Reuters, “WTO Doha round deal unlikely in 2010“:

US business groups said on Wednesday they expect slow progress in world trade talks in 2010 despite a goal set by President Barack Obama and other leaders to finish the long-running negotiations this year.

“I think it’s going to be difficult to conclude in 2010,” said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers. “I think it will probably be next year.”

(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.

(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. )

You know, the process here in Geneva is really interesting. It’s like a plane that forever flies at 50,000 feet and can never get lower. The WTO Doha process just can’t seem to get below the big picture. Ministers from WTO countries are gathered here this week to take stock of the Doha Round, state their political will for a conclusion in 2010, and think of what can be done to move forward. And guess what some of them have come up with? Another ministerial meeting!

They would gather together in Geneva in a couple of months to take stock of where things are, issue serious statements about how things have to move faster –- and probably call for yet another ministerial. If the process were facilitated by ministerial meetings and “mini-ministerials,” we could have had three trade rounds by now.

Fortunately, calling another ministerial meeting in a couple of months is an idea that does not seem to have elicited broad support –- and hopefully won’t before the ministers leave Geneva tomorrow. The U.S. Trade Representative, Ron Kirk, has the right idea – let’s do some work, some eyeball-to-eyeball negotiating and horse-trading, with support from the WTO process. You have to have produce something for the stockroom before you can take stock.

It is rather remarkable, I think, that the gulfs that have prevented agreement are well-known, very visible, have obvious solutions, and yet keep being ignored in terms of a work plan. The WTO negotiating process is a managerial nightmare, lacking substantive goals, management strategies, and tactical plans for achievement. Frankly, the process could benefit from fewer PhD’s and more MBA’s.

The goal of negotiating rounds is to liberalize trade by reducing trade barriers. The Doha Round, in addition, has the goal of creating the maximum new market access for the poorest countries. This is not rocket science. You identify where the market access obstacles are, and you devise plans for reducing or eliminating them.

In the industrial trade negotiations, one thing you have to do is cut tariffs. And if you are going to cut tariffs, you have to go where the tariffs are. And by the WTO staff’s own calculus, about 2/3rds of the tariffs assessed on global industrial trade are collected by the advanced developing countries – especially Brazil, China, and India.

Yet instead of pinpointing reduction of those barriers as a key objective back in 2001, when the round started, as the years passed by, the WTO negotiating process continuously reduced the pressure to cut those tariffs. The consequence has been the prospect of less and less market access for everyone – for the least developed countries, the United States, and everyone in between.

(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. )

The WTO 7th Ministerial Meeting opened yesterday afternoon, with Director General Lamy calling for unity (remarks), and minister after minister urging that the Doha Round conclude in 2010. U.S. Trade Representative Ron Kirk told the gathering not to confuse process for substance and urged countries to call for a round that would generate greater market access for all. (Kirk’s remarks.) There were some signs of support for this, with some ministers referring to ambition and balance, and some suggesting that we should consider different approaches, since we really hadn’t gotten very far. But despite these welcome signs, there has not been what one could call a rising tide demanding a stronger outcome.

Instead of unity, the gulf between those who want a strong outcome and those who want to hold back became even more obvious. Rather than offering any indications the time had come to begin serious negotiations, Brazil’s Minister Amorim instead chose to come out attacking the United States and re-writing history. Amorim accused the United States of “delaying the conclusion of the round because they want to have some few dollars more in some specific sections.” Wrapping Brazil in the flag of the least developed countries, he said that reducing trade barriers would hurt tariff revenues in the poorest countries and impair their ability to cope with climate change obligations. (Reuters coverage.)

What’s wrong with this picture? Well, first, once again Amorim implied that the least developed countries will have to cut their tariffs, which is untrue. Aside from the advanced developing countries like Brazil that have become global export figures, the developing countries don’t have to do anything in the Round.

Second, Amorim again is seeking to promote his revisionist view of Doha history by stating the United States is asking for new concessions, ignoring the multitude of negotiating sessions over the past eight years in which the United States has consistently said the industrial package had to be viewed as a whole - the tariff cutting formula, sectoral agreements, and exceptions from tariff cuts.

There is nothing new here. The United States has pressed consistently for both industrial and advanced developing countries to cut their barriers, while Brazil has wanted to keep its tariff protection. Amorim expressed horror that the United States thinks the Doha Round is about opening markets.

Third, Amorim stated that under what’s on the table now, Brazil is already committed to cut its applied tariff rates more than the United States, so “it is unreasonable to expect that concluding the round would involve additional unilateral concessions from developing countries.” That’s not so.

WTO data show that the formulas would have the United States cut its applied tariffs in half, while Brazil would cut its applied tariffs only by about 1/8 - from an average of 11 percent to about 9.7 percent. Moreover, Brazil’s tariffs would stay at an average of 11 percent for nine years, and only ten years out would fall to 9.7 percent. And, get this - even then only about 40% of Brazil’s tariffs would take any cut at all. What kind of market access is that?

This is what caused former Deputy U.S. Trade Representative Peter Allgeier to once quip that he finally understood what NAMA (Non-Agricultural Market Access) stood for - it meant “No Additional Market Access.”

It is time for Brazil to stop the rhetoric, show the leadership worthy of a major global player, and sit down and negotiate a deal that will have Brazil grant significant new market access and get significant new market access in return - and do this in services as well. You think?

(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.

