169

The Basic Prerequisites of Liberalization

p The growing internationalization of economic life in the context of the revolution in science and technology, the growing role of the external economic sphere, and also of international exchange activities as a major factor in the development of productive forces have all contributed to the major characteristics of the evolution of postwar capitalism’s foreign trade policy.

p The scope, objectives, and instruments of that policy are marked by great diversity. This reflects the general intensification of state-monopolistic intervention into the economic sphere, the rapid growth of external trade and also the growing complexity of its structure and its interaction witli new forms of world economic relations. This has required a corresponding modernization of the mechanism governing external economic activities. From (he wide range of problems that exist in this area it is useful to emphasize such crucial questions as the general tendency towards a liberalization of external trade, the evolution of imperialism’s foreign trade policies towards developing countries, and the tasks of reconstructing the entire system of international economic relations.

p As they reflect the internally contradictory character of the capitalist mode of production the policies bearing on the statemonopolistic regulation of external trade appear as a resultant of two contradictory tendencies. They reflect both interests of forms of capital that are nationally distinct and also an objective need for facilitating international communication under the increasing internationalization of production and of capital. A dominant role appears to be played by the second of these tendencies, which was already noted by V. I. Lenin, for it " 170 characterizes a mature capitalism that is moving towards its transformation into a socialist society".  [170•1 

p In the age of a global transition from capitalism to socialism that tendency within international economic relations expresses itself through a reduction of constraints on external trade and through efforts to remove corresponding obstacles. This is the course that is followed by trade liberalization—a term that refers to a complex of government measures designed to regulate both domestic economies and external relations in such a way as to facilitate external trade activities and reduce tariff and other barriers.

p Strictly speaking the liberalization of external trade is not a postwar discovery. But while elements of that policy existed before the war as well current liberalization policies possess a number of distinctive features. First, the scope of corresponding measures has been greatly extended and has long included much more than tariff policies alone. Liberalization reaches nearly all sectors of economic life and its mechanism has become more complex and more ramified. Secondly, there has been a vast increase in the role of coordinated international actions and coordinated efforts of different countries in achieving a multilateral liberalization of external trade. Finally, and this is perhaps the most important feature, while in prewar years international liberalization did not extend beyond short-term armistices relating to customs activities, today, in spite of the frequent trade wars that are inherent in capitalism, it has been possible to achieve a very substantial long-term reduction in the overall level of impediments to the development of external trade.  [170•2 

p In noting the substantial differences that exist between the foreign trade policies of capitalist countries in recent decades 171 and those of the prewar period it should be emphasized that the current tendency towards liberalization has passed through a number of stages, in the course of which there were changes in the conditions governing its implementation. In its initial stage that tendency developed largely under the influence of two groups of factors.

p On the one hand, having learned the bitter lessons of the disorganization of world economic relations at the time of the Great Depression and of trade wars that it produced in the 1930s, the leading capitalist countries paid greater attention to coordinating their efforts in seeking to avoid similar events. It is symptomatic that at the very height of the Second World War, at a conference of the anti-Hitlerite coalition in May 1943, concerned with problems of food and agriculture, in Hot Springs, a slogan was formulated to guide postwar foreign trade policy, namely, "to reduce barriers of every kind to international trade and to eliminate all forms of discriminatory restriction thereon as effectively and as rapidly as possible".  [171•1  Objectively such a goal was progressive in character.

p At the same time the postwar structure of international economic relations developed in the context of a major shift in the balance of power within the imperialist camp in favour of the United States. Taking advantage of the weakening of its competitors the U.S. sought to formalize its external economic expansion in international law and greatly extend the influence of American monopolies on the markets of colonial and dependent countries. The idea of an unimpeded access to these countries’ resources, that would be especially advantageous to the United States, is already present in a report of the League of Nations that was prepared while the war was still raging. It related to future foreign trade policy, whose need for liberalization was motivated by "a close interdependence between greater freedom of trade and the achievement of high and stable employment of resources".  [171•2  But at a time when the U.S. was able to impose its views on economic relations to its West European allies, 172 the American ruling circles did not always seek to hide the true reasons for their interest in liheralization of international trade. In particular, D. Acheson, the U.S. Assistant Secretary of State, cutting short any attempt to disagree, stated explicitly that "many countries will feel that they cannot venture to commit themselves to the kind of economic policy. . . unless they can be reasonably certain that the United States can be counted on to give these principles full support".  [172•1 

p As the West European and Japanese "power centres" grew stronger, while the external economic positions of the U.S. correspondingly declined, interest in liberalization of international economic exchanges came to be governed not so much and not so exclusively by the advantages that it presented to the U.S. as by the general requirements for expanding the international division of labour. In these new conditions, especially in connection with the successes of the struggle of developing countries for achieving full sovereignty over their natural resources, in many respects the tasks of liberalizing international trade came to be interpreted in a new way, in which greater emphasis was placed on the interests of all participants in external economic exchanges. It should be noted that having lost its leading role on the world capitalist market as well as its initiative in formulating foreign trade policy (this is recognized by American authors as well  [172•2 ), the United States itself began to experience the negative consequences of the "rules of the game" that had been established under its auspices. It found it necessary to advocate a "fundamental overhaul of international trading rules”,—to be sure in ways advantageous to itself—in view of its asserted "responsibility as an economic leader among nations".  [172•3 

p In considering the evolution in foreign trade policy that is taking place it should be emphasized once more that while it is the internationalization of production that has enhanced the importance of the external sphere as a factor of economic growth, 173 the intensification of international trade produced an objective need for its liberalization. Although liberalization measures are essentially only a means for extending international trade they play a substantial role in overall economic activities.

p Within the context of the revolution in science and technology the direct linkage that exists between the internationalixation of production and the problems of facilitating foreign trade is becoming increasingly apparent. This is also noted by Western researchers, who view these problems primarily in terms of the influence of technological shifts on competitive struggles. For example, Gerard and Victoria Gurzon, who are Swiss economists, stress that "there are numerous and growing industries which are becoming more interested in gaining access to foreign markets than in preventing others from entering their own—as witness the ’economies of scale’ arguments in favour of regional economic integrations".  [173•1 

It is quite natural that transnational monopolies are especially interested in the unimpeded movement of goods among countries. Ultimately they view the liberalization of external trade as a means for facilitating intracorporate transfers within their international industrial complexes. Accordingly it is not surprising that "many industries, especially large multinational firms which both export large amounts and carry on extensive manufacturing operations abroad, favour a continuation of a liberal trade policy".  [173•2  It is also true, of course, that as the TNGs’ interests are superimposed on the national interests of individual countries they by no means always operate as a catalyst of what appears to be a general tendency towards liberalization. In many respects they explain its contradictory character. But in spite of the contradictory nature of that tendency, it is governed by the tasks of widening world economic relations in the context of an internationalization of production. This view is generally accepted today because "trade liberalization is not a goal in itself . . . 174 [it is concerned with] . . . economic cooperation for mutual benefit through the more eificient use of the world economy. . .”  [174•1 .

