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TWN Info Service on Free
Trade Agreements
26 February 2008
No Fast Track in US
Recent events and reports in the US suggest that it is unlikely that
Congress will issue a Presidential "fast track trade authority"
during the remaining term of President George W. Bush, thus bringing
into serious doubt the status and value of the United States' negotiating
positions in the WTO.
The lack of fast-track authority also applies to bilateral free trade
agreements (FTA) which the US
has signed or is negotiating with other countries. Without fast-track
authority, it is very likely that a WTO deal or a FTA agreed to by the
US administration
will not get through Congress intact.
Given the elements introduced by the Democrat-controlled Congress on
bilateral FTAs with Peru, Colombia, Panama, and South Korea last year,
there will not only be changes made to texts already agreed to with
the US's partners, but new clauses or chapters on labour standards and
environment will also be added. The US and Malaysia are currently
trying to complete FTA negotiations. The Malaysian Government may reach
a balance of concessions that it can accept in a final text negotiated
with the US Trade Representative. However, given the Democrats’ position
in Congress on FTAs, it is very likely that a further one-sided negotiation
would be required where Malaysia alone has to make additional concessions
in order to get the necessary approval by Congress. In such a case,
the FTA is likely to be heavily skewed in the USA’s favour.
Therefore, developing countries such as Malaysia,
should seriously consider not proceeding with its negotiations with
the US on an FTA given that such an agreement may be
rejected by Congress, even if they are accepted by the US negotiators
and administration.
Below is an article highlighting some of these developments as well
as the strong resistance against FTAs among Americans.
It was published in the SUNS on 20 February 2008. Permission is required
for reproduction from SUNS (sunstwn@bluewin.ch)
Best wishes,
Third World Network
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Desa Sri Hartamas
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Tel: +603-2300 2585
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website: www.twnside.org.sg, www.ftamalaysia.org
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[South-North Development Monitor (SUNS), No. 6418, 20 February 2008]
Trade: Fast track at WTO, although no fast track in the US
Geneva, 19 Feb (Martin Khor) -- Recent events and reports in the United
States have confirmed that it will almost certainly be impossible for
a Presidential "fast track trade authority" to be obtained
from Congress during the remaining term of President George W. Bush,
thus bringing into serious doubt the status and value of the United
States' negotiating positions in the WTO.
The absence of US fast track is in sharp and ironic contrast to the
highly accelerated time schedule set for WTO members by its Director-General
Pascal Lamy, in which the discussion on the revised draft texts of the
Agriculture and NAMA Chairs are to be finished as soon as possible so
that a "horizontal process" at senior officials' level can
start in a week or two, and a mini-Ministerial can be held in mid-March
or slightly thereafter to conclude the modalities.
"No fast track authority in the US,
but super-fast track talks in the WTO" seems to be at the heart
of what a top developing-country diplomat called the "bizarre situation"
now prevailing in the WTO's Doha
negotiations.
Without fast-track authority, it is very likely that a Doha
deal agreed to by the US
administration will not get through Congress intact, and could even
remain bottled up in some committee or the other in the House or the
Senate.
Given the elements introduced by the Democrat-controlled Congress on
bilateral FTAs with Peru, Colombia, Panama, and South Korea last year,
there will not only be changes made to texts already agreed to with
the US's partners, but new clauses or chapters on labour standards and
environment will also be added.
It should be noted that these changes were sought on trade pacts that
were concluded under the previous fast-track authority (the Trade Promotion
Act of 2002) just before it expired. A Doha agreement sent to Congress without a TPA
is likely to be pored over and dissected much more intensely, with multiple
times more proposed changes, or even remain bottled up in some committee
or the other of either House of Congress.
The question then is why US partners, especially the developing countries,
should continue to negotiate and risk being pressurized to make further
and even more serious concessions (whether in agriculture or NAMA, services
or rules, etc), when these may be rejected by the Congress, even if
they are accepted by the US negotiators and administration.
Moreover, there is no certainty or even likelihood that any new offers
made by the US
negotiators, for example, on US agriculture domestic subsidies, will
be endorsed by Congress.
Thus, assuming the Doha negotiations actually conclude, the agreement
may be re-opened again at a future date, and what the developing countries
agreed to may be considered insufficient by the present or a future
US Congress, and they may have to "top up" their offers again,
and perhaps yet again, as the recent FTA cases show.
Even assured (in terms of the TPA of 2002) of fast-track treatment (with
only a yes or no vote) within a statutorily prescribed time-limit, only
the US FTA with Peru has passed through Congress; and there is little
likelihood of the others (Colombia, Panama, and South Korea) being approved
during this Administration, even after many changes were made.
On 15 February, the Washington Post carried an article entitled "In
US, Trade Hits Stiff Head Wind - Proposed Deals Face Resistance."
It reported that the Bush administration is facing "high resistance"
to its moves to push through Congress the FTAs with Colombia, Panama
and South Korea.
"It happens as the administration is confronting the most hostile
domestic environment toward free trade in years," said the article.
"Recent polls suggest more Americans than ever view globalization
as negative, blaming free trade for the loss of millions of manufacturing
jobs that have moved overseas.
"As the economy falters, populist pundits of the Lou Dobbsian school
are blaming reckless trade deals. In a hotly contested election year,
Democratic candidates are jockeying for the labour vote, questioning
the wisdom of such accords as the North American Free Trade Agreement."
