Monday, January 12, 2004

Good News on Trade?

An unexpected initiative from the Bush administration to get the WTO talks moving again. As usual, it leaves the EU and Japan as the major obstructionists when it comes to opening markets for developing countries.

GENEVA (Reuters) - Washington drew praise Monday for an unexpected bid to breathe life into struggling free trade talks, but risked tensions with its ally the European Union over a call to end controversial farm export subsidies.

The negotiations, whose success the World Bank says would give a huge boost to the global economy, have floundered since September when a WTO ministers' meeting collapsed, partly due to deep divisions over agriculture.

Trade officials and analysts had feared that with nobody ready to make concessions and many nations, not just the United States, facing elections or busy negotiating bilateral trade deals, there was little chance of progress at the WTO this year.

But in letters to the World Trade Organization's (WTO) 146 member states and senior trade officials, U.S. Trade Representative Robert Zoellick made it clear that he did not want 2004 to be a "lost year."

"This is clearly positive and somewhat unexpected," said former Canadian trade envoy John Weekes of Geneva-based law firm Sidley, Austin, Brown and Wood.

But in a potential blow to Washington's negotiating alliance with the EU, Zoellick said talks would go nowhere without a deal to end farm export subsidies, something the EU has resisted.

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n his first significant contribution to the debate since the Cancun ministerial failure, Zoellick urged WTO countries to set a mid-year deadline for reaching outline accords and said he would visit a number of capitals in the search for deals.

He added that farm trade reform, including slashing the massive production subsidies rich states pay their farmers and agreeing lower import duties, was so crucial that members should focus first on securing a breakthrough there before tackling other parts of the trade agenda.

In another sign of discord with Brussels, Zoellick said he was willing to see negotiations begun on customs reform, but opposed the demand of the EU and allies such as Japan to see more new issues added such as investment and competition policy.

Zoellick's emphasis on obtaining progress on agricultural trade issues to the initial exclusion of other areas, as well as his opposition to the EU and Japan's attempt to torpedo the entire enterprise by tacking on negotiations about investment and competition policy, are strong indicators that this new initiative is actually meant to achieve something, rather than being a hollow effort whose sole rationale is to make the administration look good.