Deep transatlantic divisions remain

Date: 16/09/1999

By Simon Taylor

WITH only ten weeks to go until the Seattle ministerial meeting, the world's two biggest trading blocs are still a long way off even agreeing what the upcoming trade round should cover.

The gap will not be simple to close because Washington and Brussels have completely different approaches to the forthcoming negotiations.

The EU, mindful of the fact that it is bound to have to make major concessions in its heavily protected farm sector, wants the broadest round possible. This will enable Union governments to demand major trade-offs in other areas where the EU is strong, such as financial services, to offset the losses in agriculture. Hence the long wish list which outgoing Trade Commissioner Sir Leon Brittan has presented including new rules on investment and protecting the environment.

At least the Union's position is clear. In Washington, US Trade Representative Charlene Barshefsky has yet to play her cards. While she has moved from her initial opposition to a broad-based round, the former lawyer is still prevaricating between comprehensive talks and the “early harvest” approach. This would allow World Trade Organisation members to close some negotiations early as deals were struck in certain sectors, without waiting for the whole round to be concluded.

The key aim for Washington is, above all, to avoid the next round (known as either the “Millennium” or the “Seattle” round depending on which side of the Atlantic you come from) lasting the eight years it took to finalise the historic Uruguay Round.

Both sides have publicly stated their desire to secure a deal within three years. Given that the last round established all the mechanisms essential for the workings of the WTO such as the Dispute Settlement Body, this set of negotiations should in theory be shorter.

There are obvious political reasons for the US' results-driven approach. Whoever is US president when the next round reaches its climax will have to win 'fast-track' authority to get the deal through congress, and US trade officials will need trophies to bring back from international negotiations to win the necessary support.

Washington's preference for a short, sharp round is also behind its modest agenda for the talks. It is not convinced that the WTO negotiations can achieve anything meaningful on multilateral rules on investment and competition, so would rather see these two EU priorities left off the agenda for fear of wasting precious negotiating time.

The two sides are also still far apart on issues such as biotechnology, food safety and public health protection. The US accuses the Union of muddying its approvals procedure for new genetically modified products by pandering to 'irrational' public opinion, yet it knows that it would be difficult to establish new WTO rules which would remove the Union's right to act on its own risk assessments.

Food safety issues such as the beef-hormones row have provided some of the biggest flash points in the transatlantic trade relationship in recent years, yet the Union knows that the US would never accept changes to the WTO's provisions on plant and animal health - the sanitary and phytosanitary (SPS) agreement - which favoured the EU's much more cautious approach to health issues.

So, given the dominance of the EU and the US in determining the scope of the global trade negotiations, what will be the final shape of the agenda which emerges from Seattle? One thing is already clear: it will be longer than the US wants and shorter than the EU desires.

Apart from agriculture and services, both sides agree on the need to reduce industrial tariffs and simplify bureaucratic customs procedures which add to the cost of trade. Access to lucrative government contracts for goods and service is also a major objective for both.

Brussels and Washington agree that priority should be given to helping the world's least developed countries take advantage of the opportunities offered by liberalisation. The EU also shares Washington's view that WTO provisions on environmental protection should be strengthened.

It is likely that the US, which will chair the Seattle meeting, will be happy to leave some things to be decided at the last minute.

The most likely candidate is labour rights. Nothing would better suit the Democrat administration, with its domestic trade union constituency, than to stage-manage a big fight over labour standards. The US could face down developing countries which oppose any linking of trade to labour rights as poorly disguised protectionism, settling for some mild commitments like establishing a working group on labour standards.

The EU, with its own need to sell liberalisation to a sceptical public, would doubtless side with the US and the globalisation of trade would get a worker-friendly veneer for the 21st century.