Byline: Jim Ostroff

WASHINGTON — The collapse of the World Trade Organization’s Seattle meeting in tear gas, turmoil and truculence has left business executives wondering whether the last best hope to open markets for apparel, textiles, consumer goods and retailing itself might also have expired.
“When there’s a stalemate on even setting an agenda for what had been expected to be a new round of trade talks, because of U.S. textile or French dairy interests, this could stop [a new accord] dead in its tracks….and the restrictions on retailers who want to expand abroad will continue to exist,” said Peter McGrath, president of J.C. Penney Purchasing Corp.
“Everyone was optimistic we would advance trade’s cause, but now, we may have taken a step backwards,” added Tracy Mullin, president of the National Retail Federation, following news that the Seattle meeting adjourned late Friday when trade ministers of 135 nations deadlocked over an agenda for new trade talks.
Exhausted delegates and business lobbyists simply gave up trying to begin the most far-reaching trade talks since the end of World War II. U.S. officials downplayed the meltdown, insisting talks could resume next year in Geneva, but European trade officials said even this was problematic. Either way, analysts said, the collapse is a bitter defeat for President Clinton, who sought major trade initiatives as intrinsic to the future of an international economy.
Like the tear gas that sent delegates reeling last week when they sought to pick their way through a downtown-turned-war-zone as cops clashed with anti-WTO demonstrators, trade initiatives sought by American retailers, importers, textile and apparel makers, and the wider business community, literally were consigned to limbo.
Proposals to make it easier for retailers to open stores worldwide, to speed the elimination of apparel and textile quotas, became dead letters literally overnight. So too, did proposals to open huge markets such as India, Brazil and Pakistan to American apparel; to ban taxes on e-commerce; to give nations like Bangladesh instant quota- and duty-free access to U.S. apparel markets; to set minimum standards on labor rights, and to strengthen U.S. ability to restrict some low-price imports.
Ostensibly, the trade talks were sunk by a deadlock on agriculture subsidies, pitting the U.S. against the European Union. But the rift among delegates widened into a chasm Wednesday after Clinton said he favored new WTO laws to penalize countries with lax labor standards.
Ministers with Asian, African and Latin American nations became more angered at Clinton’s seeming backpedaling on a promise to them at a luncheon last Wednesday to end quotas and duties on products imported from the world’s poorest nations. When it became obvious this would include mainly apparel and textiles, the U.S. offered only minor duty cuts, triggering a near revolt by developing nations.
Caribbean and Latin Amer-ican delegates late Thursday issued a joint statement condemning the entire talks as “a process of limited and reserved participation by some members,” according to sources, who also said delegates from African countries loudly heckled U.S. Trade Representative Charlene Barshefsky at a meeting with her the same day.
Barshefsky sought to minimize the fallout, issuing a statement that “it would be best to take a time-out, consult with one another and find creative means to finish the job.” She insisted the talks would resume in Geneva next year, but EU trade commissioner Pascal Lamy later said there are no such plans.
The outcome of the so-called Millennium Round was a bitter pill for many of the nation’s importers and retailers. Penney’s McGrath said he is concerned about the contentious arguments over textile policy and wondered whether this will prompt countries to balk at eliminating apparel and textile import quotas on Jan. 1, 2005.
“In our business, everyone bases their sourcing strategy around treaties and quotas, and now our entire industry will be challenged to guess whether quotas really will go away in 2005, or remain, if the WTO becomes a quagmire of arguments,” he said.
“I’m extremely disappointed in this WTO failure to achieve anything,” said Frank Kelly, Liz Claiborne’s vice president for international trade compliance and government affairs. “The U.S. has lost an enormous amount of credibility in world trade issues, and so the question is, ‘Where do we go from here?”‘
Julia Hughes, a Washington vice president with the U.S. Association of Importers of Textiles and Apparel, said, “The U.S.’s intransigence on labor standards and the hostility by protesters against the international community could make it very difficult for the trade ministers to reach a consensus on any new talks.”
Stephen Lamar, the American Apparel Manufacturers Associa-tion’s top lobbyist, said makers were “very disappointed” that objectives such as opening markets for their exports were dashed. But, Lamar said, it is imperative that makers lobby Congress to enact bills that would provide trade perks for apparel made in Caribbean Basin nations — where U.S. firms have huge investments — and in sub-Saharan Africa.
Carlos Moore, the American Textile Manufacturers Institute’s executive vice president, said he was dismayed that one of its chief objectives — opening Asian, African and Latin American markets to U.S. textiles — went down along with the entire WTO agenda. Moore expressed “special thanks” to U.S. trade officials for rebuffing efforts by the EU and developing nations to speed up quota elimination, cut import duties or weaken U.S. anti-dumping laws.
John Nash, Milliken & Co.’s Washington lobbyist, said the collapse signaled the death knell of the WTO’s “way of doing business, where the interests of industries like textiles can be traded off by the U.S. for concessions on agriculture.”
“The real damage,” said Robert Litan, the Brookings Institution’s vice president and economic studies director, “is the possibility of backsliding on all that was accomplished in the previous trade rounds; that the world might break up into more trading blocs, leading to a resurgence of protectionism, giving some countries preferential access for imports to the detriment of others.”
Litan said no serious talks would begin until 2001, claiming the White House agenda for new WTO labor and environmental standards has hurt its credibility. “This all was done for domestic political reasons, by an administration looking to the next election, trying to burnish its image and not offend labor unions, and most of the other countries know that,” Litan said. “Even without the protesters, [Clinton] is in no position to take risks on trade.”

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