Reducing the Level and Significance of Customs Duties

p The policy of liberalization has achieved major successes in the area of customs duties,  [174•2  whose level has declined substantially in the postwar years. It is not surprising that international efforts at liberalization should have accorded priority to that particular sector of international trade policies. First, historical developments were such that tariff duties had come to symbolize a government’s foreign trade regulating functions, and by tradition the level of tariff duties was viewed as the main criterion in judging trade policies. Secondly, tariff duties are especially visible by comparison with numerous other barriers to external trade, which are often carefully hidden. Finally, tariff duties easily lend themselves to comparisons, and in effect serve as the principal unifying element in the trade policies of all countries. This facilitates the conclusion of agreements concerning reciprocal tariff reductions.

p In many respects the specific features of tariff duties have determined the forms of coordinated international measures relating to the liberalization of trade. Beyond this, in a context in which the most-favoured-nation principle is universally applied as one of the twentieth century’s most fundamental norms of world trade policies, mutual tariff concessions by two countries automatically imply their extension to all other trading partners. In short the very nature of tariff barriers has led to their liberalization on a wide international scale.

p Such are the objective prerequisites that have led to the emergence of the corresponding international institution, the General 175 Agreement on Tariffs and Trade (GATT), which has held multilateral negotiations on reducing foreign trade barriers, and especially tariff duties. It is another matter that GATT has been greatly influenced by such subjective factors as the efforts of the United States and of other developed capitalist countries to make use of that instrument as a means for achieving a dominant position within capitalism’s system of world economic relations.  [175•1 

p Even in the Western press this emphasis in GATT activities had earned it the name of "rich men’s club”, whose primary purpose is to serve the interests of developed capitalist states, and whose legal formulas are not always applicable to the conditions that exist in developing countries.  [175•2  It is important to stress that together with the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) GATT forms an integral part of the system of organized measures that has been devised by imperialist circles to consolidate their positions in the sphere of international economic relations. This is precisely why GATT does not provide for a genuine equality among its members. On many issues full membership in GATT presupposes participation in the IMF, where votes are proportional to financial contributions. It is true that in the 1970s one could see a certain tendency towards a democratization of that institution through the greater representation of developing countries as well as of some socialist countries. At that time the growing role of progressive influences throughout the entire climate of international economic relations unavoidably influenced the work of GATT as well.

p Leaving aside for the moment those features of GATT that are contradictory, let us consider the results of its activities in reducing tariff duties. This does not imply of course that GATT’s role in the postwar liberalization of trade was decisive, for that 176 process was determined by objective factors relating to the internationalization of the world economy. Ultimately the functions of GATT (and of any other international institution) constitute an organizational i’ormali/ation of that process, although this, too, is rather important.

p One should keep in mind that some of the difficulties that attach to long-term comparisons of average tariff levels throughout world capitalist trade cannot be overcome. Indicators of the level of tariff duties that are based on arithmetic averages do not reflect differences in levels of trade in particular types of commodities. At the same time the great diversity of types of commodities (of the order of several tens of thousands) makes it practically impossible to arrive at a precise calculation of a weighted average of tariff levels for the capitalist world as a whole.

p But in spite of all the reservations that attach to such comparisons, there is a clear tendency towards a reduction in tariff barriers, and also towards an intensification of that process in the 1960s. At that time, following the negotiations of the Kennedy Round (1964-1967), agreement was reached on the largest tariff reductions in postwar years. It is true that formally the outcome of
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Table 30 Outcomes of GATT Conferences on Tariff Reductions —————————————— - V’olume of Trade AKected ))y Tariff Concessions Number of Conference Site and Year of Completion Billions Percent of Concessi ons (in thousands) of Dollars All Exports Geneva, 1947 10.0 20 . 0* 45 . 0 Annecy, 1949 5 . 0 Torquay, 1951 8.7 Geneva, 195G 2.5 2.7 . . . Geneva, 19G1 4.’,) 4 2 4 . 4 Geneva, 19G7 40.0 21.1 * Estimated. <"._i....i_..,j „„ ,;,„ v,.,_c;_c ,,r- If.,,-™ P. Tnlimnn. Ed.. New Trade Stral- Vitm,uicln_ U Mil VIIL uwjiu -. .—-*.j — ^——-__ _? , eKV lor th<; World Economy, George Allen and Unwin Ltd., London, 1970, p. 57; UN, Statistical Yearbook 1969; UNCTAD, Handbook of International Trade and Development Statistics, 1972. 177
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the initial round of negotiations under GATT in 1947 is equally impressive. But this should lie viewed primarily as transitional measures that followed the wartime constraints on trade.

p The tendencies towards increasing liberalisation reflect the capitalist economy’s growing intei nationali/ation and a corresponding internationalization of capital, as well as the increasing number of large international industrial complexes of leading monopolies. It is symptomatic that it is precisely in the 1960s (see Table 22) that a substantial increase occurred in direct foreign investments. This is also indicated by the concentration of efforts to achieve multilateral tariff reductions primarily in the trade in finished goods, reflecting a deepening of international specialization and cooperation in industrial production.

p The outcome of the Kennedy Round, which resulted in a reduction in tariffs averaging 36 percent between 1968 and 1972 conveys most fully both the scope of liberalizing measures and the composition and level of modern capitalism’s tariff duty system. While there do not exist aggregate indicators of this type for the capitalist world as a whole, the corresponding data for the Common Market (six countries), the United States, Great Britain, and Japan, which accounted for 62 percent of total capitalist exports in 1972 may be accepted as entirely representative.

p It should be noted that the most significant reductions in tarilf duties were attained for finished goods as a whole and especially for those types of industrial goods whose output is closely linked to progress in science and technology (chemical and pharmaceutical goods, machines and equipment).

p As a result of this round of tariff reductions it may be said that the average level of tariff duties in the capitalist world’s leading trading powers came to be modest in the 1970s—less than 7 percent of the value of imported commodities (excluding agrarian protectionism) and 9 percent for industrial goods. With a somewhat different mix of sample indicators the average weighted value of tariffs for industrial goods is 6.5 percent and even 6 percent.  [177•1  Detailed estimates of the influence of the outcome
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178 Table 31 Weighted Average Level of Import Duties into the EhC,* U.S., Great Britain, and Japan he/ore and after the. Kennedy Round Commodity Groups Tariff duties as a Percent of Value (C. I. F.) Percent of Reduction in Tariff Duties Under the Terms of the Kennedy Round Before tile Kennedy Round After the Kennedy Round Food Products Beverages and Tobacco 50^3 43 ’4 14 Raw Materials (except fuels) 3.2 2 2 31 Fuels 3.7 2.9 20 Fats and Oils 13.8 12.0 13 Chemicals 16.3 8.3 49 Manufactured Goods, Clas- sified in Terms of Ini- tial Materials 11.9 8.3 31 Machinery and Equip- ment 13.1 7.4 44 Other Manufactured Goods 20.3 13.8 32 Total (excluding food, beverages and tobacco with subsidized inter- nal prices) 10.5 6.7 36 Manufactures and Semi- Manufactures 14.0 8.7 38 * Common external tariff of Common Market. Source: The Kennedy Round Estimated Effects on Tariff Barriers, Parts One and Two, United Nations, New York, 1968, p. 60.
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of the Tokyo Round of GATT negotiations, which were concluded towards the end of 1979, are not yet available. But if one also considers the planned gradual reduction of tariffs between 1980 and 1987 by 33 percent (as opposed to 36 percent for the Kennedy Round) it may be expected that by the end of the 1980s the level of tariff duties will be still lower than at the beginning of the present decade. Accordingly, when compared with the average level of tariff duties in the early postwar years (approximately 20 percent) the achievements of the policy of liberalization appear to have been quite substantial.

p It is true that the actual significance of these conclusions must 179 be perceptibly adjusted if one considers at least three contradictory circumstances. First, all available calculations of the average level or else weighted average level of tariff duties hide important differences in tariffs for individual classes of commodities where tariffs may be quite high, and sometimes prohibitive. For example, duties of more than 20 percent of value, which are viewed as a significant factor influencing price formation, applied to 3 percent of the overall number of types of commodity classifications employed by customs agencies in the 1970s in the case of Great Britain, 3.7 percent for Japan, 4 percent for Canada, and 13.6 percent for the United States. In the United States, moreover, these 13.6 percent include extremely harsh duties exceeding 50 percent of the value of products on 0.5 percent of all commodity classes, while the maximum level of tariff duties was as high as 180 percent of their price. There is therefore much truth in the observation of G. Patterson, GATT’s Deputy Director, concerning the "tendency ... to suggest that . . . tariffs would be at such a low level that they no longer constituted a serious hindrance to trade”, that in fact "an overall summary of the situation camouflages the high tariffs which remain.”  [179•1 

p Secondly, the nominal level of tariff duties does not reflect their true significance, since suppliers of industrial goods rightly calculate the influence of tariffs not in relation to the full value of the product but only in relation to the value that is added at a given stage of processing.  [179•2  It has been estimated by UNGTAD that while this resulted in an average nominal level of tariffs on industrial products in developed capitalist countries of 6.5 percent in 1972, in fact the “effective” import duty was 180 11.1 percent, as opposed to 10.9 percent and 19.2 percent, respectively before the Kennedy Round.  [180•1 

p Finally, the “favourable” average outcomes of the liberalization achieved within the framework of GATT hide the actual deterioration that has taken place in the position of young states within the system of tariff duties. In particular, under the Kennedy Round duties on commodities that are of particular interest to exporters from developing countries were reduced by an average of 30 percent, while duties on all other commodities exported primarily by developed capitalist powers were reduced by 44 percent. As a result, as the United Nations Secretary-General has observed, the outcome of the Kennedy Round has produced only disappointment among developing countries since the advantages that they gained were far more modest than those of developed countries.  [180•2  Similarly in the case of the Tokyo Round, the application of tariff concessions primarily to the export commodities of Western powers is producing a situation in which tariff reductions on commodities exported by developing countries will not exceed 25 percent, i.e., will be almost a fourth less than the average level.

