Tarifflcation Part of Larger Proposal
Tariffication may be thought of as the import protection side of the
U.S. proposal. In addition to this there will be provisions for even-
tual removal of export subsidies and output distorting domestic pol-
icies. At the moment, the U.S. Trade Representative’s Office
(USTR) and U.S. Department of Agriculture (USDA) are preparing
a larger U.S. proposal for submission to GATT in October or
November, 1989, of which tariffication is one part.
The new proposal will include explicit treatment of export sub-
sidies, internal subsidies, sanitary and phytosanitary measures and
GATT rules and disciplines.
While Carla Hills and Clayton Yeutter will lead the negotiations at
the highest level, the operating U.S. team, led by Richard Crowder
of USDA and Ambassador Jules Katz of USTR, will be represented
in Geneva by Ambassador Rufus Yerxe (formerly Representative
Dan Rostenkowskfs chief trade aid). The staff level team will be led
by Joe O’Mara at USDA and Suzanne Early at USTR and repre-
sented in Geneva by Deputy Chief of Mission Andrew Stoler.
U.S. Proposal Illustrated
It may be useful to illustrate the concept underlying the evolving
U.S. proposal (Runge and Taff). In general, trade-distorting mea-
sures may be thought of in terms of their effect on (a) exports, (b) im-
ports and (c) output. Tariff equivalents describe distortions on the
import side while subsidies describe them on the export side. Output
distortions resulting from internal policies are derived with respect
to their effect on production in domestic markets. In each case, pol-
icies may either promote or retard exports, imports or output.
Export Distorting Policies
With respect to exports, a policy has a distorting trade effect if
either buyers or sellers in the domestic market face different condi-
tions from those who participate in the cross-border market. Such a
definition encompasses not only policies that affect the difference be-
tween export and domestic prices, such as export taxes and sub-
sidies, but also nonprice protective barriers such as voluntary export
restraints.
As shown in Figure 1, such policies may distort trade either by ar-
tificially promoting exports (as in the case of the Export Enhance-
ment Program) or by artificially retarding them (as in the case of Ar-
gentine export taxes or voluntary export restraints).
28
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