Trade Stakes Raised at Paris Parley

The U.S. plans to urge developing countries to drop tariffs on industrial goods in exchange for wealthy countries liberalizing agricultural trade.

GENEVA — The U.S., backed by Japan and the European Union, plans to up the stakes at this week’s meeting in Paris of  Organization of Economic Cooperation and Development ministers by urging major developing countries to agree to drop their tariffs on industrial goods if they want wealthy countries to liberalize trade in agriculture.

The expanding middle-class markets in major developing countries such as India and China have been viewed as lucrative outlets for U.S. textile and apparel exporters. However, high tariff walls have limited penetration of these markets.

“It is politically unsustainable for the U.S. to deliver on meaningful agricultural reform through the elimination of export subsidies and significant reduction in domestic supports…without a significant commercially meaningful result in nonagricultural market access,” the U.S. delegation said in prepared remarks presented last week in advance of the OECD ministerial, which opens today and continues Wednesday.

The U.S. took that strong tone in response to tepid proposals put through by India, Brazil and Argentina. In 2003, global trade in manufactured goods was worth $5.4 trillion.

Newly appointed U.S. Trade Representative Robert Portman is expected to attend the 30-country OECD talks. While not all 148 member nations will be represented at the event, WTO ambassadors said they hope the session will help give the ongoing Doha round of talks a clear political direction.

Last week, WTO director general Supachai Panitchpakdi warned that the current round of talks seems to be bogging down and said, “I have certainly toned down the optimism I had earlier this year. I am not pushing the alarm button now, but my finger is hovering over it.”

A deal to lower tariffs significantly on industrial goods is considered a must by all the leading industrialized powers for the current round, which is scheduled to wrap up next year. Developed nations argue that it’s a fair trade-off in light of the strong concessions on agricultural products that poor nations are demanding.

But many developing countries assert they need extra protection at the border to give domestic industries time and policy space to narrow the competitiveness gap with advanced countries. Agriculture has become a hot-button issue at the WTO and anger by poor countries that their needs weren’t being addressed led to the early collapse of the group’s September 2003 summit it Cancún, Mexico.

This story first appeared in the May 3, 2005 issue of WWD.  Subscribe Today.