http://www.aiada.org/article.asp?id=45255&cat=Trade

Other trade issues step up to spotlight

By David J. Lynch

AIADA summary
# Hours after the House approved a controversial Central American free trade deal, U.S. Trade Representative Rob Portman flew to Geneva on Thursday seeking to invigorate talks aimed at a new global trade accord.

# President Bush applauded the House’s midnight Wednesday vote in favor of the agreement that would drop trade barriers between the United States and six Central American nations, saying it "will level the playing field and help American workers, farmers and small businesses." But the deal’s modest economic stakes insured that attention shifted almost immediately to other unfinished deals.



Hours after the House approved a controversial Central American free trade deal, U.S. Trade Representative Rob Portman flew to Geneva on Thursday seeking to invigorate talks aimed at a new global trade accord.

President Bush applauded the House’s midnight Wednesday vote in favor of the agreement that would drop trade barriers between the United States and six Central American nations, saying it "will level the playing field and help American workers, farmers and small businesses." But the deal’s modest economic stakes insured that attention shifted almost immediately to other unfinished deals.

Chief among them are global trade talks at the World Trade Organization (WTO) intended to liberalize world trade in agriculture and services, which began in Doha, Qatar, in 2001.

Progress in the so-called Doha Round has been stalled by developed countries’ foot-dragging on opening markets and eliminating farm subsidies. The U.S. in particular showed little willingness to shrink its estimated $16 billion in agricultural subsidies while the CAFTA battle was underway.

"Much work remains to keep the WTO Doha talks on track," Portman said in a statement.

His spokesman, Richard Mills, added that the CAFTA vote "provides a great boost and momentum to the trade agenda. ... We’ll keep moving on."

Negotiators meeting in Geneva are well behind schedule and need to make major progress before December’s World Trade Organization meeting in Hong Kong.

Even if they finish by year’s end, it will take a full year for more than 139 countries to hammer out the fine print. The Bush administration wants to complete the process before the mid-2007 expiration of its authority to negotiate deals subject only to an up-or-down congressional vote.

"Now that they’ve won the (CAFTA) vote, they may be in position to do some things to move the negotiations forward," says William Reinsch, president of the National Foreign Trade Council. "Having a successful Doha Round is the single most important thing you can do from the perspective of the business community."

Meanwhile, additional bilateral trade deals are progressing. Few are expected to prove as politically controversial as CAFTA, which drew fire from many Democrats who said its protections for Central American workers were inadequate.

Amid the war on terror, lawmakers are likely to back proposed accords with Bahrain, the United Arab Emirates and Oman aimed at promoting stability in the Muslim world, says Edward Gresser, a trade expert at the Progressive Policy Institute.

"There’s a powerful security argument," he says.

But other trade deals, with Andean countries in South America and Thailand, are less certain. The administration has been pursuing a policy of so-called "competitive liberalization," completing deals with individual countries in hopes of prodding their neighbors to negotiate.

The enormous political effort required to pass CAFTA, including personal politicking by the president in the final hours before the House vote, raises questions about whether the political cost of such small deals is worth the economic gain.

The relatively small CAFTA deal, involving the Dominican Republic, Honduras, Nicaragua, El Salvador, Guatemala and Costa Rica, is "like having a free trade agreement with New Jersey," said House Majority Whip Roy Blunt, R-Mo., who led the Republican vote-counting drive Wednesday.

Daniel Griswold, a Cato Institute trade expert, says: "This means the administration strategy of competitive liberalization maybe has run its course. The administration may hesitate to expend so much political capital on future agreements that aren’t economically significant, and hold its powder for things that are, like Doha."