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Kennedy Round

December 01, 2023

The Kennedy Round was the sixth session of General Agreement on Tariffs and Trade (GATT) multilateral trade negotiations held between 1964 and 1967 in Geneva, Switzerland. Congressional passage of the U.S. Trade Expansion Act 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. Despite several disagreements over details, the director general announced the round’s success on May 15, 1967, and the final agreement was signed on June 30, 1967—the last day permitted under the Trade Expansion Act. The round was named after U.S. President John F. Kennedy, who was assassinated six months before the opening negotiations.[1]

The main objectives of the Kennedy Round were to:

  • Slash tariffs by half with a minimum of exceptions
  • Break down farm trade restrictions
  • Remove non-tariff barriers
  • Help developing countries

History edit

Background edit

The European trade integration signaled by the creation of the European Economic Community (EEC) in the 1957 Treaty of Rome led the United States to fear its own products would be shut out of the European market.[2][3] 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.[4] 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.[5] It also made provisions for treating the EEC as a single trade partner and made special provisions for any trade agreements covering agricultural commodities.[6] 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 edit

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.[7] 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.[8] 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. Members of the so-called "Bridge Club"—the United States, European Economic Community, Japan, and the UK—led the negotiations and offered linear cuts.[2] Six other European countries 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.[9] 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 United States wanted Europe to agree to cut farm tariffs before moving on to industrial tariffs, but gridlock forced the United States to relent.[9] Only low expectations stopped the concluding agricultural agreements from being considered a disaster.[2][3] 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.[10] 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.[9] 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.[11]

Effects edit

U.S. tariff concessions involved $8.5 billion worth of goods, and foreign tariff concessions on imports from the United States 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.[9] 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.[12] 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 exempting developing nations from the rule of reciprocity. It also called for the stabilization of raw material prices.[13] Further, the agricultural grains arrangement provided for higher minimum trading prices as well as a food aid program to developing countries.[14] 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.[14]

Criticism edit

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".[15] 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.[16]

References edit

  1. ^ (PDF). Central Intelligence Agency. Archived from the original (PDF) on January 23, 2017.
  2. ^ a b c Endo, Minoru (2005). Macrory, Patrick F. J.; Appleton, Arthur E.; Plummer, Michael G. (eds.). The World Trade Organization: Legal, Economic and Political Analysis, Vol. 3. New York: Springer Science+Business Media. p. 172. ISBN 978-0-387-22685-9.
  3. ^ a b The World Trade Organization: legal, economic, and political analysis, Vol. 1. Patrick Macrory, Arthur Appleton, Michael Plummer.
  4. ^ 19 USC Chapter 7 - Trade Expansion Program 2011-02-03 at the Wayback Machine. 1 February 2010.
  5. ^ US Code Title 19, Chapter 7, Subchapter III. Tariff Adjustment and Other Adjustment Assistance.
  6. ^ US Code Title 19, Chapter 7, Subchapter II. European Economic Community (repealed).
  7. ^ "Trade Promotion Authority and the Role of Congress in Trade Policy", 8 February 2008.
  8. ^ WTO, "Anti-Dumping Definition".
  9. ^ a b c d Bernard Norwood, "The Kennedy Round: A Try at Linear Trade Negotiations", Journal of Law and Economics, Vol. 12, No. 2 (Oct. 1969), pp. 297-319
  10. ^ , Time Magazine. 6 March 1964.
  11. ^ "The Cafta Conundrum", The Economist, 16 June 2005.
  12. ^ [1] Overview and Compilation of U.S. Trade Statutes. June 2001.
  13. ^ [2] international trade. Encyclopædia Britannica Online School Edition. 2011. Web. 28 Feb. 2011
  14. ^ Jack Metcalf, "Speech to Congress on H.J. Res 90", 4 May 2000
  15. ^ Howard Marvel and Edward Ray, "The Kennedy Round: Evidence on the Regulation of International Trade in the United States", The American Economic Review,

Further reading edit

  • Evans, John W. The Kennedy Round in American Trade Policy: The Twilight of the GATT (1971)
  • Lee, Donna. "Endgame at the Kennedy Round: a case study of multilateral economic diplomacy." Diplomacy and Statecraft 12.3 (2001): 115-138.
  • Marvel, Howard P., and Edward J. Ray. "The Kennedy round: evidence on the regulation of international trade in the United States." American Economic Review 73.1 (1983): 190-197. argues US firms that were hurt got special protection from Congress.
  • Rehm, John B. "Developments in the law and institutions of international economic relations: the Kennedy Round of Trade Negotiations." The American Journal of International Law 62.2 (1968): 403-434.
  • Zeiler, Thomas W. "Commanding the Middle: The American Agenda at the Kennedy Round" Australian Economic History Review. (2001) 41#3 p308-24. online