p It would accordingly be premature to “bury” the problem of tariff duties, which in fact continue to play an important role, particularly in individual sectors of world capitalist trade.  [180•3  Beyond this tariffs continue to serve as one of the most convenient 181 instruments of trade policy in relations among countries and as the traditional object of concessions or sanctions in interimperialist struggles. Nevertheless, it would be a still greater error not to recognize the decline in the role and scope of tariff barriers that continue to serve as the most significant constraint on international trade.  [181•1 

Together with the appreciable reduction in tariff barriers the tendency in recent years also to extend the scope of tariffless trade appears especially significant. Following the completion of measures designed to establish a free trade zone in Western Europe towards the end of the 1970s for trade in industrial products that complex will account for approximately 30 percent of all capitalist exports and 40 percent of exports of industrial goods.  [181•2  But if one also considers negotiations relating to the admission of new members to that zone, the other areas of tariffless trade within and among regional groupings, and the tendency towards a comprehensive gradual decline in tariffs at the international level it is possible that by the end of the present decade the greater part of trade in manufactured goods (and hence the greater part of world capitalist trade) will no longer be subjected to duties.

Contradictions in the Liberalization of Non-Tariff
Barriers

p Progress in reducing tariff duties concerns only one sector of the front encompassed by the struggle for liberalizing international economic exchange, and moreover one that is hardly the most important one. Most researchers agree that "non-tariff barriers constitute a most important clement in any programme to promote free international trade. Frequently they present more significant impediments than tariffs".  [181•3 

p The importance of liberalizating non-tariff barriers has grown substantially in recent years. This is partly attributable to a " 182 secondary effect" of tariff reductions which is unavoidable in competitive struggles for markets. In accordance with the principle of connecting reservoirs tariff reductions have been accompanied by increases in non-tariff barriers. At the same time the clear tendency towards a reduction in duties has made more apparent the unresolved nature of many other problems of liberalization.

p These encompass such a wide and extremely ramified system of state-monopolistic measures for influencing external trade that a full evaluation of its significance is perhaps impossible. This is confirmed by the great diversity of forms of non-tariff constraints. One of the most detailed lists of such obstacles compiled by GATT experts includes more than 800 items, each of which relates to constraints on an entire group of related commodities that sometimes includes several hundred commodity types within the customs classification.

p The difficulties of establishing the influence of non-tariff barriers on international trade begin with this great number of types of direct and indirect constraints on international trade. This defines the by no means simple problem of classifying them. Differences in interpreting the main criteria in systematizing nontariff barriers account for the substantial diversity that one finds in the efforts that have been made to arrive at an integrated approach to codifying these barriers. Without favouring any one of the available classifications, let us consider the example of the manner in which non-tariff barriers are grouped by GATT itself. For this conveys a conception of the nature of these barriers:  [182•1 

p I. Government participation in trade including:

p (a) production subsidies; 

p (b) export subsidies; 

p (c) countervailing duties; 

p (d) government procurement and restrictive business and union practices; 

p (e) State-trading in market-economy countries.

p II. Customs and administrative entry procedures, including:

p (a) customs valuation; 

p (b) anti-dumping practices; 

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p (c) customs classification; 

p (d) formalities connected with iinportation. 

p III. Industrial, health and safety standards, and packing, labelling and marking regulations.

p IV. Special limitations on imports and exports, including:

p (a) licensing arrangements; 

p (b) quantitative regulations, including embargoes; 

p (c) bilateral agreements; 

p (d) motion picture restraints; 

p (e) minimum prices in textile imports.

p V. Restraints on imports and exports by the price mechanism, including:

p (a) prior deposits; 

p (b) administrative and statistical duties; 

p (c) restrictions on foreign wines and spirits; 

p (d) discriminatory taxes on motor cars; 

p (e) special duties on imports; 

p (f) credit restrictions for importers; 

p (g) variable levies; (h) border taxes.

p It is still more difficult to establish the influence of each of the numerous impediments on the volume and composition of external trade. This is especially difficult with regard to overall international trade, both because of the incommensurability of basically diverse constraints, and because they are hidden and intangible in many ways. For example, it is the view of British specialists that "whereas tariffs are published in a recognizable form (though problems of classification do arise and arc treated in this statement as ’para-tariff obstacles to trade), most nontariff distortions present difficulties even in specification and may be virtually impossible to quantify".  [183•1 

p The most comprehensive study in this area is a special report of the UNCTAD Secretariat on the classification and evaluation of the main types of non-tariff barriers in developed capitalist countries. That study is based on an analysis of sample data 184 for 41 commodity groups, encompassing 136 classes within tinStandard International Trade Classification. According to these indicators the share of commodities subjected to non-tariff limitations when imported into 18 developed countries in 1968 was 44.9 percent for raw materials, 17.8 percent for finished goods and 22.1 percent on the average, including 41.2 percent on commodities from developing countries.  [184•1  While these data show the degree of discrimination that is applied by customs agencies of developed capitalist countries to suppliers from new states they do not reflect the actual scope of non-tariff barriers both because they relate primarily to exports of developing countries and because the study encompasses only non-tariff barriers of the quota type. If one considers all other types of impediments to undesired imports as well, one can easily imagine the actual scope of non-tariff barriers.

p It is probably with regard to import quotas that the effects of trade liberalization have been most evident, for those are both visible and commensurable. In the case of Japan, for example, the proportion of imports that are subject to trade liberalization increased from 42 to 97 percent between 1960 and 1973, while the list of product types that are subject to import quotas declined from 492 items to 31.  [184•2  It should be noted that just as a reduction in tariffs enhances the role of non-tariff forms of import regulation, within the latter traditional quotas and licenses are increasingly replaced by types of quantitative constraints that are less visible (see Table 32).

