Maryland's economy likely to benefit as world trade accord boosts exports

THE BALTIMORE SUN

Hundreds of export doors will eventually open for some of the fastest-growing parts of Maryland's economy with the sweeping accord under the General Agreement on Tariffs and Trade.

No one is willing to risk concrete estimates of what the state stands to gain, not until the fine print of the trade accord is read. Nonetheless, virtually everyone agrees that the state has a big stake in both the generalities and the details of the GATT negotiations.

"Maryland has always ranked in the lower half of the states in the value of its exports, but in the past few years its exports have grown by more than 50 percent, to about $5 billion a year," said James L. Hughes, director of the World Trade Center Institute in Baltimore. That makes Maryland's export growth the third-fastest the country.

"Exports have become the fastest-growing segment of the Maryland economy, and that in turn means that the new opportunities opened by expanding the trade agreement will in many cases play directly into some of the state's newly developing strengths," he said.

"None of what is going to come from big, complex trade deals like GATT and the North American Free Trade Agreement will happen overnight," said Curt Matthews, a spokesman for the international division of the state Department of Economic and Employment Development.

But Maryland's attempts to develop world-class telecommunications and biotechnology industries should benefit substantially over time, as should the state's growing agricultural technology, education and training businesses, he said.

"Many of Maryland's fastest-growing companies essentially sell ideas, and a lot of them have been waiting to see how safe they will be in selling ideas in markets where piracy has been a problem," Mr. Matthews said. "If they end up feeling comfortable with the new agreement, there is a lot of business for them to do overseas."

Some of Maryland's strongest recent export growth has been in traditional manufacturing industries, especially in exports of 1b minivans from General Motors Corp.'s Broening Highway plant, first to Germany and, more recently, to Egypt, said Charles McMillion, president of MBG Information Services.

Economists say it will become possible to make fairly firm estimates of the export prospects that will open to automobile companies and other traditional manufacturers.

"But a lot of Maryland's growth is in highly thought-intensive fields like computer software and biotechnology, so the state has an extremely high stake in details that we will see in the next few days on issues like patents and copyrights," Mr. McMillion said.

Even after those details are known, it will not be easy to estimate how much GATT will mean in export revenue for volatile businesses like biotechnology and computer software.

Assessing how those companies may do in domestic markets is a risky guessing game that frequently embarrasses respected analysts. The export factor will add layers of uncertainty that will vary from country to country as well as from company to company.

"I don't think anyone could make a quantitative prediction at this point, but these days, Baltimore companies have Russian software engineers in Moscow working on jobs, and Washington suburban software firms have Indian engineers in Bangalore doing very sophisticated work, so the more protection you have for intellectual property rights, the easier it will be to work in this kind of highly internationalized atmosphere," Mr. McMillion said.

"Realistically, there can't be state-by-state projections until a few days after Thursday morning, when we will see the final details of the draft," said James Frierson, of the Brock Group, a trade advocacy organization headed by Bill Brock, the former senator from Tennessee and Republican national chairman who lives in Maryland.

"These estimates will begin to come along in a few more days, and then we'll see how much each state can hope to gain from freer world trade," he said.

"Especially on intellectual property rights, everything will depend the precise details of the final wording of the documents," Mr. McMillion said. "You can say that some Maryland companies stand to gain just from having a clearer picture of their rights, but you won't know who stands to gain what, or how much any area or region will gain or lose, until you know the details of the wording."

"A lot also will depend on how aggressive Maryland companies are in recognizing opportunities and taking advantage of them, and stimulating them to see and act upon the opportunities is something that our department will be working on," said Mr. Matthews, of DEED.

THE GATT ACCORD

The following is a description of the changes in the General Agreement on Tariffs and Trade expected to be approved at the conclusion today:

SERVICES

Service industries would be covered for the first time by GATT rules. They include banking, securities, insurance, transport, tourism, telecommunications, film and television.

World trade in services totaled about $3.9 trillion dollars last year, according to GATT economists.

Though final details remain to be worked out, GATT nations have promised to open their markets, and pledged to further liberalize trade at a later date. Financial services would be covered in an annex to the main agreement.

