Resuscitating trade

The Bush administration faces a dilemma in the wake of last weekend's breakdown of world trade talks. It can allow the hope of freer trade to die or the administration can make one last effort to resuscitate the talks by making a more generous offer to cut U.S. farm subsidies, says the Washington Post.

The United States risks being blamed if trade talks fail – as now seems likely. Even though the U.S. offer to cut farm subsidies was more substantive than the reciprocal European Union offer, the U.S. position is not above criticism, says the Post:

  • It would involve reforming subsidies so they damage trade less, and U.S. negotiators have yet to accept a minimalist proposal from Pascal Lamy, head of the World Trade Organisation, that the United States cap its farm subsidies at less than $20 billion annually, roughly their existing level.

  • Meanwhile U.S. negotiators also seek to shelter domestic textile companies from competition from the poorest countries, notably Bangladesh and Cambodia.

    Administration officials may argue, rightly, that other countries take even less defensible positions. But their arguments are more likely to find an audience if the U.S. position is beyond reproach. And besides, the Bush administration should judge itself not by the standard of other countries' behaviour but rather by its own principles, says the Post.

    Moreover, the Bush team needs to realise this soon. The president's trade promotion authority expires one year from now, and Congress is unlikely to renew it. Because it will take months to translate a political bargain into a detailed agreement that can be presented to Congress, this month's Group of Eight summit may be one of the last opportunities to breathe life into the negotiations.

    Source: Editorial, Resuscitating Trade, Washington Post, July 7, 2006

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    For more on Trade:

    FMF Policy Bulletin/ 11July 2006
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