It now becomes apposite to precede the following sections with a methodological premise clarifying the questions to which this chapter purports to answer and, therefore, its way of proceeding. It goes without saying that this chapter does not aim at providing a detailed analysis of the results of the Tokyo Round from a legal perspective.1 Rather it purports to answer two questions: did the long awaited conclusion of the round create a new setting for international trade, i.e. a legal environment enhancing free trade, or was this objective only partially achieved and if so to what extent? And second, did the results of the negotiations coincide with the perspective of the main actors, the US and the EC, and to what extent did they satisfy the interests of each of the two parties?
As expected, opinions on the results of the negotiations are not uniform, although each judgement has its caveat; in other words, the results were a failure, but not an extreme one; alternatively, the results could be classified as a success, but only under the specific circumstances.
Curzon Price argues that, ‘although worse cases could be cited’, the Tokyo Round was characterized by ‘protracted negotiations which by any normal input/output measure have been extraordinarily unproductive and disappointing’.2 This was because the negotiations were doomed by the steady advance of protectionism which was the natural result of a declining economic environment marked by a high rate of overcapacity which both the main parties were unable to redress. The European Commission stated that the conclusion of the Tokyo Round brought ‘results which exceed appearances’ not only with regard to tariff negotiations but above all to the non-tariff issues and that ‘protectionism and world crisis were held in check’, an outcome even more significant as it was ‘achieved at a time of international economic recession’.3 The Report of the President of the United States argued that ‘in their entirety, the Tokyo Round Agreements represent a new beginning to achieve and maintain an open and fair trading system’.4
A series of notations can be made on the above judgements. Certainly, as Curzon Price argues, the worsening of the economic environment imposed severe constraints on the drive to create a less protectionist environment for the world economy and trade management, but this does not imply that the deal could not encourage progress when the tide changed and prevent further deterioration of trade conditions when there was a downturn. On the other hand, the outcome of a negotiation must be measured not with reference to the moment in which the agreement is signed but to future circumstances which could significantly alter the economic environment in which the agreement must find its implementation. Actually, in contrast to what the EC maintained, the decisive moments of the GATT negotiations did not occur during a recession. Only some important sectors of the economy in the United States and Europe were in a declining trend and were thus in need of financial support or protection from foreign competition when the negotiations ended. The recession occurred when the agreements were to be implemented. It seems, therefore, that from the historical perspective the best way to answer the questions listed above is first to leave aside a general assessment of the round and to look at what was finally agreed as well as at what it was not possible to agree on, also examining, by focusing on the last phase of the round, the reasons for these outcomes and their possible impact on the management of world trade in future stages.
The advent of the Carter administration and the nomination of a new Special Representative for Trade Negotiations, Robert Schwarz Strauss, an accomplished lawyer in fields not directly related to international trade, but also a cunning politician with long-standing good relations with Congress members, meant the relaunch of the multinational negotiations. It also meant an agreement with the EC that involved the US renouncing its efforts to significantly liberalize trade in agriculture by opening up the EC market and dismantling the CAP. Various factors can explain, also from a rational viewpoint, this turn in US strategy. First, if the United States wanted the commitment of its main trading partner to the ‘locomotive’ approach to sustain growth without trade disequilibrium and consequent currency instability, progress towards a mutually satisfactory deal on trade issues, based on perceived reciprocity, was a cornerstone in fostering wider cooperation. By the same token, prolonging the round stalemate on an issue to which the other main party in the negotiations appeared to give paramount importance, thus risking non-cooperation on other areas, was something to be avoided. Secondly, the need for improvement of the trade balance and for greater opportunities for those sectors with higher competitive capacity did not involve, or at least no longer involved, an enhanced contribution from agriculture. Certainly, as noted after the completion of the round by the Secretary for Agriculture, Bob Bergland, in contrast to the non-agricultural trade balance which had been in deficit for most of the decade, agricultural trade had posted a surplus for over 15 years and this surplus had been rocketing since 1973.5 The share of US agricultural exports over world farm exports grew from 12 per cent in 1971 to over 16 per cent six years later.6 But all this was due to the high productivity of American agriculture, assisted by a set of favourable circumstances, among which the devaluation of the dollar, and so the achievement did not appear to be conditional on a legal environment guaranteeing trade liberalization and the curbing of trading partners’ protection and support policy. Besides this, room for further expansion was predictably not unlimited. From the 1950–4 base period to 1977 world production of all goods, agricultural and non-agricultural, had more than tripled in volume, while the volume of farm production had grown 75 to 80 per cent. During the same period world agricultural trade had nearly tripled in volume, but the volume of American farm exports had almost quadrupled.7 No doubt, less than ten years later the scenario would have completely changed and with it the US attitude, but in 1977 the main problems concerned industrial trade and it was there that substantial gains had to be speedily sought.
In April 1977, during the talks that Strauss had in Brussels with Wilhelm Haferkamp and Finn Olav Guntelach, vice-presidents of the Commission respectively responsible for External Relations and Agriculture, agreement was reached on the need to conclude the GATT negotiations as soon as possible on the basis of an overall compromise embracing all the areas of the negotiations. A month later the Heads of State and Government participating in the Downing Street Summit stated that continuing economic difficulties made it essential to achieve the objectives of the Tokyo Round negotiations and ‘to negotiate a comprehensive set of agreements to the maximum benefit of all’. As regards agriculture, the participants committed themselves to a mutually acceptable approach that would achieve increased expansion and stabilization of trade and greater assurance of world food supplies. The commitment made no further explicit reference to liberalization. In June and July the United States and the EC tabled convergent proposals.
The new terms of negotiations agreed upon by the two parties relied on an offer and request approach, covering both tariff and non-tariff barriers, with reference to single farm products. Lists of requests had to be submitted by 1 November 1977, but they could be modified and additional lists could be submitted as the negotiations proceeded. Offers had to be tabled by 15 January 1978.8
The formula simply meant that concessions, mostly in the form of tariff reductions and quota increases or repeals, should concern single products of interest for the parties involved in the negotiation. No agreement implying the general framework of agricultural trade was scheduled. Thus, no general reform of the various kinds of support, either in the United States or in the Community, was required. There was certainly the possibility that the negotiations on subsidies and countervailing measures could also address agriculture, but, given the rather vague GATT provisions concerning farm subsidization and the resistance of the Community negotiators to an agreement going beyond the border of trade in non-primary products, there was no likelihood that any significant provision on farm trade could be agreed.
