[asia-apec 1694] Fw: Bilateral deals: WTO in danger?

[APEC Monitoring Group]

> >Tuesday, January 02, 2001, 12:00 a.m. Pacific
> >
> >Is WTO in danger?
> >by Stephen H. Dunphy
> >Seattle Times business columnist
> >
> >The Seattle Times
> >A fork-lift driver at Container Care International in Seattle moves a
> >container ready to be delivered to a shipping line.
> >WTO MEMBER NATIONS increasingly are negotiating trade deals outside the
> >world organization, which calls into question the WTO's future.
> >
> >A year after global trade talks collapsed here, a new pattern of
> >negotiations is emerging that could pose a greater threat to the World
> >Trade Organization than even the wildest hopes of its opponents.
> >
> >Increasingly, the 140 members of the WTO are entering into smaller-scale
> >trade accords among themselves, or are pushing ahead with plans to do so.
> >As a result, the WTO estimates those agreements now cover as much as
> >three-quarters of world trade, and market barriers are dropping from East
> >Asia to Latin America.
> >
> >Mike Moore, the director general of the global trading body, warned
> >recently that there is a "growing danger" that the surge in trade
> >agreements "could come to be seen as a substitute for multilateral
> >liberalization rather than a complement to it."
> >
> >The U.S. alone has signed accords with China, Jordan and Vietnam in
recent
> >months, and is negotiating with Chile and Singapore. It has opened its
> >markets to sub-Saharan Africa and the Caribbean Basin, and next April
will
> >consider forming a Free Trade Area of the Americas - a tariff-free zone
> >that would cover the entire Western Hemisphere, from Canada to Argentina.
> >
> >Last week, U.S. Trade Representative Charlene Barshefsky praised the deal
> >with Jordan, calling it a model for how bilateral accords could help
> >protect the environment and ensure labor standards are followed.
> >
> >Japan has abandoned its long-standing policy of multilateral-only trade
> >liberalization to consider agreements with Singapore and Korea, while the
> >European Union is in the process of establishing a Euro-Mediterranean
> >free-trade area by 2010.
> >
> >Some experts like the bilateral deals because trade is booming. The World
> >Bank said trade will expand 12.5 percent this year - the fastest growth
in
> >more than three decades. The WTO estimates trade growth this year at more
> >than 10 percent.
> >
> >While some regional pacts can be good, they run risks. Trade economists
say
> >regional trade pacts can result in one country granting preferences to
> >another and buying goods from it that should really be purchased
elsewhere.
> >
> >That could have a huge impact on big trading ports. The Port of Seattle
had
> >at least some trade with more than 150 countries or regions last year,
> >ranging from $27.5 billion with Japan to $7 million with Moldova.
> >
> >Moore and WTO officials argue that the system in place since the end of
> >World War II has worked well and should not be abandoned. The facts seem
to
> >point that way. Trade is up 16 fold since then, growing every year since
1945.
> >
> >The free movement of goods and services across borders saves the average
> >consumer in the U.S. about $2,000 a year. Countries like South Korea have
> >moved from poverty with per capita annual income of less than $100 to the
> >ranks of the wealthy developed countries in a generation, largely through
> >the ability to trade.
> >
> >But these bilateral agreements - deals between two countries - are being
> >looked at more and more by big nations, especially the U.S. and the
> >European Union. The deals allow them to get things it wants - agreements
on
> >labor standards and the environment - which it cannot get in bigger
> >multilateral deals.
> >
> >Even disputes are moving outside the WTO.
> >
> >The U.S. may challenge how Airbus uses government loans to finance its
> >proposed A380, a super jumbo that would compete with Boeing's 747.
> >
> >U.S. and EU trade officials discussed the financing during high-level
> >meetings in Washington this week.
> >
> >But both sides - and Boeing - do not want the dispute to become a
> >full-blown trade battle.
> >
> >In addition to the list of country-to-country agreements regional
> >agreements are growing as well. Among them:
> >
> >Mercosur, the free-trade area that includes Brazil, Argentina and other
> >Latin American countries, is negotiating to add Chile to its membership.
> >
> >The Association of Southeast Asian Nations has proposed an East Asia
> >free-trade zone, while Australia and New Zealand are seeking to open
Asian
> >agriculture markets.
> >
> >Mexico has signed accords with the EU and the smaller European Free Trade
> >Area. And the Andean and Central American common markets have reaffirmed
> >their commitments to regional free trade.
> >
> >The growth in regional trade accords could help build the political case
in
> >the U.S. to push again on multilateral-trade negotiations. Starting a new
> >round of global trade talks won't be easy.
> >
> >The WTO meetings in Seattle failed partly over a U.S. proposal to include
> >labor and environmental standards in future trade accords.
> >
> >That plan was supported by many of the tens of thousands of street
> >protesters who tried to shut down the meetings.
> >
> >Yet it drew fire from developing nations, which saw it as a veiled
attempt
> >to deprive them of their chief competitive advantage: low labor costs.
> >
> >China's imminent accession to the WTO might also complicate things.
> >
> >China is "big enough by itself that we need some time to concentrate on
> >it," one official said. "Integrating 1.5 billion people into the system
> >will be a huge boost to world trade" on its own.
> >
> >Negotiations under way at the WTO in two areas - agriculture and
services -
> >are likely to run into resistance early next year.
> >
> >"When horse trading begins in earnest in agriculture and services, we are
> >likely to experience a sharp slowdown," said one WTO official. "Up until
> >now, the work of those negotiating groups has gone well, but we have
> >largely been in a phase of both information gathering and presentation of
> >offers. It will not be until March that the real dealing is due to
start."
> >
> >Meanwhile, the bilateral deal making continues. The U.S. and Singapore
are
> >near an agreement on a free-trade pact.
> >
> >Information from Bloomberg News was included in this report. Dunphy
> >traveled to WTO headquarters earlier this fall.
> >
> >
> >Copyright © 2000 The Seattle Times Company