US business urges big changes in WTO trade talks

WASHINGTON, Aug 3 (Reuters) - With U.S. economic growth nearly stalled and unemployment stuck above 9 percent, Caterpillar's (CAT.N) man in Washington, Bill Lane, has been pitching what many think is a crazy idea: one more try to reach a big market-opening deal through the World Trade Organization.

Facing a panel last week of top trade lobbyists for the U.S. manufacturing, services and farm sectors, Lane warned that countries in Asia, Latin America and Europe were striking new trade deals at much faster pace than the United States.

"We're being disadvantaged not because of protectionism but because they're embracing trade liberalization in a much more aggressive form than the U.S. The only way we can leapfrog what's going on ... is to do something bold and do something bold through the WTO (World Trade Organization)," Lane said.

It was a rousing call for resuscitating the all-but dead Doha round of global trade talks, which the United States helped launch in the capital of Qatar just two months after the September 11, 2001 attacks.

But these days it is hard to get cheers in Washington for the epic-length talks. Lane's friends and colleagues, as much as they would welcome a global deal to open new markets to U.S. exports, essentially told him there was no hope.

"The WTO, for services, holds no promise," said Bob Vastine, president of the Coalition of Service Industries. "It's a vehicle incapable of delivering the goods."

"The premise that a breakthrough idea is possible in Geneva is not borne out by the facts," said Scott Miller, director of global trade policy for consumer products giant Procter & Gamble (PG.N). "It's hard to find ambition in Geneva."

Looking for A Way Forward

In four months, the 153 members of the WTO will gather in Geneva to try chart a new path for the Doha negotiations.

Caterpillar has benefited mightily from trade reforms and the construction equipment giant has been at the forefront of efforts to push long-stalled U.S. free trade deals with South Korea, Colombia and Panama through the U.S. Congress.

But many U.S. business groups have soured on the Doha round, seeing it now as more of an obstacle to trade liberalization than an opportunity for export growth.

They complain the never-ending talks have kept the WTO from moving on to other more promising projects.

"Nobody wanted a deal to slash trade barriers more" than the National Association of Manufacturers, said Frank Vargo, the group's vice president for international economic affairs.

"(But) the Doha round has failed miserably in generating new market access that we want for ourselves and other countries," he said.

Last month, World Bank President Robert Zoellick, a former chief U.S. trade negotiator, criticized the United States for not showing more leadership in the talks.

But Vargo and other panel members at the discussion put the blame on major emerging countries such as China, Brazil and India for refusing to offer deep enough tariff cuts to create new export opportunities for the United States.

Those concessions are needed to persuade Congress to cut U.S. farm subsidies and remaining high U.S. tariffs in areas such as textiles and trucks, the businessmen said.

In the services negotiations, "the offers on the table (from major developing countries) offer virtually no new commercial advantage," Vastine said.

"Why are we wasting our time? Let's find other venues," Vastine said, such as the proposed TransPacific Partnership between the United States and eight other countries.

Others said putting the WTO back on track as a venue to negotiate new market openings required changes in the conduct of the multilateral trade talks.

"The Doha round is committed to a strategy that may not work any more," Miller said, arguing the WTO should shift from its focus on a wide-ranging deal involving all 153 members to smaller agreements with fewer countries.

Vargo agreed, saying the Doha round's governing principle that nothing is resolved until everything is resolved has in effect prevented any agreement.

WTO members should also "look at moving away from universal MFN (most-favored nation)," Vargo said, referring to the long-established principle that all WTO members provide each other the same degree of market access.

Abandoning MFN would allow groups of WTO members to strike deals to liberalize trade in a particular services or manufacturing sector, but bar countries that don't want to open their own

August 3, 2011

Source: Reuters