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 Editorials | Issues | July 2007 
After Six Years, the Global Trade Talks Are Just That: Talk
 Steven R. Weisman - Herald-Tribune
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| | Farmers work in a field in the suburbs of Hanoi. US Trade Representative Susan Schwab has warned that global trade talks risk being stalled for years unless a breakthrough is made this year, as APEC ministers called on all sides to go back to the table. (AFP/Hoang Dinh Nam) |
Soon after Sept. 11, 2001, the United States helped start a round of global trade talks aimed at getting rich countries to lower trade barriers so that poor countries could prosper by exporting goods, not terrorism. But it was never that simple.
Six years later, the trade talks are on life support, suffering from so many disputes that like the victim in Agatha Christie’s “Murder on the Orient Express” almost everyone could be guilty of killing them off.
There are disputes pitting Europe against the United States, rich countries against poor countries, and farming countries against industrial countries.
But a major new factor in the deadlock is a global economic realignment that has vaulted China, India and Brazil into the top tier of the world’s emerging markets, much to the concern of other developing countries like Mexico, Chile and Thailand.
India and Brazil are refusing to lower their tariffs out of fear of export-driven economies like China’s. A second tier of developing countries that are trying to compete with India and Brazil are complaining that they are being shut out by India, Brazil and other rapidly developing countries. Meanwhile, the poorest of the poor countries in Africa and elsewhere charge that the richer emerging market economies, which portray themselves as champions of the poor, are actually ignoring their needs.
“There is no value in blaming any single country over the state of our negotiations,” Peter Mandelson, the top European trade negotiator, said in an interview. “But this is not a classic North-South conflict. It is also South-South. The developed countries and the emerging economies have a responsibility to help the poorer countries.”
Failure of the global trade talks is widely seen as potentially damaging to the world economy, which is powered by more than $10 trillion in trade of goods and services annually. The World Bank calculates that a new trade deal could add hundreds of billions of dollars to the world’s income.
This week, the World Trade Organization in Geneva tried to resolve the trade impasse by proposing compromises by all sides. On Friday, Robert B. Zoellick, president of the World Bank, urged the parties to heed the call for a middle ground. “The global community should stay focused on the prize,” he said, adding that “all economies should be able to benefit” from a deal.
It was a pointed appeal, because Mr. Zoellick served as the United States trade envoy when the current talks were started in Doha, Qatar in 2001, as a “development round” to aid the poor.
The impasse has grown bitter, however.
Last month, Susan C. Schwab, the United States trade representative, charged that India and Brazil displayed “a lack of flexibility, indeed a rigidity” in refusing to lower farm and industrial tariffs in a way that could benefit not just the West but other poor countries.
“There are some folks who may want to portray this as a north-south breakdown,” Ms. Schwab said. “I think nothing could be further from the truth.”
In an interview Friday, after returning from meetings with nearly 40 envoys of African countries in Ghana, Ms. Schwab said that while South Africa was backing the position of India and Brazil, the other African countries were in desperate need of a trade deal. The onus, she said, was on the richer developing countries to make it happen.
“The Doha round is a development round, but that means something different than it would have meant 15 years ago,” she said. “It means that obviously the developed countries need to do the most. But the most rapidly growing developing countries need to do the next most because of the benefits they derived from an open trading system.”
But the Indian trade minister, Kamal Nath, has stood firm, suggesting that the United States and Europe were intransigent in keeping farm subsidies and other trade barriers high, hurting the world’s poor. India charges that American farm subsidies especially keep American farm products artificially competitive against imports.
Though Mr. Nath maintained that trade talks were still mired in a conflict between rich and poor countries, recent developments suggest that a cleavage has indeed opened up among developing countries, with some emerging economies not wanting China, India and Brazil to speak for them.
India and Brazil, for instance, call for phased-in reductions of tariffs on manufactured goods that would leave the highest tariffs at roughly 30 percent, though there were hints they could live with a level of 25 percent.
The United States and Europe, which would reduce their own industrial tariffs to a few percentage points, say that India and Brazil have taken a hard line because of a fear of imports from China and other export-driven economies. India fears more specifically that its auto industry could be nearly wiped out by Chinese imports.
A new bloc of exporting countries are proposing a more conciliatory approach by suggesting a range for tariffs of the upper teens to the low twenties for the most protected products. This new “middle ground” bloc is led by Chile, Colombia, Costa Rica, Hong Kong, China, Mexico, Peru, Singapore and Thailand.
Brazil is considered pivotal in future negotiations because many analysts say it stands to gain the most from a trade deal as a superpower exporter of industrial goods and also a wide range of food products, from sugar to fruits and vegetables. Its position is considered likely to be more flexible than India’s.
Celso Amorim, the Brazilian foreign minister and trade envoy, has been less willing to attack the West than Mr. Nath, but he denies that there is a rift between Brazil and India and other poor countries. “We are on the same wave length in terms of unity and mobilization,” he said in Geneva this month.
The United States, meanwhile, is still under pressure to do more on its own to reduce its farm subsidies. Current law allows the United States to subsidize farm products, if it so chooses, to nearly $50 billion a year. But in the last three years, world food prices have been so high that American subsidies have not come close to that level.
Last year, for example, the United States paid $12 billion to subsidize farm products that compete with imports from other countries. That is the level at which India and Brazil want the United States to keep its so-called trade-distorting subsidies in the future.
The Bush administration argues that $12 billion was unusually low and that its offer of a ceiling of $17 billion was below the levels of much of the last 10 years. Ms. Schwab has also hinted that the United States might reduce the level further if it saw flexibility from India and Brazil.
Outside the picture are the 60 or 70 poorest countries that stand to benefit the most from a trade deal, including countries in Africa and the poorest parts of Latin America and Asia. In a speech in Africa last week, Ms. Schwab said that 70 percent of the tariffs paid by poor countries went to other poor countries.
Ms. Schwab has also repeatedly called on China to show more leadership in promoting an international trade deal. But many trade experts say that China is deliberately lying low to avoid stoking fears of its products in the developing world.
“A lot of developing countries are seized with the idea that if they undertake tariff reductions, they’re going to be overrun by Chinese goods,” said William A. Reinsch, president of the National Foreign Trade Council in Washington, a lobbying group. “It’s going to be hard to disabuse them of that fear.” |
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