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March Of The Trade Negotiators
by Danielle Belopotosky
The drumbeat is mounting for the 148 members of the World Trade Organization to conclude their next round of trade talks, but negotiations could stall if a deal on agriculture is not brokered, trade experts predicted last week.
The WTO will meet in Hong Kong in December for its third round of trade talks since the opening round in Doha, Qatar, in 2001. The basic framework for reducing tariffs has yet to be set. WTO nations are hesitant to unveil proposals for agreements on market access in various sectors, let alone address a trade-in-services agreement dealing with mobility of highly skilled temporary employees, an issue of interest to the technology industry.
Add to that the pressure on U.S. negotiators to finish work before President Bush loses his trade-negotiating authority, which gives Congress only an up-or-down vote on deals. Congress waived its right to amend trade deals in 2002 and again in July; it is now set to expire July 1, 2007.
Rep. Jim Kolbe, R-Ariz., said at last week's symposium on the state of the 10-year-old WTO that he "wouldn't place any bets on the president getting his trade-promotion authority [extended] in 2007." He added that even though the renewal date is 18 months after the Hong Kong session, "there isn't enough time for us to have a failure at Doha [and] for us to pick up the pieces" and negotiate a new deal.
Marylander Ben Cardin, the top Democrat on the House Ways and Means Trade Subcommittee, said agriculture will be the "kingpin" for future trade deals. "You are not going to pass a trade agreement in Congress that does not balance" the interests of the agriculture sector, Kolbe added. He said agriculture is perhaps the most powerful of the three trade coalitions in Congress, with manufacturing and services interests being the other two.
The Services Elephant In The Room
Over the course of the two-day meeting hosted by the American Bar Association and the Washington International Trade Association, congressmen, trade negotiators, legal advisers and Capitol Hill staffers examined 16 key negotiation areas, including dispute settlements, non-agriculture market access and services. As European Union and U.S. trade negotiators seek a compromise over farm subsidies and market access to agricultural produce, U.S. services may be receiving the least attention.
Under that area of the WTO, progress over "Mode 4" labor provisions has been limited, V.S. Seshadri, minister of commerce for the Indian Embassy in Washington, said on Friday. Mode 4 involves a visa-related provision for temporary or contact workers, such as software engineers or researchers, who travel to other countries for project work.
To Congress, Mode 4 resonates like an immigration issue, and immigration provisions in trade agreements rub against Congress' authority to establish immigration rules. "Yes, that's kind of the big elephant in the room that no one wants to pull the blanket off of," Kolbe said.
But the importance of the services industry is growing as new technologies foster electronic transmissions in sectors like banking, health and telecommunications. Trade in services accounts for more than 20 percent of global trade, according to the WTO, and it accounts for more than 30 percent of U.S. trade. In July, the U.S. sector accounted for $58 billion in two-way trade, according to U.S. Census Bureau.
In May, the Office of the U.S. Trade Representative (USTR) made its revised services offer to the WTO. It calls for allowing highly skilled professionals to enter the United States for three years, with two-year extensions. It also addresses the "movement of persons," under which non-immigrant visas could be extended to foreign-born executives or those who "carry on substantial trade, including trade in services or trade in technology."
But language in agreements that could circumvent or pre-empt congressional authority to change the current visa program has been frowned upon by Congress. In 2002, Senate Judiciary Committee Chairman Orrin Hatch, R-Utah, warned USTR against implementing immigration language in trade agreements.
India has proposed letting employees of foreign-based companies travel up to one year to perform services, with the maximum extension of three months.
The Deadlock On Market Access
As far as talks over non-agricultural market access, National Foreign Trade Council (NFTC) President William Reinsch said "there is a growing concern that they are lagging." Market access for investment services, telecom and other high-tech manufacturing interests have yet to be placed on the negotiating table.
"We are in a bit of a deadlock," said Meredith Broadbent, assistant USTR for industry, market access and telecom. Thus far, proposals to increase market access for the automobile industry and for wood products have been offered, she said. Manufactured goods, including semiconductors and other tech goods, represent 62 percent of U.S. exports, she added, but more than half of those U.S. goods are exported to countries where the United States does not have trade agreements.
Officials remain hopeful for sector-based agreements. "Assuming everyone is responsible and works aggressively," said Bill Lane, Washington director of government affairs for Caterpillar, "at the end of the day we will get an ambitious agreement."
Some panelists at last week's event urged the business community to push for finality on the "Doha Round" of WTO negotiations. "The business community has to be more engaged and tell Congress how important it is" to them, said Everett Eissenstat, who serves as the chief international trade counsel for the Senate Finance Committee.
"I have been bothered by the Doha round because I have not seen excitement by the private sector," said Ambassador Mike Smith, former deputy USTR. He noted that the business community has other issues on its plate, including rising healthcare costs, pension problems and trade fatigue. "We have to see the private sector in the United States get a little more ginned up about this," Smith said.
Reinsch said the outlook is not so bleak. The NFTC is taking a delegation of some 30 business community members to the Hong Kong ministerial.
Although some Democrats are still on defense after the Central America Free Trade Agreement (CAFTA) passed over their objections, Cardin said the Democrats are willing to work with USTR Rob Portman on the Doha round. Cardin urged consultation with the minority party, noting that the administration could have won more than the 15 Democratic votes for CAFTA it won in the House if it has pursued such talks. But he said it is time to "make Doha our top priority."
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