November 15, 2001

Page One Feature

WTO Members Agree on Agenda
For New Round of Trade Talks

By HELENE COOPER and GEOFF WINESTOCK
Staff Reporters of THE WALL STREET JOURNAL

DOHA, Qatar -- After seven years of back-room haggling, the 142 nations of the World Trade Organization finally agreed to launch a new round of trade talks that keep the global economy on track toward freer trade and investment.

The negotiations here, which extended a full 24 hours past the scheduled ending and frequently seemed on the verge of collapse, reflect the new realities of the post-September 11 world.

In an effort to keep poorer nations on their side in the war on terrorism, U.S. and European negotiators went further than anyone expected to meet the demands of the developing world. Poorer nations, led by India's Commerce and Industry Minister Murasoli Maran, took full advantage of that situation by demanding more concessions right up to the end.

Ultimately, the U.S. and Europe made big concessions to the developing world -- concessions fiercely resisted by pharmaceutical and steel companies in the U.S. and farmers in Europe. The deal also demonstrated the limits of the antiglobalization movement, which successfully blocked any agreement in Seattle two years ago.

Even after the concessions, a deal was far from finished. As weary negotiators rewrote the agreement yet again, Ecuador brought up concerns about banana exports -- a decades-old, contentious trade fight between the U.S. and EU over Chiquita bananas which trade envoys thought they had finally put to rest this past spring.

Standing in the conference center at 4 a.m. on Tuesday morning, with delegates literally sleeping on the floor, a stunned WTO official kept repeating: "They are talking about bananas. They are talking about bananas."

Thailand and the Philippines brought up tuna trade. Then India tried, again and again, to add even more amendments to the already-dense sections on investment and antitrust policy.

A Difficult Launch

Launching a round of talks is difficult because the agenda the delegates approve essentially becomes a game plan for negotiations by the 142 nations -- and can foretell the ultimate outcome. But it will be years before any changes take place.

The agenda includes cutting tariffs on industrial goods, phasing out farm subsidies, reducing barriers for foreign investment and limiting the use of "antidumping" laws. The agreement to include antidumping laws in the talks was fiercely resisted by the steel industry, which frequently uses those laws to combat foreign companies that sell steel in the U.S. at low prices.

In a landmark shift, Europe and the U.S. also agreed to put the rights of poor countries seeking to obtain cheap medicine above the rights of multinational drug companies seeking to protect their patents. The declaration goes far beyond the narrow language favored by drug companies -- which wanted the pact to be limited to health pandemics like AIDS. Instead, the deal would allow poor countries to break patents for illnesses ranging from cancer to diabetes to asthma.

The Man to See

India's Mr. Maran became the man to see at Doha, frustrating U.S. and European efforts to get an agreement. He spent the first five days refusing to negotiate and the last day threatening to walk out of the talks. Before cutting a final deal, Indian delegates used every argument they could muster -- from chiding Europe for its legacy of colonialism to charging the U.S. with superpower arm twisting.

India's last stand involved pushing back the start of talks on foreign investment and antitrust policy by two years, to 2007 rather than 2005. The extra years would give India more time to ease restrictions on foreign investment in India's protected markets, such as insurance and autos. But the compromise language on investment was so dense and filled with so many loopholes it will almost certainly be subject to differing interpretations later. Negotiations on other subjects, such as tariff reductions and agriculture, will begin immediately.

Mr. Maran's strong stance in Doha was in part the result of the severe political pressure being exerted on his government back home. Last weekend, some 25,000 protesters marched in the streets of New Delhi to oppose the WTO negotiations under way here.

At 3 p.m. Wednesday, a small group of trade ministers called Mr. Maran into a private room. Kenyan Trade Minister Kipyator Biwott attacked Mr. Maran for throwing the landmark deal on patents into jeopardy. U.S. Trade Representative Robert Zoellick suggested Mr. Maran have a telephone call with President Bush to discuss his concerns. Instead, according to someone present, Mr. Maran went out into the corridor and called New Delhi on his cell phone.

'I Intimidated Them'

It was 6:45 p.m. Wednesday night when Mr. Maran finally announced at what was supposed to be a largely ceremonial closing meeting at the Doha convention center: "India is supporting the text," he said. Envoys erupted into cheers. Afterwards, Mr. Maran appeared before journalists brandishing a copy of the text. "I intimidated them," he said.

In 1947, when 23 mostly rich nations agreed to start a new international organization to promote trade and arbitrate disputes, the wants of developing nations mattered little. Industrialized nations were rebuilding after World War II, and remained the colonial masters of Asia and Africa.


Winners & Losers at Doha

ISSUE WINNERS LOSERS
Public health trumps patents AIDS patients in Africa Drug companies
U.S. anti-dumping laws up for negotiation Foreign steel makers U.S. steel makers
U.S. refused to import more textiles from poor countries U.S. textile makers Pakistani textile makers
Tariffs on industrial goods to be cut or eliminated Big multi-national manufacturers Subsidized manufacturers in protected markets
Farm subsidies to be phased out Farmers outside high-subsidy countries of Europe, Japan, Korea French farmers

Over the following half century, the WTO's predecessor -- known as the General Agreement on Tariffs and Trade, or GATT -- conducted eight rounds of trade negotiations which slashed industrial tariffs from an average of about 40% to 3.8%. World trade soared 14-fold over the past 50 years, while economic growth climbed worldwide.

The WTO is supposed to wrap up the new round in three years, but given past history, most envoys said it will take longer. The last round of negotiations took more than a decade to complete. It led to a broad reduction of farm subsidies, textile quotas and industrial tariffs, and also boosted patent protection and foreign investment.

