ECONOMIC

Reducing Nontariff BarriersIn order to make possible the more effective management of the tradingsystem, new understandings need to be negotiated with respect to a widevariety of nontariff barriers (NTB's), such as import quotas, preferentialgovernment procurement regulations, discriminatory standards, and unreasonablecustoms procedures. Some NTB's are imposed for the same reasonsthat tariffs are imposed, to protect a particular domestic economic activity.In negotiating reductions in NTB's the goal is the same as in negotiatingreductions in tariffs: to remove or reduce the obstacles to free exchange ofgoods. Other NTB's, however, are merely the unintended by-product ofprograms designed to achieve various domestic social or economic objectives.The negotiating objective in such cases is to bring about modifications in thedesign or implementation of policies related to such an objective in order toavoid unnecessary distortion of trade. It may also be desirable to subject suchpolicies to periodic review to make sure that the level of protection offeredis the minimum necessary to achieve legitimate domestic goals.There is a natural tension between the free market principle on whichthe GATT is based and the practical reality of extensive government interventionin the economy in most countries. The challenge for these negotiationsis to devise arrangements that will give governments considerableleeway in forming and pursuing their own policies, while encouraging themto adopt policy measures that will minimize the disruption of the economicinterests of other nations. Such arrangements in themselves will not eliminatepotential policy conflicts among governments, but they can provide someguidelines for resolving such conflicts to everyone's satisfaction. The absenceof such arrangements creates the danger that governments will try to protectthemselves against the disruptive influence of actions by foreign governmentsin sensitive sectors by imposing new measures that distort trade.Reforming Agricultural TradeTrade barriers and domestic social objectives are perhaps most intertwinedin the agricultural sector, where domestic programs to support farmincome and to guarantee the availability of food supplies from domesticsources have been sheltered by comprehensive tariff and nontariff barriers.The challenge facing the negotiators is to work out some arrangements thatwould permit governments to honor their commitments to both farmersand consumers at lower levels of protection. A reduction of the level ofprotection would not only benefit consumers by reducing real food prices,but encourage producers to use their resources in a manner more consistentwith comparative advantage. It is also true, of course, that the necessaryshifts in production patterns would be difficult for some producers, andprovisions to ease the adjustment costs would be needed in many countries.For some countries this will mean new measures to transfer incometo those farmers who suffer income losses in the short run from lowerlevels of protection.214