Current Issues in U.S. Participation in the Multilateral Trading System

Gao ID: NSIAD-85-118 September 23, 1985

In response to a congressional request, GAO analyzed the international trading system and U.S. participation in the General Agreement on Tariffs and Trade (GATT) and described problems with: (1) trading in the wheat, telecommunications, and steel sectors; (2) the rules of GATT; and (3) member nations' compliance with GATT provisions.

GAO found that government intervention in domestic economies is widespread within the United States and other countries with which the United States trades. Government influence in wheat trade is significant and influences both the price and supply of wheat. GAO found that, because of a GATT agreement that domestic policy priorities should take precedence over international discipline, GATT has not established a clear trade regime for agriculture, leading to a significant trade distortion for wheat. In the telecommunications field, barriers imposed to protect privacy and national security have restricted market access, as have government monopolies and market reserve policies. Although telecommunications trade is growing, significant segments of the industry face a wide range of barriers restricting access to markets, and GATT has just begun discussion of trade liberalization in the services area. In steel trade, developed and developing countries have used a number of domestic support and protection mechanisms, and import restrictions have placed almost all exporters of steel to the United States and Europe under some form of import restriction. GAO found that GATT: (1) has been largely ineffective in limiting these restrictions or in enforcing criteria for applying the restrictions; and (2) objectives which promote free trade are consonant with U.S. trade policy objectives, but GATT has frequently been unable to control government actions or to settle disputes between trading partners.

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