United States losing interest in WTO?
By Shadaba Islam
WORLD trade negotiators striving to clinch an end-year deal on tearing down global trade barriers face an array of obstacles, including high European agricultural tariffs, American farm subsidies and developing countries’ refusal to slash duties on industrial goods.
Interestingly, however, the view at the European Union’s headquarters in Brussels is that it’s the unexpected departure of the influential Rob Portman as chief US trade negotiator which poses the biggest threat to the flagging five-year old negotiations being conducted by the Geneva-based World Trade Organization (WTO).
The fear shared by many top EU officials and independent analysts in Brussels is that Portman’s appointment as White House budget director and his replacement by Susan Schwab, one of three deputies at the US Trade Representative (USTR), signals declining US interest in the WTO negotiations.
It also increases uncertainty about the timetable of the trade discussions, including plans to convene a special ministerial meeting in Geneva at the end of April to hammer out nitty-gritty details on thorny issues like farm and industrial tariffs.
Although the US is insisting that it remains committed to the WTO negotiations, EU officials have complained about the timing of Portman’s job move. “The change (in Washington) comes at a critical time. We hope it will not have a negative impact on the current talks,” says EU spokesman on trade Peter Power.
Meanwhile, EU Trade Commissioner Peter Mandelson warned in a terse statement that given continuing difficulties in the WTO talks, ‘it would have been easier to manage’ with Portman in charge of the US negotiating team.
In more candid off-the-record comments, EU officials have described Portman’s removal from the trade job as a ‘bad move’ which could mean that the end-April talks in Geneva will be either postponed or will produce only meagre results. Given the already fragile state of the WTO negotiations, the job-switch in Washington ‘is bound to lead to further uncertainty’, said one EU trade expert.
Clearly some EU concerns are justified. There is little denying that the reshuffle is a sign of growing US disillusionment with the slow pace of WTO negotiations. Although the ministerial held in Hong Kong in December did give a political boost to the talks, progress on key farm-related issues remains limited, with no country in a mood to talk about concrete figures for tariffs on reductions in farm subsidies.
In recent weeks, Washington has made clear that it is disappointed with the EU for not further opening up its agriculture markets and with key developing nations like Brazil and India for not cutting industrial tariffs. As a result, the US focus is now on clinching bilateral market-opening trade deals.
Officials in Brussels were especially alarmed by recent comments from members of the US Congress asking Washington to shift the focus away from the WTO talks.
The EU is also concerned about how the personal chemistry will work out between Schwab and other key WTO negotiators. Although Schwab, who has been Portman’s deputy in charge of intellectual property rights since last November, is widely reputed to be a skilful negotiator, progress in the WTO talks also hinges on personal relationships forged by the most important trade ministers.
Transatlantic trade relations, for instance, hit hard times last year because of tense contacts between Mandelson and Portman’s predecessor Robert Zoellick. Significantly, while Mandelson said this week that he got along well with Schwab, he was particularly insistent that his relationship with Portman had been ‘very good’.
While the unexpected introduction of a new player in the WTO chess game may prove to be a good move by prompting a fresh look at difficult issues like farm subsidies and tariffs, it will require that key players like Mandelson as well as Kamal Nath, Indian commerce minister and Brazilian Foreign Minister Celso Amorim will have to get to know Schwab’s negotiating style.
In addition to dealing with the WTO talks, Schwab will also have to fight off increasingly virulent demands from Mandelson that the US must stop making ‘unrealistic’ demands in the WTO for further cuts in EU farm tariffs.
Without such a change in stance, Mandelson warned recently that the EU had ‘precious little incentive’ to continue its search for more flexibility on the key issue of agriculture.
WTO chief Pascal Lamy also cautioned recently that further efforts were still needed from the US, the EU and developing nations to reach an agreement on reducing agricultural and industrial trade tariffs before the deadline set for April 30.
In a sign of further transatlantic skirmishes ahead, EU officials said that while they were still committed to securing a WTO deal, the end-April meeting should only be held if people were in the mood to strike real deals.
While Schwab may want to go to Geneva to meet other WTO negotiators, the EU had a ‘pragmatic view’, said an EU official, adding: “We want a meeting which yields something. If not it should be postponed.”