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NEWS ANALYSIS

Trade Heavyweights Postpone the Match

U.S. and Brazil delay dealing with differences on an economic zone. But the next round of talks faces the pressure of election-year politics.

November 23, 2003|Carol J. Williams | Times Staff Writer

MIAMI — They are the economic giants of the Western Hemisphere, but remain poles apart on how to create a free trade zone that could recharge the New World's economy.

A week of speeches and meetings among the hemisphere's 34 countries ended here last week with little to show beyond the agreement by the United States and Brazil to postpone dealing with differences on how to create a Free Trade Area of the Americas. Only time will tell whether the next round of ministerial negotiations in late July or August in a yet-to-be-determined city in Brazil can heal the North-South divide.

Crafting what would be the world's biggest free trade area -- uniting all Western Hemisphere states with the exception of Communist Cuba -- is expected to spill into the early part of 2005. And the year leading up to an anticipated agreement, 2004, is subject to the pressures of a U.S. presidential election, when the political costs of making national concessions will escalate.

The battle between the U.S. and Brazil also mirrors the split between the developed and underdeveloped nations that wrecked September's World Trade Organization summit in Cancun, Mexico.

The industrialized world is seeking changes that would make it easier for them to do business: lower tariffs, protection of foreign investments and respect for copyrights. The poorer countries want more protection for their fledging industries, particularly the agricultural sector.

Small and large countries alike complain bitterly about government export subsidies that allow U.S. farmers to price their produce below cost, undercutting counterparts in the developing world. In Mexico, for instance, thousands of corn farmers have been forced to abandon their fields because consumers prefer to buy cheaper U.S. imports over domestically grown corn. Brazil wants reductions in U.S. citrus and sugar supports so its exports can compete, and Argentina wants U.S. barriers to its beef exports removed.

U.S. Trade Representative Robert B. Zoellick insisted that the Bush administration was committed to ending farm subsidies, considered by many to be a key cause of poverty in developing nations. Brazilian Foreign Minister Celso Amorim, in the same collaborative spirit, professed confidence that his nation's concerns about investment and patent rights could also be alleviated in future talks.

"The United States is very committed -- the agricultural community and the agriculture members of our Congress are -- to eliminating export subsidies, to getting significant cuts in domestic subsidies and obviously to getting significant improvements to market access," Zoellick said. "We believe that we can't do that -- the export subsidies and the domestic support -- in this forum because then what leverage do we have with the Europeans and the Japanese?"

The 15-nation European Union and Japan provide two to three times more government support to food exporters than does Washington.

Zoellick and Amorim were congenial in their talks, reinforcing an impression that the delay in tackling contentious issues was a mutual agreement. That suggested a common strategy to pressure the other big traders to level the global playing field, and then resolve their own differences later.

"I think that after Cancun, a lot of countries realized that slowing down in free trade is not in our best interests," said U.S. Commerce Secretary Don Evans. "We need to get focused on the bigger picture of what free trade does for economic development in our countries, and not be so focused on the narrow, smaller issues that sometimes get in the way."

Asked if farm subsidies first must be negotiated at the global level within the WTO, Evans, a former oil and gas entrepreneur, said it was impossible to resolve the issue "until you have all the players at the table."

In regard to the EU and Japan, he said: "We are not going to unilaterally disarm our agricultural community."

Some analysts saw the Miami meeting as a strategic move to keep the Free Trade Area of the Americas forum alive while pressures mount on the EU to make concessions to revive stalled global trade talks within the World Trade Organization. The WTO summit failed largely because EU trade czar Pascal Lamy refused to relax the European bloc's restrictions on investment, competition, trade facilitation and transparency in government procurement.

While the Western Hemisphere ministers were meeting here, Lamy said during a visit to WTO headquarters in Geneva that the EU was considering "removing some or all" of the bloc's objections that contributed to the collapse of the Cancun summit. Although the Cancun forum broke up after Brazil led 22 developing nations in a revolt against the U.S., Japanese and European refusal to compromise on farm supports, it was the EU's obstinacy on the four access issues that emboldened the have-nots to walk out of the talks.

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