The problem of estimating the effects of non-tariff barriers and especially their relative effectiveness by comparison with traditional tariff barriers is especially complex.  [184•3  In our own view it is in fact hardly possible to arrive at precise values of quantitative indicators. Here technical difficulties (the need for collecting and integrating an enormous volume of statistical information and carrying out large-scale calculations) are by no means the
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185 Table 32 Non-Tariff Barriers to Imports in Developed Capitalist Countries in the Early 1970s Types df Harrier Total Number* Percent of Total Total 531 100.0 Including: Discretionary Licensing 185 34.7 Quotas 133 25.3 global import quotas 00 12.4 bilateral import quotas 50 10.8 bilateral quotas with global import quotas 11 2.1 Other Non-Tariff Barriers 213 40.0 variable levies 134 24.9 unspecified licensing 11 2.1 “voluntary" export restraints 11 2 1 import prohibitions 12 2.4 unspecified types ot restriction 10 3.0 Other Measures 29 5 . 5 * Sum total of various types of barriers to individual commodities or commodity groups applied in each country. Source: Proceedings of the United Nations Conference on Trade and Development. Third Session. Vol. II, p. 147.
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decisivc ones. For in the overwhelming majority of cases the chain ol causal relations that joins the numerous components that exist in the sphere of production and in that of distribution is so very large and possesses such unexpected configurations that it is simply impossible to identify particular links that do not influence external trade. While formally only a part of the measures initiated by governments concern the regulation of external trade transactions, in fact nearly all activities of the bourgeois state, and especially those that relate to the country’s economic life, eventually influence both exports and imports. Accordingly one can only refer to the category to which particular government measures refer, and to their order of importance in terms of their proximity to a direct source of influence on external trade. When the problem is posed in this way it becomes evident that the non-tariff barriers can have a far greater overall impact than the old tariff duties. Such an evolution of forms of regulation of 186 external trade appears to be a further development of the principle established by V. I. Lenin that "no tariff system can be effective in the epoch of imperialism"  [186•1 . At a time when statemonopolistic intervention in economic life is increasing, one sees this tendency both in the declining importance of import duties and in the gradual shift of the center of gravity of non-tariff duties from customs procedures to countless other forms of influencing external trade. Non-tariff barriers are especially effective when this carefully hidden layer of impediments is difficult to overcome, and when the corresponding bourgeois state pursues a policy of active reliance on these new instruments in its struggle for markets. At the same time non-tariff barriers are becoming an increasingly important sphere of liberalization, even though for the time being achievements in this regard have been limited. This is partly attributable to the novel character of the problem itself, and partly to the purely technical difficulties that attach to international comparisons of non-tariff barriers. But above all it is explained by the great diversity and refinement of means that are available to limit undesired imports. Although numerous declarations were made in GATT concerning the liberalization of non-tariff barriers, the first significant steps in that direction were taken only during the most recent Tokyo Round. At that time realistic possibilities for reducing tariffs had become largely exhausted. Six codes and agreements were developed to regulate the application of several widely-used types of such barriers. They relate to national technical standards, the access of foreign suppliers to state purchases, questions relating to government subsidies and compensatory duties, methods employed by customs agencies in evaluating commodities, import licensing, and systems designed to protect firms from the competition of foreign suppliers. Although it is still too early to judge the effectiveness of the measures that are envisaged there is no doubt that they represent only partial compromises, while the most sensitive problem—namely the use of import barriers to protect local producers—continues to be a source of disagreement and has been scheduled for further discussions. This provides one of many 187 indications of the contradictory nature of the liberalizing processes that are taking place in modern capitalism’s international trade.

Liberalization and Protectionism

p The tendency towards an intensification of external economic exchange that accompanies the internationalization of economic life under capitalism coexists, although far from peacefully, with an opposite tendency towards a modernization in the means that are employed in both open and undeclared trade wars as well as an extension in their spheres of action. Increasingly trade wars are becoming an inherent attribute of capitalist international trade, whether they encompass the entire world capitalist market or whether they are small, local trade wars between individual countries or else relate to trade in individual commodities (such as the famous "Chicken War" between the U.S. and the Common Market or the "Wines War" within the EEC). These contradictory traits of the liberalization of external trade are especially apparent in recent years, when protectionism has come to prevail over policies of free trade in many areas and even appears to have placed the further fate of liberalization in doubt.

p Ironically, corresponding indications coincided with the initial implementation of large-scale liberalization measures under the terms of the Kennedy Round. Shortly after the signing of the corresponding agreement, a bill was introduced in the U.S. Congress to establish quotas on the importation of a number of commodities. Emergency measures designed to save the American dollar, including a unilateral decision in the second half of 1971 to levy an additional 10 percent surcharge on imports served as a signal to intensify "military operations" in world capitalist trade. According to the then Managing Director of the International Monetary Fund Pierre-Paul Schweitzer, unilateral action on the part of the United States produced a real threat of an all-out trade and currency war that could cause the capitalist world face "the prospect ... of disorder and discrimination in currency and trade relationships which will seriously disrupt trade and undermine the system . . .”  [187•1  Subsequently this concern proved to have been justified.

188

p This is also the type of situation that one would expect when viewing the evolution of external trade policies against the background of the more general tendencies that govern the economic development of world capitalism. It is not a coincidence that a peak in introducing international measures serving the liberalization of reciprocal trade among developed countries occurred in the second half of the 1960s, i.e., at the end of the world capitalist economy’s most prolonged period of stable development since the Second World War. Nor is it a coincidence that an accumulation of economic difficulties at the turn of the seventies within several leading imperialist powers has increased the number of local trade wars.

p Moreover, the economic crisis that developed in the mid-1970s and interacted with an intensification of world capitalism’s problems in the area of fuels, food products, ecology and international finance, not only dampened the liberalization of international trade but also frequently intensified protectionist tendencies in Western countries. Initially, in fact, the economic crisis paralyzed the scheduled round of bargaining within the framework of GATT (the Tokyo Round), which in 1975 had not only not been concluded as originally planned but had not even begun. It was only in 1976 that these negotiations were initiated.

p The trade conflicts that flare periodically express an intensification of the intcrimperialist struggles for markets that originate in the contradictory character of capitalist integration. The logic that governs these processes under capitalist conditions is such that an expansion in mutual exchange among participants of closed integrated groupings such as the Common Market operates not only as a factor that enhances growth in world trade but also as a source of negative influences, through its discriminating practices, on other participants in world economic relations, impeding their normal development.  [188•1  This is precisely why the completion of trade liberalization measures within the EEC 189 and EFTA towards the end of the 1960s also stimulated protectionist attitudes both within these groupings and in other capitalist countries. The expectation that a turning [joint would occur- in the history of the liberali/ation of international trade by the 1st of July, 1968, when the Common Market countries fully eliminated tarilfs among themselves and also began to reduce external tariffs in accordance with the terms of the Kennedy Round, did not prove to be justified. In fact the entry of Great Britain into the Common Market and of certain other former members of the EFTA provided a new stimulus to conflicts on the world capitalist market.

p Aside from reflecting general economic difficulties the increased frequency of trade wars in recent years also reflects certain shifts in the balance of forces between modern capitalism’s "power centres”, whose rivalries define the major centres of contradictions in world capitalist trade. These lie within a triangle joining the United States, the Common Market, and Japan. The increased membership of the EEC has produced a grouping of states that accounts for over 40 percent of capitalist trade and in spite of serious differences among its participants objectively this strengthens the position of the Common Market. Similarly the position of Japan within the world capitalist market has become much stronger. Exceptional rates of economic growth and of growth in foreign trade have led her to exert a pressure on her major competitors and to become the capitalist world’s second economic power and third exporter (after the United States and West Germany), moving ahead of France in 1968 and of Great Britain in 1971. Today the United States not only lags behind the Common Market by about three times in terms of its aggregate external trade turnover (twenty years ago their exports were equal), but has also lost its position of the leading exporter. West Germany began to overtake the U.S. in this respect already in the early 1970s, and today, as West European authors note with a certain stint of gloating, "that primary responsibility is being shared increasingly with the European Community and Japan".  [189•1 

190

p It is true that because of the relatively lower share of exports in its gross product the United States is generally less dependent on external markets than are its competitors, and this provides it with certain advantages in trade conflicts. In the words of a West European publication to the United States, whose export quota is significantly lower than that of countries on the other side of the Atlantic or of Japan, "threats of retaliation are like flea bites on an elephant’s toe nail".  [190•1  But such a comparison greatly underestimates the possible consequences of trade barriers on individual economic sectors of the United States that are more closely linked to the external market.

p Moreover, as the share of the United States in world capitalist trade declines, so does its economic dependence on the external sphere increase. This is reflected in the growth of U.S. export quota.  [190•2  The fact that these two mutually interdependent tendencies operate in different directions largely accounts for the intensity and specific features of external trade contradictions between the United States, on the one hand, and the Common Market and Japan, on the other.

p It should be noted that within the U.S.—Japan—Western Europe “triangle” the fundamental contradictions in external trade are focussed on the relations between the United States and the Common Market.  [190•3  These arc capitalism’s primary economic centres and its “superpowers” in the field of trade. The economic complexes of North America and Western Europe are linked most closely to each other through the internationalization of production as well as of capital. At the same time, in keeping with the contradictory logic of capitalist internationalization, the United States and the Common Market are also the principal sources of discrimination in world trade although it would seem that they should be especially interested in avoiding 191 obstacles to mutual economic relations. Moreover, foreign trade contradictions between the United States and Japan are also becoming deeper. The competitiveness of Japanese products is now higher. This is largely explained by the lower level of wages in Japan by comparison with the United States.

