(Frank Vargo, the National Association of Manufacturers’s vice president for international economic affairs, has blogged from Geneva this week at the ministerial meeting of the WTO.  This is his final report.)

Ah well, the strangeness and wonder of the WTO negotiating process continues. Consider, for example, the Chairman’s report at the conclusion of the 7th WTO Ministerial meeting that ended yesterday. (Report available here as .doc.)

The report states, “There was wide support for building on progress made to date. There was also support for not attempting to reopen stabilized texts.” (My emphasis.) This statement refers, among other texts, to the Non-Agricultural Market Access (NAMA) text that the U.S. has not accepted. The clear implication from yesterday, though, is that many consider the text to be done, agreed, and not to be revisited.

Stabilized texts? Excuse me, but when the NAMA chairman Luzius Wasescha wrote that text at the end of last year, he stated right in his own text that, “Even though the included text is accepted as a basis for further work, we are far from a consensus among Members.” He also added “Anyhow, everything is conditional in the deepest sense.”

Whoa! By what magic elixir do we move from that December statement to the Ministerial Chairman’s statement yesterday that there is strong support for considering the text wrapped up and immutable? Is this sleight of hand? Or does the WTO have all the collective memory of a computer with a fried hard drive?

Example two: Press reports indicate at the end of the conference European officials lamented, “Doha does not seem to be fully on the agenda of the United States … there is no sign today that the Americans are ready to go forward.” (AFP report.) One said, “They want more concessions for a more acceptable package for the US Congress. Now, the problem is to find a way without damaging what has been achieved so far.”

What hypocrisy! In private, European government officials and business representatives are quite free in admitting their analysis conforms perfectly with the U.S. view – they are getting virtually no new market access out of the proposal so far. But they are willing to accept that, because they believe if they were to press for more industrial market access, the developing countries would turn right around and demand more European concessions in agriculture.

That has the Europeans terrified, for they feel they have given all they possibly can in agriculture. One more grain of wheat will break the European back and result in a revolt that will cause them to pull out of the whole deal. So they would rather build Fortress Europe around their agriculture and forgo market access gains in the rest of the world.

Example three: Indian officials still indicate a reluctance to have India participate in sectorals (but not the same degree of “shut-the-door” resistance I saw last year). But at the same time, India has free trade agreements cooking or under discussion with China, Japan, the European Union and Canada – and when India’s Prime Minister visited Washington recently, he indicated a free trade agreement could be possible with the United States as well. So my question is, who’s left? Why can’t you make cuts in the Doha Round?

The problem isn’t that the United States isn’t showing leadership, for it is. I spoke with Ambassador Ron Kirk a couple of times in Geneva this week. He knows the point to the Doha Round is getting meaningful market opening, and he knows the road to Doha goes through Beijing, New Delhi, and Brasilia. The problem isn’t U.S. leadership. The problem is getting others to get off their defensive agendas and join the United States is a commitment to open markets and grow world trade. (continue reading…)

(Frank Vargo, the National Association of Manufacturers’s vice president for international economic affairs, is blogging from Geneva this week at the ministerial meeting of the WTO. This is his first report.)

This afternoon, Monday, November 30, 2009, marks the official start of the 2009 Geneva Ministerial Meeting of the World Trade Organization (WTO). Whether by design or coincidence, the Ministerial starts on the 10th anniversary of the failed Seattle Ministerial, which opened on November 30th, 1999. November 2009 is also the 8th anniversary of the launch of the Doha Round of trade negotiations.

I am in Geneva, and I was at Seattle. There are similarities and differences. The anti-globalization protests at Seattle were vicious, lengthy, and very destructive. So far, the protests in Geneva have been relatively mild, with some destruction, but limited to a small minority of the demonstrators. We’ll see what happens today.

There are also similarities in the status of the negotiations. The Seattle Ministerial failed not because of the demonstrators but because of failure to reach agreement – principally between the United States and Europe over agriculture and sectoral agreements in industrial trade. Agriculture seems, after eight years of negotiation, to be agreed but for a handful (albeit a difficult handful) of issues, but the sectoral trade agreements (eliminating tariffs in major industrial sectors) is still an unresolved issue.

The Ministerial meeting that starts today ostensibly is not for the purpose of negotiating the Doha Round. Instead the official focus is on reviewing the WTO’s activities and its contribution to development. In talking with people, though, it is clear that Doha is the big undercurrent. The hope is that with so many trade ministers gathered in one place, informal discussions can lead to a narrowing of differences among countries that can clear the way for negotiations early next year.

If those differences are not narrowed, it will be extremely difficult to wrap up the Doha Round in 2010, which is the current objective (the first goal was 2005). The differences are still profound. In the key area of manufactured goods, which comprise about 70 percent of world trade in goods and services, the gulf that has been there since the round started is still there: The advanced developing countries are unwilling to provide major cuts in their tariffs and trade barriers.

