Report from Geneva, III

By July 24, 2008Policy Experts, Trade

Well, there is good news and there is bad news. The good news is that they are really engaged in meaningful discussions and negotiations at WTO Headquarters, having broken into smaller groups that can actually talk about swapping concessions. The bad news is that the divides have not been bridged. As this is the NAM, I focus on industrial trade, but the situation in agriculture is not much better. French Prime Minister Sarkozy today said there is no way France will agree to what’s on the table, for example. That’s a pretty blunt and serious statement. At the same time, Brazil and India say the United States still needs to reach more deeply into its agricultural pockets and give them more. In the Non-Agricultural Market Access (NAMA) discussions, things are pretty heated. Three key issues are in contention: the “flexibilities” (amount of imports that developing nations can exclude from making any tariff cut at all), sectoral agreements, and the anti-concentration clause (limiting the ability of developing countries essentially to exclude entire industries from tariff cuts, and compelling them to spread their “flexibilities” around.

In all three case, the United States and the European Union are very much shoulder-to-shoulder and U.S. and European industries have basically the same goals and the same concerns. But in all three cases, the three primary big emerging manufacturers (BEMs) — Brazil, China, and India — so far are intransigent. It is “eyeball-to-eyeball,” and went on well through last night and into this morning. They are at it again this evening in Geneva.

On the anti-concentration clause, vigorously opposed by India, their Trade Mininster Kamal Nath made the most amazing – and incomprehensible statement. He chided “high-cost” U.S. and European businesses for trying to prevent developing nations from shielding entire manufacturing industries from tariff cuts, and is reported to have said, “is at the heart of globalization, if you’re non-competitive you can’t seek refuge under an agreement of the WTO …The future is that cars are not going to be made in Stuttgart or Detroit — they’re going to be made in Asia.”

Huh? Excuse me, but I think he got it exactly backward. Our auto industry is so efficient that we are down to 22 hours or so of labor in a car, charge only a 2.5% import duty on cars, and export $45 billion of our cars around the world – 2.5 million cars. How many of those cars went to India? Last year exactly 417 cars, worth a little over $3 million. Why so few? For starters, how about India’s 100% import duty? And then there are those non-tariff barriers.

You want to talk about being non-competitive and seeking refuge under a WTO agreement – you’re talking India. Mr. Nath, we will compete with you any day – if you will come out from hiding behind your huge tariff wall you are trying to keep.

Really very little more that I can add from Geneva today. Had more good meetings with key U.S. negotiators. Also met with European industry groups and Japan’s Keidanren – all of whom are pressing their negotiators for market access.

One area hasn’t been talked about much – non-tariff barriers. There really is little controversy here between industrial and emerging nations, and seems to be something that can be put into the negotiation stream with little difficulty at this point. Of course the actual negotiations could be difficult.

And behind the closed doors of the negotiating rooms at the WTO headquarters, they keep going at it, with U.S. and European negotiators pressing for market access, and the BEMS pressing for protection. Ambassador Schwab, Dan Price, Peter Allegeir, John Veroneau and the whole U.S. government team are just fantastic. They are getting by on a couple of hours of sleep a night, and are trying everything possible to get other countries to get with the program and truly negotiate. They deserve a real hand.

That’s about it for this evening . It could still go either way. The negotiations could come to an inconclusive halt tomorrow, or they could go on perhaps into next week and perhaps with real results. Stranger things have happened, right?

Frank Vargo
NAM’s Man in Geneva


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