The implication of the new terms of negotiations did not go unnoticed. A main exporter of farm products, Australia, remarked that because of an agreement between ‘two of the major proponents of the negotiation …. what is now in prospect for agriculture is an item by item approach’, destined to put countries overwhelmingly dependent on primary products exports, like Australia, at a disadvantage as ‘we could not reconcile a multilateral and formula approach to reductions in barriers to trade in industrial products which form less than 6 per cent of our trade with developed countries, with a matched bilateral approach to trade in agriculture which forms 50 per cent of our total exports’.9 However, Australia realistically declared that ‘We are prepared to work with them towards a practical, realistic and balanced result on an item-by-item basis. To do otherwise would be merely obstructive’.10
On the other hand, discussions for a comprehensive arrangement of the market continued in the three product areas covered by the subgroups on grains, meat and dairy products, although relevant negotiations were conducted outside the Tokyo Round framework. In particular, negotiations for a new International Wheat Agreement (IWA) were conducted in the International Wheat Council (IWC) under the auspices of the UNCTAD between late 1977 and the early weeks of 1979, during which period the GATT subgroup suspended discussions on this topic. As the Wheat Trade Convention negotiated during the Kennedy Round had soon collapsed when in 1968–9 contraction of demand, coupled by unexpected abundance of supply, resulted in a decline of price below the minimum level set by the arrangement, a new IWA was established in 1971, but with no pricing provisions.
The negotiations in the IWC under the aegis of the UNCTAD offered the advantage of more active participation of the developing countries than in the GATT and the presence of important members of the wheat market like Russia which were not GATT members. China, however, did not take part in the negotiations.
The Carter administration, which was more willing to explore an arrangement on wheat than its Republican predecessor, saw the IWC as an appropriate forum in which to negotiate an arrangement with stabilization, food security and burden sharing, leaving the issues of subsidization and access to the GATT negotiations.11 In spite of these favourable premises, the IWA Conference, whose works officially started in February 1978, soon got bogged down in a multitude of issues on which the participants were not able to find practical trade-offs.12 A consensus was quite soon reached that the operative mechanism for the new wheat convention should be a system of nationally held reserves whose accumulation and release should be triggered by the movement of price indicators specified in the convention. Accumulation of reserves would occur when the indicator fell to a pre-agreed low level and release would occur when the indicator rose to a high level. However, major exporters like the US, Canada and Australia favoured large reserves to moderate downward pressure on price when supply exceeded demand, while major commercial importers such as the EC and Japan demanded smaller reserves. The developing countries felt that large reserves could provide security against global food shortages. Likewise, the main exporters wanted a high minimum price to trigger the build-up of reserves, while the main commercial importers preferred a lower trigger price. The EC, which exported as well as imported, requested relatively higher prices than Japan and most developing countries. The developing countries also called for financial assistance to pay off the costs of acquiring reserves and improving storage facilities but the major trading countries, whether importers or exporters, were unwilling to satisfy such a request. Thus the IWA Conference concluded unsuccessfully in February 1979. For a moment the US and Canada together with Argentina considered an arrangement which would have excluded the importers but the Carter administration, hostile to an agreement that could be seen as a cartel by consumer nations, among which developing countries were the majority, abandoned the proposal.13
As regards dairy products, in late 1977 two proposals were put forward by the EC and New Zealand which led to a draft arrangement. The draft originally included such areas as maximum and minimum prices, but such provisions were dropped in 1978. On bovine meat the discussions were based on proposals put forward by Australia and the EC in late 1977. In particular, the EC proposal called for a multilateral framework arrangement which would provide for an information and surveillance system, multilateral consultations in crisis situations and consensus recommendations for joint action by all meat traders. The proposal also envisaged a framework of bilateral or plurilateral agreements between exporters and importers, including commitments on both export behaviour (i.e. voluntary restraints and export price agreements) and import behaviour (i.e. actions to improve conditions of import). The idea, however, was abandoned.
The removal of one of the main stumbling blocks in the negotiations paved the way to negotiating achievements in some other sectors of the Geneva talks, although in others progress was slower and more uncertain.
Proposals for a general approach to tariff reductions had already been tabled in 1976. The United States, which had the highest and most frequent tariff peaks, had gradually accepted the idea of a formula aimed at duty reduction and harmonization but was recalcitrant to accept a significant curtailment of its highest tariffs. The tariff-cutting formula proposed by the United States envisaged that the percentage tariff reduction (Y) should be equal to one and one half times the initial tariff rate (X) plus 50, but with a ceiling of 60 per cent of the previous duty rate: Y = 1.5 X + 50; Y ≤ 60% X.14 It must be noted that the 60 per cent ceiling reflected the limit imposed by the Trade Act of 1974 which allowed the president to reduce duties over 5 per cent by a maximum of 60 per cent of the 1 January 1975 rate.
The US proposal was not welcomed by the other parties in the negotiation. The EC in particular noted that, although the formula suggested by the US delegation contained an element of harmonization, the 60 per cent ceiling considerably limited its effectiveness.15 Indeed, if it was undisputed that the formula nominally cut the highest tariffs deeper, the gap with average or low rate duties remained. For instance, applying the 60 per cent maximum reduction rate, a 25 per cent duty would be reduced to a still high 10 per cent but a 6 per cent duty would be reduced to a modest 2.5 per cent – ineffective in discouraging imports. The Community, therefore, contended that the formula put forward by the United States, particularly with regard to industrial products, would impact prevalently where, as in the case of the EC, a high concentration of moderate tariffs could be found, that is, on those sectors that had already attained a non-negligible level of liberalization. It would be much less effective where, as in the case of the US, there was still a high proportion of protective duties and consequently international trade could not achieve its potential. What was needed in the EC view was a formula aimed at significant tariff reduction and harmonization but not fixed at a level where it would lose credibility being, consequently, eroded by a host of derogations and exceptions.16
For its part the Commission suggested a formula based on a reduction rate equal to the initial tariff (Y = X ) repeated several times. However, by the beginning of 1977 most European countries, including the EC member states, were showing preference for the proposal put forward by the Swiss delegation which was based on the following formula: Z = 14 x X/(14 + X), where Z is the final duty and X is the initial duty.17 The Swiss formula had a series of advantages. It was simple and direct as it determined the new tariff rate rather than the reduction rate and above all it was very effective in achieving harmonization since the reduction rate rose steadily as the initial duty increased. For instance, applied to an initial 5 per cent duty the formula gave a 3.68 per cent final duty, with a 26.32 per cent reduction rate, while applied to a 21 per cent duty it gave a final 8.4 per cent duty, with a 60 per cent reduction rate. On the other hand, the formula ensured that for very high initial duties, i.e. those above 100 per cent, final duty would not fall significantly below a 14 per cent ceiling.
