Kennedy Round

Background 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. 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. 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. It also made provisions for treating the EEC as a single trade partner and made special provisions for any trade agreements covering agricultural commodities. 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 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. 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. 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. 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. ==Effects ==

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. 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. 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. Further, the agricultural grains arrangement provided for higher minimum trading prices as well as a food aid program to developing countries. 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. ==Criticism ==

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". 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. ==References==