Noting the new anti-globalization public sentiments, the Washington
Post quotes Commerce Secretary Carlos M. Gutierrez as saying: "It's
very alarming. This is the very time for us not to have second thoughts
or convey a lack of confidence in free trade to the world."
Democrat Senators Byron L. Dorgan and Sherrod Brown presented legislation
last week that would make it more difficult to pass trade agreements
unless they are accompanied by a more thorough financial analysis. It
would mandate inclusion of what they call essential data, such as estimates
of how many US jobs would be lost or gained.
Representative Sander Levin (D-Mich.), chairman of the trade sub-committee,
said: "What's happening here is that we've had years of a passive
trade approach from this administration. They have had a mindless policy
that even if trade is one sided, it's better than nothing."
The Post concludes that "Given the opposition to the agreements,
both are likely to remain on ice until at least after the US elections in November."
The low priority accorded by the Congress to considering trade bills
was emphasized by Senator Max Baucus, Chairman of the Senate Finance
Committee (which has the mandate over trade policy), at a meeting held
on 30 January at the pro-free trade think tank, the Peterson Institute
for International Economics.
Baucus announced that his top trade priority is to get Congress to adopt
a Trade Adjustment Assistance (TAA) program and until an expanded and
re-authorized TAA is passed, other issues on the trade agenda like pending
free trade agreements with Colombia,
South Korea and Panama must take
a "back seat." A WTO deal was not even mentioned as being
on the agenda.
The TAA is the program that helps workers adversely affected by increased
imports and offshoring. The House of Representatives has already passed
a TAA reform bill and Senator Baucus has introduced a companion TAA
bill in the Senate.
According to the Peterson Institute, a central theme of these bills
is expanding TAA coverage to include workers in the services sector,
especially those adversely affected by outsourcing and offshoring. The
bills would also expand health coverage and wage insurance, and the
need for TAA reform is heightened by the current slowdown of the economy.
In the most relevant part of his speech, Senator Baucus said: "Our
task is to adopt and implement a TAA program that reflects the 21st
century global economy. Let me be very clear. This task, and no other,
must be our nation's trade policy priority.
"Until we accomplish it, other issues on today's trade agenda must
take the back seat. That includes congressional consideration of pending
free trade agreements with Colombia,
Korea, and Panama. I simply cannot support, or
consider moving these agreements in the Senate, until we realize the
goal of expanded and re-authorized Trade Adjustment Assistance."
Meanwhile, at another event at the Peterson Institute on 13 February,
the US Trade Representative Susan Schwab, presented her most comprehensive
reactions to the revised texts of the Agriculture and NAMA Chairs.
She seemed to complain about "slippages" made by the Chairs
to placate developing countries.
She said that "slippage occurs when negotiations are re-framed
to placate the outliers, the nay-sayers, and the obstructionists",
and gave a warning of "a lowest-common-denominator outcome that
fails to generate economic growth."
She resumed her earlier lecturing, or rather a hectoring tone about
the need for developing countries who want to be represented at the
negotiating table to show "a degree of responsibility and accountability
that several advanced developing countries, who have become major players
in the global economy, have not yet been willing to undertake."
Trade observers noted that the Schwab tone and posture, as if the presence
and representation at the negotiating was something for the US to give or not, is in strange contrast to the
actual current overall situation of the US.
On the Agriculture text, Schwab said more work needs to be done before
the text is ready for negotiations among Ministers. She identified the
key outstanding issues as the magnitude of cuts appropriate to developed
and developing country agricultural barriers and trade-distorting subsidies,
and how to "ensure that the use of sensitive and special product
flexibilities do not negate the market-opening purpose of the Round."
The USTR especially picked on Special Products (SPs) and the Special
Safeguard Mechanism as problems for the US, saying that "the current
text is particularly alarming as it raises the possibility of excluding
special products from tariff cuts and allowing protective duties under
the Special Safeguard Mechanism in a way that would result in more,
rather than fewer, agricultural barriers."
She was even more caustic regarding the NAMA text. Said Schwab: "Not
only does the new text offer a diminution of ambition, it raises new
challenges when it comes to clarity for decision-making."
In fact, in its most recent iteration, while the ranges for tariff cuts
remain, developing country flexibilities that had been stable since
2004 have now suddenly disappeared.
"This new uncertainty creates the prospect that we must now duke
it out over whether there should be more or less flexibility than in
the original draft. This is certainly not a step designed to take us
closer to Ministers making choices."
She however indicated US
interest in giving "extra credit" for countries that renounce
flexibilities entirely and that opt for less severe tariff cuts.
Schwab also insisted that the Chair's services paper be revised, to
be one where "members make commitments to maintain current levels
of market access and to create new market access."
She also wanted "a renewed bilateral and plurilateral consultative
process on Services market access among developed and major developing
countries. This process should culminate in minister-level engagement
that coincides with the conclusion of negotiations on Agriculture and
NAMA modalities."
Schwab's speech interestingly did not provide any indication that the
US itself is ready
to improve its own offers, for example, on agriculture subsidies or
services Mode 4.
But it gave clear indication that the US will be tough on developing countries
on their market openings in all three areas of agriculture, NAMA and
services, in the weeks ahead. +
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