During the talks with his counterparts in the EC Commission Strauss made a prudent but clear reference to the need for substantial tariff reduction with a sufficient degree of harmonization, thus making it implicitly clear that the US was willing to improve on its 1976 proposal. By 1978 only two main issues remained: which items were to be excluded from the application of the Swiss formula, and whether a parameter other than 14 – for instance, a parameter resulting in a lower level of approximation – should be adopted. But these issues turned out to be thorny.
By the beginning of 1978 substantial progress had been achieved on the customs valuation issue. The EC had long defended the so-called ‘notional’ concept of valuation embedded in the Brussels Definition of Value according to which the price to be taken into account by the customs was the price at which the goods ought to be sold under a specified set of circumstances.18 In particular the EC suggested that the customs value of goods should be the price on a sale for exports between unrelated parties. The approach presented some difficulties. Indeed, to establish the arm’s length price for customs purposes was no easy undertaking and the assessment was bound to entail a certain degree of discretion, being consequently exploitable for protectionist objects. However, during 1976 and the first half of the following year, in the course of a series of visits from European Commission officials to Washington and debates within the Commission and among the member states, the EC gradually changed its stance in favour of the ‘positive’ concept, that is, the price at which imported goods are in fact sold under specified conditions, which was at the basis of the US customs system. The problem was that the ‘positive’ concept was at the basis of just one of the measurement criteria followed by the US customs statute which provided nine methods of valuation, some of which, the American Selling Price in particular, were notoriously used as a protectionist device. In November 1977 the EC submitted a draft customs valuation code which, as the EC negotiators did not fail to point out, was based on a ‘positive’ rather than a ‘notional’ approach.19 The proposal put forward by the EC, which actually was a compromise between the two systems, adopted the price paid or payable for imported goods as the primary base for evaluation, even if the buyer and seller were related so long as such a relationship did not give rise to a non-allowed price reduction. If this method could not be applied, the proposal provided for a set of subsidiary criteria (price of identical goods; price of similar goods; price of the imported goods sold to an independent buyer less commissions and various costs) to be applied hierarchically. The draft also carefully listed the methods that should not be applied: the cost of production of the goods; the selling price in the country of importation of similar or comparable goods produced in that country; the price of identical, similar or comparable goods on the domestic market of the country of exportation; and the price of identical, similar or comparable goods sold to another country. It is to be noted that all the forbidden methods were part of the array of valuation criteria envisaged by the US legislation. The draft also stated that valuation procedures should not be used for antidumping purposes.
The EC proposal was overall favourably received and became the basis for the following negotiations.20 However, sources of disagreement remained in areas like the need for separate rules for developing countries and methods for dispute settlement and a particularly thorny issue was found in the area of transactions between related parties.
The negotiations on technical barriers to trade went quite smoothly and the draft code tabled in May 1977 was similar in content to the text finally approved two years later also because the subject was rather technical and did not have a direct impact on sensitive issues. The negotiations, which covered such areas as testing and certification by governmental bodies, packaging, labelling and marking of origin, resulted in the basic agreement that signatories to the code would refrain from using standards as obstacles to trade.
The negotiators in the ‘government procurement’ subgroup were able to make substantial progress also because a lot of preparatory work had been done in the OECD where the negotiations involved the individual countries of Western Europe and America plus Japan. The United States supported the transfer of the negotiations to the Tokyo Round deeming that a larger forum would provide greater opportunities for tradeoffs and settlement, while some EC member states, in particular France, opposed the move.21 The EC Commission supported the transfer, first because it was the Community negotiator in the GATT forum, whereas the OECD negotiations were conducted by the single EC member states, and secondly because its role in the GATT negotiations provided it with a better opportunity to push through a Directive for the coordination of public procurement procedures all over the Common Market.22
A first draft of the code was circulated in December 1977, followed by a second draft in July 1978. Progress was made on the issues of transparency, tender procedure and the value threshold for the application of the code, although some differences were not settled. During the negotiations efforts were made to establish a threshold low enough to accomplish the goal of opening-up the market but high enough not to cause difficulties to the authorities in the signatory countries. The United States favoured a low value threshold deeming that American companies could benefit from the fact that foreign procurement contracts tended to be much lower in value than those in the United States. Other industrialized nations, among which the EC, which had set a minimum threshold of approximately $250,000 in its good procurement Directive, favoured a higher value threshold.23 Tender procedures remained a difficult issue till the end of the negotiations. The US proposal provided for two types of tender, ‘public’ (formal) bidding and ‘informal’ (negotiated or sole-sourced) bidding.24 The EC along with Japan, in line with their domestic practice, favoured a tripartite system with ‘open’, ‘selective’ and ‘single’ tenders.25 The open tender allowed all interested parties to bid, while in selective tenders only invited suppliers could do so. In single tendering procedures, permitted only in few cases, governmental bodies could deal with single suppliers. The disputes over transparency were resolved quite quickly. The United States pressed on this issue feeling that its procurement procedures were more open, and therefore fairer, than those of other industrialized countries, among which the EC member states and Japan. The thorniest issue remained the determination of the entities subject to the code. The EC was not disposed to make commitments on international tendering in areas such as energy, transportation and telecommunications. The United States, in turn, was not willing to extend the agreement to state and local government bodies many of which had enacted their own ‘Buy American’ laws. The July 1978 draft overcame the problem by adopting a system of offers and requests whereby each country would notify the others of those entities in its own country that would be subject to the code and those entities in other countries it would like to see covered.26
Progress in subsidies and countervailing measures was slow, but by the end of 1977 the United States and the EC were able to draw up a heavily bracketed ‘outline of an approach’ in which, although reiterating their viewpoints, some common ground was found.27 The United States aimed at extending subsidy regulation to domestic support to non-primary products and at clarifying the rules on agricultural export subsidies in a way that could rein in their use. Although the US had already accepted the idea that causation of injury was necessarily to be part of an agreement on countervailing measures, it was not disposed to allow that subsidization should be the main, or even worse, the sole cause of injury and if the prospective code were not to reform the provision of GATT Article VI, according to which injury was to be ‘material’, this term should be interpreted restrictively. The EC was wary of commitments that could endanger its own and member states’ policies to support industry in a presumptively limited period of difficulty, or in need of restructuring and policies to encourage business to locate to depressed regions. This had been even more necessary since 1975 because the recession had been followed by slow recovery and the unemployment rate remained high. After all, the adjustment assistance provided by the US government to industries and communities hit by foreign competition could be considered a form of subsidization and state authorities were not loath to offer incentives to attract business. On the other hand, the Community judged that, as material injury was already required by GATT Article VI for the imposition of antidumping and countervailing duties, there was no reason to view it as a bargaining chip in the negotiations, nor had it any sympathy for a watered-down interpretation of the requirement lest it allow leeway to the US authorities in their investigations against imported products accused of being dumped or subsidized.