Under yesterday's U.S.-European Community accord, the United States would maintain a two-tier system that grants most-favored-nation (MFN) trade status to accessible countries and penalizes countries that don't open their markets.

MARKET ACCESS

Tariffs would be cut by at least one-third to one-half on a broad range of industrial goods and raw materials, including wood, paper and metals.

Full details of the tariff reductions won't be available until today, though U.S. Trade Representative Mickey Kantor said the reduction in duties on those goods whose tariffs were being eliminated completely would amount to $5 billion. Special efforts were made to achieve the largest duty reduction on goods whose tariffs were higher than average. Negotiators also sought to eliminate all tariffs on as many goods as possible.

INTELLECTUAL PROPERTY RIGHTS

Widely varying standards in the protection of patents, copyrights and trademarks have been a frequent source of friction in international economic relations.

Final details haven't yet been agreed to, though if the existing draft is accepted, international standards of protection would be established for the first time. Governments would be required to incorporate them into their own laws to ensure that the new rules can be enforced effectively. A disputes-resolution panel would also be established to settle any disagreements among countries.

TEXTILES AND CLOTHING

Over 10 years, the current quota system on textiles would be phased out. Since 1974, most industrialized countries have restricted imports of textiles and clothing through bilateral quotas negotiated under the Multifibre Arrangement (MFA). Ordinarily, quotas are banned under GATT rules.

Many countries also impose high tariffs on textile imports. Under the draft agreement, those tariffs would be reduced as the quotas are phased out. The textiles package hasn't been completely wrapped up because the EC and the United States are demanding that countries that benefit from the MFA phase-out agree in return to open up their markets to exports form industrial countries.

Some textile exporters, most of which are developing countries, pTC are balking at that demand. GATT economists estimate the agreement would boost world textile trade by 26 percent.

ANTI-DUMPING

GATT signatories agreed Monday to new rules to control the practice known as dumping. Dumping occurs when goods, such as steel and automobiles, are exported at lower prices than those charged in domestic markets.

The United States has some of the toughest anti-dumping laws. Critics hoped to limit the impact of U.S. anti-dumping laws by bringing them under GATT regulations. The United States objected, and largely prevailed.

AUDIOVISUAL

Audiovisual products and services, such as films, cable television, music and video tapes, are already covered by GATT rules governing such areas as tariffs.

The United States wanted to broaden that coverage to include such matters as EC limits on the amount of U.S. television programs and movies that can be shown on European television.

Led by the French, the EC balked, and the two sides agreed to disagree.

NDAs a result, there will be no liberalization of trade in this area.

SHIPPING

The United States and the EC also failed to agree on liberalizing trade in ocean shipping. In this case, though, it was the Europeans who demanded, among other things, that the United States open up to foreign competition certain shipments of U.S. exports that must be carried by American ships.

A U.S offer of modest liberalization was rejected by the EC as inadequate.

As a result, existing GATT rules in this area will remain unchanged.

CIVIL AIRCRAFT

The United States and the EC failed to agree on a separate accord governing subsidies for commercial aircraft manufacturers. That means they would now be brought under general GATT rules governing subsidies for the first time -- a key U.S. demand.

"The U.S. gets better discipline on subsidies and a better dispute settlement system," said Michael Hathaway, a lawyer at Crowell & Moring in Washington, D.C., who is representing United Technologies.

The EC and the United States did agree to continue discussions in this area for another year.

AGRICULTURE

Tariffs would be cut by an average of about 50 percent, and import bans and other restrictions would be eased or eliminated.

U.S. Agriculture Secretary Mike Espy said the accord would, for the first time, open the Japanese and South Korean markets to agricultural products from the United States and other countries's .

Mr. Espy said U.S. agricultural exports would grow faster than imports, and bolster the $18 billion to $20 billion surplus in that sector.

The U.S. government would cut export subsidies to its farmers by about 36 percent, reducing its farm spending by about $500 million over the six-year lifespan of the accord.

The United States for the first time would allow peanuts and new citrus and berry products to be imported. In addition, the United States would guarantee an annual import of 1.25 million tons of sugar.

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