Wall Street Journal | By Neil King Jr. and Scott Miller | Sept. 12, 2003
CANCUN, Mexico -- U.S. trade negotiators scrambled to salvage World Trade Organization talks amid mounting opposition from developing countries reluctant to further open their markets to imported food and industrial goods.
Some U.S. officials warned the Cancun talks could collapse because of the demands of an expanding group of developing nations, led by Brazil, India and China. Failure to make progress could imperil the ambitious bid for world trade liberalization launched in 2001 in Doha, Qatar.
U.S. Trade Representative Robert Zoellick told U.S. industry representatives that a stalemate over how to proceed with agricultural negotiations could continue into Saturday and delay progress in other crucial areas such as lowering industrial tariffs. The five days of talks among 148 WTO countries are to end Sunday. Developing countries have intensified pressure on the U.S. and the European Union to drop agricultural tariffs and slash domestic farm subsidies faster and deeper than either power seems willing to do. The alliance of developing countries, meanwhile, continues to insist that poorer nations be allowed to protect sensitive domestic industries from imports.
Mr. Zoellick so far has had little luck wooing key developing countries to support his push for wider market liberalization. The U.S. has promised to slash its huge farm subsidies and eventually to eliminate its tariffs on all goods -- but only if other countries show a willingness to lower their trade barriers, too.
Signs of potential deadlock, particularly over agriculture, have caused alarm among U.S. industry representatives and in Congress that the U.S. won't meet its goals for the talks. Frank Vargo of the National Association of Manufacturers said his group was distressed by the protectionist stance of big countries such as Brazil, India and Malaysia. Without greater market access for industrial goods, he said, "there's no way this deal can come home."
The U.S. team has been caught off guard by the rise and cohesion of the Brazilian-led alliance, known as the Group of 21, which has stuck by demands that the U.S. and Europe eliminate their $300 billion a year in farm subsidies. The group's members have widely divergent trade interests; eight of the members are actively seeking free-trade agreements with the U.S.
In a sign of mounting pressure on the group, Senate Finance Committee Chairman Charles Grassley (R., Iowa) said in a statement that he questioned the free-trade commitment of countries such as South Africa and Egypt that have joined Brazil in opposing the U.S. but also want to negotiate separate trade deals with Washington.
Along with the agricultural impasse, Mr. Zoellick is struggling to overcome rising support for a West African initiative to eliminate all U.S. and European cotton subsidies. Four countries -- Mali, Benin, Chad and Burkina Faso -- contend that subsidies in rich countries have devastated their struggling cotton industries, which employ about 10 million people.
The cotton issue has become a major rallying point for developing countries -- and an increasing headache for Mr. Zoellick. The U.S. this year will pay out more than $2 billion to U.S. cotton farmers, twice the amount that Europe will pay. But ending the U.S. cotton program would be politically explosive, especially in advance of next year's presidential election. So Mr. Zoellick is pushing a complex proposal to incorporate West African cotton into an expanded African textile industry -- a fix that has won little open support among delegates in Cancun.
The U.S. also came under fire from another group, led by Japan and known as the G-9, that wants to protect sensitive domestic agricultural sectors. The group opposes a U.S.-led effort to put a cap on agricultural tariffs. Japan, for example, maintains tariffs on rice of nearly 500%.
U.S. officials continue to believe that the Group of 21 will fracture as the talks in Cancun move forward and countries jockey to advance their own interests. "This group has no glue really binding it together," one senior U.S. trade official said.
But so far the group has shown no sign of falling apart, and it continues to grow. Turkey Thursday joined the alliance.
The job of bridging the gulf on agriculture falls to George Yeo, Singapore's trade minister and a close U.S. ally, who is heading the agricultural working group. But without progress soon, trade diplomats worry that the agricultural logjam could jeopardize talks on lowering industrial tariffs and possibly launching negotiations on rules to protect foreign investors.Wall Street Journal:
