Politics, war, likely to slow trade talk

The spat across the Atlantic over war with Iraq could cause unforeseen collateral damage to a world trade-liberalization round.

"Bad relations between the United States and France and Germany aren't going to help," says Walter Russell Mead, a senior fellow at the Council on Foreign Relations.

Last summer Congress gave the Bush administration "trade promotion authority" to negotiate trade deals and present them to the legislature for an up or down vote with no opportunity for deal-killing amendments.

But politics, at home and abroad, are making the conclusion of a world trade round highly unlikely before 2005 at the earliest, maybe not before 2009.

In the US, President Bush will be concentrating on his reelection in 2004.

"He will have no desire to bring contentious trade issues to Congress in the months before the election," says Harald Malmgren, a veteran trade consultant in Washington.

Global trade negotiations always involve cuts in trade barriers that are attacked by affected industries and their employees.

The Doha Round, launched by the 144-nation World Trade Organization at a meeting in 2001 in Doha, the capital of Qatar, will be no exception. So Mr. Bush probably won't let negotiations get really serious until his second term - if he wins in the 2004 election.

Abroad, the insults the Bush administration has thrown at "Old Europe" won't improve the negotiating mood. Europeans, though not entirely comfortable with "Pax Americana," have little desire or prospect for matching American military might. But they are able and willing to go chest-to-chest with the US on trade and economic issues.

"It is one area where they are an effective counterbalance to the United States," says Mr. Mead.

Three negotiating areas are crucial to the European Community and the US: agriculture subsidies and exports, the Airbus competition with Boeing, and "cultural exceptions."

France and some other European nations are keen on protecting their domestic "culture," including television and movies.

Europe will likely provide Airbus with enough research or other subsidies to assure its competitiveness. It has become a symbol of European technological competence.

And Europe will not give up its farm subsidies to let efficient American Midwestern farmers take their agricultural market. Europeans love their rural landscapes. Farmers are an important political bloc. And there is some genuine concern that there be enough domestic production for Europe to feed its own people in an emergency. Uncertainties circling war with Iraq add to European uneasiness over US might.

Older Europeans remember the grim food shortages after World War II. So do the Japanese, who are keen to protect their rice farmers from foreign suppliers.

"In Europe and Japan, food is a security issue as well as an economic issue," says Mead. With the US Navy standing as the key guardian of the world's sea lanes, many in Europe and Japan are hesitant "to hitch their food wagon to globalization."

Since the US Senate is unlikely to approve any global trade deal that does not win farm-trade concessions from Europe and other nations, prospects for a successful round do not appear great.

In the meantime, both the US and the European Community are pushing for smaller trade deals with individual nations or regions - sort of "coalitions of the willing," as Mr. Malmgren puts it.

The risk in this is that the world could end up divided into trading blocs centered around the US or Europe, rather than a universal trading system fair to all nations.

US Trade Representative Robert Zoellick has been energetically negotiating smaller trade deals, mostly started under President Clinton.

"It is improvisational," says Malmgren. "He is exploring wherever there is a possibility to achieve something."

Last month, the administration reached a trade deal with Singapore, a month earlier with Chile. These have a good chance of winning approval in Congress if its key committees, the House Ways and Means Committee and the Senate Finance Committee, can set aside enough time from two priorities: a tax-cut measure and making prescription drugs available under the Medicare system.

Another trade possibility is a deal with Australia. Prime Minister John Howard is giving Bush strong support on Iraq. But opening up the US market to Australian beef, lamb, wool, and sugar may hit political snags from the congressional representatives of the Rocky Mountain states.

Two weeks ago the administration offered to eliminate tariffs and trade barriers in a Free Trade Area of the Americas, with 34 countries and 800 million people involved.

The talks will be difficult. For one thing, Brazil in a year or two will become the world's largest grower of soybeans. American soybean farmers will not relish that competition. Nor will more Brazilian orange juice be welcomed by Florida growers.

But the European Community already has a trade deal with Mercosur, a trade alliance of Brazil, Argentina, Paraguay, and Uruguay, with Bolivia and Chile as associate members.

Perhaps the US will find it easier to reach a deal with five Central American nations. Negotiators hope to have an agreement by year's end.

Another prospect is a trade deal with Morocco. In Washington, it is called the "Baker FTA" - or free trade agreement - because it is being pushed by James Baker, the Texas lawyer prominent in the Florida election fight and in the first Bush presidency. Such a deal would have the advantage of demonstrating friendliness with a Muslim country.

Mr. Zoellick is also hoping for a deal by the end of this year with the Southern Africa Customs Union, made up of South Africa, Botswana, Lesotho, Namibia, and Swaziland.

To Zoellick, the host of small trade deals are stepping stones to global liberalization of trade. But he is not considered part of the Bush inner circle where politics often overrule trade issues, as with high steel tariffs.

At the moment, the Bush administration faces worldwide demonstrations against its threats to Iraq. If world trade talks get somewhere, similar massive antiglobalization scenes could trouble a second Bush term.

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