U.S. Trade Representative Robert Zoellick led the way in making extraordinary concessions to developing countries -- which is certain to engender opposition among Republican and Democratic lawmakers at home. Agreeing to renegotiate America's antidumping laws was probably the most risky concession he made. Those rules are used by some of the most politically powerful U.S. manufacturing industries, including steel and autos, to protect themselves from low priced competition during economic downturns. The laws have defenders across the political aisles in Congress and among industrial unions, which are major contributors to the Democratic party.

Mr. Zoellick appeared to be carefully calculating the political consequences. While alienating steel and other industries who support the antidumping laws, he stood firmly behind the textile industry. Pakistan and many other nations sought more access to the protected U.S. clothing and textile business, which they see as their best hope for gaining a foothold on the ladder of global trade. But Mr. Zoellick refused to yield, no doubt mindful of the hold the textile lobby has on Congress.

Drawing a Line

In particular, Mr. Zoellick resisted repeated requests from Pakistani negotiators that America import more clothes to make up for reductions in Pakistani exports that most U.S. buyers blame on the war on terrorism. Instead, on Saturday during a meeting, President Bush promised Pakistan's General Pervez Musharraf $600 million in U.S. aid and $500 million in debt relief.

Pakistani envoys said they were disappointed because they had counted on the WTO talks to boost economic development through trade, not aid. They estimate they will lose $2 billion a year in export revenue because of the military campaign against Afghanistan. Of the WTO deals, Pakistan's WTO ambassador Munir Akram said: "We don't like it. But it's a question of whether we'll have to swallow it."

While turning away Pakistan, however, Mr. Zoellick repeatedly framed the need to reach a global trade deal, and the need to reach out to poorer countries, as a central component in the war against terrorism. U.S. negotiators said they clearly felt under pressure to fight the image of the U.S. as a "global bully," and took pains to appease poorer countries.

Reaching agreement in Doha required laborious negotiations, a few fierce fights and a lot of brinksmanship. French farmers, notorious worldwide for their ability to put EU policymakers through contortions, were the first to threaten the talks. EU Trade Commissioner Pascal Lamy, desperate to defend subsidies to farmers in advance of French elections next spring, held out until 3 a.m. Wednesday morning. Finally, after Japan and Korea both deserted Europe's fight, EU nations deserted France. Mr. Lamy gave ground after the U.S. proposed some face-saving language.

"We commit ourselves to substantial improvements in market access ... with a view to phasing out all forms of export subsidies," the agreement says.

To get members of Europe's politically-left Green parties on board, Mr. Lamy, his voice raspy from smoking cigarillos to get through the talks, got envoys to agree to some language that would make the WTO more environmentally friendly. In the coming talks, the WTO will try to bring its rules in line with environmental treaties and may give tariff preferences to environmentally sound products.

When a deal was finally struck, delegates were relieved and exhausted. But U.S. and EU trade envoys are jetting home to face political fights over the compromises they just made.

The politics are especially difficult in the U.S. In order to finish negotiating the trade pact, the Bush administration badly needs to win so-called fast-track authority from Congress. Such authority would give the administration greater control over any final agreement by forcing Congress to approve or disapprove the pact under expedited procedures that make it possible to avoid amendments. Other countries are reluctant to enter substantive negotiations with a president who lacks such authority.


Past Trade Talks

YEAR ISSUE NUMBER OF COUNTRIES
1947 Tariffs on goods 23
1949 Tariffs on goods 13
1951 Tariffs on goods 38
1956 Tariffs on goods 26
1960-61 Tariffs on goods 26
1964-67 Tariffs on goods anti-dumping 62
1973-79 Tariffs on goods non-tariff measures 102
1986-93 Tariffs on goods establish WTO,
intellectual property, etc.
123

But because he agreed to renegotiate antidumping, Mr. Zoellick risks a tough challenge from steelmakers and other industries with powerful friends in Congress.

The United Steelworkers of America and lawmakers representing steel states, have repeatedly promised retribution for putting U.S. antidumping laws up for renegotiation. Indeed, Congress just last week voted 410-4 for a resolution telling the U.S. Trade Representative to try to preserve antidumping laws.

But in what some lawmakers describe as a "trick," staffers of House Ways and Means Committee Chairman Bill Thomas, a California Republican who says he backs trade liberalization, switched the wording of the original resolution, which had expressly ordered the U.S. not to renegotiate the antidumping provision. In the final version, Congress merely asked the trade envoy not to renegotiate -- advice that Mr. Zoellick chose not to take.

"Sometime between the time the bill was introduced and when it passed last week on a voice vote, they changed the wording," one House Democratic aide said. "Wait until you tell Congress that what they thought they were voting for, they didn't vote for."

Mr. Zoellick is gambling that his extraordinary concession on the drug patents issue will pull enough Democratic votes, especially among African American and Hispanic lawmakers, for him to cobble together a fast track majority. And his newfound friendship with a continent full of African officials clamoring to sing his praises indeed may help sway some wavering Democrats. In Doha, Mr. Zoellick promised many of his new African friends to come and visit them, and he's sure to invite some key Democratic lawmakers along for the ride.

"Mr. Zoellick put this whole thing together," said Tanzania's Minister of Trade Iddi Mohamed Simba. Added Morocco's ambassador to the WTO, Nacir Benjelloun-Touimi: "This is what leadership is about -- he has been brokering the deal between the Europeans" and the African countries.

Still, such an effort to woo African-American lawmakers is risky. Liberal Democrats have been among the fiercest opponents of trade liberalization.