Clouds Over Trade Talks

The next round of World Trade Organization talks is just a month away, and there is little agreement on what will be discussed. The rich countries, which account for the bulk of international trade, continue wrangling over their agenda, while the developing countries, which have most of the votes in the WTO, are yet to be convinced there is something in the talks for them. Clearly, all the participants, rich and poor, will have to make concessions. Otherwise, this round of talks on continuing the necessary opening of global trade may come to nothing.

The talks, which begin Nov. 30 in Seattle, are already the target of protest by those who see free trade as the root cause of everything from child labor in Pakistan to the destruction of the rain forest to poverty in the Third World. Lost in the clamor is the fact that the eight previous rounds of talks by the WTO and its predecessor brought huge benefits to consumers around the globe. Tariffs have been cut by 90%, making imports much cheaper. The World Bank estimates the gain from the last round alone was equivalent to a $200 billion tax cut.

Certain main points for the coming negotiations had been agreed on in the previous round. They include liberalizing trade in agricultural produce and services and further reductions in import tariffs. These important issues should rightly top the agenda. There is no major disagreement on trade in services, but farm trade is full of contentious issues, such as export subsidies to farmers, trade in genetically modified crops and the use of health and safety rules as trade barriers. Farm trade is vital not only for the food-producing powerhouses such as the United States, which exports $50 billion of food each year, but for the developing countries as well. For them, farm exports are their major source of foreign revenue. A deal in this sector is urgent.

Other issues, though important, should be set aside because their contentiousness could endanger the entire round of talks. For example, the EU wants rules for international investment and competition. Others tried for years and failed to draft investment rules even among countries less diverse than those in the WTO. On competition issues, such as big mergers, governments have found other ways to work together, making a WTO deal less pressing.

Also excluded from the talks should be labor issues, which belong elsewhere. In practical terms, time has run out for reaching any deal to bring China into the WTO before the Seattle round. But environmental matters, such as how to square trade rules with the growing number of international conventions, ranging from the protection of endangered species to shipping hazardous materials, will have to be dealt with.

Most important, the member governments of the WTO, including the United States, must show a greater commitment to free trade than to their own narrow political agendas.