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

From an author who embraces the attack on property rights by the government of Rafael Correa, a news release, “Ecuador president Correa to override drug patents in order to provide affordable medication“:

(NaturalNews) The President of Ecuador, Rafael Correa, announced Sunday that he planned to override a number of pharmaceutical patents in order to provide more affordable medicines to the People of Ecuador. In a statement, Correa explained that access to medicine is a “human right” and that he intends to seek “compulsory licenses” to acquire medications considered indispensible.

Under current World Trade Organization rules, countries have the right to seek such “compulsory licenses” that override traditional patent rights. Current WTO rules require that such countries negotiate with the patent owners to determine fair compensation.

This action by Correa joins Ecuador’s recent declaration that it would not honor the illegitimate debt that had been placed on the country by foreign banks (under previous administrations). This bold move allowed Ecuador to renegotiate its debt for roughly 30 cents on the dollar. Much of that debt was considered “predatory debt” by academics who understand the way the World Bank and other first-world banking interests attempt to place debt burdens on many smaller nations as a tactic for exerting long-term influence over their economies.

Right. And the Barbary Pirates had legitimate grievances against the United States, too.

See also the AP story, “Ecuador pres: National labs to ignore drug patents.”

Also, on September 25, major U.S. business groups sent a letter to the leaders of the Senate Finance Committee and House Ways & Means Committee urging Congress not to reward Ecuador and Bolivia for undermining rule of law by renewing Andean trade preferences for those countries. The letter from Business Roundtable, Emergency Committee for American Trade, National Association of Manufacturer, National Foreign Trade Council, United States Council for International Business, and U.S. Chamber of Commerce is available here.

As the NAM’s Shaun Donnelly explained yesterday, the U.S. Trade Representative took a well-justified step against the European Union’s unscientific ban against U.S. poultry products yesterday. (USTR: “United States Requests WTO Panel in Challenge of EU Restrictions on U.S. Poultry Exports“)

Just interesting to see the Canadians taking similar action against U.S. country-of-labeling laws. From AP, “Canada takes US to WTO over cattle, hog labeling“:

OTTAWA — Canada is asking the World Trade Organization to intervene in a dispute with the United States over cattle and hog exports.

Ottawa announced Wednesday it has asked a WTO trade dispute panel to strike down country-of-origin requirements it says are making it difficult for Canadian cattle and hog exporters to compete fairly.

The 2002 U.S. farm bill included a requirement that firms identify the origin of products at every stage of production, including retail, which brings in the labeling requirements. From our days in North Dakota government — late ’90s — we can say with confidence the driving force behind the law was U.S. ranchers who objected to competition from Canadian beef. But who can object to labels?

The World Trade Organization (WTO) sided with the United States Wednesday and slapped China for its restrictions on selling copyrighted U.S. films, music, books and other media. (WTO report.) China has been forcing companies to route imports through Chinese state-owned or controlled enterprises, while restricting reading material and music. The U.S. argues that this opens the door to the vast amount of Chinese counterfeiting in these media. And we’re talking about real money for U.S. producers –$3.6 billion lost sales in China of legitimate media in just 2008 alone.

A very important case filed by the U.S. and the European Union in June of this year against China for restricting exports of raw materials is still in the early stages. The U.S. is concerned that the Chinese export restraints hurt U.S. “downstream producers” of goods by limiting access and raising world market prices for the raw materials, while lowering the prices that domestic Chinese producers have to pay. The case covers nine materials: bauxite, coke, fluorspar, magnesium, manganese, silicon carbide, silicon metal, yellow phosphorus and zinc. (USTR news release.)

The National Association of Manufacturers has long supported the use of WTO cases as a legitimate trade enforcement tool after negotiations fail. The seven cases brought against China since it joined the WTO in 2001 have produced results in areas like semiconductors, foreign financial information suppliers, packaging paper and auto parts. Although it is always preferable to avoid a litigation process, the use of WTO cases doesn’t mean the U.S.-China trade relationship is crumbling - it’s the way trade disputes between mature trading partners are settled – without a costly trade war.

More …

• USTR news release, “World Trade Organization Report Upholds U.S. Trade Claims Against China“
• Motion Picture Association of America news release, “MPAA’s Dan Glickman Hails WTO Decision“
• National Journal, “WTO Rules Against China On Copyrights“
• WSJ Law Blog, “WTO Ruling a Possible Boon to U.S. Copyright Holders“
• Agence France Presse, “China may appeal WTO order on films, music“

(Pat Mears is the NAM’s Director for International Commercial Affairs)

The United States and the European Union today initiated World Trade Organization (WTO) dispute settlement procedures against China for it trade-distorting export restrictions on critical raw materials. Those materials, such as coking coal, are vital inputs to U.S. and other manufacturing, and China’s action has hiked world prices for those inputs while holding China’s internal prices down. That gives China an unfair competitive advantage and is directly contrary to the promises that China made when it joined the WTO. (See Ambassador Kirk’s statement, USTR materials.)

America’s manufacturers have been hurt by these practices, and the National Association of Manufacturers (NAM) has pressed the U.S. Government to take action to get China to stop. As our press release today indicates, we strongly support the action taken today.

I am surprised, though, at some of the press reaction feeling this is a negative step. For example, the Guardian’s website has a headline screaming, “China and U.S. head for trade war.” Ridiculous. The WTO dispute settlement mechanism is in effect the international trade court for the world — the impartial place you go to resolve trade disputes so you don’t have to have a trade war.

While I am sure China will say they haven’t done anything wrong and will contest the charges before the WTO, China’s past record on settling and complying with WTO cases has been pretty good. I expect that they will abide by whatever decision the WTO makes this time, though it would be really good if China recognized they are in the wrong and voluntarily came into compliance.