The ‘outline of an approach’, jointly submitted by the US and EC delegations in Geneva, did not explicitly mention domestic subsidies, but confined itself to state that agreement should be sought not to use export subsidies on non-primary products and that an updated list of prohibited subsidies should be drawn up. The provisions on agricultural subsidies proposed by each delegation were bracketed by the other as the negotiators did no more than restate the traditional positions of the United States and the EC. As reported by two former high-ranking officers in the US delegation, the United States proposed a Supplementary Understanding on Internal Subsidies which stated that signatories would ‘seek to avoid the use of subsidy practices in a manner that causes serious prejudice to the interests of other signatories’ and provided an illustrative list of subsidies that could have an impact on the interests of other countries.28 The proposal was not accepted by the other negotiators in the group. However, during the run-up to the Bonn Summit a new ‘outline of an arrangement’ was put forward by the US and EC delegations together with the delegations of Canada, Japan and the Nordic countries.29 The new outline recognized that subsidies other than export subsidies were widely used as important instruments for the promotion of social and economic objectives of national policy and recognized the right of signatories to implement such subsidies, but contained in an Annex a list of internal subsidy practices which might have an adverse effect on the trade and production of other signatories. As was to be expected, the list was in brackets. On the other hand, as regards countervailing measures, requirements that subsidized products should be a principal cause or an important contributing factor of injury were also presented in brackets.
Safeguards remained one of the most controversial topics in the negotiations. The main stumbling block was selectivity. The EC backed by the ‘Nordic Countries’ group tried to push through a reform of GATT Article XIX which would allow selective actions against individual countries, subject to subsequent review by a GATT committee. The strongest opposition came from the developing countries which, having had to accept that they would not be entitled to any general exclusion from safeguard measures, argued that such measures should only be applied according to the MFN non-discrimination principle. The United States took a middle-ground stance, accepting the selectivity approach but only under exceptional circumstances to be ascertained by a GATT committee before the enforcement of any discriminatory measures. Another area of disagreement between the industrial and developing countries was the definition of ‘injury’ since, although the standard of serious injury provided by Article XIX was accepted, the parties disagreed as to the proper threshold for such a finding. Thus the draft text tabled in June 1978 was heavily bracketed and it contained a multitude of not easily reconcilable proposals on the issue of selective action.30 In July both the American and the EC delegations held meetings with representatives of developing countries which, although stating that they were not opposed to all negotiations on selectivity, made it clear that they would not accept the EC version allowing unilateral action.
A late arrival in the negotiations was a proposal tabled by the United States for the elimination of tariffs and substantial reduction of non-tariff barriers on aircraft between the US and its main competitors on aircraft exports, i.e. the EC, Japan, Canada and Sweden. The United States was the leader in the sector accounting for 63 per cent of transport aircraft sales between 1973–7 and 28 per cent of general aviation sales in the same period. However, competition from the above-mentioned countries, quite often providing strong financial support to their national companies’ production and export, was starting to make itself felt. The US was convinced that tariffs were not a serious obstacle to a continued high level of exports but non-tariff barriers could represent a threat. In return for the elimination of its 5 per cent duty on aircraft it called, therefore, for effective discipline on non-tariff measures going beyond the general agreements under negotiation in the round. The kind of measures the United States wished to subject to strict discipline included government-directed procurements, governmental subsidies, licence restrictions and mandatory subcontracts.
Naturally, the United States failed to notice that major manufacturers of aircraft like Boeing could receive a boost from their governments if their activities also embraced military equipment through sole-sourced bidding for high value contracts and Research and Development financing.
On 13 July the delegations of the main trading nations issued what they called a ‘framework of understanding on the major elements of a comprehensive package for the Tokyo Round’, which was to be ‘a reasonable basis for completing a mutual agreement in the weeks ahead’.31 The document was endorsed three days later at the Bonn Summit by the heads of state and government who also set a deadline for the conclusion of the negotiations on 15 December 1978. The deadline, designed to add further impetus to the talks, proved too optimistic. The ‘framework of understanding’ took stock of the progress achieved but also of the work that was yet to be done. As noted above, the main differences concerned the prospective codes on subsidies and countervailing duties and on safeguards. Concerning industrial tariffs, though the delegations agreed on the approach to achieve a substantive harmonized reduction of tariffs, generally following the Swiss formula, they were still negotiating reciprocal adjustments in their initial offers involving improvements as well as exceptions.
Within the EC, France feared that the articles of the subsidy and counter-vailing measures code on the exportation of primary products could result in curbing farm exports which had an increasingly important role in improving its merchandise trade balance. France, with various degrees of support from the other member states, was not prepared to accept stricter discipline on domestic subsidies and in particular on a list of domestic subsidization measures that were likely to cause serious prejudice to the trade interest of other GATT parties. The British Labour government shared the French misgivings while Germany, though not reluctant to provide financial help to those industries that most suffered from the sluggish economic recovery, favoured a more flexible approach.
On the other side of the Atlantic, at a moment in which imports were by far exceeding exports, despite the ongoing devaluation of the dollar, Congress felt that concessions on countervailing measures should be subject to commitments to avoid any kind of subsidization, either domestic or export oriented, that could hinder US trade or impair American industries. In its view it seemed that other parties to the multilateral negotiations, nominally the EC, were dragging their feet on accepting a fair deal. A provision of the Trade Act of 1974 authorized the Secretary of the Treasury to waive the imposition of countervailing duties for a four-year period ending on 2 January 1979, one year prior to the expiration of the president’s overall negotiating authority. Congress simply refused to renew this authority. The imports found to be subsidized amounted to about $600 million and were mostly agricultural products from the EC.
