Industry / Business
Sector bargaining sought in trade talks Chemical industry fears that, without sector bargaining, U.S. may seek agricultural gains at chemicals' expense Tomorrow, agricultural trade experts from the U.S., the European Economic Community (EEC), and other trading nations will reconvene in Geneva. They will try to agree on ground rules to govern bargaining on agricultural trade when actual hard-nosed bargaining of the Tokyo round of multilateral trade negotiations begins in September. Late last month, a similar attempt ended in a stalemate. "We agreed to disagree," says one U.S. trade official. What does all of this have to do with chemicals? Plenty, because the way in which the negotiators handle the controversial issue of agriculture during the Geneva talks will to a great extent dictate what chemical concessions each of the countries involved in the trade talks may give and receive. Although the whole question of agricultural trade is complex, the basic lines are simple. The question is whether to negotiate agricultural concessions independently as a sector or combine them with industrial negotiations. As happens so often in trade matters, the U.S. and EEC are on opposite ends of the rope. EEC wants—in fact, it insists—that agriculture be handled separately. The U.S. wants agriculture and industrial negotiations combined. One of the primary goals of the U.S. negotiators at Geneva will be to increase U.S. agricultural export opportunities. They see increased exports of farm products as one of the best ways to counter the trade deficit caused by oil imports. Last year, the U.S. exported almost $22 billion worth of farm products, more than double the amount it imported. The agricultural sector alone had an $11.6 billion trade surplus. One way to increase agricultural exports is to convince other countries, particularly EEC members, to lower their barriers to agricultural trade. For years EEC's Common Agricultural Policy, with its system of variable import levies, has been a sore point for U.S. agricultural trade officials. They would like to see this trade wall dismantled, but the U.S. has very little to offer in 8
C&EN April 14, 1975
agricultural trade concessions. It does, however, have much to offer in the industrial sector, which is why the U.S. wants to combine the two. After the Kennedy round of international trade negotiations ended in 1967, U.S. negotiators were criticized because they failed to gain many concessions for U.S. agriculture. The U.S. now considers meaningful agricultural concessions a "must" for the Tokyo round. Without them, the negotiations could collapse. Consequently, during the years of debate on the trade bill, the agricultural community, championed by the U.S. Department of Agriculture, fought hard for the idea of combining agriculture and industry during the trade negotiations. The chemical industry, along with the steel and electronics industries, fought just as hard for the "sectoral bargaining" approach. Under sectoral bargaining, each agricultural and industrial sector
would be negotiated as a unit. And, it was hoped, negotiators would achieve reciprocal concessions for the concessions they gave in each sector. It isn't hard to understand why the U.S. chemical industry favors sector bargaining. If industrial negotiations are combined with agricultural negotiations, chemical trade experts are afraid that the chemical industry will be sold out in return for trade concessions that benefit the U.S. farmer. The U.S. chemical industry alone boasted a $4.8 billion trade surplus last year on the strength of its $8.8 billion exports and only $4 billion worth of imports. "That $5 billion trade surplus is a tempting target for negotiators on the other side of the table," says Dr. David H. Dawson, the chemical industry trade adviser. "And they will go for it," he adds. The chemical industry mounted its campaign for sector bargaining two
Chemical trade future hinges on Geneva negotiations Between now and September, six c o m m i t t e e s within GATT (General A g r e e m e n t on Tariffs and Trade) will be busy laying the g r o u n d w o r k for the Tokyo round of multilateral trade negotiations that a r e s c h e d uled to begin this fall. Between now and September, the U.S. c h e m i c a l industry, along with other industries, agriculture, labor, and consumer interest groups, will be peppering g o v e r n ment trade officials with data, a d vice, and recommendations on what the U.S. should strive for in the trade talks. Over the next few m o n t h s , C&EN will publish a series of articles explaining many of the complex issues that U.S. trade negotiators will face and what they m e a n to the U.S. c h e m i c a l industry. C&EN will do this because trade always has been an important aspect of the c h e m i c a l business and the u p c o m ing trade negotiations figure to be one of the most important developm e n t s shaping the course of world trade for years to c o m e . W h e n the negotiators actually get d o w n to shirt-sleeve bargaining in Geneva this September, they u n doubtedly will focus on the major topics laid d o w n at the ministerial meeting in Tokyo two years ago that gave this round of trade talks its
n a m e . These include tariffs, nontariff barriers, agricultural products, tropical p r o d u c t s , safeguards, and special sector problems. But the world's business c l i m a t e has c h a n g e d considerably in even those t w o short years. Inflation and recession simultaneously plague the e c o n o m i e s of many nations. The international monetary system is wobbly. A c c e s s to raw materials and food has b e c o m e as important, if not m o r e so, as a c c e s s to markets. Oil-related trade deficits are forcing some countries to at least bend generally a c c e p t e d rules in other areas of international trade. These c h a n g e s in the global e c o n o m y threaten the basic c o m petitive structure of the international trading system. Whether or not the world's trading nations will be able to counter these threats will depend largely on what they a c c o m p l i s h in Geneva. In addition to countries that are m e m b e r s of GATT, n o n m e m b e r countries have been invited to attend. Several, including Arab oil and c o m m u n i s t nations, have indicated that they will. The U.S. c h e m i c a l industry has a huge stake in the o u t c o m e of the multilateral trade negotiations. For this reason, C&EN believes it has an obligation to keep you well inf o r m e d about the issues involved.
