November 9, 2002 Global Trade Looking Glass: Can U.S. Have It Both Ways? By DANIEL ALTMAN
Policies adopted by the Bush administration to advance specific domestic and international goals are undermining the White House’s own efforts to open markets through trade’s global rule-making body, some foreign officials say.
In particular, new farm subsidies and other barriers to the American market have led some of America’s trading partners to doubt Washington’s commitment to free trade, in spite of its ambitious proposals to reduce distortions in world markets. Those doubts, combined with the United States’ pursuit of trade agreements outside the World Trade Organization, have also diminished the pre-eminence of the W.T.O., the critics say. That change may impede a crucial round of global trade negotiations begun substantially through American diplomacy last November in Doha, Qatar.
“The United States was very supportive of some of the positions that those of us from the developing countries took at Doha,” Kofi K. Apraku, Ghana’s minister of trade and industry, said in a telephone interview. “What happened at Doha gave us hope that we could work together.”
But the mood has changed in the last year, he added. “There is a lot of concern and a lot of worry in our country about the United States’ commitment to carry forward the momentum that was created in Doha,” Dr. Apraku said.
In response, Robert B. Zoellick, the United States trade representative, said that all negotiators have to balance domestic concerns with those of their trading partners. “Many countries had to stretch politically and then had to deal with sensitivities back home,” he said in an interview earlier this week, “so a pause for repositioning is understandable.” Mr. Zoellick added that he was optimistic that the talks would succeed on schedule. “We’re not refusing to discuss anything,” he said. “I believe we can get the Doha negotiation done by 2005, if key developed and developing countries make the effort.”
Chief among Ghana’s concerns is the Farm Security and Rural Investment Act of 2002, generally referred to as the farm bill. The law will protect American farmers from slumps in the business cycle, but critics say it may also encourage farmers to overproduce. That would depress world prices for crops. Ghana does not export all the same crops as the United States, but Dr. Apraku said the bill set a bad precedent.
“It is a major concern for us in Ghana,” Dr. Apraku said. “We are a developing country. Agriculture is very important to us.” Farming accounts for 36 percent of Ghana’s economy and 60 percent of its jobs.
Ghana is not alone. “It is clear that the United States farm bill is not very popular in Canada, either,” said Pierre S. Pettigrew, Canada’s minister for international trade. “It certainly requires more explanation on the part of the United States.”
Experts estimate the farm bill, signed by President Bush last spring, could increase federal spending on agriculture by 70 percent over the next six years, to as much as $180 billion, potentially violating limits for farm support set during the last round of global trade talks, but Mr. Zoellick’s office disputed that.
Supachai Panitchpakdi, the director general of the W.T.O., said the increase in subsidies under the farm bill had hampered the new round of global trade talks. “It has created some questions, some doubts in the mind of some countries,” he said, “and has sometimes been used to delay some of the proposals.”
Dr. Supachai also noted that the talks were behind schedule. Negotiators missed a deadline for submitting a report on trade preferences for poor countries to the W.T.O.’s general council. “When the members missed the July deadline,” he said, “the prevailing view of the developing countries was a bit of disappointment â€” that they were let down.”
Mr. Zoellick said that the deadline had come too soon, since the overall shape of the negotiations â€” whether they would apply to tariffs, subsidies, quotas or other items â€” was still unclear.
He also said critics were overstating concerns about the farm bill. “The farm bill does nothing in terms of tariffs or market access,” he said. “It doesn’t change our policy on export subsidies.” Additional annual appropriations to subsidize farmers, he asserted, could make the situation problematic.
In addition to complaints about specific policies, some critics have also objected to Mr. Zoellick’s simultaneous pursuit of trade pacts with individual countries, with regional bodies like the Free Trade Area of the Americas and with the W.T.O. While that approach ensures against any one set of talks collapsing, diplomats say it also puts some negotiating partners at a disadvantage. Small countries in particular often lack the expertise to engage in three sets of talks, and the comprehensive negotiations at the W.T.O. could be shortchanged.
“The fact that our trade negotiators are so busy with the W.T.O., with the F.T.A.A. and with the bilaterals, causes a problem for all of us, not only for smaller countries,” Mr. Pettigrew of Canada said.
The Workers’ Party of Brazil, which will soon govern that country’s economy, the biggest in South America, plans to make the Free Trade Area of the Americas â€” not the W.T.O. â€” a top priority. “The schedule is more urgent on that,” said Giancarlo Summa, a party spokesman, “and of course there will be much more diplomatic pressure.”
The Free Trade Area of the Americas would lower and eliminate tariffs on goods traded among 34 countries on the two continents, and could shape the rules for trade in services and foreign investment.
For Chile, by contrast, a long-awaited bilateral agreement with the United States is “in the front of the road,” said Osvaldo Rosales, the country’s top trade negotiator.
Though Mr. Rosales asserted that bilateral and regional trade agreements would serve as an important test for American leadership in the W.T.O., he also said that the existence of such pacts could make the negotiations at the W.T.O. more difficult.
Dr. Apraku was even blunter. “These negotiations will reduce the scope of the W.T.O.’s influence,” he said.
Though a proliferation of trade deals could enhance African countries’ negotiating skills and influence, it could also deflect attention from the overall effort to improve the living standards of the poorest countries by bringing them more fully into the global trading system.
Mr. Zoellick affirmed the United States’ commitment to seeing negotiations through at all levels. He said he intended to complete free trade agreements with Chile and Singapore by the end of this year, and the pan-American and W.T.O. negotiations by the end of President Bush’s current term.
Yet worries about populist governments in Argentina and Brazil seem to have made neighboring nations more eager to sign bilateral deals. Panama, the Dominican Republic, Bolivia, Colombia, Peru and other countries have approached the United States, Mr. Zoellick said.
“They don’t want to be left out,” he said.
That suits Mr. Zoellick. “We will work with Brazil because its participation is important,” he said, “but if it doesn’t work, we’ve got to have alternatives.”
Developing countries have also taken issue with Mr. Zoellick’s opinion of the United States’ importance to the global trading system.
“Doha wouldn’t have happened if it weren’t for the United States,” he said. “The United States has an added responsibility for the trading and international economic system as a whole,” he added later.
Rafidah Aziz, Malaysia’s minister of international trade and industry, said that view might be overblown. She predicted that Mr. Zoellick would be “tearing his hair out” if he tried to strong-arm smaller members of the W.T.O. “No one can force anyone to do anything there, least of all the United States,” she said.
Sherman E. Katz, a scholar of trade policy at the Center for Strategic and International Studies, a policy center here that Mr. Zoellick used to head, said that the United States still provided much of the intellectual energy behind talks on complex issues like intellectual property and trade in services. He concurred, though, with Ms. Aziz’s central point.
“We can’t throw our economic clout around on the W.T.O. table as much as we used to,” he said.
Poorer members of the W.T.O. do not face an easy task. At least 50 issues related to carrying out the last global trade pact â€” a primary concern of developing nations â€” are on the table to be discussed before the end of this year.
“We are mobilizing ourselves so that we can have some leverage, make some difference, in these meetings,” Dr. Apraku said. “We do not want to be marginalized.”