The move provoked a firm response from the EC side. Wilhelm Haferkamp, vice-president of the Commission, in a letter addressed to Robert Strauss in September made it clear that the imposition of countervailing duties on EC exports would precipitate a commercial war of considerable dimension that would prevent the Community from concluding the Tokyo Round.32 Since the threat of pending countervailing measures was not removed, despite the good will pressure exerted by the US executive on Congress, the Commission’s step was followed by an apparently more conciliatory public statement from the president of the Council of the Community announcing that ‘in spite of the serious decision taken in Congress’, the Community would continue the talks to prepare the way for the conclusion of the negotiations on the understanding, however, that ‘the continued application of the waiver, even after 3 January 1979, is guaranteed’.33 The US Special Representative managed to keep the negotiations on track. In November, in a series of visits to European capitals and meetings in Geneva, Strauss convinced his European counterparts that the US executive would introduce legislation in the opening days of the new Congress session and would take any appropriate measure to avoid the disruption of normal trade flow. The law temporarily extending the president’s authority to waive countervailing duties was signed by Carter on 3 April 1979.
On safeguards, the EC could not overcome the opposition made by the developing countries to its proposal also because it failed to gain the backing of the United States and Japan. The former was not disposed to go beyond its compromise proposal as it was not willing to cause open confrontation with developing countries whose cooperation it aimed to gain or preserve and because the US believed that it already had more persuasive means than the selective imposition of safeguard measures to protect its industries. Japan, which in the final stages of the negotiations on safeguard measures maintained a low profile, was certainly not ready to support a proposal that could provide its European partners, and prospectively the United States as well, with a powerful weapon against its exports. In April 1979, when the texts of the agreements reached in the negotiations were signed by the representatives of the participating governments, the GATT Secretariat submitted a working draft intended to serve as a basis for further consultations but by July it was clear that further efforts to find acceptable common ground were pointless.
In its report submitted to the Council of the Community in late December 1978, the Commission argued that the conditions for signing a comprehensive agreement on the various negotiating items had not yet been established.34 Although most codes, including customs valuation and standards, could be signed and significant progress towards the EC position had been secured in the negotiations on subsidy and countervailing measures, further talks were needed in other areas. Apart from safeguards, where there was no prospective of a prompt deal, on government procurements there were still differences on both the government purchasing entities and the value level of contracts to be covered by the code. As regards the Aircraft Agreement, if a deal on zero import duties seemed near, the US desire for a series of additional clauses governing the degree of government involvement in the manufacture and sale of aircrafts was regarded with suspicion by the Commission.
As regards tariffs, the Commission related that progress had been made in securing possible improvements of US offers on textiles and chemicals, but that a full additional evaluation of the offers had not been completed and pending further discussions both parties had agreed that reaching a satisfactory overall balance was not yet possible. On the other hand, in the case of Japan, even though additional offers were forthcoming, they did not include significant concessions in areas of interest for the Community, such as textiles, leather goods and processed agricultural products. Since the additional offers were accompanied by a number of possible withdrawals, there was no prospect for real improvement at that stage.
It was only in a subsequent communication sent to the Council of Ministers at the end of February 1979 that the Commission claimed that conditions were ripe for a GATT agreement as, viewing the negotiating package as a whole, it was equitable and balanced and overall was advantageous for the EC.35 According to the Commission, the agreement on tariffs would offer much greater access to new markets for EC producers, while the EC concessions were moderate and would be gradually introduced over a long span of years. As regards non-tariff barriers, a series of gains was to be achieved, from the repeal of the ASP and of the Wine Gallon Assessment method to the curtailment of the Buy American Act in those sectors covered by the Government Procurement Agreement and to the acceptance of the ‘material injury’ principle in countervailing measures proceedings by the US authorities. After a delay of over a month, the Council gave the Tokyo Round agreements its green light in April.
The US executive, which in mid-December had reached a comprehensive understanding with Japan on issues under negotiation in the Tokyo Round, had to appease Congress on sensitive tariff issues. Indeed, if Congress was barred from introducing amendments on the agreements to be signed in Geneva, nevertheless it had the definitive word on any non-tariff agreement. If there was no hope for a comprehensive settlement on agriculture satisfying the expectations of the powerful farm lobby, and if the outcome of the negotiations on subsidies only partially met the expectations of key areas of American industry, no ground was to be given on tariff and quota protection for sectors threatened by foreign competition or on countervailing measures. The US government by the end of December felt that the balance of concessions and achievements negotiated in Geneva would not meet with opposition from the lawmakers and on 4 January notified Congress of its intention to enter into MTN agreements, according to the procedures envisaged by the Trade Act of 1974.36 In the event, in the following three months the executive had to appease some interest groups with powerful lobbies in Congress, textiles and steel industries in particular. An agreement, made public on 15 February, was reached with the unions and employers of the textile industry in which the administration pledged to control disruptive import surges, to negotiate bilateral agreements with new emerging suppliers like China, and to continuously monitor textile imports on a global basis. Although no comparable overt arrangement was made with the steel industry, the administration had to be particularly attentive to the industry’s insistence on a minimal injury test and on stricter rules on antidumping and countervailing proceedings. The executive had also to take heed of the chemical industry’s call for more moderate tariff cuts on some of the products in the list negotiated in Geneva.
When at their annual meeting held in Geneva from 26 to 30 November 1979 the Contracting Parties to GATT approved the results of the negotiations by consensus, the conclusion of the Tokyo Round was hailed with satisfaction by both the US and the EC which claimed that significant advantages had been achieved by the whole International Community and, in particular, by each of them. The snag was that, in many areas and with a view to papering over their differences, the main actors sacrificed effective opening of markets to preservation of established policies.
The tariff reductions negotiated in the Tokyo Round were apparently impressive. According to GATT estimates, the schedules of concessions annexed to two protocols signed in the second half of 1979 affected a total value of trade of over US$155 billion measured on MFN imports in 1977.37 Concessions by the EC, the United States, Canada, Japan and five EFTA members covered imports for US$141 billion. Those agreed on industrial products covered about US$127 billion, 90 per cent of the industrial trade among the major developed countries in 1977. The weighted average tariff on manufactured products of the industrialized countries was bound to decline from 7 per cent to 4.7 per cent, amounting to a third of tariff collection. The adoption of the Swiss formula as a general criterion to establish reduction rates meant that the deepest cuts were mostly made on the highest tariffs. Most of the tariff reductions were scheduled to begin on 1 January 1980, to continue with equal annual cuts until 1987.
The average US tariff on total industrial products (dutiable plus duty-free), excluding petroleum, was cut by 32 per cent from 6.2 per cent to 4.2 per cent.38 The US applied the Swiss formula with the 14 per cent coefficient, subject to the 60 per cent maximum imposed by the Trade Act of 1974, as well as to a set of exceptions for individual products. This allowed the United States to reduce the duty on products exposed to foreign competition such as textiles and apparel or iron and steel by much less than the average 40 per cent trade-weighted cut rate under the Swiss formula. On the other hand, the number of duties exceeding 20 per cent was greatly reduced.
