Millennium Round will require a kick-start from new US administration

Date: 23/11/00

By Tim Jones

NEGOTIATING a Millennium Round has just become harder. All 135 members of the World Trade Organisation had been sitting on their hands since the round stalled in first gear in Seattle last year, waiting for the outcome of the US elections. Now they have it and they wish they did not.

The administration and Congress chosen by the American people have been designed to get nothing done. When Bill Clinton took office in January 1993, he used up all his political capital within two years on a battle to persuade the military brass to accept openly gay soliders into their ranks and a scrap with the insurance lobby over healthcare reforms.

The new president's capital and legitimacy will be spent before he swears the oath. Democrats and Republicans have fought themselves into standstill in both the House of Representatives and the Senate. No trade bills worth the name will get through Congress without significant bipartisan support but, at the same time, the hand of organised labour has been strengthened by crucial votes it delivered for Al Gore and Democratic congressmen in battleground states.

The main union federation, the AFL-CIO, will be lobbying Congress and the administration to try to persuade them not to agree to a new multilateral round of trade talks under the WTO's auspices without safeguards for labour standards or the environment.

They tried to build these measures into the North American Free Trade Agreement (NAFTA) after Clinton came to power, but are convinced that these clauses never delivered. The politically resurgent AFL-CIO will not make the same mistake again.

The trouble is that the WTO's developing-country members, many of which believe they were cheated by the Uruguay Round settlement in 1994, will never accept even a hint of inserting labour standards into the negotiating mandate for this round.

A possible way out, floated by the Japanese, would be to start talks on banning child labour and setting labour standards via other fora such as the International Labour Office - but without the threat of trade sanctions for non-compliance or the risk that WTO rules could creep into imposing minimum wage levels.

Under the new administration, the fundamental demands for a new round will be the same. The US trade representative will revive Clinton's call for a three-year round to include open access for genetically modified crops and to government contract markets; deep cuts in farm subsidies; the dismantling of barriers to trade in all services; tight protection for patents, brands and knowhow; and bans on duties on electronic commerce

'Institution-building' plans including technical assistance to the world's least developed countries, customs reform and cooperation between the International Monetary Fund, World Bank and the WTO to spot and tackle regional crises will all remain on the White House agenda.

But that is just the view from the Oval Office. Getting genuine negotiations under way within a three-year timeframe will be tough unless the incoming USTR wins 'fast-track' negotiating authority from

Congress - something the EU will be unable to complain about until it ends the slow-track negotiating authority it gives the European Commission in the area of trade in services.

Kick-starting a new round will depend on an early signal from the new administration. The US' key interlocutors - the EU, Japan, the Cairns Group of agricultural exporters and the increasingly assertive developing countries' vanguard - know both what they want and what they think is realistically achievable over three years.

That has been the one great advantage from this post-Seattle 'gap-year'. Nobody has been rushed or brow-beaten into an early round with an agenda set, like last time, in Brussels and Washington with the others tagging along.

Expectations this time around are also healthily downbeat. The developing economies feel their anger has been taken into account, even though not all their demands have been accepted, and they have been offered special provisions. Early areas for compromise have already been identified in agriculture, services and textiles, clothing and footwear trade.

None of this can be done and dusted without the Americans. Given their increasing dominance as the motor of the world economy, doing deals without them would be pointless. Nevertheless, if and when the new administration and Congress turn up at the Millennium Round party, they will find most of the guests have already arrived and are onto their second drink.

Article forms part of a survey on trade.