WALL STREET JOURNAL | By HELENE COOPER and GEOFF WINESTOCK | November 12, 2001
DOHA, Qatar -- During a closed-door meeting here Friday, a U.S. trade official made an offer that he said Pakistan shouldn't refuse.
If Islamabad signed on to the U.S. negotiating line here at the World Trade Organization ministerial meeting, commerce undersecretary Grant Aldonis told Pakistan's commerce minister that America would consider slightly easing its restriction on imports of bedsheets and pillowcases from Pakistan. In addition, Mr. Aldonis said, the U.S. also would be willing to lift a 1998 quota on cotton yarn. He also said the U.S. couldn't lower tariffs on Pakistani textiles for fear of angering House Ways and Means Chairman Rep. Bill Thomas (R., Calif.), whose congressional district includes a big cotton manufacturer.
The Pakistani negotiators looked at Mr. Aldonis in astonishment. The WTO already had ruled in April that the U.S. quota on cotton yarn was illegal, so America had to lift it anyway. And bedsheets and pillowcases? Given that Pakistan has lost 40% of its U.S. exports since Sept. 11, when frightened American buyers halted orders from the front-line country, Mr. Aldonis's lowball offer was "totally inexplicable," one Pakistani negotiator said. "We told him, 'Please don't announce this to anyone. It will insult our intelligence to pretend this is a concession.' "
In the high-stakes brinksmanship here at the WTO's meeting, the leading proponents of launching a new round of talks to liberalize trade are the U.S. and the European Union. Publicly, the U.S. and EU envoys argue that freer trade will create wealth world-wide and help fight terrorism.
But in the back rooms of the heavily fortified conference center here, the U.S. and EU are struggling to defend protectionist interests at home: U.S. textile and steel lobbies and subsidized farmers in the EU. Both U.S. Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy desperately want to liberalize trade in areas where they are competitive, but so far, neither man has been able to make the trade-opening concessions back home that are necessary to get the rest of the world on board..
Most trade envoys here say they likely will come up with some kind of deal -- even a weak one -- at the close of negotiations here Tuesday, if for no other reason than to preserve the WTO's reputation and to project an image of unity amid troubled times. But there is a danger the deal won't do much to liberalize trade.
Indeed, for all the lofty talk here, most of the positions taken inside the negotiating rooms haven't moved an inch since the disastrous WTO meeting in Seattle two years ago. "We're still arguing about the same things," said Jamaican envoy Richard Bernal.
Meanwhile, after 15 years of often-tortuous negotiations, China, the world's largest communist country, joined the ultimate capitalist club that is the WTO. The trade organization's members voted unanimously Saturday to accept China as a member. Sunday, the trade body voted to accept Taiwan. In an attempt to steal its neighbor's thunder, China scheduled its formal signing ceremony and news conference at the exact time that the WTO was voting on Taiwan's membership.
As the back-room dickering continues, Mr. Zoellick, in particular, is in a box. To get a WTO pact here, he almost certainly will have to sacrifice his dearest wish at home: fast-track authority for President Bush to negotiate trade deals that Congress can approve or reject, but not amend. The same constituencies whose interests he must bargain away to get a deal here for a new round of talks are the ones whose support he needs to get fast-track back in Washington. Fast-track legislation in Congress already is on life-support this year, and moves to resuscitate it will certainly die next year if Mr. Zoellick alienates certain constituencies.
Mr. Aldonis's weak offer to Pakistan underscores the U.S. dilemma. There are few on the U.S. negotiating team who don't think Pakistan should get tariffs on textiles dropped, given the strategic importance of Islamabad in the war against terrorism. Several U.S. officials also say privately that America should agree to poorer countries' request to import more of their textiles, and their requests to renegotiate America's antidumping laws, which protect domestic industries -- such as steel -- from foreign products that are "dumped" on the U.S. market at below cost.
But "the U.S. should make no further concessions in textiles and apparel in future trade agreements," says an Aug. 2 letter to President Bush that is signed by 31 members of Congress, including four Republicans the administration is hoping will vote for fast-track. As for renegotiating America's antidumping rules, Senate Finance Committee Chairman Max Baucus (D., Mont.), another essential vote on fast-track, said last week: "Why would we agree to this? What do we gain?"
The farm-subsidies issue is almost more embarrassing for the EU's Mr. Lamy, who boasts that he is a "bridge" between the untamed capitalism of the U.S. and the developing world. He has visited AIDS clinics in Kenya and South Africa; Sunday he boarded the Greenpeace protest ship Rainbow Warrior SV to talk to indigenous people from Africa and South America allegedly hurt by WTO environmental policies.
But that doesn't square with the $40 billion in subsidies and the trade barriers that keep EU agricultural markets shut to most developing countries. Or, for that matter, the EU's $5 billion program that dumps surplus food onto world markets. In a meeting during the weekend, Guatemala, the Philippines, South Africa and Brazil lined up to demand that the EU eliminate completely its export-subsidy program, as a precondition for even starting talks. "For the EU, it's a matter of pocketbook sensitivities. For us, it's a question of life and death," said Philippine Agriculture Minister Leonardo Montemayor.
But conceding the issue would be political suicide for Mr. Lamy, a French socialist whose party wants to win the votes of the traditionally militant French farm lobby in presidential elections in May. "If we have to eliminate export subsidies, then there won't be a round," says Jacques Desponts, the French leader of UNICE, Europe's main business lobby.
Mr. Lamy spent all weekend on the defensive against 100 farm-exporting countries. Asked to meet with the U.S. and other farm-products exporters to resolve the export-subsidies issue, the EU refused, fearing it was a tactic to isolate Europe. Instead, EU officials met individually with Brazil and Argentina, suggesting the two countries turn their guns on U.S. farm subsidies and stop picking on Europe. European negotiators also exploited old colonial links to further their cause, roping the Ivory Coast and tiny Mauritius into a joint statement on the value of farm subsidies.
Envoys and trade experts here say Mr. Zoellick may have one way out of his "fast-track vs. WTO" bind. Beyond textiles, agriculture and antidumping, one other issue dominates the talks here: patent protection for medicines in poor countries. The developing world wants to be able to manufacture, buy and import cheap generic drugs to deal with public-health pandemics without jumping through a lot of WTO hoops first. The U.S. says it is willing to make concessions for emergencies such as AIDS, but doesn't want to weaken the WTO's strong intellectual-property protection language to the point that poor countries can manufacture cheap generics for any illness.
On Saturday, U.S. negotiator Joe Papovich met with AIDS activists here and discussed one possible compromise: allowing countries that make generics, such as India, to export them to poor countries in some circumstances without violating patent rules. Such a compromise likely would score Mr. Zoellick points with crucial developing countries here such as Brazil and India, but it also would infuriate the U.S. pharmaceuticals industry, a core Republican Party constituency.
"It's what Clinton did to labor" when he abandoned his labor allies to forge previous trade deals, says Lori Wallach, head of Public Citizen's Global Trade Watch. "What's the U.S. pharmaceutical industry going to do? Vote Democratic? I don't think so."WALL STREET JOURNAL:
