- The Washington Times - Tuesday, August 3, 2004

A shift in U.S. trade-negotiating strategy was a critical driver of the successful World Trade Organization meeting in Geneva last week. The shift helped ratchet up the pressure on the European Union to accept reductions in its farm subsidies and led to the framework agreement that has salvaged the trade round, for the time being.

During the collapsed WTO meeting in Cancun in September, the U.S. approach was markedly different. During those talks, the United States aligned itself with Europe to try to extract concessions from the G-20 bloc of developing countries. U.S. Trade Representative Robert Zoellick chastised developing nations for spoiling the talks by making unreasonable demands.

The United States made a tactical error in criticizing developing nations for calling for subsidy cuts and associating itself with the Europeans. The move minimized the pressure on Europe and gave the impression that the United States was equally unwilling to make cuts, when U.S. proposals for global reductions in farm subsidies were much more comprehensive than Europe’s. G-20 countries walked out of Cancun in disgust after encountering an unmovable alliance of rich countries.

After Cancun, U.S. negotiating strategy evolved. In January, Mr. Zoellick sent out a letter as part of an attempt to re-energize the round. He acknowledged that member countries had to agree on a definitive date for eliminating agricultural export subsidies and committed the United States to dismantling the subsidy component of agricultural export credit guarantee programs.

By the time negotiators met last week in Geneva, Europe’s isolation on agricultural subsidies had reached a critical mass and the G-20, now backed to some degree by the United States, had considerable weight in the negotiations. Europeans, concerned about losing their global geopolitical clout and being blamed for the trade round’s failure were under considerable pressure to make concessions. That backdrop allowed the European Commission, the executive arm of the European Union, to sideline France’s opposition to meaningful reductions in farm subsidies.

These factors allowed strategic logic to prevail over short-term political considerations (mostly France’s). The framework agreement WTO members reached in Geneva leaves timelines and other important details unresolved, but commits Europe and the United States to important elements of reform, such as cutting by 20 percent the most trade-distorting subsidies and eliminating export subsidies by a certain date. The United States also agreed to reduce its export credits and food-aid exports. WTO members also made progress by agreeing on a formula to reduce farm tariffs. The breakthrough on agriculture opens the way for more substantive dialogue on services and industrial goods.

Mr. Zoellick deserves credit for his agile diplomacy. WTO members still have a lot of work to do, but in wake of Cancun and the dramatic failure of talks in 1999, the success in Geneva is welcome — and critical.

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