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U.S. Not Giving Up on Failed WTO Negotiations; Official Blames E.U. for Breakdown

The Washington Post

July 27, 2006

Global trade talks may have been suspended Monday, and the Bush administration's critics may be calling its trade agenda defunct. But after returning from the acrimonious meeting in Geneva where the trade talks broke down, U.S. Trade Representative Susan C. Schwab made it clear yesterday that she isn't retreating from the fray of international negotiations.

"The Doha round is obviously in serious trouble, but it isn't dead yet," Schwab said, referring to negotiations launched in 2001 in Qatar's capital of Doha that were aimed at lowering trade barriers worldwide. She said the administration will "do everything possible" to get the talks back on track eventually, but at the same time, she vowed to pursue more free-trade agreements with individual countries, especially if efforts to revive the global talks prove futile.

"If the Doha round ultimately does not become a reality, I think you will see us going that way, even more actively than we have," Schwab said.

Her comments came at a news conference at which she alternated between earnest pledges to support the Doha goals and feisty accounts of how the talks broke down, salted with barbed asides about her European counterpart, Peter Mandelson. The European Union and the United States have engaged in a war of words over who is to blame for the deadlock in Geneva, with the Europeans attacking the United States for refusing to cut farm subsidies sufficiently and U.S. officials pointing the finger at the E.U. for balking at opening its markets to foreign farm products. Schwab's remarks showed that tensions continue to run high. She said she turned to chat with Mandelson after the talks were suspended, "but he didn't want to talk."

She declined to predict how and when the talks might be revived. "We're, what, 48 hours away from the crisis, the breakdown, the explosion," she said. "Feelings are a little raw."

The administration has long pursued a strategy of negotiating trade deals at several different levels -- at the global level in the Doha talks; at the two-way level with countries including Australia, Singapore, Morocco and Bahrain; and at the regional level, including a free-trade accord with five Central American countries plus the Dominican Republic.

That approach, dubbed "competitive liberalization" by trade insiders, was based on the theory that smaller pacts would lead to bigger ones and eventually to success in the Doha talks. Dismissing concern that the proliferation of two-way accords would undercut the authority of the World Trade Organization, the administration predicted that if it struck free-trade deals with countries that are enthusiastic about open markets, the left-out countries would be more willing to accept the big deals for fear of losing out to their competitors in the giant U.S. market.

But with the Doha talks moribund, along with a proposed Free Trade Area of the Americas that would eliminate barriers throughout the Western Hemisphere, skeptics contend that the administration has wasted a lot of effort on pacts with small countries. Moreover, negotiations with some countries, notably South Korea and Thailand, have run into trouble because of resistance to U.S. demands.

"Doha's demise . . . puts the final nail in the coffin of the so-called theory of competitive liberalization," said Lael Brainard, director of the global economy and development program at the Brookings Institution and a former top adviser to President Bill Clinton. "It is looking increasingly unlikely that President Bush will have much to show on global trade liberalization in his legacy."

Schwab retorted, "I would say just the opposite." She said that the strongest allies of the U.S. position in the Doha talks have been countries that have completed free-trade deals with Washington, such as Mexico and Chile, and countries that hope to, including Colombia and Peru.

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