The Bush Administration’s Response To Repression: US Concessions On Gatt Membership

Even as Soviet tanks were rumbling through the streets of Vilnius last week — and the Bush Administration was softly urging restraint on Moscow — the United States was offering an important trade concession to the Kremlin. The Center for Security Policy noted today that the United States has officially dropped its major precondition concerning Soviet observer status in the General Agreement on Tariffs and Trade (GATT). At the GATT Council meeting in Geneva yesterday, the United States withdrew its objection to the immediate approval of the Soviet application for observer status in that institution.

At the Malta Summit in December 1989, President Bush offered to back Mr. Gorbachev’s bid for GATT observer status once the Uruguay Round was completed. (The current Round, kicked off in Montevideo, Uruguay, is not scheduled to end until December 1990.) The lead-time stipulated was intentional; President Bush in a White House press release dated 4 December 1989, "urged the Soviet Union to use the intervening time to move toward market prices at the wholesale level so its economy will become more compatible with the GATT system." (Emphasis added.)

In other words, just five months ago President Bush recognized the essentiality of transforming the Soviet Union’s economic system if its participation in GATT — even on an observer basis — is to serve the interests of the existing membership.

Interestingly, this sensible precondition was reemphasized in the National Security Strategy of the United States report released just last month by the White House. In it, the President said:

We have offered to support observer status for the Soviet Union in the structures created by the General Agreements on Tariffs and Trade after the Uruguay Round of Multilateral Trade Negotiations is completed, and I personally urged Chairman Gorbachev to use the intervening time to move more rapidly towards market practices in the Soviet economy.

 

Thus far, however, there has been no genuine move toward systemic price reform in the Soviet Union. To the contrary, the Soviet economy remains as fundamentally incompatible with both the philosophy and operations of the GATT as ever.

Now, much as the Bush Administration attempted to improve China’s status in the GATT last year despite Beijing’s brutal repression of democratic movements through a gambit revealed by the Center on 5 September (see The Bush Administration’s Incredible Shrinking Chinese Sanctions Policy, No. 89-P 52), it apparently is prepared to reward Moscow with a similar gesture despite Soviet coercion in Lithuania.

"There is a remarkable parallel between the Bush Administration’s current willingness to facilitate accelerated Soviet involvement in the GATT — despite the fact that the USSR is actively intimidating and repressing Lithuania — and its abortive efforts last year to upgrade China from observer status to full membership in that organization following the Tiananmen Square massacre," said Frank J. Gaffney, Jr., the Center’s director.

"Over the past few years, the executive branch has waffled on the issue of GATT observer status and eventual membership for the Soviet Union. This most recent erosion of the U.S. position, in the midst of the Lithuanian drama, is as untimely as it is ill-advised," said Roger W. Robinson, Jr., former Senior Director for International Economic Affairs at the National Security Council and a member of the Center’s Board of Advisors.

Worse yet, the invitation to the Soviets to gain early observer status in the GATT comes on the heels of at least two other recent economic concessions to Moscow: (1) The United States has acceded to Soviet membership and borrowing privileges in the European Bank for Reconstruction and Development, thereby placing the Soviet Union both in the Board Room and at the teller’s window of the EBRD. Treasury Secretary Nicholas Brady is expected to sign off on these arrangements over the week-end as the G-7 Finance Ministers meet in Paris. And (2) the United States is now advancing with its COCOM partners proposals easing Soviet acquisition of mainframe computers, telecommunications equipment and technology and highly accurate machine tools.

The Center regrets that, as the cause of freedom in Lithuania has been steadily undermined by Moscow, the belief seems to persist among the small cadre of decision-makers in the Bush Administration that a "linkage-free" policy toward the Soviet Union can be successfully pursued.