The tariff concessions of the EC were slightly less generous overall than those of its transatlantic partner. A report on the final results of the Tokyo Round somewhat candidly stated that ‘the Community’s aim was to keep the Common Customs Tariff at a significant level and, at the same time, to obtain a reduction of tariff from its main trading partners to increase the degree of harmonization’.39 The EC along with the Scandinavian countries applied the Swiss formula, however, using a coefficient of 16 rather than 14 as in the US and Japan. As noted above, the smaller the coefficient the higher the tariff reduction. The EC also made a substantial number of exceptions to the general formula to protect industries particularly sensitive to import competition, such as motor vehicles, television sets, fertilizers, shoes and cutlery.40 Overall, the Common Customs Tariff on industrial goods, excluding duty-free imports, was reduced from an average of 9.8 per cent to an average of 7.5 per cent. Thus most of the EC duties lay in a range between 5 per cent and 10 per cent with the exception of only 180 duties exceeding 10 per cent and one (on lorries) exceeding 20 per cent.41 Including duty-free imports, the average tariff was cut by 27 per cent from 6.3 per cent to 4.6 per cent. The areas where tariff reductions offered the greatest opportunities to Community exporters included chemicals, ceramics and mechanical engineering, while the areas opened to increased competition from foreign producers were paper, plastics and non-ferrous metals.42 The customs reductions were spread out over a period of eight years from 1980 to 1987, but the Community reserved the right to review the situation after the first five years before deciding whether to proceed to the final three stages of reduction.
The concessions made by the US and the EC to each other exceeded their average level of reduction as they made a depth of cuts of about 35 per cent on their reciprocal trade. The United States obtained gains on certain chemical items, certain paper items, printing machinery, electrical machinery, scientific instruments and photographic equipment, while it made important concessions to its trading partner in certain textile, leather, glassware, chemical and machinery items. The tariff concessions benefiting US products also made it possible to narrow the gap with the EFTA countries and those Mediterranean and former colonies which had preferential arrangements with the Community that allowed most industrial and some agricultural items to enter the European Common Market duty free.
The impact of tariff reductions was, however, watered down from the outset by the concessions already made in the previous rounds. For instance, a 30 per cent reduction on tariffs not exceeding 10 per cent would result, at most, in a 3 per cent cut. The cut, perhaps, could have been significant under fixed exchange rates but it was easily offset by currency movements in a floating exchange regime. Besides, as the tariff cut was to be completed in eight years, it would amount to a reduction in import prices of one-half of one percentage point a year, not to mention the fact that the tariff concessions agreed in the Tokyo Round might be nullified by antidumping or countervailing duties imposed on imported items and, as we shall see, the Tokyo Round codes did not prevent such measures from being adopted more and more frequently as a weapon against competing products which were performing too well.
On the other hand, the modest impact of the tariff reductions agreed at the end of the round was balanced by the harmonization of the systems designed to assess the import value for the imposition of ad valorem duties and by the consequent elimination of assessment methods that unfairly distorted such a value. The Customs Valuation code established five valuation methods – applicable on either an f.o.b. or a c.i.f. basis – ranked in hierarchical order. The first and primary method referred to the transaction value as expressed by the invoice price. The second and third methods relied on the transaction value of identical or similar goods exported to the same country. Under the fourth method the resale price of the imported goods was used as the starting point for calculation. The fifth value was based on the computed value of the imported goods which comprised material and manufacturing costs plus general expenses and profits. If none of the above listed methods could be applied, the customs value was to be determined using any reasonable means consistent with the principles and general provisions of the code and of ArticleVII of the GATT. The methods provided by the code largely reflected the US practice, but the code also meant the abrogation of the American Selling Price (ASP) system as well as the special valuation system for what were known as Final List products which together accounted for about 20 per cent of customs entries. On the other hand, the United States secured agreement on higher tariff binding for some of the products protected by the eliminated systems, such as benzenoid chemicals and rubber-soled footwear. There was thus a trade-off between concessions in different, though related, areas of negotiations which left the actual tariff protection for some specific sectors almost unchanged, in spite of the fact that the US executive, whether under a Republican or a Democratic president, favoured the abrogation of these systems viewed as an irritant in the negotiations with foreign exporters.
The Subsidies and Countervailing Measures (SCM) code reinforced the ban on export subsidies on non-primary products and the prohibition was supported by an illustrative list of prohibited export subsidies. The code also introduced a four stage dispute settlement procedure providing for consultation, conciliation by a newly established committee on subsidies and countervailing measures, investigation by a panel and countermeasures. This procedure applied both to export subsidies and domestic subsidies, allegedly causing or threatening to cause serious prejudice to other contracting parties. The foregoing met the US goal of achieving stricter discipline on subsidies. However, there was no definition of what constitutes an export subsidy, even less a subsidy, and as regards domestic subsidization a compromise was reached between the United States and the EC which was aimed to satisfy everybody but was not destined to be very effective. Indeed, the code set out by claiming that non-export subsidies can be a means for achieving desirable social and economic policies, such as eliminating regional disadvantages, restructuring particular sectors, encouraging research and development and maintaining employment and encouraging retraining. But it added that domestic subsidies may cause adverse effects to the interest of other signatories in several forms: injury to the domestic industry of another signatory; nullification or impairment of previous benefits; and serious prejudice or threat of serious prejudice in the export market. The question was where to draw the line between commendable goals in the domestic market and adverse effects on other signatories. In particular, there was no clear definition of what could cause serious prejudice. Nor, contrary to the hopes of the United States and unlike export subsidies, was there a list of domestic measures likely to cause prejudice. Thus, the United States claimed that the code resulted in ‘an explicit recognition of the needs for limits on domestic subsidies’, while its transatlantic counterpart argued that ‘the Community’s freedom of action in the matter of internal subsidies (regional ones for instance) will not be fundamentally affected’.43 If, as claimed by the United States, the code introduced stricter discipline also for domestic subsidies, there was more ground for confrontation than conciliation.
On the countervailing duty side, the code embodied the principle of material injury but here too it failed to provide a definition of what the term actually meant. Thus, the effectiveness of the code in preventing protectionist abuse would depend on the implementing legislation of the countries adhering to it. In ratifying the code the US Congress was likely to adopt a restrictive interpretation as prospects for industries like steel, facing competition from abroad and capable of conducting effective lobbies, were getting increasingly bleak.44
Substantially analogous rules were agreed on antidumping. Therefore, here too, particularly with regard to implementation in the United States, the question of what was meant by ‘material injury’ remained hovering and the code failed to prevent or at least effectively restrict the use of antidumping duties as a protectionist tool for import competing industries.