(continue reading…)

In the November 4, 2009, Toronto Globe and Mail, World Trade Organization (WTO) Director General Pascal Lamy was quoted as saying that a Doha round deal can be concluded soon: “We are nearly there,” he said, “but there remain a few nuts to crack, mostly the U.S.”

The National Association of Manufacturers (NAM) finds this comment unfortunate and distressing. The United States, which was instrumental in creating the post-World War II trading system that has served the world so well, which has led other nations – sometimes kicking and screaming – to liberalize world trade and open their markets in every negotiation since the Geneva Round of 1947, and which is pressing so hard for global market opening in the Doha Round, is not a “nut to be cracked.”

Rather than singling out the United States and seeking to pressure the Obama Administration to accept a deal the Bush Administration had already rejected, Mr. Lamy should focus his efforts on those WTO members who are still reluctant to offer substantial new market access. U.S. negotiators have been working tirelessly for a deal that creates significant and genuine new market openings that would benefit not just American firms, but firms in all countries – including in the poorest countries, who are key intended beneficiaries of the Doha Round.

Based on the recent estimates of the prestigious Institute for International Economics, without the sectoral tariff cutting agreements the U.S. is working so hard to achieve, the current (un-agreed) Doha Round text would barely increase world manufactured goods exports one percent. Furthermore, most of that gain would not occur for up to 10 years. And the situation in the services negotiations is even worse.

For over eight years the U.S. has been consistent in saying that only a balanced and ambitious outcome – not just for U.S. producers, but for all producers globally — is acceptable. The Doha Round is not there yet, and will not get there if Mr. Lamy continues to view the U.S. as a nut to be cracked rather than reinforcing the U.S. effort to obtain more trade liberalization globally.

Frank Vargo is Vice President, International Economic Affairs, National Association of Manufacturers

A good Reuters preview of the G20 gathering in PIttsburgh, “ANALYSIS-G20 heads to Pittsburgh with flat tire on trade.” Excerpt:

To bolster chances of meeting the end-2010 target for finishing Doha, the European Union has proposed an interim deadline of the end of 2009 for agreeing on the key formulas for cutting tariffs on farm and industrial goods, as well as reining in domestic farm subsidies.

U.S. businesses fear that could mean a deal without clear new export opportunities for them.

“We have not been seeking meaningful market access for eight years just to throw it away because someone wants an artificial deadline,” said Frank Vargo, vice president in charge of trade for the National Association of Manufacturers.

U.S. Trade Representative Ron Kirk is giving what was billed as a major address on U.S. trade policy at the Georgetown University Law Center, and the prepared remarks are here. We’ll leave the detailed policy analysis to our NAM trade colleagues, but in general terms: It’s a pro-trade speech representing a pro-trade Obama Administration, and in that, is very, very welcome.

There’s the expected talk about rethinking trade, charting a new path, etc., but the basic thrust is more trade is good:

To get our economy back on track, we need to increase exports. That means we need access to growing economies abroad.

The rational response is to reach out and do more.

But in times of extraordinary crisis, it’s hard for people and for nations to remain objective.

The temptation is to turn inward.

People worry that trade will cost them their jobs – and no wonder!

The closure of a plant due to international competition usually makes a lot more news than the hiring of additional workers because of new markets overseas.

But the truth is that jobs do come when trade policy is done right.

While the pain of trade can be concentrated at times – its benefits are lasting and widespread.

These are sentiments that have marked the bipartisan, pro-trade consensus since the 1980s, a consensus on which the Obama Administration has now placed itself fully on the side of.

There’s welcome support for using existing enforcement mechanisms to go after barriers to U.S. exports, an endorsement of the merits of the Panama, Colombia and South Korea trade agreements as having merit (in that order), and a lengthy passage about Doha. If anything, that emphasis on the Doha Round was the surprising part of the speech.

Taken as a whole, Ambassador Kirk’s remarks reflected a strong reaffirmation of a trade as an economic benefit to the American people and the economy. Good!

From Reuters, “WTO’s Lamy presses US manufacturers on Doha deal“:

WASHINGTON (Reuters) – World Trade Organization Director General Pascal Lamy urged U.S. manufacturers demanding deeper tariff cuts in world trade talks on Friday to consider the billions of dollars of savings that would come from proposals already on the table.

“We understand how important it is to have U.S. companies favorably disposed to the Doha round, and the director general made his case,” Keith Rockwell, a spokesman for the Geneva-based World Trade Organization, told Reuters.

Reuters’ diligent Doug Palmer reports that Lamy met with the NAM, making the case that the tariff concessions already on the table are substantial — the equivalent of an annual tax cut of $7 billion to $8 billion on U.s. exports. The NAM’s Frank Vargo outlined manufacturers’ objections, according to Reuters:

In too many cases, U.S. exporters would get no new market access because the bound tariff cuts are not deep enough to affect the applied tariff, said Frank Vargo, vice president at the National Association of Manufacturers.

