A Question of Exceptions

For months, one of the world's brightest hopes in the field of international business has quietly been getting nowhere. The Kennedy Round of tariff-cutting talks* in Geneva, which was envisioned as the first bold step toward a free-trading Atlantic Community, has been hung up by delays and disagreements since its opening in May. The negotiations resumed this week in Geneva, where each nation presented a top-secret list of sensitive and important products that it wishes exempted from the tariff bargaining. Last week, as 45 nations prepared to dispatch their lists to the 19th century Geneva villa where Leo Tolstoy once lived, a new crisis in the Common Market once more showed that France not only is lukewarm about the Kennedy Round but could frustrate it at any time.

After insisting that Europe must reach a common agreement to cut farm tariffs before it would negotiate about industrial tariffs, the U.S. recently relented and urged that tariff talks proceed, for the time being, without a common agricultural policy. Last week France agreed to give the Germans, whose high grain prices have proved a stumbling block, more time to come to terms. That seemed very magnanimous of the French--but they had something up their sleeve. When the Common Market Commission met in Brussels and proposed that the Six adopt a compromise list of 210 exempt items involving about 12% of the Market's imports, France balked. Having neutralized the Germans by its farm concession, France now demanded that another 130 items be tacked on to the industrial list, and Italy joined in with a demand for another 68. The additions could swell the Common Market lists of exemptions to more than 20% of the Market's imports --meaning further trouble for the Kennedy Round.

The U.S. has held its own list to less than 10% of the 5,000 items under negotiation. Among its exemptions: steel, lead and zinc, glassware, stainless-steel flatware. Even before adding to the list, Europe's protectionists had called for special protection for their aluminum, textiles, watches and sewing machines. Early this week, after desperate all-night bargaining, the French and their Italian allies gave in a bit, agreed to a list somewhat short of their original demands but much above what the Germans wanted.

Although the disputes strained Europe's unity, the French seemed unlikely to go so far as to break up the Common Market--if only because they have gained so much from it. Since 1958, the six members' gross national products have grown by an average 30% (v. the U.S.'s 23%, Britain's 16%), and their exports to one another have doubled. France has done much better than the average; its exports to the Market countries have nearly tripled, to $3.1 billion. If France is too protectionist to want any meaningful tariff cuts, it nonetheless could turn the market into a narrow, inward-looking organization. And if it persists in its demand for a lengthy exception list, it may well bog down the Kennedy Round for many more months.

*The name originated in honor of John Kennedy, whose Trade Expansion Act gave impetus to the "round," which is only one in a series of trade talks in recent years.

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