CHECKOFF MERGERS
Dawson: would have liked more
Dent: will head U.S. negotiating team
years ago when the House Ways & they point out that the Senate Finance Means Committee started considering Committee report on the bill contains the trade bill. Harold C. Whittemore even stronger language that fortifies Jr., then president of the Synthetic Or- this view. The committee's report ganic Chemical Manufacturers Associa- clearly specifies the need for chemical tion (SOCMA), argued that reciprocity sector bargaining. "This was imporwithin sectors was essential "unless tant, but we would have liked more," trade negotiations are to become a says Dawson. means of deciding which industry shall The office of the Special Trade Neflourish and which languish or die." gotiator, now headed by former secreThe industry's position was: mandato- tary of Commerce Frederick B. Dent, ry sectoral bargaining and reciprocity, apparently is satisfied that the trade and a mandatory report to Congress on bill is one that it can live with. Obthe results of the negotiations. viously, the office, which is responsible The Ways & Means Committee met for conducting the negotiations, prefers industry halfway with the so-called as much discretion as possible. Karth amendment. This amendment, Ambassador Dent's predecessor, Wilnamed after Rep. Joseph E. Karth liam D. Eberle, explained the office's (D.-Minn.), called for sector negotia- objections to the "extent feasible" tions "to the extent feasible." The clause of the Karth amendment. He chemical industry had two objections said that you can't prove anything unto the Karth amendment. First, it was less you try. "In some cases, we don't permissive and not mandatory as far as want to try. We simply want to say we sector bargaining was concerned. And can't do it." it covered only negotiations on nontarIn the final analysis, neither the ofiff barriers. The industry wanted tariff fice of the Special Trade Negotiator, negotiations included. nor Congress, nor the trade bill will The Karth amendment stayed in the dictate how negotiations will be conHouse version of the trade bill. By the ducted. That will be decided jointly by time the Senate Finance Committee U.S. negotiators and their counterparts considered the trade bill late last year, from all of the countries participating agricultural interests began applying in the trade talks. The joint position of pressure. Chemical industry spokes- the EEC countries will play a big part men knew that they would have to in the decision. compromise or lose everything. Dawson Right now, this much is certain noted that "we were forced to concede about EEC's negotiating policy. It more than we wished." wants agricultural bargaining conductIt became obvious that Congress had ed separately and this policy puts EEC no intention of limiting U.S. negotia- and the U.S. on a collision course. tors to the sector bargaining approach. EEC policy on sector bargaining for To do so would have made negotiations various industries hasn't been made impossible, or at least "unrewarding clear yet. But reports out of Europe inand not worth the effort," according to dicate that Europeans are concerned Dawson. about the problems facing some indusWith time running out, Congress trial sectors and they may want negopassed the Trade Act of 1974. The lan- tiations affecting these industries conguage that finally appeared in the bill ducted separately, too. called for sector bargaining as a "prinIn effect, the U.S. chemical industry cipal U.S. negotiating objective," but may get its wish on sector bargaining it did not make this approach manda- for chemicals, even though it couldn't tory. convince Congress to guarantee it in The final version of the bill does, the trade bill. Meanwhile, chemical however, require the President to sub- trade spokesmen plan to keep up a mit a report to Congress detailing the running dialogue with Congressional degree of sectoral reciprocity. Although delegates to the trade talks, just to the bill's language may be subject to make sure that the chemical industry's interpretation, chemical industry trade interests aren't overlooked. experts, at least, see it that way. And Earl V. Anderson, C&ENNew York
• Commercial Solvents—Merger into subsidiary of International Minerals & Chemical approved by boards of directors of both companies; Commercial Solvents stockholders to receive $45 pershare cash from IMC; vote by Commercial Solvents stockholders set for April 30. • Millmaster Onyx—Acquisition offer by Kewanee Oil extended to April 11; more than 91% of Millmaster Onyx common stock already tendered for purchase by Kewanee Oil at $18.55 per-share cash. • Reichhold Chemicals—Acquisition made of glass fiber facilities of Kaiser Glass Fiber Corp., subsidiary of Kaiser Industries, for undisclosed sum of cash; purchased facilities located in Irwindale, Calif. FINANCE • Airco—Approval made by board of directors to purchase up to $4.8 million of the company's $31.8 million of 37/s% convertible subordinated debentures due 1977 to 1987. • Lubrizol—Registration statement planned for secondary stock sale of about 480,000 shares now held by certain stockholders. • Vulcan Materials—Offering made of $60 million 10%% sinking fund debentures due in 2000; proceeds to be used principally for new chlor-alkali plant. PLANTS COMPLETED • Isocyanates—Upjohn at LaPorte, Tex.; 50% expansion to 300 million lb per year, 90% of which represents products based on PAPI or MDI. • L-Menthol—SCM at Jacksonville, Fla.; first U.S. synthetic L-menthol plant. PRICES • Sulfur—Increase of $5.50 to reach $62.50 per ton fob Tampa, Fla., set by Freeport Minerals; follows increase of $8.00 to reach $65 per ton fob Tampa set by Texasgulf.
April 14, 1975 C&EN
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