External links edit

  • WTO.org slide show
  • Deardorff's Glossary of International Economics

December 01, 2023
kennedy, round, sixth, session, general, agreement, tariffs, trade, gatt, multilateral, trade, negotiations, held, between, 1964, 1967, geneva, switzerland, congressional, passage, trade, expansion, 1962, authorized, white, house, conduct, mutual, tariff, nego. The Kennedy Round was the sixth session of General Agreement on Tariffs and Trade GATT multilateral trade negotiations held between 1964 and 1967 in Geneva Switzerland Congressional passage of the U S Trade Expansion Act 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 Despite several disagreements over details the director general announced the round s success on May 15 1967 and the final agreement was signed on June 30 1967 the last day permitted under the Trade Expansion Act The round was named after U S President John F Kennedy who was assassinated six months before the opening negotiations 1 The main objectives of the Kennedy Round were to Slash tariffs by half with a minimum of exceptions Break down farm trade restrictions Remove non tariff barriers Help developing countriesContents 1 History 1 1 Background 1 2 Negotiations 2 Effects 3 Criticism 4 References 5 Further reading 6 External linksHistory editBackground edit The European trade integration signaled by the creation of the European Economic Community EEC in the 1957 Treaty of Rome led the United States to fear its own products would be shut out of the European market 2 3 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 4 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 5 It also made provisions for treating the EEC as a single trade partner and made special provisions for any trade agreements covering agricultural commodities 6 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 edit 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 7 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 8 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 Members of the so called Bridge Club the United States European Economic Community Japan and the UK led the negotiations and offered linear cuts 2 Six other European countries 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 9 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 United States wanted Europe to agree to cut farm tariffs before moving on to industrial tariffs but gridlock forced the United States to relent 9 Only low expectations stopped the concluding agricultural agreements from being considered a disaster 2 3 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 10 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 9 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 11 Effects editU S tariff concessions involved 8 5 billion worth of goods and foreign tariff concessions on imports from the United States 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 9 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 12 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 exempting developing nations from the rule of reciprocity It also called for the stabilization of raw material prices 13 Further the agricultural grains arrangement provided for higher minimum trading prices as well as a food aid program to developing countries 14 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 14 Criticism editGeneral 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 15 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 16 References edit GATT and the Kennedy Round PDF Central Intelligence Agency Archived from the original PDF on January 23 2017 a b c Endo Minoru 2005 Macrory Patrick F J Appleton Arthur E Plummer Michael G eds The World Trade Organization Legal Economic and Political Analysis Vol 3 New York Springer Science Business Media p 172 ISBN 978 0 387 22685 9 a b The World Trade Organization legal economic and political analysis Vol 1 Patrick Macrory Arthur Appleton Michael Plummer 19 USC Chapter 7 Trade Expansion Program Archived 2011 02 03 at the Wayback Machine 1 February 2010 US Code Title 19 Chapter 7 Subchapter III Tariff Adjustment and Other Adjustment Assistance US Code Title 19 Chapter 7 Subchapter II European Economic Community repealed Trade Promotion Authority and the Role of Congress in Trade Policy 8 February 2008 WTO Anti Dumping Definition a b c d Bernard Norwood The Kennedy Round A Try at Linear Trade Negotiations Journal of Law and Economics Vol 12 No 2 Oct 1969 pp 297 319 World Trade Toward the Kennedy Round Time Magazine 6 March 1964 The Cafta Conundrum The Economist 16 June 2005 1 Overview and Compilation of U S Trade Statutes June 2001 2 international trade Encyclopaedia Britannica Online School Edition 2011 Web 28 Feb 2011 a b In Public Papers of the Presidents of the United States Lyndon B Johnson Remarks Upon Signing the Kennedy Round Trade Negotiations Proclamation p1148 speech by LBJ on December 16 1967 Jack Metcalf Speech to Congress on H J Res 90 4 May 2000 Howard Marvel and Edward Ray The Kennedy Round Evidence on the Regulation of International Trade in the United States The American Economic Review Further reading editEvans John W The Kennedy Round in American Trade Policy The Twilight of the GATT 1971 Lee Donna Endgame at the Kennedy Round a case study of multilateral economic diplomacy Diplomacy and Statecraft 12 3 2001 115 138 Marvel Howard P and Edward J Ray The Kennedy round evidence on the regulation of international trade in the United States American Economic Review 73 1 1983 190 197 argues US firms that were hurt got special protection from Congress Rehm John B Developments in the law and institutions of international economic relations the Kennedy Round of Trade Negotiations The American Journal of International Law 62 2 1968 403 434 Zeiler Thomas W Commanding the Middle The American Agenda at the Kennedy Round Australian Economic History Review 2001 41 3 p308 24 onlineExternal links editWTO org slide show BOPCRIS Glossary of customs terms Deardorff s Glossary of International Economics Retrieved from https en wikipedia org w index php title Kennedy Round amp oldid 1144474283, wikipedia, wiki, book, books, library,

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