The Government Procurement (GPR) code, which entered into force in 1981, contained detailed rules on the way in which tenders for government purchasing contracts should be invited and awarded to ensure they did not protect domestic products or suppliers or discriminate against foreign products and suppliers. The agreement applied to contracts worth more than 150,000 Special Drawing Rights (SDRs ), equivalent to about US$197,000. In line with US hopes and contrary to the EC’s wishes, the agreed minimum amount was below the threshold set by the EC Directive on good procurement within the Community. On the other hand, the SDR 150,000 threshold eliminated access to many smaller contracts frequent in the developing countries. In any case, the code had some relevant limitations. In the first place, its scope was not abreast with the widening areas of government procurement at the end of the 1970s. It did not apply to the purchase of services. This was in line with the purview of the General Agreement which referred only to trade in goods, but did not take into account the growing demand for the supply of services from public authorities. Neither did the agreement apply to construction contracts or to defence related purchases. Secondly, procurements by states and local governments (with or without federal funds) and by important government entities were not covered. The United States, for instance, excluded the Department of Transportation and the Department of Energy and certain quasi-governmental organizations. This entailed that, although the Buy American Act could no longer apply to some federal procurements, buy-American or buy-local law proliferated among states and local governments within the US.
The Aircraft Agreement abolished customs duties and similar charges not only on complete aircrafts but also on engines and components as well as on their maintenance and rebuilding. It also prohibited import and export restrictions unless justifiable under the provisions of the GATT and, with a sentence which sounds quite vague, provided that no obligation or unreasonable pressure should be imposed to persuade prospective aircraft buyers to choose from a particular source. As regards subsidies, the signatories noted that the code on subsidies and countervailing duties also applied to civil aircraft but qualified the statement by stressing that special factors applying to the aircraft sector, and in particular the widespread governmental support in this area, had to be taken into account. Thus domestic subsidies were left aside but even in the export subsidies area, export credit subsidization, one of the major instruments in promoting civil aircraft sales, was not covered by the agreement. Certain agreements on export credits were concluded under the aegis of the OECD, but at that time they did not prove very effective. The fact that just over 12 years later the United States and the EC would sign a bilateral agreement with the specific goal of solving a dispute by regulating their respective industry support measures is clear indication that the Tokyo Round Agreement on civil aircraft was far from establishing an environment free from state interference as was claimed at that time.
In keeping with the request and offer process agreed in mid-1977, both the United States and the EC made and obtained some important concessions on agricultural export. The United States obtained concessions on tariff reductions and quota liberalization on products representing about 16 per cent of its farm exports. The trade coverage of the concessions received from the EC, measured on a 1976 basis, was about $1 billion. The major concessions by the Community involved beef, tobacco, rice, poultry and certain fresh and canned fruits.45 The most significant US concessions to its transatlantic partner concerned the increase of the quota allocation for cheese, the removal of certain retaliatory duties imposed as a result of the chicken war of the 1960s and the elimination of the so-called ‘wine gallon’ method of duty assessment.46 This system assessed taxes and duties on all bottles containing less than one gallon as if they were 100 per cent proof. Instead domestic producers generally only paid excise tax on the proof gallon method, i.e. the actual alcoholic equivalent of one gallon of spirits at 100 per cent proof. The different method of assessment resulted in a classic non-tariff barrier penalizing foreign alcoholic beverages as they entered US customs already bottled.47 In return for the removal of this system of assessment, the US received various concessions from other countries, including a pledge from the EC to ensure that its member states would eliminate any measures resulting in discrimination against US distilled spirits.
As regards the regulation of particular commodity markets, the round produced an International Dairy Arrangement (IDA) which provided for minimum export prices for butter, powdered milk and certain cheeses, and established a mechanism for information exchange and policy consultations. However, the agreement had neither enforcement mechanisms nor provisions for stock and production adjustments. The Bovine Meat Arrangement created a council with the task of monitoring the sector and a mechanism of consultation and settlement of differences, but had no economic or regulatory provisions. As regards wheat the only result, after the failure of the IWA Conference, was a decision to extend the 1971 International Wheat Agreement which contained no economic provisions.
Regarding farm export subsidies, limited progress was achieved by the code on Subsidies and Countervailing Measures whose Article 10 referred to primary products. The code provided a more precise interpretation of the expression ‘equitable share of world export trade’ and extended the ban to export subsidies that resulted in the acquisition of a non-equitable share ‘in a particular market’ and in cut price competition in that market.48 However, these precisions proved to be ineffective when applied to actual cases of export support. Nor did the code provide any effective discipline on domestic mechanisms of farm price or income support. Thus Finn Olav Gundelach, vice-president of the Commission with special responsibility for agriculture, could claim with justified relief, at least for the time being, that the Uruguay Round agreements meant the acceptance ‘of the principles and mechanisms of the Community’s common agricultural policy’ and ‘had brought an end to the “trench warfare” and “religious wars” that had so often characterized discussion of agriculture in the past’.49
The most conspicuous absentee among the agreements signed at the end of the round was the code on Safeguards. Not only was it impossible to bridge the gap between the EC and the developing countries, whatever their industrialization progress, but differences remained in the negotiating stance of the main industrial participants: the call from the EC for unilaterally actionable safeguard measures was received with caution by the United States and with suspicion by Japan.
Failure to reach an agreement on the safeguard issue calls for a reflection that could be extended to areas where an agreement was signed. On the one hand, selectivity limited the impact of emergency measures to the actual origin of the problem, avoiding the obstruction of exports from third countries, and therefore was less disruptive to trade. On the other hand, the idea of selective safeguards was opposed to the principle of non-discrimination which was the cornerstone of the GATT system and in its implementation would be bound to penalize, contrary to the economic precept, those exporters that were in the best position to make inroads in the importing country’s market, that is to say, the most efficient.50 Moreover, the EC proposal presented a fundamental strategic difficulty: it impinged on the network of voluntary export restraints agreed outside the discipline of the GATT, which were in fact selective safeguards adopted with the, sometimes quite reluctant, countenance of the exporting country. If a radical reform of GATT Article XIX had been agreed extending the power of Western industrialized countries to curtail, though temporarily, the inflow of products from the NICs or other emerging countries, not to mention Japan, then it was to be expected that the vast array of so-called ‘grey-area actions’ was to be dismantled or at least conducted within the scope of the GATT.
