U.S. Vows to Pursue Pacts Outside WTO

Faced with a disappointing setback in global trade talks, U.S. officials vowed Monday to push forward on bilateral and regional border-opening agreements to create a coalition of countries that are enthusiastic supporters of the United States’ trade agenda.

A senior official, who insisted the United States was not looking to “place blame” for the failure of last weekend’s World Trade Organization talks in Cancun, said Washington would find other ways to advance trade liberalization if the global effort bogged down further because of increasing acrimony between rich and poor nations.

The WTO talks in the Mexican resort were halted abruptly Sunday after about 90 developing countries represented by Botswana refused to consider adding new issues to the agenda, contending that the U.S. and the European Union had failed to live up to promises to slash their farm-subsidy programs.

California, the nation’s leading agricultural exporter, had a lot riding on the talks.

Some of the state’s most successful exporters are fruit, vegetable and nut growers that face high tariffs and other barriers abroad but get almost no federal aid. At the same time, California also is home to cotton and rice growers, whose crops are among the most heavily subsidized. In all, U.S. cotton growers received more than $3 billion in government support.

Federal payouts to cotton farmers were among the key sticking points in Cancun. Some African nations were particularly unhappy with the developed world’s refusal to set a deadline for eliminating billions of dollars in cotton subsidies that they claim severely depress global prices and undercut poor farmers’ ability to compete.

The growing polarization among the WTO’s 148 members makes it increasingly unlikely that the group will meet its January 2005 deadline for completion of the so-called Doha round of trade talks.

U.S. trade officials insist that they have not given up on the negotiations but intend to pursue bilateral trade deals to sustain momentum.

The U.S. is negotiating free-trade agreements with 14 countries or regions, including Central America, Egypt and Australia, and is the main cheerleader for a plan to create the Free Trade Area of the Americas, a zone stretching from Alaska to the tip of South America.

“There was clearly in Cancun a big divide,” said a senior U.S. trade official, who briefed reporters Monday on condition that she not be named. “We will be looking forward to working with those countries that want to move ahead globally.”

Some members of Congress have threatened to punish countries that refuse to support the U.S. in the global trade arena.

Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee and one of about 30 U.S. congressional delegates attending the meeting in Cancun, issued a warning to countries such as Colombia, El Salvador and Egypt that had joined the so-called Group of 21 developing countries opposing the rich nations’ subsidy programs and also are in talks with the U.S. on separate free-trade pacts. He said he questioned whether they had enough of a “commitment to free trade” to be rewarded with special access to the U.S. market.

But trade analysts warned that such a punitive strategy could backfire, adding fuel to anti-U.S. sentiments abroad and poisoning efforts to build the economic partnerships that could create goodwill among poor nations.

“I worry now that the U.S. will engage in the kind of pressure that Sen. Grassley alluded to when he made his statement that ‘We’ll remember who our friends are,’ in Cancun,” said John Audley, a trade expert at the Carnegie Endowment for International Peace in Washington.

Audley is pessimistic that the Bush administration will be able to make significant progress on border-opening agreements before the presidential election, given the sluggish economy and growing complaints that low-cost imports have contributed to the more than 2.5 million jobs lost in the last three years.

“Given the problems that we’re having generating jobs in the U.S. and everything else,” the two pacts concluded this year between the U.S. and Chile and Singapore may be the last free-trade agreements “down the pipe for a while,” Audley said.

The Cancun talks fell apart Sunday during a discussion about adding four new issues to the WTO negotiating agenda, including transparency in government procurement and investment policies. But developing countries said they wouldn’t move forward until the blueprint for cutting agricultural subsidies was finalized.

The negotiators actually had begun to make progress on some of the more contentious issues late Saturday. The last draft negotiating text included an agreement to set a timetable for the reduction of domestic farm supports and the elimination of export subsidies.

“All of the U.S. trade-distorting subsidies were on the table if the rest of the world was prepared to make similar concessions,” said Bill Bryant, a Seattle-based trade consultant who works with California farm groups. “But the U.S. was not going to unilaterally disarm.”

EU Trade Commissioner Pascal Lamy said the European Union was “open to restarting” the global trade talks at WTO headquarters in Geneva later this year. But he expressed reservations that lower-level trade negotiators would be able to make the tough compromises that eluded trade ministers in Cancun.

“I know of few government officials who lose their jobs for saying no,” Lamy said. “I do know of cases where government officials have lost their jobs for saying yes.”

Kraul reported from Cancun, Iritani from Los Angeles.