p While noting such a growth of protectionist attitudes it does not seem necessary to identify the initiators of specific trade confrontations, particularly since all participants seek to ascribe blame to others and to pass themselves for victims initiating countenneasures. It is appropriate, however, to draw attention to the extent to which such accusations are true. In our opinion accusations of this type that have been made since the formation of the EEC are close to the truth. A case in point is such assertions as "every day the EEC is looking more like a tight little protectionist club, instead of the free-trade champion it once claimed to be".  [191•1  Similarly the American press often admits that while the U.S. advocate free trade they practice protectionism. The main point, however, is that practically all capitalist countries have contributed to the intensification of "trade wars”.

p It would be an oversimplification, of course, to infer from the increased frequency of such trade wars that the policy of liberalization has collapsed and that protectionism is generally growing, even though there is much evidence of this. As they define their foreign trade policies, bourgeois states find it necessary to recognize the contradictory factors on which contemporary protectionism is based. Protectionism is facilitated by socially demagogic positions, by slogans calling for the protection of domestic production from foreign competition, particularly in the case of old and relatively ineffective economic sectors (which are, moreover, the ones that are least internationalized), and by a wish to receive election votes associated with these sectors.

p Yet protectionist tendencies are opposed by the interests of big business, and above all of transnational corporations, who seek to provide for an unimpeded movement of commodities within their own international industrial complexes. Account is 192 taken, moreover, not only of the internationally unpopular character of protectionist policies lm( also of the clanger of reprisals. Essentially all these processes may he viewed as a struggle between national forms of capital and monopolies. Within this struggle one of the major issues concerns protectionism.

p In stressing the contradictory character of capitalist liberalization and the intensification of protectionist elements while the general economic difficulties accumulate, let us consider the extent to which this does point to a radical shift in the long-term tendencies that govern policies relating to foreign trade. On the one hand, one may expect that the flaring of contradictions in the sphere of trade that has occurred since the early 1970s will be recorded in history not only as the sharpest one since the Second World War, and the one that extended to the greatest range of commodities, but also as the most prolonged one during that period. A coincidence of a number of specific circumstances during that time does not alter the essence of the matter, since the seeds of protectionism fell on receptive ground, thus only intensifying the disproportion within capitalism’s world economic relations that appeared in the development of individual sectors. Generally it would appear that the crisis of 1974-1975 has not only impeded liberalization but has caused it to regress by several years.

p On the other hand, it is hardly possible to view the successes of neo-protectionisrn as the final demise of liberalization policies, since there have been no fundamental changes in the most recent period in the objective need for a further internationalization of productive forces. One should not, of course, underestimate the seriousness of the numerous barriers to a normalization of international trade. There are no grounds, however, for overestimating them, as certain bourgeois theoreticians are inclined to do. For example, Richard N. Cooper writes that "world trade policy has entered an acute phase. Tariff reductions agreed under the Kennedy Round in 1967 are still taking place, but the future of trade policy beyond 1971 lacks direction. There are even dark mutterings of an impending ‘trade war’ among the major trading nations. . .”  [192•1 .

193

p Yet it is precisely at a time of economic crisis, which stimulates protectionist measures, that world capitalism places its hopes on the further liberalization of external trade and regards it as a means for overcoming growing difficulties. It is by no means a coincidence that one of the first joint actions of capitalist countries, following the economic crisis, was to agree on a code of responsible behaviour (within the OEGD framework) designed to avoid counter-productive forms of competition through unilateral measures to limit imports and stimulate exports. Already at the first meeting in Rambouillet in 1975, the leaders of major capitalist countries were explicit in stating that "in a period where pressures are developing for a return to protectionism . . . we believe that the multilateral trade negotiations should be accelerated. . . They should seek to achieve the maximum possible level of trade liberalization therefrom.”  [193•1  The actual manner in which these good intentions are implemented is another matter, but the awareness that it is important to check protectionism in a critical situation is itself noteworthy.

Capitalist foreign trade policies generally are marked by an internally contradictory nature that has long expressed itself in the struggle between free trade and protectionism. The realities of the present situation confirm Lenin’s conclusion that "it is not a fight between free trade and protection . .. but between two rival imperialisms, two monopolies, two groups of finance capital".  [193•2  Each step along the path of a liberalization of capitalist international trade as well as each impediment on that path should accordingly be viewed primarily as a new landmark in a struggle to redistribute the world market that records changing balances of forces among leading trade powers.

Contemporary Neo-Protectionism

p In analyzing the features that characterize the international trade of capitalist countries today one observes both definite achievements in trade liberalization and increasingly frequent eruptions of trade wars. This raises the following question: What 194 is the relation of the present stage within the long-term evolution of external trade policies? On the one hand, it might appear that nothing is taking place that is new, and that all recent changes fit into the familiar pattern of struggle between free trade and protectionism that has been taking place for several centuries and is generally typical for capitalist external economic exchanges. On the other hand, it is also true that in the last several years protectionist tendencies are acquiring some kind of new and unfamiliar colouring in ways that offer grounds for referring to the emergence of a qualitatively new phenomenon rather than simply another intensification of contradictions on the world capitalist market.

p Above all, this signifies the development of new forms of protectionism and the application of new, less visible and more refined methods for impeding deliveries of foreign goods to the markets of developed capitalist countries. But another feature of the modernized instruments of protectionism concerns the fact that changes in the organizational forms of customs barriers are becoming discriminatory, and are directed against specific groups and countries and types of industrial output rather than simply against foreign commodities generally.

p What is, then, the evidence for this new protectionism, what is its scope, and what are its methods? Above all one should note that aside from traditional methods that rely on unilaterally established import barriers, there is an increasing emphasis on a variety of internationally coordinated trade barriers. They include “voluntary” limitations on exports that are applied not only at the private level but primarily at the level of governments, as well as new methods for applying anti-dumping rules in regulating both the volume and prices of imported products. Voluntary export restraints are formalized as multilateral as well as bilateral agreements concerning either the volume of trade in particular industrial products (orderly market arrangements) or the share of individual countries in marketing these products (organized free trade). They may also take the form of special international agreements for regulating reciprocal trade in industrial products.  [194•1 

195

p An early instance of such “voluntary” restraints on exports was an international Long-Term Agreement on Cotton Textiles of 1962. In 1973 this was extended to all types of textiles ( MultiFibre Arrangement). According to its terms developing countries that had reached a certain ability to compete in a number of textile products were in effect assigned a system of quotas. In the event suppliers disregarded them Western countries would apply explicit import barriers. And although that agreement was presented as a means for ”organizing trade" and for serving the “prosperity” of its participants, even Western specialists admit that it was viewed as "a weapon for retaining and solidifying restrictions and, in some respects, for extending them".  [195•1 

p An illustration of the use of anti-dumping legislation to limit the competitive powers of foreign suppliers is provided by the trigger price mechanism on ferrous metals that was introduced in the United States in 1978. Under that arrangement imports at prices of 5 percent or more below the currently established level are subject to additional duties. A similar system of minimal import prices on these products was introduced by the Common Market countries in 1978. It was specified that these “temporary” measures would remain in force until foreign suppliers accept “voluntary” commitments to adhere to the price levels existing within the EEC and take appropriate measures to limit their exports.

