WASHINGTON — The breakdown of global trade talks was a setback for the Bush administration’s agenda, which will likely focus now on removing trade barriers through a piecemeal arrangement of bilateral and regional agreements, experts said Tuesday.
The decision to suspend the negotiations after five years represents a loss for retailers, who might have benefited as a result of lower prices on goods from other countries and better access to growing consumer markets, said Erik Autor, vice president and international trade counsel at the National Retail Federation.
“We’re stuck with the status quo for the time being, which is disappointing,” Autor said. “Retailers are going to continue to muddle along.”
The World Trade Organization talks, which were aimed at lowering tariffs and other trade barriers, and which had held the promise of increasing global commerce and alleviating poverty in poor countries, fell apart on Monday after key participants — particularly the U.S. and the European Union — could not break a deadlock over agricultural trade.
Launched in 2001 in Doha, Qatar, the Doha Development Agenda, as the negotiations were known, could have changed the ground rules for the WTO’s 149 member countries by lowering tariffs, reducing subsidies and spurring trade in agricultural and industrial goods as well as services.
For U.S. textile groups, Doha offered an opportunity to impose restrictions on China, which they say competes unfairly — partly by keeping its currency undervalued and making apparel manufactured in China cheaper abroad. However, the talks also might have lowered tariffs on apparel and textiles, resulting in more foreign competition for the domestic industry.
It appears unlikely that the negotiations will be completed by the end of this year, which was a goal, or before President Bush leaves office. The President’s authority to negotiate a trade deal without amendments from Congress expires on June 30, 2007.
“This is not just another missed deadline,” European Union Trade Commissioner Peter Mandelson said Tuesday in Brussels. “It is a major missed opportunity, with serious systemic implications for multilateral trade.”
There is now debate on whether it would be best to seek a less ambitious round of negotiations in order to keep the WTO relevant, or hold out for a better deal that would increase trade, said Gary Hufbauer, senior fellow at the Institute for International Economics.
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“It’s not that the WTO is going to disappear,” Hufbauer said.
“But it could fade, as other international institutions have faded when they seem not to have delivered on their mandate, and this would be a big nondelivery.”
The trade talks might also have had to hit rock bottom before any real progress could be made.
“It’s the classic phoenix story: It has to die before it can rise from the ashes,” said Stephen Lamar, senior vice president of the American Apparel & Footwear Association. “For the foreseeable future, the Bush administration trade liberalization instinct can really only be satisfied through bilateral free trade agreements.”
Capitol Hill lawmakers are considering pacts with Peru and Colombia, as well as legislation that would normalize trade relations with Vietnam and eliminate quotas on some apparel imports from that country. The administration is also working to complete free trade agreements with South Korea, Malaysia and Thailand, among others.