- The Washington Times - Wednesday, December 4, 2002

Where's Bob? Some people in Washington have been wondering whatever happened to the debonair Robert Zoellick, who, as U.S. Trade Representative, is the Bush administration's point man on free trade. Mr. Zoellick has been uncharacteristically absent from the Washington scene in recent months, in fact since the administration more or less sunk its own trade agenda by adopting notoriously protective steel and agriculture policies this spring.

These measures, of which one slapped protectionist tariffs on imported steel and the other smothered the American farmer in subsidies, may have helped President Bush win the midterm election. There is no doubt the political gain was there, but the price was high, in more ways than one. The legislation did serious harm to the cause of international free trade and to the World Trade Organization (WTO) Doha round of negotiations, which had just been launched.

Emboldened now by the midterm elections, however, the Bush administration is again pushing global free trade, and Mr. Zoellick is back with a sweeping new proposal to eliminate tariffs on all manufactured goods from WTO countries by 2015. This elimination process would be a gradual reduction; by 2010, WTO members would pledge to reduce tariffs to below 8 percent, and phase out those that had been 5 percent.

"Globally, tariff-free trade could help lift millions of people in developing countries out of poverty," said Mr. Zoellick Nov. 26, as he announced the initiative, which will be formally presented to the WTO this week. Mr. Zoellick is right about that. When trade flows, consumers and exporters alike benefit. The initiative was enthusiastically greeted by WTO Director-General Supachai Panitchpakdi, who commented that "We need leadership, we need ambitious goals." Indeed, something needs to be done to blow the next round of trade negotiations out of the dead water in which it is currently languishing.

Tariff-free trade worldwide would lift some 300 million people worldwide out of poverty, according to World Bank estimates. That's more than the entire population of the United States. However, this estimate presupposes that agricultural goods are included in the equation, and there's the rub. After a drastic U.S. proposal this summer to lower worldwide agricultural tariffs, which was rejected by the European Union, the U.S. trade representative this time has left farm goods out of the equation, the very sector where developing countries have most to offer.

The fact is that American tariffs on manufactured goods are already low, just 4 percent, according to the U.S. trade representative, as are those of other industrialized countries. It's in the developing countries that they are high. The average tariff on manufactured goods around the world is 40 percent, mostly because developing countries try to protect their fledgling domestic industries from competition. As Mr. Zoellick pointed out, American consumers would surely benefit from the elimination of domestic tariffs, by as much as $1,600 a year. American exporters would, too, as foreign tariffs affect some $670 billion in U.S. exports.

Agricultural goods, however, are much more difficult to touch for Europe and the United States. With worldwide average tariffs of 62 percent on agriculture, it begs to be liberalized, but no sector provokes such passionate domestic reflexes, whether you look at the United States or France, India or Japan.

In accordance with the farm bill, passed in April, American farmers stand to receive $271 billion in subsidies over the next 10 years. This fact not only undermines American leadership on free trade, but also leaves the United States open to WTO sanctions, as WTO rules limit the United States to $19.1 billion a year in "trade-distorting" subsidies open to WTO sanctions.

And, it is not even the small family farmer that American taxpayers pay to protect. The top 10 percent of recipients, those making more than $250,000 a year, will receive 73 percent of the subsidies. Of those, 12 are Fortune 500 companies, like Chevron and Caterpillar, a far cry from the family farm near and dear to popular imagination.

However, between the American farm lobby and the European Union's Common Agricultural Policy, the prospects for agricultural tariff reforms are dim. Americans usually point to the Europeans and vice versa when the blame game is played. Though Europeans are the worst offenders, both must do better. Europe's Common Agricultural Policy, a marvel of trade-distorting quotas, tariffs and subsidies, has been under review in anticipation of the EU round of enlargement about to take place, but progress has been very modest, and Europeans are nowhere close to agreeing on productive proposals to take to the table at the WTO.

So, yes, there's hope to be found in the renewed American commitment to international trade liberalization. It would be much more convincing, however, if we took pains at first to examine and redress where U.S. policies went wrong.

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