By  on December 12, 2005

WASHINGTON — The success of a World Trade Organization summit that starts Tuesday in Hong Kong might hinge on whether it generates enough of a feel-good factor among the 149 member nations to keep talks rolling.

The meeting was intended to produce a roadmap for a treaty that, by the end of 2006, would wrap up the Doha Round of talks promoting free trade that started four years ago in Qatar's capital. But many experts have lowered their expectations, hoping the session scheduled to end Sunday doesn't collapse. That's what happened in Cancún, Mexico, two years ago after African cotton-producing nations walked out when rich nations failed to meet their demands to drop farm subsidies.

Hanging in the balance is an effort to increase trade and promote globalization by reducing tariffs on agricultural and industrial goods and services. Many countries and industries, including textile and apparel producers, are wary about the negotiations, which could erode protections vital to them and give manufacturing powerhouses like China and India a better chance to dominate.

Mickey Kantor, former U.S. Trade Representative and Commerce Secretary under President Bill Clinton, said progress could be made in Hong Kong, particularly by setting a hard deadline of Dec. 31, 2006, for the behind-schedule Doha talks to be completed.

"Once you put that kind of pressure on everyone, it tends to focus the mind, and probably will be more helpful in moving these discussions forward after Hong Kong," said Kantor, now a Washington-based partner at the law firm of Mayer, Brown, Rowe & Maw.

"This negotiation can't be successful unless the various world leaders decide they're going to personally get involved and put their prestige behind the discussions," he said. "That will allow their ministers then to begin to make the necessary compromises on all sides."

In addition to readying for the summit, Hong Kong is bracing for protests, which, at previous meetings, including one in Seattle, became violent. An estimated 10,000 protesters are anticipated to be on hand voicing their opposition to trade policies they charge are unfair to poorer nations and workers.

The slow movement of compromise on the agricultural front, where domestic farm subsidies play a key role, has held up other areas of the talks. Some of the difficulties are tied to the nature of this phase, which is to take on some of the most sensitive issues in international trade."You always save the hardest for the last," Kantor said. "It's like a stuck piece of grain after you've made some pasta. It's always the stickiest. It's the last to get off the bottom of the pot, and that's exactly where we are in this case."

The sense of urgency for the talks stems partly from the expiration on July 1, 2007, of a measure that limits Congress to approving or rejecting any trade agreement from the Bush administration without amendments, making the process less difficult and lengthy.

"We're finally tackling the hardest part of freeing trade, and that is, by and large, the most protected industries and also agriculture," said Daniella Markheim, senior trade policy analyst at the Heritage Foundation, a conservative think tank based in Washington. "These have been the very topics that have been put off each time."

Trade ministers will discuss industrial goods in Hong Kong, but Markheim said progress will be slow.

"They will talk about it, and I think they will probably make some headway on the issues, but I think it's really going to boil down to results on agriculture," she said.

U.S. Trade Representative Rob Portman said during a news conference in Geneva this month that the success of ministerial conferences tends to hinge on the attitude of the officials heading into the meetings.

"My colleagues and I are committed to putting our maximum efforts toward making Hong Kong successful, making it a staging ground for completing the negotiations by the end of 2006," he said. "Our success in doing so is certainly in the best interests of the global economy, and specifically the developing world."

Specifically, Portman on Friday said the U.S. will offer additional initiatives to lower trade barriers for cotton farmers.

"There ought to be more market access, as our proposal on the table indicates, but specifically on cotton we are willing to do what we can to ensure that there is access in the key cotton markets around the world," he said. "This is something I think you'll see more of next week in Hong Kong."

Another key figure, European Union Trade Commissioner Peter Mandelson, said this month, "The key thing is to ensure that no wrong moves are made in Hong Kong that jeopardize the successful completion of the round."Even with such lowered expectations, representatives of the U.S. textile industry, as well as importers, will be on hand to lobby for their agendas. One point of debate is a push by the EU to give the world's least-developed countries' apparel and textiles duty-free and quota-free access to other markets.

There are 32 least-developed countries (LDCs) eligible for that treatment. Many of them are African countries that already have duty-free and quota-free access to the U.S. market.

"I think there is definitely a good chance we have movement there," said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel.

Cass Johnson, president of the National Council of Textile Organizations, said such duty-free and quota-free treatment would be a bad deal for the U.S. textile industry and the world's poorest countries.

"If you scratch beneath the surface, what it really does is give Bangladesh the ability to eliminate other LDCs as exporters of apparel," he said. "If most countries realized this would hurt LDCs more than it would help them…they might take a second look."

The U.S. has embraced the concept of duty-free, quota-free access for the poorest nations, but is still considering the details of the issue.

In Hong Kong, Johnson also will push for textile and apparel trade to be taken out of the larger negotiations for industrial goods and placed within a separate negotiation for the sector.

The idea, proposed by the Global Alliance for Fair Textile Trade, of which NCTO is a part, is to strip textiles and apparel away and give them higher tariffs than other industrial goods, providing more protection to the domestic industry. Johnson said many countries would support the effort, especially those in Central America, Africa and the Middle East, which already get preferential access to the U.S. market and would lose some of their edge if overall tariffs fall.

Textile groups also hope to use apparel and textile talks to restrain China by extending safeguard quotas on that country.

Separate, or sectoral, talks, however, usually would be used to lower trade barriers and not raise them, which has some parties calling for such negotiations to go the other way."If textiles is carved out into a sectoral, there's the potential for a lot of things to get done, good or bad, depending on your perspective," said Mark Jaeger, senior vice president and general counsel at Jockey International. "Given what could potentially get done, it's a very important meeting. It's also very possible that [agricultural] issues will sort of push other ones aside and not much will get done."

Importers oppose any move to restrain apparel and textile trade with higher tariffs than they would get as part of the general negotiations on industrial goods.

Erik Autor, vice president and international trade counsel for the National Retail Federation, said his group has called for a "zero-for-zero initiative" that would mean a reciprocal drop in tariffs in the sector between countries.

Autor said he isn't holding his breath for anything of great moment to happen in Hong Kong.

"As long as it doesn't blow up and we have the grounds to move forward next year, I think that that's a reasonable hope at this point," he said. "Next year's the make-or-break year for these talks."

Should the talks break down in Hong Kong, the U.S. and other countries would go on to sign more trade deals with individual countries and regions, such as the Central American Free Trade Agreement, said Jonathan Fee, a partner at the Washington law firm Alston & Bird.

"The all-inclusive playing field that a successful Doha offers is probably better in the long run for the interests, particularly, of the Third World, but the United States as well," said Fee. "I'm not convinced it's healthy to have piecemeal negotiations for the next several years."

Trade Summit Primer

  • Goal: Promote free trade in agriculture, and industrial goods and services, primarily by decreasing or eliminating tariffs among the World Trade Organization’s 149 member countries. Ministers hope to complete the Doha Round of talks by Dec. 31, 2006.

  • Challenges: Getting beyond agricultural issues and making substantial headway on industrial goods and services, and agreeing to a deal before expiration of a measure on July 1, 2007, that limits Congress to voting approval or rejection, without amendments.
  • Location: Hong Kong Convention and Exhibition Centre

  • Dates: Dec. 13-18

  • Key Players: U.S. Trade Representative Rob Portman; European Union Trade Commissioner Peter Mandelson; WTO Director-General Pascal Lamy

  • G20 (Group of 20): developing countries led by China, India and Brazil

  • C4 (Cotton 4) Countries: Benin, Burkina Faso, Chad and Mali

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