United States says trade holdouts can't keep global deals hostage

January 22
6:08 AM 2015

New world trade talks had to level the playing field between developed and developing economies on farm support and avoid being held hostage by countries unwilling to open markets, U.S. Trade Representative Michael Froman said in an opinion piece to be published on Thursday.

As a group of World Trade Organization members prepares to meet in the Swiss resort of Davos to discuss the 2015 agenda, Froman called for "soul-searching" about the next steps for the 20-year-old institution, which late last year clinched the first global deal in its history.

In an opinion piece to be published on Reuters, Froman said

success in cutting customs red tape, which was hard-won after strong opposition from India, could be a "brief blip" unless countries could start afresh on the broader Doha round agenda, which seeks to lower trade barriers and set common rules in a range of areas.

Officials had to consider the "tectonic shifts" in the global economy as emerging markets gained economic muscle, while avoiding double standards in giving emerging markets easier treatment on agricultural subsidies, and ask whether a small group of trade laggards should dictate the agenda, he said.

"Put simply, many of the Doha Round's primary goals will remain inconceivable as long as a subgroup of countries are dogmatically opposed to the whole concept of liberalization," he said.

The Doha Development Round, launched in 2001, was originally meant to help developing economies and was strongly supported by India, Brazil and China. A deal to cut tariffs on information technology products has been held up because of opposition by China andSouth Korea.

Doha negotiations have effectively been on hold since 2008, giving way to smaller, piecemeal deals and discussions of "plurilateral" agreements forging coalitions of the willing rather than those that include all WTO members.

Bilateral and regional agreements outside the WTO, such as the Trans-Pacific Partnership the United States is pursuing with 11 other trading partners, have also proliferated.

Froman said the United States still wanted an ambitious Doha deal, opening markets to manufactured goods and services and discussing the "full array" of farm trade issues, but it was possible not all members would be on board.

"In that event, a more focused and tailored agenda, one that is balanced to reflect the world we all live in today, could present an alternative path forward," he said.

"While no country should be subject to obligations without its consent, we cannot allow a small group of countries to hold back all those who are prepared to move forward."

His comments could open the door to cutting some countries out of agreements - one option discussed during the stand-off last year with India over customs reform - or to diluting goals for agreements covering all members.

Froman said the United States was prepared to pick up the thorny issue of support for domestic agricultural production and exports, but only if emerging markets did the same. A proposal in 2008 was for developed countries to cut subsidies while developing countries did not but Froman said such a "double standard" made no sense in a global market.

"In reality, trade-distorting subsidies from emerging economies have the same impact on global commodity prices as trade-distorting subsidies from developed countries," Froman wrote.

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