WASHINGTON — Retail and wholesale importers of textiles and apparel said Monday they were disappointed, but not shocked, by Sunday’s breakdown of world trade talks in Mexico, as they wondered whether negotiations can be righted.
After five days, the World Trade Organization meeting in Cancún ended without a declaration or road map for further liberalizing global trade. The sticking point never changed from the start: the American and European refusal to bow to developing country demands, with their focus largely on the elimination of government farm subsidies.
“There’s plenty of blame to go around,” said Julia Hughes, vice president of international trade with the U.S. Association of Importers of Textiles & Apparel. “What we have here is an effort to move forward and eliminate subsidies and barriers in the most politically sensitive area: agriculture. No trade agreement has been able to do this before, and it’s going to be difficult to do it at any time.”
Importers had hoped for progress on a U.S. proposal to reduce all global tariffs to zero, including those covering garments and mill products. However, even before negotiators faced off, importer expectations about potential progress were dimmed after learning that U.S. Trade Representative Robert Zoellick proposed including cotton in the sector talks otherwise largely focused on reducing textile and apparel tariffs. Because of the broader agricultural impasse, those talks never got off the ground.
“We had a concern about taking agriculture negotiations and sticking it into textile-apparel negotiations,” said Jonathan Gold, director of international trade policy with the International Mass Retail Association. “Negotiations on textiles and apparel would be difficult, but adding cotton would make those negotiations more difficult.”
A key target by developing countries was cotton and U.S. subsidies of the fiber, in particular. The U.S. government subsidizes U.S. cotton by about $2 billion a year, of which millions are channeled to U.S. textile mills to compensate them when American cotton costs more than foreign cotton.
There were other issues being pressed by developing countries and resisted by the U.S., including a slower tariff phase-out schedule for poorer nations and exemption from Doha Round obligations for countries new to the WTO, such as China.“If these talks had moved forward, it is clear that the final result would have mandated a further substantial reduction, if not the total elimination, of U.S. tariffs in practically all manufacturing sectors,” said Augustine Tantillo, Washington coordinator for the American Manufacturing Trade Action Coalition.
Tantillo also criticized the WTO for maintaining developing country status for economic powers like China and India.
“As long as these countries are considered to be developing…under the WTO, the WTO system will remain flawed and broken,” he said.
Since negotiations remained mired in developing countries’ demands, apparel companies with representatives dispatched to Cancún, including J.C. Penney, the Limited, The Gap, Liz Claiborne, Sara Lee, Jockey International, Levi Strauss and Target, were sidelined.
“American consumers and developing nation exporters are the real losers,” Steve Pfister, National Retail Federation senior vice president for government relations, said in a statement. “Both stood to gain from the elimination of high tariffs on clothing exported to the United States.”
The Cancún meeting was designed as a midway point in five years of planned negotiations first launched in Doha, Qatar, with the goal of spurring economies among poor countries. In light of Sunday’s collapse of talks, a 2005 completion date for the so-called Doha Round is now considered an overly ambitious goal. However, WTO officials urged parties to continue working on differences, with a Dec. 15 goal to reach consensus on how to next proceed.
Zoellick bemoaned the collapse of talks and reaffirmed U.S. plans to push ahead with negotiating individual free-trade pacts, like one pending with Central America, and not place all its global trade ambitions at the WTO. Central America Free Trade Agreement talks resumed Monday in Nicaragua.
In the U.S., the idea of eliminating federal farm subsidies doesn’t play well among voters in vast rural areas, many of them in key political battleground states, including those seen as crucial in the upcoming 2004 presidential and congressional elections.
The Bush administration’s unabashed pursuit of global free trade has also left it open for criticism among flagging U.S. manufacturers in sectors ranging from textiles to furniture that have found it difficult competing with inexpensive imports.On Monday, Commerce Secretary Donald Evans, one of the administration’s biggest free-trade proponents, reasserted the President’s commitment to bolstering U.S. manufacturing, as well, and singled out China for putting U.S. factories at a disadvantage.
In a speech before the Detroit Economic Club, Evans offered a glimpse of an upcoming Commerce report on boosting U.S. manufacturing, which has seen jobs drop for 37 straight months.
Evans said a new Unfair Trade Practices Team will be created at Commerce, apparently to augment personnel already dedicated to trying to persuade foreign markets to lower barriers to U.S. exports. Evans reiterated that the agency will create an assistant secretary for manufacturing to focus on factory needs.
Evans highlighted manufacturer complaints about China’s currency and questions of whether it’s undervalued by as much as 40 percent and is fueling the flood of inexpensive Chinese imports. However, Evans didn’t depart from the administration’s position that China should voluntarily let its currency float, instead of being pegged to the U.S. dollar.
Senate and House lawmakers, including GOP members, have introduced legislation that would slap tariffs as high as 40 percent on Chinese imports until the country changes how it values its currency.
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