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WTO Talks Face Numerous Obstacles

The potential for lowering trade barriers is great, but the obstacles are many for upcoming World Trade Organization talks.

WASHINGTON — The potential for lowering trade barriers is great, but the obstacles are many for upcoming World Trade Organization talks.

Trade officials from around the world face political and economic hurdles as they head into a crucial meeting in Hong Kong in December that, if successful, will lay out a plan to complete the Doha round of talks aimed at decreasing global tariffs by the end of 2006.

A broad assortment of policy wonks, former trade officials and lawmakers who will ultimately sign off on an agreement sounded more than a few notes of caution at “The World Trade Organization at 10 and the Road to Hong Kong,” a two-day conference held here last week at the Georgetown University Law Center. It was cosponsored by the American Bar Association and the Washington International Trade Association.

Agricultural issues, including subsidies in rich nations, remain the most difficult aspect of the talks aimed at lowering international tariffs, but are not the only trouble spots. The erosion of preferential treatment for African nations could also provide some fireworks. There are 37 sub-Saharan countries receiving reduced tariffs under the African Growth & Opportunity Act, an edge that would be diminished as overall tariffs are dropped.

Wanting to hold onto their special treatment, some African countries might oppose the liberalization of textile trade, raising the specter of the September 2003 ministerial meeting in Cancún, Mexico, which fell apart when African trade negotiators walked out over agricultural subsidies in rich countries.

“Will we have a repeat of Cancún, where countries felt there was not enough on the table for them?” asked Meredith Broadbent, assistant U.S. trade representative for industry, market access and telecommunications. “We’ve been working … on this in terms of defining the problem.”

The U.S. is looking for countries that receive preferences to better define how a general drop in tariffs would affect them.

Given the breadth of the undertaking, the Doha round could produce dramatic results.

“The U.S. and China are the engines of the growth and we need to find more ways to spark economic growth internationally,” Broadbent said.

Even if WTO trade ministers eventually resolve the thorny issues that have crippled the current round of talks — and that will require some heavy lifting — lawmakers on Capitol Hill will have the final word on ratifying the treaty in the U.S.

This story first appeared in the October 4, 2005 issue of WWD.  Subscribe Today.

Rep. Ben Cardin (D., Md.), who emphasized the appetite for trade treaties in Congress has been greatly diminished after the bruising battle over the Central American Free Trade Agreement, said a global deal that weakens trade laws allowing the U.S. to impose duties against unfairly priced or subsidized imports would be the “single, largest barrier” to Congressional approval.

The Bush administration agreed to place U.S. antidumping and countervailing duty laws on the table in the Doha talks at the behest of many countries that oppose the use of the measures by the U.S. and are seeking some regulation of their use.

“There is no interest in Congress to weaken our [trade] laws and this could be the deal breaker,” Cardin said.

Rep. Jim Kolbe (R., Ariz.) said Republicans also have concerns about how agriculture subsidies are being negotiated in the current round of talks.

“There is no doubt the U.S. and Europe have to reduce subsidies, but that is a tall order,” said Kolbe. “We simply cannot decide to shift subsidies [among various areas being negotiated]. If it’s just a shell game of shifting subsidies from one [area] to another, it could mean the loss of having an agreement.”

The “sense of urgency about Hong Kong” stems from the timing of the expiration of the President’s Trade Promotion Authority in June 2007, he said. Under the authority, which must be approved by Congress, lawmakers can only vote for or against a trade agreement and cannot offer amendments, which is why it has sparked so much controversy on Capitol Hill.

“There isn’t enough time for us to have a failure in Hong Kong and pick up the pieces in time before TPA expires in 2007,” said Kolbe, noting Congress has extended the authority in the past, although it has never been easy.

Clayton Yeutter, who was USTR from 1985 to 1989, stressed there was still a long way to go in the Doha talks.

“I think we have to be very careful about the expectations that we have for a ministerial meeting in Hong Kong,” Yeutter said. “There aren’t going to be any home runs in Hong Kong.”