p The new forms of non-tariff barriers extend to a wide range of products. The latter include not only products of light industry, which have long been subjected to protectionism ( textiles, clothing, shoes, other leather goods) but also those of a number of other sectors. They extend to investment goods as well as to consumer goods, and include products that are 196 technologically complex (rolled steel, ships, radio receivers and television sets, electronic components, chemical products). Even according to a very conservative estimate prepared by GATT, such import barriers on the part of developed Western countries affected approximately 3-5 percent of international trade between 1975 and 1977 and amounted to 30 to 50 billion dollars.  [196•1  In 1976 such “voluntary” restraints were applied to trade in special steels, television sets, radio receivers, and portable calculators,  [196•2  let alone the international agreement on textile products, whose exports on the world’s capitalist market in 1975 amounted to 37 billion dollars.  [196•3 

p The emphasis on such restraining measures represents an additional factor in the crisis of the international capital division of labour itself, for as American specialists recognize, ”. . . this neo-mercantilism is a profoundly disruptive force in international relations".  [196•4  It has produced a growing concern among most of the participants in international trade. As UNGTAD V documents observe "the new wave of protectionism implies that a change in the character and emphasis of protectionism has taken place which includes the introduction of new protective devices”.  [196•5 

p All this reflects the new forms of competitive struggle in the international trade policies of developed capitalist countries which call for a separate consideration. They justly deserve such terms as "new protectionism" or “neo-protectionism” that are employed to describe them. It should be noted, however, that the term “neo-protectionism” has been used repeatedly during the prolonged history of capitalist world trade whenever import 197 restrictions were periodically increased. It is therefore more accurate to refer to the present measures as "new neo-protectionism”. But what is the essence of this phenomenon? How does it differ from the "old neo-protectionism"? And how does it relate to the general tendency towards the liberalization of international trade?

p Above all while there is no doubt concerning the negative influence of these forms of trade restraints on the development of world economic relations it should be recognized that this problem is so recent, so contradictory and also so carefully hidden that it is still very difficult to establish the essence of this most recent neo-protectionism. It would probably be simplest to view it as a change in the forms of protectionism and a replacement of import duties by new types of customs barriers. And indeed while tariff barriers decline non-tariff barriers become increasingly visible. Even when they remain constant their relative significance becomes greater.

p The point, however, is that non-tariff barriers do not remain constant. On the contrary, they are becoming so refined that they remain increasingly immune to various liberalization measures that are directed against traditional forms of protectionism. It is precisely because they make it possible to ignore a system of international regulations and of integration of trade policy norms—in particular those established by GATT—that is functioning relatively well that the protectionist effect of such “ voluntary” restraints on exports and similar devices is so significant. As specialists working in UNGTAD observe "more importantly, there has been increased use of measures lying outside the scope of GATT in the form of Voluntary export restraints’ and ’ orderly marketing arrangements’, where the exporting sources ‘agree’ to limit their exports, as well as new policies such as the extended anti-dumping procedures.. .”.  [197•1  It is because it is making especially visible the inappropriatcness of the existing system of world economic relations in truly overcoming the contradictory interests of participants in world capitalist trade that “ neoprotectionism” is leading to an intensification of contradictions.

p We believe that many of the neo-protectionist tendencies originate in the major geographic shifts in both the international 198 division of labour and the composition of participating sectors and firms. But they also reflect the broader competitiveness of a number of consumer goods in developing countries, as well as the fact that developed capitalist powers are not ready to initiate a restructuring of their economies to adjust to the new conditions governing world trade. At first sight there is nothing fundamentally new in this respect, for as earlier, the principal objects of protectionism are old industries such as textiles, clothing, shoes, and the food industry, which are not so closely linked to technical progress.

p But the "new neo-protectionism" may also be viewed in the light of general tendencies toward a change in the structure of the division of labour between centres of imperialism and developing countries. In particular this refers to the efforts to relocate the most material-intensive and labour-intensive processes to developing regions. This includes a number of advanced industrial sectors representing incomplete technological cycles, as well as attempts on the part of imperialism to participate more actively in the industrialization of developing countries in forms that would primarily meet the interests of the developed countries themselves. Finally, and this is especially important, it is primarily through international monopolies that a policy of " technological neo-colonialism" is being carried out that transforms the new states into both industrial and raw material appendages of leading capitalist states.

p The fact that historically progressive processes relating to the industrialization of developing countries and a deepening of the international division of labour are carried out on a privatemonopolistic basis creates sources of extremely deep, truly antagonistic contradictions whose consequences are destructive. In its turn, the dominant position of international monopolies influences the ways in which protectionism expresses itself. It produces a different impact on industrial sectors, depending on their monopolization by transnational corporations.

p These general considerations acquire concrete dimensions when the actual results of the "new neo-protectionism" in individual areas of the economy are considered. In particular the influence of import restrictions on trade in textile goods is especially marked, as it is in the case of clothing and shoes. For these 199 products developing countries have reached a level of competitiveness in terms of both prices and quality that has permitted them to play an important role in meeting the internal needs of developed countries. For example, 52 percent of all imports of silk cloth into developed capitalist countries in 1976 originated in the developing states, as did 49 percent of their imports of cotton textiles, 46 percent of leather clothing, 43 percent of textile clothes, 33 percent of other types of knitted clothing, and 18 percent of shoes.  [199•1 

p It is not a coincidence, of course, that it is precisely the output of these sectors, which are less dependent on foreign capital, that encounters particular difficulties on the markets of Western powers and is subjected to the greatest non-tariff barriers. The reasons must apparently be sought in the protectionist policies of the powerful monopolistic associations of consuming countries.

p A similar picture emerges in a number of metal-producing sectors (ferrous and non-ferrous metallurgy, shipbuilding, basic chemicals) where suppliers from developing countries and in some cases of developed countries as well (Japan, Australia, a number of West European states) are exposed to the competition of large monopolies that are primarily engaged in serving the needs of their own domestic markets.

p All these elements of the current neo-protectionism of Western powers are especially harmful to the foreign trade position of developing countries, to say nothing of the clearly discriminatory nature of various restraining measures directed against the growing industrial exports of socialist states. In this connection Western specialists admit that "developing countries can acquire relatively easy access to OECD markets provided that they deal through the most powerful marketing and producing enterprises ... if, on the other hand, a developing country exporter chooses to ’go it alone’ in an unskilled labour-intensive industry . . . he is likely to face trade barriers. . .".  [199•2 

p It should be added that this refers to only some of the several 200 Emacs-File-stamp: "/home/ysverdlov/leninist.biz/en/1982/TACC284/20071009/284.tx" sources of neo-protectionism. For even though products that are technically relatively complex, or else corresponding components, may be supplied by TNG subsidiaries in developing countries this does not yet provide them with an easy access to the markets of developed states. While it would seem that the TNCs are interested in an unimpeded movement of commodities within the framework of intracorporate international division of labour, developing countries find themselves in a particularly disadvantageous position in such cases, for they then bear the costs of the intermonopolistic competitive struggle. It often happens that the most powerful international monopolies, which are located primarily in developing countries, also seek to persuade their own governments to introduce protectionist barriers primarily against imports from developing countries. Such measures impede the effectiveness of those competitors who rely most on intracorporate cooperation with developing countries.

p This draws attention to the inconsistency of the most common argument employed by advocates of contemporary neo- protectionism, namely that it does not harm the new states, since most of their industrial exports are concentrated in a small number of countries. Gerald Helleiner, who is a Canadian researcher, notes that "nothing could be further from the truth. Apart from the fact that in the long run every developing country aspires to a more diversified export bundle which includes industrial products, there is no country so poor that even today it is not affected by problems of market access at least for its processed raw materials.”  [200•1  Thus it makes no difference that some of the neo-protectionist measures affect primarily trade among developed countries (for example, the agreement concerning "organized marketing" in stainless and tool steels among the United States, the EEC, Japan, Canada, and Sweden; or concerning trade in television sets, radio receivers and portable calculators among Great Britain, Japan and the Benelux countries). Today some developing countries are already exporting these products, and in the future their number will undoubtedly increase.

