Kennedy Round - AbsoluteAstronomy.com

The Kennedy round was the sixth session of General Agreement on Tariffs and Trade

General Agreement on Tariffs and Trade

The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...

(GATT) trade negotiations held in 1964-1967 in Geneva, Switzerland. Congressional passage of the US Trade Expansion Act

Trade Expansion Act

Under the Trade Expansion Act of 1962 , the United States Congress granted the White House unprecedented authority to negotiate tariff reductions of up to 50%. It paved the way for the Kennedy Round of General Agreement on Tariffs and Trade negotiations, concluding on June 30, 1967 — the...

in 1962 authorized the White House to conduct mutual tariff negotiations ultimately leading to the Kennedy Round. Participation greatly increased over previous rounds. Sixty-six nations, representing 80% of world trade, attended the official opening on May 4, 1964, at the Palais des Nations

Palais des Nations

The Palais des Nations in Geneva, Switzerland, was built between 1929 and 1936 to serve as the headquarters of the League of Nations. It has served as the home of the United Nations Office at Geneva since 1946 when the Secretary General of the UN signed a Headquarters Agreement with the Swiss...

. The director general announced the round’s success on May 15, 1967, despite bitter disagreement upon many of the details. The final agreement was signed on June 30, 1967 ––the very last day permitted under the Trade Expansion Act

Trade Expansion Act

. The round was named after American President John F. Kennedy

John F. Kennedy

John Fitzgerald "Jack" Kennedy , often referred to by his initials JFK, was the 35th President of the United States, serving from 1961 until his assassination in 1963....

, who died six months before the opening negotiations.

Goals

The main objectives of the Kennedy Round were:

to slash tariffs by half with a minimum of exceptions
to break down farm trade restrictions
to strip away nontariff regulations
to aid developing nations.

Background

The European trade integration signaled by the creation of the European Economic Community

European Economic Community

The European Economic Community The European Economic Community (EEC) The European Economic Community (EEC) (also known as the Common Market in the English-speaking world, renamed the European Community (EC) in 1993The information in this article primarily covers the EEC's time as an independent...

(EEC) in the 1957 Treaty of Rome caused the U.S. to fear its own products would be shut out of the European market. Thus, President Kennedy pressed for the passage of the Trade Expansion Act, which gave the president authority to decrease duties up to 50% from their 1962 levels or increase them up to 50% from their 1934 levels. The window for this increased authority was after June 30, 1962 and before July 1, 1967. Trade adjustment assistance was considered within the act with several provisions that provided for the financial and technical assistance to firms and workers adversely affected by the opening of trade. It also made provisions for treating the European Economic Community as a single trade partner and made special provisions for any trade agreements covering agricultural commodities. After the act was passed, the administration pressed for a new round of multilateral trade talks to utilize its new authority, which would become known as the Kennedy Round upon the death of President Kennedy in November 1963.

Negotiations

The Kennedy Round officially opened on May 4, 1964 at the Palais des Nations. It was the last GATT round to have tariff reduction as its primary focus. However, it was the first GATT round to deal with non-tariff issues, such as dumping, a practice whereby a company exports a product at a price lower than the price it charges in its home market. It notably also pioneered a "linear" style of negotiations. In contrast to the item-by-item negotiations of previous GATT rounds, many countries offered across-the-board cuts of a certain percentage on all tariffs of participating countries. The so-called Bridge Club of the United States, EEC, Japan, and the United Kingdom led the negotiations and offered linear cuts. Six other European nations joined them in linear cuts. Another 36 countries were nonlinear participators, a difference which led to tension within the negotiations, as linear countries often felt nonlinear countries had no right to participate in the "confrontation and justice" procedure for dealing with proposed exceptions. Thus, although the Kennedy Administration had originally contemplated finishing the round in six months, the round was plagued with delays and slow progress. In addition to the linear and nonlinear divides, disputes arose over agricultural policy and tariff disparities. The U.S. pressed for Europe to agree to cut farm tariffs before proceeding to negotiating industrial tariffs, but gridlock led the U.S. to relent. Only low expectations stopped the concluding agricultural agreements from being considered a disaster. Further, equivalent percentage cuts to high U.S. tariffs (18% on average) and medium EEC tariffs (12% on average ) were seen to favor the United States. Since President Lyndon Johnson had little chance of success in reauthorizing the Trade Expansion Act, its July 1, 1967 deadline served as the effective deadline for the Kennedy round. After a marathon session, negotiators announced a satisfactory agreement at a midnight meeting with the press on May 15, 1967. The final agreement was signed on June 30, 1967. However, within the United States, Congress repealed several provisions of the round of global tariff cuts, hurting the future credibility of the United States in worldwide trade negotiations.

Effects

U.S. tariff concessions involved $8.5 billion worth of goods, and foreign tariff concessions on imports from the U.S. involved $8.1 billion. 64% of non-agricultural dutiable imports were covered by U.S. linear cuts, with an average tariff reduction of 35%. Foreign tariff reductions were on average 34%, and covered 48% of their non-agricultural dutiable imports. Non-tariff achievements included the establishment of the GATT Antidumping Code of 1967, which gave a procedural framework for negotiating dumping accusations and expanded upon the original Article VI in GATT. The round can also be seen as a success for developing nations. A “Trade and Development” section was added to the GATT charter; its most significant feature was excepting developing nations from the rule of reciprocity. It also called for the stabilization of raw material prices. Further, the agricultural grains arrangement provided for higher minimum trading prices as well as a food aid program to developing countries. Some progress was also made with negotiations on commodities. The round extended the Long Term Cotton Textile Arrangement for another three years and provided frameworks for negotiating steel, aluminum, chemicals, pulp, and paper tariffs.

Criticism

General protectionist criticisms have been made of the round. In voting to withdraw from the WTO in 2000, Congressman Jack Metcalf cited the Kennedy round as the beginning of “the slow decline in Americans’ living standards” and that all such multilateral agreements “may mesmerize and motivate Washington policymakers, but in the American heartland...translate as further efforts to promote international order at the expense of existing American jobs.” However, the round also has economically liberal critics, who believe that it did not achieve as liberal of goals as the tariff cuts suggest and instead, out of political fears, erected non-tariff barriers to protect domestic industries from the negative effects of trade.

External links

The source of this article is wikipedia, the free encyclopedia. The text of this article is licensed under the GFDL.