The Kennedy Round was the sixth session of
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade (GATT) is a legal agreement between many countries, whose overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or quotas. According to its pre ...
(GATT)
multilateral trade negotiations
The term multilateral trade negotiations (MTN) initially applied to negotiations between General Agreement on Tariffs and Trade (GATT) member nations conducted under the auspices of the GATT and aimed at reducing tariff and nontariff trade barriers ...
held between 1964 and 1967 in
Geneva
Geneva ( ; french: Genève ) frp, Genèva ; german: link=no, Genf ; it, Ginevra ; rm, Genevra is the List of cities in Switzerland, second-most populous city in Switzerland (after Zürich) and the most populous city of Romandy, the French-speaki ...
,
Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
. Congressional passage of the U.S.
Trade Expansion Act
The Trade Expansion Act of 1962 (, codified at ) is an American trade law.
Section 232 of the Act permits the President to impose tariffs based on a recommendation by the U.S. Secretary of Commerce if "an article is being imported into the Unite ...
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
The Palace of Nations (french: Palais des Nations, ) is the home of the United Nations Office at Geneva, located in Geneva, Switzerland. It was built between 1929 and 1938 to serve as the headquarters of the League of Nations. It has served ...
. 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 Trade Expansion Act of 1962 (, codified at ) is an American trade law.
Section 232 of the Act permits the President to impose tariffs based on a recommendation by the U.S. Secretary of Commerce if "an article is being imported into the Unite ...
. The round was named after U.S. President
John F. Kennedy
John Fitzgerald Kennedy (May 29, 1917 – November 22, 1963), often referred to by his initials JFK and the nickname Jack, was an American politician who served as the 35th president of the United States from 1961 until his assassination ...
, who was
assassinated
Assassination is the murder of a prominent or important person, such as a head of state, head of government, politician, world leader, member of a royal family or CEO. The murder of a celebrity, activist, or artist, though they may not have a ...
six months before the opening negotiations.
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
Non-tariff barriers to trade (NTBs; also called non-tariff measures, NTMs) are trade barriers that restrict imports or exports of goods or services through mechanisms other than the simple imposition of tariffs.
The Southern African Development ...
*Help developing countries
History
Background
The European trade integration signaled by the creation of the
European Economic Community
The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisb ...
(EEC) in the 1957
Treaty of Rome
The Treaty of Rome, or EEC Treaty (officially the Treaty establishing the European Economic Community), brought about the creation of the European Economic Community (EEC), the best known of the European Communities (EC). The treaty was sig ...
led the United States to fear its own products would be shut out of the European market.
[The World Trade Organization: legal, economic, and political analysis, Vol. 1. Patrick Macrory, Arthur Appleton, Michael Plummer.] 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.
[19 USC Chapter 7 - Trade Expansion Program]
. 1 February 2010. 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.
[US Code Title 19, Chapter 7, Subchapter II. European Economic Community (repealed)]
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
The Palace of Nations (french: Palais des Nations, ) is the home of the United Nations Office at Geneva, located in Geneva, Switzerland. It was built between 1929 and 1938 to serve as the headquarters of the League of Nations. It has served ...
. It was the last GATT round to have tariff reduction as its primary focus.
["Trade Promotion Authority and the Role of Congress in Trade Policy"]
8 February 2008. 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.
[WTO]
"Anti-Dumping Definition"
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
The European Economic Community (EEC) was a regional organization created by the Treaty of Rome of 1957,Today the largely rewritten treaty continues in force as the ''Treaty on the functioning of the European Union'', as renamed by the Lisb ...
,
Japan
Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the north ...
, and the
UK—led the negotiations and offered linear cuts.
[ 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.] 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. Only low expectations stopped the concluding agricultural agreements from being considered a disaster. 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.["World Trade: Toward the Kennedy Round"](_blank)
''Time'' Magazine. 6 March 1964. Since President Lyndon Johnson
Lyndon Baines Johnson (; August 27, 1908January 22, 1973), often referred to by his initials LBJ, was an American politician who served as the 36th president of the United States from 1963 to 1969. He had previously served as the 37th vice ...
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. 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.["The Cafta Conundrum"](_blank)
''The Economist
''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
'', 16 June 2005.
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.[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 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.
Overview and Compilation of U.S. Trade Statutes. June 2001. 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.
international trade. Encyclopædia Britannica Online School Edition. 2011. Web. 28 Feb. 2011 Further, the agricultural grains arrangement provided for higher minimum trading prices as well as a food aid program to developing countries.[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. 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
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and e ...
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".[ Jack Metcalf]
"Speech to Congress on H.J. Res 90"
4 May 2000 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.[Howard Marvel and Edward Ray]
"The Kennedy Round: Evidence on the Regulation of International Trade in the United States"
''The American Economic Review
The ''American Economic Review'' is a monthly peer-reviewed academic journal published by the American Economic Association. First published in 1911, it is considered one of the most prestigious and highly distinguished journals in the field of eco ...
'',
References
Further reading
* 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
Glossary of customs terms
{{Authority control
General Agreement on Tariffs and Trade
World Trade Organization
Commercial treaties
Treaties concluded in 1967