Hudson Institute Report

Next round of trade talks lacks a workable agenda

Former Senior Fellow and Vice Chair, Board of Trustees

__Uncertainties over developing countries' support, anti-dumping laws and U.S. negotiating authority could make Doha a bigger disaster than Seattle__

Most people have never heard of Doha and have no plans to travel to this city in Qatar, now or in the near future. Except, that is, if they are involved in trade negotiations, because that is the site of the upcoming ministerial meeting that will attempt to launch a new round of multilateral trade talks under the auspices of the World Trade Organization (WTO).The last meeting, in Seattle in 1999, was an unmitigated fiasco, largely because world leaders -- notably then U.S. president Bill Clinton -- had not bothered to rigorously design an agenda for the discussions. On the contrary, Mr. Clinton appeared to prefer stalling, not wanting to antagonize labour and other opponents of trade liberalization just a year before a presidential election. He even invited protest groups to voice their opinions and they obliged, unabashedly resorting to violence. The disrupted talks fizzled, and trade liberalization and globalization became the targets of non-governmental organizations (NGOs) throughout the world.

It is not surprising, therefore, that the next consultation is slated to be held in November in a rather inaccessible and protected location. Unwelcome protesters may be discouraged from coming, but the meeting faces at least one of the same problems as the Seattle encounter: poor preparation.

Granted, in the past few weeks U.S. Trade Representative Robert Zoellick and Pascal Lamy, the European Commissioner re-sponsible for trade, have expressed their desire and willingness to overcome their differences and devise a workable meeting agenda. Observers suspect that the United States may have indicated that it would abandon its relentless push for reform of Europe's Common Agricultural Policy in exchange for European support for the launch of a new round of trade negotiations. Until now, European and U.S. views about the scope and focus of a new round of trade negotiations have differed enormously. The United States has called for very focused negotiations and a limited agenda, whereas Europe has tended to favour more comprehensive talks. A compromise achieved on the backs of other agricultural exporting nations might have temporarily smoothed U.S.-European relations, but it will engender a host of new irritants among other negotiating countries.

Already, a number of developing and emerging countries oppose trade talks and are especially vociferous about developed-country intentions to impose strict constraints on labour and environmental practices. Many have also taken issue with restrictions on agricultural trade, anti-dumping policies and safeguards. Mr. Zoellick is on his way to India to attempt to reverse that country's opposition to a new trade round, but very few efforts have been made to broaden support for a meaningful agenda. Too few visits have been paid to key developing-country players on the international scene. Time is running out if this meeting is to be better prepared than was the Seattle conference.

Meanwhile, back in the United States, failure to obtain congressional support for trade promotion authority seems to be dissipating support for new trade talks. As has been widely discussed, the Clinton administration failed to renew fast-track negotiating authority, which means that, as it now stands, any trade treaty agreed to by the U.S. administration would be subjected to a clause-by-clause review and debate by Congress. Adoption of trade promotion authority would give U.S. negotiators more flexibility, and hopefully allow agreements as a whole to be subjected to congres-sional ratification. Without this authority, many countries are hesitant to embark on negotiations with the United States, fearing that the U.S. Congress would not enact many U.S. decisions.

The chances of Congress granting the administration trade promotion authority before November are slight indeed. First, labour vehemently opposes a new trade round, and in the current economic climate, few politicians are prepared to confront labour just a year away from congressional elections. The chairman of the Senate Finance Committee, Max Baucus, faces re-election next year, and he has insisted that strong language on labour and environmental protection be included in the trade negotiating authority bill. He would also prohibit negotiations about unfair trade practices such as anti-dumping. Such strong restrictions would, in all likelihood, prevent the launch of a new round of talks, but such are the politics of the U.S. Con-gress and, especially, of the Democratic party eager to regain the majority in both the Senate and Congress.

Unfortunately, this political posturing coincides with a worldwide economic slump that would benefit from a boost towards more open and competitive markets. Though a new trade round would extend for a good number of years and its full benefits not be felt for some time, the promise of more enlightened world leadership bent on promoting growth and trade would be reassuring. Worse, a breakdown in talks, the spectre of mounting trade disputes, and the menace of growing protectionism would exacerbate an already fragile world economy.

The next time Prime Minister Jean Chretien picks up the phone to discuss lumber, oil and gas with President George W. Bush, he may want to remind him also of the tremendous responsibility the United States has to ensure that trade liberalization continues to happen.