p The argument of advocates of neo-protectionism that import barriers are necessary to avoid unemployment is equally 201 inconsistent. They often describe unemployment almost as if it is attributable exclusively to a flood of foreign products. The purpose of such demagogic assertions is to conceal inherent deficiencies of the capitalist system itself, under which the costs of structural shifts produced by the scientific and technical revolution are transferred entirely to workers. Even calculations performed by American economists indicate that in the United States between 1963 and 1971 "the loss in job potential in import-competing industries due to foreign trade has averaged about 44,000 jobs per year—about 0.2 percent of total manufacturing employment, and an even more minute fraction of the total U.S. labour force. The loss of job potential due to increased labour production was about six to nine times as great as the loss due to foreign trade in import-competing industries.”  [201•1 

p The manner in which various groups of countries react to the spread of new forms of contemporary neo-protectionism is symptomatic. While the Western powers simultaneously declare their condemnation of protectionist tendencies and justify their measures in limiting foreign imports by referring to internal economic difficulties and to the need to defend the interests of their own producers, developing countries are quite active in oppossing such policies, which restrain their exports and constitute a major impediment to their industrial development. As they support the just strivings of developing states socialist countries emphasize the discriminatory nature of this new form of limiting international trade, which is primarily directed against developing countries and the states of the socialist community. In such a context they seek to expose the relations that exist between neo-protectionist tendencies and the “global” policies of transnational monopolies.

p The activities of international organizations responsible for opposing the growing restraints on international trade reflect different approaches to identifying the actual causes and objectives of the new neo-protectionism. A particularly visible clash occurred in the summer of 1979 at a session of UNGTAD 202 between the advocates and the opponents of normalizing the world economic relations and reconstructing them on a just and democratic basis.

p At the conference in Manila the socialist countries proposed a constructive comprehensive programme for overcoming ’ neoprotectionism. A joint document presented by these countries indicated persuasively that "an intensification of protectionism on the part of developed market economy countries exerts a negative influence on the development of international trade as a whole and serves as a major impediment to extending mutually advantageous economic exchange in ways that take into consideration the interests of all groups of countries. In creating additional artificial barriers to international trade developed capitalist countries impede its development on an equitable and truly democratic basis. Above all, new forms of protectionism harm the exports of developing and socialist countries and this causes them to be discriminatory.”  [202•1  Particular attention was given to the interrelations that exist between neo-protectionist tendencies and the very nature of capitalist economies, as well as to the current intensification in their contradictions. It is fairly evident that it is the serious consequences of the economic crisis of the mid-1970s that have served as "the immediate causes of an intensification of protectionism, with the help of which developed countries possessing market economies seek to solve their problems at the expense of the interests of other countries".  [202•2 

p This point of view, which is based on a well-structured argument, takes into consideration the interests of developing countries, which also stressed the responsibility of Western powers in spreading protectionism and called for decisive measures to overcome it. But in spite of the unambiguous position of the overwhelming majority of participants in the Manila conference, the obstructionist tactics of the Western powers made it impossible to develop a comprehensive programme designed to permit an effective struggle against neo-protectionism. Aside from an appeal to developed countries to adhere to earlier commitments concerning the freezing of import restrictions at their existing 203 level and to seek their reduction, the compromise resolution that was adopted (Resolution 131/V) forwarded all other problems bearing on a struggle against neo-protectionism to bodies in UNCTAD and in GATT.  [203•1  Past experience has shown that Western powers often use such types of postponement to delay solutions on many vital issues. One need not be a prophet to know that the struggle against the new neo-protectionism will be prolonged and persistent.

Thus, a specific feature of the present stage in the evolution of capitalism’s external trade policies is that the tendency towards liberalization generally intensifies rather than alleviates interimperialist differences in that sphere as it opposes countervailing tendencies towards protectionism. Clashes between these tendencies and interactions among them activate entire chains of trade policy conflicts and increase the tensions that exist throughout capitalism’s entire system of international economic relations. It is the dialectical unity of these factors operating in different directions that defines further approaches to liberalization.

The Possibilities and Limits of a Global Liberalization
of Capitalist Trade

p While prospects for the further development of that process will depend primarily on the objective needs of the international division of labour they will also largely depend on purposeful activities in formulating trade policies. These may either contribute to external trade or impede it. In spite of the highly contradictory nature of the practical measures that have been adopted in the field of trade policies in recent times, the accumulated experience—both positive and especially negative—has been such as to make bourgeois ideologists and political leaders increasingly aware of the importance of overcoming trade barriers for economic progress. Subjective though it may be, this factor cannot be neglected, particularly since its significance increases as statemonopolistic intervention in economies takes place.

p In recent years the proposition that it is important to liberalize trade, and that trade is linked to the general problems of 204 the world capitalist economy has come to be generally accepted both at the theoretical level and in practice. It serves as a basis for the overwhelming majority of Western forecasts of international economic relations. For example, Harry Johnson, a prominent bourgeois specialist in that area, has observed that ".. . trade liberalization in the 1970s [will be] a crucial factor in the further progress of the whole world economy”. He called for a rapid development of a "bold conception of the global benefits of much enhanced freedom of trade, and a global strategy for working towards trade liberalization".  [204•1  Similarly William Diebold, Jr., an American researcher, has proposed ”. . . the removal of barriers to trade and payments" as an objective that "remains high on the list of objectives for the ’70s”,  [204•2  while Hiroshi Kitamura, a Japanese researcher, believes that "the greatest task before the North Atlantic world is trade liberalization".  [204•3  In a report to the OEGD prepared by a group of experts under Jean Ray, one finds the collective point of view of the leading capitalist countries concerning the proposition that "these efforts [at liberalization] should be resolutely continued"  [204•4  in the decades that will follow.

p This last statement is symptomatic in the sense that such a formulation of the problem does not limit itself to pious wishes in favour of free trade but emphasizes the need for active international actions. In particular, William Diebold states that it is difficult to accept the view of traditional advocates of free trade, who believe that only a modest measure of coordination of policies of various countries is needed in order that free trade be effective.  [204•5  Gerald M. Meier, an American economist, stresses that "free trade is not a natural state of affairs, and trade warfare has to be averted by some form of multilateral 205 surveillance. ..”. He proposes a strategy of "peacekeeping ... in international economics as in political affairs" in order that ”. . . the real forces of international economic integration ... be allowed to operate and the gains from trade ... be shared among all nations. . .”  [205•1 

p It should be emphasized that in many ways such conceptions resemble traditional slogans of advocates of free trade only superficially. While the ultimate objectives of “old” free traders and today’s advocates of liberalization formally appear to coincide, there is a definite shift in emphasis from "free competition" in external trade to "freedom of economic activities" at the international level for “global” monopolies. It is these elements of “merging” of the internal and external spheres of contemporary economies that define the central approach of trade policies and the prospects for trade liberalization that has become vital to the further development of the international division of labour.

p At the same time the laws that govern the capitalist mode of production have produced contradictions within liberalizing tendencies that express themselves through neo-protectionist barriers.

p This takes the form of inconsistencies with regard to liberalization, as well as of an inclination to compromise in theoretical and practical questions of trade policy. An open pragmatism on the part of the advocates of free trade influences all initiatives in that area. It causes a deliberate slowness in liberalizing processes, their division into stages together with a specification of only limited objectives at each successive stage.

p In particular such a strictly pragmatic approach to these problems has caused a full abandonment of customs duties on industrial products moving between developed capitalist countries to be defined as the major objective for the immediate future. This idea was proposed by a group of British businessmen and researchers, among others, that was established in order to develop a long-term strategy for the international economic relations of the Western world during the 1970s. A similar view has 206 been expressed by Olivier Long, Director-General of GATT. He has pointed to the experience of the Common Market and of EFTA in arguing for tariffless trade in finished goods.  [206•1  Since practical steps to that effect have been taken to create a tariffless zone throughout nearly all of Western Europe, and since the average level of tariff duties today is relatively insignificant, such a prospect appears to be more or less realistic.