“The new market access we get from the formula is inadequate. It’s got to be bolstered by good participation in sectorals,” Vargo said, even after Lamy presented figures showing 86 percent of India’s applied tariffs would be cut by an average of 14 percent under the proposed formula.

For more on the NAM’s position on the Doha round, please see Vargo’s commentary from the last round of WTO negotiations in Geneva — and the NAM’s position papers on the WTO negotiations.

Negotiations at the World Trade Organization (WTO) “Mini-Ministerial” meeting called by Secretary-General Lamy technically started Monday, but real negotiations did not start until today. Lamy called the meeting in a gamble to break the deadlock between industrial and developing countries over agriculture and industrial trade.

In what is called “Green Room” meetings, ministers from key countries negotiate with each other in an attempt to narrow differences and increase the points of agreement. These green room negotiations have started on agricultural trade, and will move to industrial trade (Non-Agricultural Market Access – NAMA) later today. Then, on Thursday, there will be a “signaling conference” for services in which countries are expected to signal what more they are willing to do to liberalize trade in services – which, until now has been virtually nothing.

Both the European Union and the United States advanced new agricultural offers – the EU raising the amount of its subsidy cut to 60 percent, and the United States cutting its agricultural subsidy ceiling to $15 billion. (Ambassador Schwab statement.) Unfortunately, neither of these offers appeared to have the desired effect—kickstart this week’s negotiations. Brazil sneered at them, and that pretty much set the tone. Things will become even more fun when the other developing country leader – India’s Trade Minister Kamal Nath arrives tomorrow. He was in India today to participate in a Parliamentary vote of confidence, which the government won.

The NAM’s principal activities in Geneva have been to work close in with U.S. NAMA negotiators, and I discussed NAMA strategy with Dan Price (Assistant to the President for International Economic Affairs and Deputy National Security Advisor for International Economic Affairs), and Deputy USTRs Peter Allgeier and John Veroneau. We all agree that the key to a NAMA deal that would provide new market access for U.S. manufacturers is the sectoral agreements. The overall tariff-cutting formula options that have been proposed are simply too weak to cut deeply into the tariffs of the high-tariff countries, particularly Brazil, China, and India. In rough terms, the formula deal would have the United States cut its industrial tariffs in half, while the high-tariff countries would cut theirs one-tenth – and even that would not occur in some cases until 10 years out.

Sectoral agreements, on the other hand, particularly if they take tariffs to zero, would provide real market access. The NAM has been pushing sectorals for seven years, initiating the zero tariff coalition years ago, constructing a tariff model to simulate the results of various negotiating formulas, and buttonholing anyone who would listen.

Now, sectorals have finally become the name of the game. The big news is that the European Union has come on board and insisted there have to be sectorals in order to get enough balance.

But the key high-tariff countries say “no”. They want to stick to a weak formula cut that will shelter them from cutting tariffs a lot. And that is where the dividing line is on NAMA. The Industrial countries are insisting there have to be sectorals if there is to be a deal, and the developing countries are insisting there can be no deal with sectorals. Something like the irresistible force meeting the immovable object.

The negotiating strategy on sectorals that will be played out by the U.S. negotiators is a good one. Can’t discuss it at this point, but it is good, and has a reasonable chance of succeeding. And our negotiating team is the best. So with a great team and a great game plan, it can work. But if the other team simply does not want to play, then nothing can work.

We will know more tomorrow.

Frank Vargo, NAM’s man in Geneva
July 22, 2008

• Manufacturing Groups Say, Keep Going on Doha: From NAM President John Engler, “We need to see real market access in the advanced developing countries that are charging the bulk of world tariffs through a strong tariff-cutting formula, avoiding exempting entire industries from trade liberalization, obtaining strong participation in sectoral tariff liberalization agreements, and seeing significant reduction of non-tariff barriers (NTBs).” Manufacturing associations signing the statement — available here — represent the United States, Canada, the EU, New Zealand, Taiwan, Japan, Korea and Australia.

• Dickie Scruggs, Mississippi trial lawyer extraordinaire, to be sentenced today.

• From Reuters: “More than three-quarters of big U.S. employers offer formal health and wellness programs, while more than half have disease management programs amid rising health-care costs.” An NAM survey of employers is cited.

• Mostly Absent from the Headlines: Warranting less attention but still notable among the U.S. Supreme Court decisions this week was this opinion in Morgan Stanley Capital Group Inc. v. Public Util. Dist. No. 1 of Snohomish Cty. From the San Diego Union Tribune: “Efforts by utility regulators to reopen costly long-term electricity supply contracts struck at the height of the California energy crisis were deflected by the U.S. Supreme Court in a ruling yesterday.”

• Stop Talking Down the Economy: Now the Finns are getting depressed.