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TRADE: U.S. Wants Its Way, But So Do Others

Analysis by Sanjay Suri

GENEVA, Dec 2 2009 (IPS) - Three minutes to speak about the world trade situation was a little more than U.S. Trade Representative Ron Kirk needed to sum up his country’s position on trade; after eight years of talks to thrash out a single trade deal, he needed less time than that.

Trade ministers were allotted three minutes each to state their positions at the start of the three-day ministerial of the World Trade Organisation that ended in Geneva Wednesday.

The meeting itself was about two years late. Meant to be held every two years, ministers skipped one after the meeting held in Hong Kong four years back. The talks launched in Qatar capital Doha in November 2001 to work out a set of rules to guide world trade have not led to an agreement yet.

Coming after all that, many thought three minutes too little for ministers to describe their position within the deadlock – a deadlock seen by much of the world to have arisen from the position of an unyielding U.S., although the U.S. does not quite see it that way.

Kirk used part of his three minutes to put it across succinct and straight, in the celebrated North American way, after the usual politeness about how trade “can play an important role in the restoration of global prosperity.” He was speaking of course of that part of the globe occupied by the U.S.

“The creation of new trade flows and meaningful market opening, particularly in key emerging markets, is required to fulfil the promise of Doha,” said Kirk. “We are looking for concrete signs from other members that they are ready to join us in that commitment.”


The International Monetary Fund has pointed out, he said, that “58 percent of global economic growth between now and 2014 will be provided by China, India, Brazil, Argentina, South Africa and the ASEAN countries.”

But the U.S. wants far more access to the markets of developing countries, particularly the emerging economies among them, than they are prepared to allow. Fleets of cars from General Motors on the streets of Delhi and Shanghai would be a better deal for the U.S. than for those cities, and not because the cars will take up so much space.

If the U.S., it is argued, can get flooded by Chinese goods, it should in turn expect to flood that market back with its own, given the fast rising spending power of China’s consumers. Separate rules for the two sides have long been claimed as valid on that principle of ‘common but differentiated’. The U.S. is seeing commonness more closely now than the differences, and wants quid pro quo.

Few now expect the government of President Barack Obama to yield. “We are still waiting for the big speech from Obama on trade,” Pradeep Mehta, secretary-general of CUTS International, a leading watchdog on trade issues, tells IPS in Geneva. “Their position is that they are keen but not ready. They still have not appointed their ambassador to the WTO.”

The U.S. needs to produce a deal they can sell back home. But so does everyone else. “Basically everyone has to go back and sell a deal to their constituency,” Theresa Carpenter, executive director of the Centre for Trade and Economic Integration in Geneva, tells IPS. “It’s not going to be a situation where you have one winner and everyone else a loser. And within a national community there will be some who benefit and others who don’t benefit so much.”

Across these vast differences Carpenter nevertheless is optimistic over eventual convergence. “People are optimistic that there is a landing zone,” she says. “I think that a deal is near; there is no complete breakdown of talks.”

Past all the grand jargon and the opaque acronyms that crowd discussions of the WTO kind, the issues are a good deal simpler to figure out than what one might expect to find – though they are not quite as simple to resolve. So when the U.S. is spoken of as taking a hard line on sectorals in NAMA (non-agricultural market access), what the U.S. is asking for is essentially that emerging economies allow import with little or no taxation of a range of U.S. goods it particularly wants to sell.

That’s because a sweeping deal now seems unlikely. “The ordinary tariff cutting negotiations are at such a stage where they are unlikely to produce any major new market opportunities for American exporters,” Simon Evenett, professor of international trade and economic at the University of St. Gallen in Switzerland, tells IPS.

“They have said this is not enough; either we cut the tariffs, which there is not much appetite to do across the board, or we have a series of sectoral negotiations where we try and go for zero tariffs or very low tariffs. The Americans have pushed for those proposals very aggressively.”

The biggest in these sectors, Prof. Evenett says, is chemicals. “This covers about a thousand different kinds of products. They (the U.S.) are looking for zero tariffs or close to zero tariffs in that particular sector.” Inevitably, this is a major issue for both India and China, who have very strong domestic chemicals production that could get knocked around if the U.S. were to have its way.

Automobiles and related parts is another one of these “sectorals” where the U.S. wants to drive into Delhi and Shanghai with General Motors or its giant, if now ailing cousins. Other kinds of goods the U.S. wants to sell without tariffs: bicycles, electrical goods, electronic products, fish and fish products, forest products, gems and jewellery, industrial machinery, clothing and footwear.

“There will be proposals to have zero tariffs in all of these areas,” says Prof. Evenett. “But these are only proposals. This has not been accepted.” Naturally, as seen from India and China. In many of these sectors (sectorals for someone anxious to sound WTO-literate) the two countries have strong production spilling over to exports. No one wants to buy what they are themselves making and selling.

To ‘Buy American’ is controversial enough within the U.S. For the rest of the world to skip their own and also buy American could be non-controversial – many might not even consider it.

 
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