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WTO Negotiations And TPA Renewal: Chicken? Egg? Does It Matter?
By Russell Smith, Willkie Farr & Gallagher LLP
WASHINGTON, DC (KWR) March 5, 2007 -- The current state of the Doha negotiations, at least so far as the U.S. is concerned, brings to mind the question of which came first, the chicken or the egg. The Bush Administration is taking the position that both an extension of Trade Promotion (“fast track”) Authority (TPA) AND progress in the Doha negotiations are its highest trade priorities for the coming year. In this regard, USTR Schwab has repeatedly told Democratic and Republican trade leaders in Congress that she wants to work with them to obtain a comprehensive TPA extension. Ambassador Schwab is rejecting, at least publicly, talk of a short-term extension designed just to keep the door open for an agreement in the Doha negotiations. She urges Congress to think of the long-term needs of “any president,” rather than Bush alone. The Administration has helped push the private business sector to organize itself to support TPA extension, and in mid-February USTR Schwab appeared at a press conference announcing the creation of Trade for America, a coalition of business and farm groups formed to lobby for an extension of TPA.
As for Doha, Ambassador Schwab now seems to be saying that progress depends on extending TPA, rather than the other way around. Her message is that a failure by Congress to act on trade negotiating authority before its June 30 expiration would signal a U.S. “loss of faith” in Doha. Otherwise, Ambassador Schwab continues to claim that substantive and potentially productive discussions are taking place between the U.S., the EU, and Brazil (with no mention of Japan, India or China). Ambassador Schwab dismisses any inconsistency between the potential of massive agricultural subsidies in a new U.S. farm bill and the U.S. demands on agriculture in the negotiations, stating that trading partners should not “draw conclusions” and continue to respect the U.S. offer. This position does not appear to be convincing to U.S. trading partners who view the farm bill as a U.S. signal that it does not have much hope for success in the Doha negotiations.
As if to confirm this thinking, Agriculture Secretary Johanns has taken a hard line regarding the Doha negotiations. Johanns, while giving some recognition to the impact of extending or not extending TPA, asserts that any additional U.S. concessions turn on the willingness of other countries to offer easier market access to U.S. agricultural products. Johanns makes it clear that he expects Brazil, India and Indonesia to reduce tariffs and other barriers to imported foods, and that he regards criticism from other countries of the proposed farm bill as, in his words, "a lot of noise." Finally, Johanns repeats the claim, possibly true but at this point arguably unhelpful, that the European Union and Japan both spend much more on farm subsidies than the United States.
The Democratic leadership of the House Ways and Means Committee and the Senate Finance Committee, as well as many of the Republican members on those committees, have a somewhat different perspective. They regard progress in the Doha negotiations as an essential prerequisite to any extension of TPA, and they tend to be pessimists as to whether any such progress will be made between now and June. Moreover, they are demanding new and potentially very difficult requirements as to labor and environmental standards as the price of any such extension.
Whether progress in the Doha negotiations is the “chicken” or the “egg,” the fact of the matter is that no essential country appears to feel any short-term motivation to move away from its long-held position on agriculture. Among this group, the G-20 developing country group, which includes Brazil and India, has said it has already offered its compromise position.
Moreover, it appears that negotiators cannot even reach a consensus as to whether the main agricultural objective is to increase market access through tariff reductions and other measures or to cut subsidies in developed countries. The United States holds to its position that only market access measures can increase the flow of products among countries and produce economic growth. Developing countries argue that the U.S. and the EU shelter their farmers with unnecessary subsidies that create market barriers for their products.
These domestic and international political inconsistencies are, of course, prescriptions for continued stalemates and lack of progress, and would appear to block any extension of TPA for the time being. What is unclear is whether on the U.S. side, Ambassador Schwab and Secretary Johanns have in fact given up the hope of achieving either TPA extension or Doha progress this year and are simply pressing these positions because they have no choice. While the situation has not as yet become that politically cynical, if the weeks and months continue with nothing positive regarding either Doha or TPA, it will not be long before that point is reached.