- The Washington Times - Friday, May 30, 2003

President Bush’s visit this weekend to Europe will partly focus on reaffirming a common trans-Atlantic agenda, “issues like the global economy and trade,” National Security Adviser Condoleezza Rice said at a press briefing this week.

But trade issues increasingly have driven the 15-nation European Union and the United States apart.

Disagreements on farm policy have stalled negotiations for freer trade at the World Trade Organization, and recent disputes over biotechnology, a U.S. tax shelter and steel tariffs threaten to spark a trade war.

Pro free-trade businesses and academic groups hope that Mr. Bush can patch up some differences and lend momentum to the trade agenda during a meeting of leaders from the Group of Eight industrialized nations. The meeting begins tomorrow in Evian, France.

“I hope that he can engage in a dialogue that can open markets,” said Sara J. Fitzgerald, a policy analyst at the Heritage Foundation, a pro-trade think tank in Washington.

Trade relations are crucial to economies on both sides of the Atlantic. The European Union and the United States share the largest two-way trade and investment relationship in the world.

“We have to work together on the global economy; we have to cooperate,” said Frank Vargo, vice president of the National Association of Manufacturers.

Because of the disputes and differing policies, worldwide talks to liberalize trade are seen in the greatest jeopardy.

This week, WTO negotiators could not agree on a plan for tariff cuts in industrial goods, missing a May 31 target.

So far, the international body’s 146 members have let slide every major decision-making deadline as they try to set the agenda for a meeting in Cancun, Mexico, in September.

The Cancun conference, in turn, is supposed to set the stage for an agreement by December 2004 that would help developing nations join the world economy and lower trade barriers for all nations.

U.N. Secretary-General Kofi Annan this week called on the G-8 leaders to step up their trade efforts, with an eye toward meeting the 2004 target.

Without an agreement, “the hopes of many millions of people will be dashed, and the developing countries will find it very hard to maintain their belief in an open-market system,” Mr. Annan wrote in a letter to G-8 leaders.

The WTO talks hinge on agriculture, widely seen as the most important component of the negotiations that started 18 months ago.

“Without substantial reform of the agricultural-trading system … we are highly unlikely to progress with the rest of the topics under negotiation,” U.S. Trade Representative Robert B. Zoellick told Congress last week.

Mr. Zoellick said Europe must make the reforms — especially cutting tariffs and subsidies — that will allow progress.

EU agriculture leaders in June plan to consider changing their Common Agricultural Policy to allow for some compromises in WTO talks.

Mr. Vargo said that from a trade perspective, the best outcome at the G-8 would be to secure a French agreement with EU proposals on agriculture reform.

“That would really clear the decks for major progress at Cancun,” he said.

The United States recently widened the gap on agricultural issues when it filed a case at the WTO against the European Union’s policy on biotech crops, and Mr. Bush last week said Europe was hindering “the great cause of ending hunger in Africa.”

The European Union has a de facto moratorium on the importing of genetically modified farm goods. The 5-year-old policy effectively blocks the importing of some U.S.-produced goods, such as corn.

About one-third of U.S. corn is genetically modified, but because it is not segregated from unaltered products, almost all corn exports to Europe are blocked, costing an estimated $300 million per year.

U.S. accusations are misguided and ignore consumer health and environmental concerns of developing countries, EU officials said.

The European Union, meanwhile, has its own problems with U.S. policies on trade, and has won major cases at the WTO against the way exports are taxed and against steel tariffs.

The United States plans to appeal the steel case but must change its laws that shield major exporters from taxes on overseas sales, which the WTO ruled was an unfair subsidy.

The European Union won the right to retaliate against the tax law with $4 billion in trade sanctions, but said it would not implement them before January.

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