs and Trade (GATT); it is restricted to the years
1940–53. It is the work of an historian but one at the political, rather than
economic, end of the spectrum. The heavy emphasis throughout is on the
American role within an essentially Anglo-American tussle. The argument is
that although trade was a relatively small proportion of US output it was used
for political and diplomatic purposes. The general thrust is that the US was
keen on a new liberal order and determined to break the British empire’s
preferential trading arrangements. However, when we read that the central
argument is that, ‘by liberalizing trade while protecting domestic economies
— a bargain consistent with US trade law, practice, and history …’, we
might reasonably expect to be in for a roc ky ride.

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Politics is important and possibly even central in the process of trade
protection, but will always be found to depend on economic forces. The
politics here might well be overdone. The whole story is presented as a
struggle between the US and Britain/British empire. Although this tension is
an old story, Zeiler takes it further and argues that the Commonwealth had ‘a
major hand in shaping the GATT order’ (p.197). It is a complex story of
negotiations taking place under conditions of extreme difficulty, and the
author has worked diligently in the American, British and Commonwealth country
There is, however, a lot that raises the eyebrows of the economic historian.

Within a few lines of the opening we read that, ‘global business leaders …

seek a commercial regime unfettered by barriers’. This is rather the
antithesis of the conventional understanding of businessmen almost invariably
(and nowhere more so than in the US), seeking protection. And running against
the conventional view (without seemingly noticing) is the idea that America is
the home and inspiration of free trade. The British in the 1930s opted for,
‘Regulated, rather than American style market, capitalism … ‘ (p.20). Or
again, ‘Free trade frightened the British’ (p.39). And richest of all, ‘The
British simply would not accept the free trade doctrine’ (p.24). Zeiler
suggests that free trade was key to the American economy ignoring the fact
that America had been one of the most protectionist countries for most of its
history. This is unfortunate and results in a distortion of the argument, for
of the GATT negotiations Zeiler say s the British were not willing partners in
pursuit of lower trade barriers. At certain times that may have been true but
it did not derive from long-term hostility. Nevertheless, in the closing pages
of the book the author does concede that the US was no unilateral free trader.

Running alongside this idiosyncratic view is an account of the British economy
that is surely at odds with the facts. It is a picture of pathetic feebleness:
‘Great Britain faced a future of decline and hardship. Its once predominant
global position lay in tatters’ (p.2O). ‘Their economy was in a shambles …’
While the book is well written there is a danger of the story being presented
in overly dramatic terms (hinted at in the title), and at times a frivolous
and dismissive tone creeps in — ‘From his perch in the Treasury Department,
Keynes …’. And there are occasional lapses in accuracy such as that the
Commonwealth had moved to a discriminatory


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