''The Stakes in Hong Kong''
Washington Post, 12/13/05
For a brief moment after the 2001 terrorist attacks, the world's leading nations wanted to extend a ladder of opportunity to poor and potentially resentful nations. They launched a new round of global trade talks, calling it a "development round" because it was supposed to cut farm tariffs and other obstacles to poor countries' progress.
The good intentions didn't last. A follow-up summit of trade ministers in Cancun, Mexico, in 2003 broke down chaotically when the European Union and the United States tried to impose an unsatisfactory pseudo-deal on developing countries.
Now, after another two-year interval, trade ministers are convening in Hong Kong. Progress has been shamefully slow, and the chances that the round will realize its development potential are almost nil. Still, it's important that the next few days yield at least a modest deal. A collapse could destabilize the global trading system.
The stakes are high because the effective negotiating deadline is nearing. Congress has granted President Bush "trade promotion authority," the power to negotiate trade deals and get an up-or-down vote in Congress without having the document picked apart in a series of amendments.
But this authority expires in the summer of 2007 and is unlikely to be renewed; it was granted in 2001 in that anomalous moment of post-Sept. 11 lucidity. Negotiators therefore have about a year to put together a hugely complex deal, but their efforts so far have been confined mainly to agriculture.
Even there they have stalled, largely because the European Union has offered a loophole-ridden proposal that would barely reduce its farm protectionism.
If this trade round collapses, it would fuel the disturbing trend toward regional and bilateral trade pacts, which boost prosperity less effectively. These smaller deals tend to come with burdensome red tape.
For example, the United States has granted preferential market access to African exporters, but it insists that African goods be laboriously certified as genuinely African to screen out products that might be shipped from another region to take advantage of the special access.
Regional deals also tend to divert trade as much as they create it, shifting prosperity from one region to another rather than actually generating it.
The collapse of the trade talks would also threaten a dangerous burst of litigation. Earlier this year, the World Trade Organization's appellate tribunal upheld a Brazilian complaint against U.S. cotton subsidies, with the result that those subsidies are supposed to be cut back.
A new paper from the Cato Institute argues that, under the logic of that ruling, U.S. subsidies on corn, wheat and rice may also violate world trade rules. So long as trade talks limp on, there's little incentive for other countries to bring expensive legal challenges to U.S. farm programs.
But if the prospect of a negotiated reform of U.S. policies fades, the United States might face a series of WTO rulings against agricultural subsidies. If it bowed to these, it would be putting its own house in order without getting reform from others in return. If it refused to bow, it would fuel anti-Americanism and undermine support for the rules-based trading system.
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