[WTO Doha Round] U.S. Must Drop WTO Talks to Save Support for Trade, Thomas Says

from bloomberg

The Bush administration should put off efforts to negotiate a global trade agreement this year and instead focus on concluding new deals with individual countries to show that its policy of open markets is worthwhile, a top Republican lawmaker said.

Representative Bill Thomas of California said that with World Trade Organization talks likely to fail anyway, U.S. officials should seek bilateral pacts as a way of damping the rising protectionist sentiment that is dominating the political environment in this year's congressional elections.

Lawmakers are increasingly taking aim at trade, foreign investment and immigration in an effort to win voters' support by saying they will ``preserve our way of life,'' Thomas, the chairman of the House Ways and Means Committee, said yesterday. The administration needs some quick victories on trade deals to show how open borders pay off, he said.

``Right now the anti-free trade forces have a better chance of winning'' the November elections, Thomas said in a speech at the American Enterprise Institute, a Washington think-tank. If that happens, ``we are going to have national, hemispheric and global disruptions, and it will be around for years.''

Thomas is the first congressional leader to urge the administration to effectively call off the so-called Doha Round of WTO talks. That ``should not be where the U.S. puts its major resources in the next three months,'' he said. ``For anyone hoping somehow that there is going to be a significant conclusion of the Doha Round, my apologies.''

Merry-Go-Round

Thomas blamed the European Union for the failure of the Doha Round, which began in late 2001. The talks have stalled in large part over a dispute between the U.S. and EU on how far to cut agricultural tariffs.

``The U.S. and EU have irreconcilable differences on trade,'' Thomas said. ``I don't know the exact day the music stopped, but it stopped, and we need to get off the merry-go- round.''

The comments from Thomas, whose committee has primary jurisdiction for trade issues in the House, reflect widespread unhappiness among lawmakers about the WTO talks.

Republicans such as Senate Finance Committee Chairman Charles Grassley of Iowa and House Agriculture Committee Chairman Bob Goodlatte of Virginia have criticized the EU for not offering deeper cuts in farm tariffs and developing nations such as Brazil and India for not providing greater access for U.S. imports. They have stopped short of calling for the U.S. to walk away from the talks altogether.

``In the end, Chairman Thomas may be right,'' Grassley said in a written response to questions about Thomas's speech. ``But for now we need to remain committed to the Doha negotiations because that's where the biggest potential gains are. But that's not to say just any agreement will do.''

Administration View

The Bush administration said the global trade talks remain the best way to open markets for U.S. companies.

``The U.S. believes a successful Doha Round will produce tremendous benefits for global economic growth and poverty reduction,'' said Christin Baker, a spokeswoman for the U.S. Trade Representative's office. ``But we are clearly disappointed with the lack of urgency and political will shown by some of our trading partners.''

Thomas said that disappointment should lead to a specific response: ``At some point you simply have to walk away.''

In place of the WTO talks, Thomas said the U.S. should focus on more narrow accords with individual countries, such as Peru, South Korea and Oman. The deals would offer those countries duty- free access to the U.S. market in return for increased protections for U.S. patents and the recognition of U.S. food sanitation rules, he said.

Immediate Advantages

Thomas said such deals are easier to broker and hold more immediate advantages for the U.S. that would help quell anti- trade sentiments as the congressional elections approach.

Thomas listed three situations where those sentiments have already had an effect: the political furor that forced Dubai- based DP World to abandon its acquisition of six U.S. port terminals; a similar controversy that led Hong Kong-based Cnooc Ltd. to give up its attempt to buy El Segundo, California-based Unocal Corp.; and House approval of immigration legislation that would build 700 miles of barriers along the border with Mexico.

In such a climate, Thomas said, it is unlikely that a law requiring Congress to hold up-or-down votes on trade agreements without being able to amend them will be renewed next year. Advocates of trade liberalization say the law is essential to the conclusion of new deals because other countries will not enter into agreements if Congress can alter them.

Quick Deals Needed

To turn the tide, Thomas urged a focus on deals that can be wrapped up quickly in order to provide pro-trade Republicans something to run on in November.

Thomas, who is in his 14th congressional term, announced on March 6 that he wouldn't run for re-election. Because of House term-limit rules, he must relinquish his committee chairmanship at the end of the year.

One analyst, Claude Barfield, a fellow at the American Enterprise Institute, said Thomas was on the mark. ``This irrational overreaction against trade and investment is something we need to worry about,'' Barfield said.

Barfield added that both parties have given vent to anti- free trade sentiments. ``A lot of this reaction to Dubai ports came from Republicans,'' Barfield said. ``We are going to have problems no matter who wins in the elections this year.''

Former Clinton administration official Lael Brainard said more political support is needed from President George W. Bush to make the Doha Round a success.

``Big trade deals require political engagement from the White House,'' said Brainard, who served as deputy director of the White House National Economic Council under Clinton and is now a fellow at the Brookings Institution in Washington. ``But I don't see any political leadership to get it done.''