p Another area that has been emphasized in the efforts of corresponding governments and international organizations concerns non-tariff barriers. The need to liberalize them has become particularly evident following the tangible reduction in import tariffs as a consequence of the Kennedy Round. This refers primarily to quantitative restrictions. These are already relatively weak in many sectors of world capitalist trade and also readily lend themselves to international comparisons, thus facilitating joint measures designed to reduce them. On this issue advocates of liberalization display their militancy and propose, like the OEGD experts, a complete rejection of quantitative barriers, although with the usual loopholes that characterize "neo-free traders" generally (“except where they form part of safeguard measures, applied not arbitrarily or unilaterally but after multilateral discussions”).  [206•2  A campaign against non-tariff barriers has now become one of the major points emphasized by GATT. It is true that the outcome of the Tokyo Round, which took place under conditions that were considerably more difficult than during the earlier rounds, shows how much remains to be done in reducing non-tariff barriers, and how difficult it is to produce long-term forecasts of the liberalization of world trade.

p Still, there are no longer any doubts concerning a number of factors. For example, in the case of trade in agricultural products interimperialist contradictions are extremely intense. As a result it is highly unlikely that the superprotectionist barriers that exist in this area can be reduced in the foreseeable future. Even in such an openly apologetic document as the Report of the Commission on International Development which proposes a 207 “new" external economic policy for imperialism, it is recognized that "no dramatic advances towards free trade in agriculture can be expected in the short run".  [207•1  Even after the limited measures proposed by the Tokyo Round are carried out, it is likely that the level of protectionism in the agrarian sector will remain extremely high and that trade liberalization in this area— to the extent that it is at all possible, given the world capitalist economy’s socio-economic structure—will remain a task for the distant future and will continue to be highly problematic.

p Still on the whole, in spite of the inevitable costs of a capitalist liberalization of trade it continues to develop. It is especially important that it already appears to be irreversible in the long run, for it has developed as far as has the process of internationalization of economic life on which it rests. It is not a coincidence that the ideologists of monopolistic capital are formulating their agenda not in terms of reducing trade policy barriers, but of liquidating them completely. This is viewed as a major condition for the capitalist economy’s further development. That conception was first formulated comprehensively in a declaration of British economists, who emphasized that "if multilateral trade negotiations are viewed in an historical context, it can be seen that freer trade could be the only realistic objective of the free-enterprise world in the 1950s and 1960s. .. The 1970s should be the beginning, therefore, of a new phase in the movement towards an open world economy in which free trade can be regarded as not only a realistic but also a necessary objective."  [207•2  While this has partly turned out to be the case—as indicated by the outcome of the Tokyo Round—the intensification of neoprotectionism must also be recognized.

p This also raises the following question: How should the 208 current stage in liberalization be viewed within a long-term historical perspective on the evolution of the world capitalist market? Without considering the history of external trade policies,  [208•1  let us simply recall the long-term trends of customs duties in the U.S. Since there are no data concerning other elements of customs control, and keeping in mind that traditionally the United States has been a country with high protective barriers (Table 32) we will assume, for the sake of argument, that the level of import duties may be viewed as a criterion of the level of protectionism.

p Of course in no case can one view the current level of import duties in the U.S., which incidentally is generally similar to that
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Table 33 Average Level of Import Duties in the U.S. (percent of value) Years On Imports Subject to Tariff Duties On All Imports 1890-1894 48 23 1894—1897 41 21 1897—1909 47 26 1909-1913 41 19 1913—1922 27 9 1922—1930 39 14 1931—1935 50 18 1936—1940 38 15 1940—1945 32 11 1946—1950 16 7 1951—1955 12 5 1956—1960 11 7 1961—1965 12 7 1966—1971* 8 6 1972—1979** 8 5 * Following the period set aside for implementing the measures under the Kennedy Round. ** Author’s estimate. Source: United States International Economic Policy in an Interdependent World, Washington, July 1971, Vol. 2, p. 81. 209
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of other developed capitalist countries, as a measure of the absolute level of contemporary protectionism. Yet no matter how one interprets these data it would be difficult to deny that with regard to the tariffs, at least, there has been significant progress in the liberalization of trade.

p It is hardly useful to attempt forecasting specific dates and magnitudes in world capitalist trade’s liberalization over the long term. Instead, one can only define the principles underlying approaches to that problem, and weigh the relative importance of individual factors that govern the possibilities and limitations of a “liberalization” of international trade under capitalism.

p At a very general level one may assume that the possibilities for liberalizing external trade are as broad as are the objective requirements for an internationalization of productive forces, and that the limits to liberalization are therefore defined by the internally contradictory nature of the international division of labour under capitalism. It is not unexpected that, as Western researchers have concluded in recent years, the economic interdependence of states "began to be seen by some as perhaps a source of more problems than benefits".  [209•1  Clearly the coexistence of two irreconcilable principles that express themselves in the mutual opposition of free trade and of protectionist tendencies will fully disappear only together with the world capitalist economic system itself.

p Yet while protectionist elements may temporarily become even stronger at times of increased economic difficulties, the tendency towards a further emphasis on international economic exchange activities still appears to prevail, for it stems from the further enhancement of the role of the external sphere in economic life as further progress takes place in science and technology.

p The experience of recent years has shown that in spite of the seemingly growing complexity of responding to the external economic problems of world capitalism resulting from unprecedented impediments, the tendency towards a liberalization of exchange 210 activities continues to prevail. At the present time one cannot see any forces that could alter that tendency.

p Even if one accepts the seriousness of the threats that are posed by the new neo-protertionism, one cannot neglect the outcome of the Tokyo Round, for in spite of its contradictory nature, this still represents a further step towards liberalization. It is also symptomatic that the negotiations under the Tokyo Round were completed towards the end of 1979, i.e., at the beginning of a new decade, that was marked from the very first by further intensification of all the economic and socio-political contradictions that characterize modern capitalism. The fact that in spite of this it was possible not only to arrive at an agreement on the second most significant reduction in tariff duties in postwar years, but to envisage concrete international measures for limiting non-tariff barriers for the first time points to an objective need for a liberalization of external economic exchange activities. This need increases, moreover, at times of difficulties produced by crises. For capitalism also seeks to overcome these difficulties through a further deepening of the international division of labour. It is of course true that because of the inherent contradictions of the capitalist system that tendency then also encounters an opposing tendency towards neo-protectionism, especially at times of crises. In the long run it would be difficult to deny the growing importance of the international division of labour and of the factors that are associated with it. For in the final analysis this corresponds to the interests of a further development of international production, and what is most relevant, to the interests of international monopolistic capital, which is acquiring an increasing influential role within world capitalism’s economic hierarchy.

p In spite of these contradictory factors one may therefore expect that improvement in conditions of international exchange in industrial products in the long run, especially of technically complex items, is more probable than a growth in impediments. Above all this refers to tariff duties and quotas.

p In particular, it is possible that while the current cyclical crisis is overcome the large zones of tariffless or else preferential trade that already have or else are being established will continue to develop. These include the Common Market and countries 211 associatcd with it,  [211•1  the West European zone of tariffless trade in industrial products, the American-Canadian agreement concerning the free exchange of a number of industrial products, the system of general preferential terms for exports of manufactures and semi-manufactures from developing countries to developed capitalist countries, and individual preferential trade zones between developed and developing countries. But there will probably also be a tendency towards a gradual, although contradictory merging of such zones, most probably through the absorption of some by others, but ultimately resulting in a widening of the international "economic space" that will be available for the development of international production activities in advanced economic sectors, primarily in the interest of the TNCs.

p But as nationally differentiated financial groups retreat under the blows of international monopolistic supergiants, they will probably shift the centre of gravity in the struggle against liberalization to the highly differentiated area of non-tariff and noncustoms protectionism, especially in order to hinder emerging industrial exports from developing states. Aside from the traditional instruments of agrarian protectionism, opponents of liberalization will most probably be able to take advantage of such new factors as the need of imperialist powers for imported fuel supplies and the growing commitment of developing countries to independent policies with regard to their natural resources. This makes the prospects of a substantial reduction in agrarian and raw material protectionism as problematic as in the past. Capitalism is even less able to arrive at fundamental solutions to these problems than with regard to trade in industrial goods.

This brings to mind the words of Adam Smith. Writing at the dawn of capitalism, and referring to Great Britain, he observed that to expect completely free trade would be as naive as to expect a Utopia. Today we can fully appreciate the realism of this great British scientist.