In line with the stated objectives of the Tokyo Round, formal steps were made towards more favourable treatment to developing countries. In particular, the so-called ‘enabling clause’ provided that notwithstanding the MFN provision of GATT Article I, ‘contracting parties may accord differential and more favourable treatment to developing countries without according such treatment to other contracting parties’ with regard to both preferential tariffs and non-tariff measures. However, in keeping with the policies adopted by the United States and the EC during the decade, the provisions in favour of the developing countries contained a ‘graduation clause’ which made it clear that their capacity to accept obligation under the GATT and to benefit from preferential treatment would respectively increase and decrease according to their economic development. In short, countries like Hong Kong, Taiwan and South Korea and many other newly industrialized countries could not expect to be entitled to special treatment and had to play by the rules, which were prevalently established by the industrialized members of the General Agreement.
The Special Representative for Trade Negotiations, Robert Strauss, commenting upon the results of the Tokyo Round with specific reference to NTB codes said that ‘we should be realistic about the significance of these agreements, neither overstating nor understating their importance. They are no more and no less than the first new chapters on a new book of rules for international trade’.51 Strauss’s prudently toned-down judgment can be extended to the whole package that emerged at the end of the negotiations.
In every trade negotiation, representatives must reconcile the call for trade liberalization by industries hoping to expand their trade with the call for protection by industries that feel the heat of foreign competition, often accused, rightly or wrongly, of not abiding by level playing field rules. As there were two major actors in the Tokyo Round, the US and the EC, the curves within which negotiators had to find a point of equilibrium were multiplied by two. Besides, the main parties felt it incumbent upon them to avoid the failure of the negotiations just when they had committed to cooperate in order to achieve a better economic environment while the recovery was shaky and new strains were looming on the world economy. Thus what many commentators have rechristened as the ‘Strauss Round’ was to be a success, but to achieve this goal it was necessary to paper over many differences that re-emerged when the agreements had to be implemented.
As was foreseeable, the round provided a good occasion to cut tariff rates but the results were not impressive, especially because the impact of tariff cuts had been pre-empted by concessions in previous rounds and also because, as was to be expected, import competing sectors managed to obtain greater tariff protection than the average.
Examining the performance of the Tokyo Round NTB codes in the 1980s, Grieco points out that there was significant variation in the effectiveness achieved by the codes and that their fate was a reflection of the level of US–EC cooperation or discord within the relevant committees of signatories.52 Codes which were technical in nature like those on customs valuation and standards were brought into force with minimum difficulties, while the implementation of the SCM code, especially with reference to subsidizing measures, was marked by disputes and by attempts not to comply with transparency requirements. An intermediate level of success in implementation and extension of its purview was attained by the GPR code. It must be noted that the various code committees had not only the task of ascertaining the correct implementation of the codes and of solving disputes, but also acted as a forum wherein the contracting parties could discuss amendments and negotiate enlargements of the scope of the agreements.
Actually, the performance of the NTB codes in the 1980s reflected the balance of converging or conflicting interests between the main negotiators that had been achieved, with different levels of difficulty, in the previous decade, taking into account that the Tokyo Round agreements were as notable for what they excluded as for what they included.
For instance, on the one hand, the SCM code did not define what constituted ‘material injury’, thus allowing the United States to avoid significantly altering its administrative practice on countervailing proceedings. On the other hand, the EC resisted any extensive interpretation of obligations concerning subsidies and, ignoring US complaints, for a long time failed to notify its subsidy programmes and some EC member states never notified their industrial support measures. The unwillingness to notify lay in the fact that notification of subsidy programmes was likely to be taken as evidence that the programmes were affecting trade, thus harming the trading interests of other partners; therefore, it entailed the risk of becoming the target of countervailing measures or dispute settlement actions in the GATT.53
Likewise, the US attempt to extend the GPR provisions to government purchasing entities not covered by the code, but over which governments had direct or substantial control, such as government-owned companies, was resisted by the EC and analogous resistance met the attempt to extend GPR rules to the provision of services, a sector of growing interest for the United States but also one of the areas on which the EC executive focused to enhance integration within the Common Market. Finally, for over five years, the EC resisted the US call for a reduction of the threshold level above which public purchases were subject to the GPR code. It was only in 1986 that the threshold level was reduced by SDR 20,000, but this was done on a two year experimental basis. As noted above, the EC Directive on public procurements in the member states had set a much higher minimum threshold of approximately $250,000 than that agreed in the GATT and, therefore, the EC authorities had to introduce a new Directive addressing procurements covered by the GATT code. Unsurprisingly, the EC tried to dodge the Tokyo Round agreement arguing that bidding value should be determined excluding Value Added Tax. The United States lodged a complaint and a GATT panel in 1984 found that the EC practice was not in conformity with the GPR code.54 The Community did not accept the panel’s report and only three years later a compromise was laboriously worked out by which the Community accepted a further cut of the threshold of code covered purchases in the EC member states while continuing not to take VAT into account.
In short, in many areas the United States in particular felt that there was room for ‘further’ liberalization – no matter if it was really willing to offer corresponding concessions affecting the interests of American industries – but within the framework set by the NTB codes it was difficult to go beyond the terms agreed at the end of the Tokyo Round negotiations, which nevertheless were a step in that direction.
As regards agriculture, when in the early 1980s US exports plunged and EC competition became increasingly dangerous, the United States called for a reshaping of the rules but it had to wait for over ten years till the end of the Uruguay Round wherein agriculture turned out to be the stumbling block in the negotiations.
There were no reported clashes in the enforcement of the Antidumping code or calls for amendments to the 1979 agreement which either codified the practices of the two main parties in its negotiations or caused no serious obstacle to their maintenance, although, as already noted, such practices might be directed to protectionist ends. Indeed, exploitability for protectionist goals helps explain why antidumping proceedings became widely adopted not only in other industrial countries like Canada and Australia but also in some fast growing developing countries. As illustrated by the reports of the Committee on Anti-Dumping Practices, in 1980 the United States was by far the main user of antidumping measures, with 37 proceedings initiated between July 1979 and June 1980, and 19 provisional measures and 9 definitive duties applied in the same period.55 The US was followed closely by Canada and the EC. Between July 1982 and June 1984 the US started 65 proceedings and applied 61 provisional measures and 42 definitive duties. The EC initiated 59 proceedings and applied 28 provisional measures and 18 definitive duties. However, both were outshone by Australia which, in spite of its much smaller economy, boasted 141 new proceedings, 55 provisional measures and 71 definitive duties.56