ECONOMIC

Negotiating a New International Safeguard SystemNew international agreements would also be useful with respect to therules and procedures adopted by countries to deal with problems of importdisruption. Most nations at one time or another find it desirable to limit thegrowth of imports for a transitional period so that domestic industry canhave time to adjust. Since the current international rules and procedureshave proved largely unworkable in practice, governments have generallyworked out informal arrangements with each other. It would be desirable tobring these arrangements within an accepted international framework inwhich the interests of third parties could be better protected. The adoptionof certain internationally accepted principles could also reduce some of thepolitical friction which has tended to be associated with the negotiation ofsuch arrangements. It would moderate the effects of adjustment, while givingthe international community some better assurance that restrictive measureswill not be any broader or continue any longer than necessary for domesticadjustment to take place.Subsidies and Countervailing DutiesBetter international understanding is also needed on the use of subsidiesand the imposition of countervailing duties designed to offset foreignsubsidies. Governments commonly employ subsidies to achieve specific economicand social goals. When such subsidies are used to favor industriescompeting with export or import industries, they affect not only domesticeconomic activity but foreign economic activity as well. Foreign governmentscan try to neutralize the effect of the subsidy on their own trade byimposing an equivalent duty on imports or an equivalent subsidy on exports.Given the widespread use of subsidies by most governments, tradewould become increasingly subject to new tariffs if governments actuallycountervailed against every form of foreign subsidy. Conversely, the competitiveposition of unsubsidized businesses in some countries could be increasinglyaffected by subsidized production in other countries. What isneeded therefore is international agreement on the types of subsidies that arenot internationally acceptable, and consequently subject to countervailingduties, and general agreement on the types of subsidies that are acceptable.Access to Foreign SuppliesThe events of the past year have demonstrated that access to suppliescan be as much of a problem as access to markets, and that internationalguidelines on access to supplies can be as valuable as internationalagreements about access to markets. The possibility has thus arisen of anew type of reciprocity in international trading relations: commitmentsby producing countries to consuming countries on access to supplies, andcommitments by consuming countries to producing countries on accessto markets. Similarly, safeguard arrangements which are designed to protectproducers in consuming countries when excessively large increases in importsthreaten to disrupt domestic production could be matched by safeguard217