Why world-trade talks won't happen soon

It was big, shocking news. A year ago this week, large, sometimes violent, demonstrations marred a ministerial meeting of the World Trade Organization in Seattle.

The WTO goal was to set a detailed agenda for launching a new round of world-trade liberalization talks.

The ministers failed.

So President Clinton won't get to launch a "Clinton Round."

Meeting with leaders of 21 nations of the Asia and Pacific regions earlier this month in Brunei, Mr. Clinton did win agreement to try to draft an agenda and begin talks in 2001.

The Asia-Pacific Economic Cooperation statement was proclaimed a victory for the United States.

"All of our trading partners and the WTO membership recognize that it is important to move forward," says Amy Stillwell, a spokeswoman for the president's trade representative, Charlene Barshefsky.

But Harald Malmgren, a veteran Washington trade consultant, sees the APEC statement as "meaningless." There is no coalition of special interests in the US to back another worldwide trade round, he says.

In any case, it will be up to the new president in Washington to carry that domestic consensus-building process forward - if he can and really wants to.

With Congress almost evenly split between the two major parties, a new president will need help from leaders of both parties to go ahead.

"It is bipartisanship or nothing," says Greg Mastel, an economist with the New America Foundation in Washington.

A President Al Gore, beholden to the trade unions in his election campaign, will face difficulty persuading other nations to include labor and environmental protections in a WTO deal. And Republicans in Congress probably won't want to do organized labor a favor by supporting US legislation that requires protections for workers.

George W. Bush has spoken only of seeking a free-trade area for the Americas, beyond Canada, Mexico, and the US.

As for trade rules that would please the AFL-CIO, the trade union federation, Mr. Malmgren says: "A confrontation with labor wouldn't bother Bush. Deep down, he is antilabor."

Clinton was unable to get congressional approval for so-called "fast-track authority." This provision would require Congress to approve or reject as a whole any deal negotiated by the president's trade officials. But it cannot amend the treaty. America's major trading partners won't sign an agreement if Congress can nibble at its edges.

"The prospects for another round of WTO negotiations don't look too good," says Mark Weisbrot, an economist at the Center for Economic and Policy Research, in Washington.

It has been six years since the end of the last round of world-trade talks, the Uruguay Round. Those talks lasted eight years before a deal was struck to diminish import barriers.

World trade has grown since then. The value of world merchandise trade rose by 3.5 percent in 1999. The year before, in the wake of the Asian and Russian crises, it shrank 1.5 percent. Its volume, however, was up 4.5 percent both years.

Trade doesn't happen unless it benefits those who buy the goods exported. But the Seattle fuss did elevate concerns about the impact of economic globalization on US workers.

Many economists suspect that imports are partly to blame for the wage stagnation of less-skilled American workers during the 1980s and most of the 1990s.

The Clinton administration figures it made more trade progress than many thought possible after Seattle and the failure to achieve fast-track. It did get Congress to approve normal trade relations with China, now in the last stages of admission to the WTO.

But that, cautions Peter Morici, a senior fellow at the Economic Strategy Institute in Washington, is only "Act I, Scene 1" for incorporating China into the world economy. China needs a Western-style legal system, for one thing.

The US has also reached a free-trade deal with tiny Jordan. And at the APEC summit, Clinton agreed with Singapore's prime minister, Goh Chok Tong, to negotiate a free-trade agreement. A deal is also cooking with Vietnam.

Much effort has also gone into dealing with various trade disputes. The latest is over a tax-benefit law for US exporters, known as the Foreign Sales Corp. (FSC). The European Union brought a case against the law to the WTO and won. It now seeks $4 billion in trade sanctions against US exports. Congress passed a revised FSC just before the election to try to duck the sanctions.

A new president will have to deal with this issue.

As for a new world trade round, it is at least two years off, Malmgren figures.

(c) Copyright 2000. The Christian Science Publishing Society

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