Wednesday, October 14, 2009

Life As A WTO Backbencher

A few days ago, I openly questioned whether the White House's failure to formulate a trade agenda - including real negotiating stances in the WTO's Doha Round - had caused America's trading partners to become fed up with US stalling and start to move on without us.  My evidence - a leaked EU-Brazil letter imploring the US to announce its trade priorities - left me to warn "[s]o unless something changes quickly inside the White House, 60-plus years of American trade leadership will have abruptly come to an end, and the first year of American also-ran status will have quietly begun."

Unfortunately, two subsequent developments might force me to change the verb-tense of that (admittedly melodramatic) warning because they indicate that "year one" may have already begun.  In each case, the United States issued a strong ultimatum regarding Doha's conclusion, and it each case it was blown off.  Completely.

First comes news from India's Business Standard that--
The United States has handed over a list of industrial products such as chemical, health care and industrial engineering items to India, China and Brazil, saying the three emerging countries must agree to eliminate tariffs on these items for any further progress in the stalled Doha trade negotiations, analysts said.

During separate bilateral meetings with Brazil and India in Paris last week, the US conveyed that it was the responsibility of emerging countries to convince their trade and other lobbies on a zero-for-zero tariff elimination for these products, failing which Washington would find it difficult to secure the green light from its powerful industrial and Congressional groups to conclude the Doha talks, Business Standard was told.
In other words, US support for the Doha Round depends on the full participation of China, India and Brazil in voluntary, sectoral negotiations to eliminate tariffs on chemicals and other industrial products (more on sectorals here).  And the countries' response to the American threat?
China... categorically rejected the US’ demand while India said there is no need for such a treatment as the tariffs on these items are at historic lows enabling the American industry to have a sizeable export presence.

Brazil, which recently carried out a study by an American trade research outfit on the implications of the tariff elimination on chemicals on its industry, gave a mixed signal.
Translation: "Pffft.  Whatever, dude."

But at least these three countries responded.  The same can't really be said for the second US ultimatum.  According to Reuters, United States Trade Representative Ron Kirk yesterday proclaimed that the United States would not agree to a final Doha deal unless other countries made better offers to open their markets to services trade.
"We know that the biggest gains to the global economy are likely to derive from multilateral services liberalization, but the offers on the table right now fail to deliver on that promise," ... Kirk said at the Global Services Summit.

"We have said flat-out that there will be no deal without a solid result on services which would result in new market opportunities, but we believe that a positive outcome is still achievable," Kirk said.
So according to the USTR, there will be "no deal" unless Members make new and bold services offers.  And the response from the rest of the WTO?

Crickets.  Literally.  I've googled around and found only a few stories even mentioning Kirk's statements, and the only public responses from other WTO Members are a lukewarm "meh" from the EU, a forced "ok, sorta" from India (their commerice minister Anand Sharma was speaking at the same conference as Kirk), and an anonymous delegate's suggestion for further delay in the services talks.  That's it.

It's certainly not the rousing response that one would expect when the world's largest economy (country-wise) loudly demands that the Doha talks be rebalanced - they've thus far focused on agriculture and industrial market access - towards services, and that most nations make stronger services commitments.  But maybe this is what happens when the United States (for nine months and counting!) flatly refuses to (i) formulate a coherent position on Doha (or any other trade issue, for that matter); (ii) make any formal commitments on trade issues that other Members deem critically important (like subsidies reductions and trade remedies reforms); and (iii) even hint that it will provide President Obama and his trade team with the congressionally-sanctioned negotiating power (through "Trade Promotion Authority") that they need to forge a binding WTO agreement.

Maybe we get blown off.  And maybe we should get used to it.

So where does this really leave the United States?  For now, it appears to be a WTO backbencher - a Member whose refusal to put any real skin in the game means that its loud demands are met with polite, diplomatic non-responses, rather than the loud applause, measured appreciation or extreme public angst that used to follow American ultimata at the WTO.  And if we're not there yet, we're quickly heading that way, and that's not good for anyone who seeks a conclusion to the Doha Round and freer trade around the world (especially considering that these latest US demands are actually quite sound and productive).

Now, I don't mean to imply that this (apparent) demotion is permanent.  The United States' GDP will always carry weight, and America can regain the mantle of a "WTO first-teamer" if only it would decide to actually do something.  Make some binding commitments along with new demands.  Commit to providing President Obama with Trade Promotion Authority.  Fill out the rest of USTR's staff.  Get back to the Doha negotiating table for real, instead of just "expressing support" and pointing fingers from afar.  If the US does these things, it can again be a leader in global trade.

But until then, I think we're gonna be hearing a lot of crickets.


Colin said...

We're not just WTO backbenchers, we're on the sidelines in broader free trade efforts as well. Bilaterals with Panama, South Korea and Colombia languish while TPA needs to be renewed.

While the US sits on its hands South Korea concludes a new deal with the EU this week on terms similar to the bilateral with the US. Both Panama and Colombia have either concluded or entered into agreements with EFTA.

Scott said...

Yep. The world is moving on without us. However, do keep in mind that the EU-S.Korea agreement won't enter into force for about a year or so (lots of typically european bureaucracy to get thru), so the US could still get into the game on that if it wanted. I'll probably be writing about that issue over the weekend.