US to seek FTAs, TPA extension while continuing Doha work

Original Publication Date: 
27 July, 2006

In the wake of this week’s collapse of World Trade Organization talks in Geneva, U.S. Trade Representative Susan Schwab said her office would continue to make an effort to revive the Doha round, including by meeting with Brazil’s foreign minister this week. However, Schwab also laid out other areas of work for USTR now that the talks have effectively ended, including the extension of trade promotion authority (TPA), the possibility of increased bilateral free trade agreements, and extending the generalized system of preferences program.

One reason for the need for an extension of TPA is Schwab’s acknowledgement that it would not be possible to submit a Doha agreement to Congress under the current law, which expires next June. “At this stage of the game, we do not expect to be able to use the current TPA authority to enact a Doha agreement if and when one comes together,” Schwab told reporters in a July 24 call from Geneva.

In an interview with reporters later in the week, Schwab also suggested it is still a possibility that trade promotion authority could be extended or renewed. “I think none of us are in a position to predict what Congress will and will not do,” she said.

Until the fast-track law expired in 1994 and remained expired for eight years, fast track was regularly renewed or extended with virtually no gap, Schwab said on July 26. She said it was uncertain whether the eight-year gap was the anomaly, or whether that was the pattern for the future. She also suggested that if it is still possible to get the outlines of a Doha deal by the spring of 2007, “it would seem more likely that we’d get a positive reception to TPA extension.”

Private-sector sources said U.S. trade and agriculture officials were pressing trade associations to call for the renewal of trade promotion authority in the immediate aftermath of the Doha failure. The American Farm Bureau Federation called for an extension on July 27, as did the U.S. Chamber of Commerce.

Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers, said it would be necessary to get either an extension of the current TPA, which he said NAM would prefer, or a new fast-track law in order for the U.S. to continue negotiating the Doha talks. Without a fast-track law, he said, U.S. negotiators will not have clear negotiating objectives in the Doha talks and cannot negotiate a deal that they can bring back to Congress.

Even if Doha goes into a “deep freeze” for years, Vargo said, the U.S. should move to extend or enact a new fast-track law, since if the U.S. does not have one it will lose out on foreign markets to others. He predicted that if the Doha round remained frozen, members such as the EU and Japan will seek FTAs and if the U.S. does not also have the ability to do so it will lose exports and jobs.

While the U.S. is still hopeful the Doha round can be salvaged, Schwab also predicted in a July 26 press conference that if the Doha round does die for good, the U.S. would move forward with bilateral free trade agreements, and said there is a growing list of applicants for these FTAs.

“There are an awful lot more potential FTAs out there than we currently have the capacity to negotiate and get implemented before TPA expires,” Schwab said, referring to the trade promotion authority law. “There is a line at the door. And I’ll tell you, if the Doha Round ultimately does not become a reality I think you will see us going that way even more actively than we have.”

Schwab said the U.S. wants to complete “if at all possible” bilateral FTA negotiations with Korea and Malaysia and finalize these deals under current TPA authority. Negotiations with Thailand, the United Arab Emirates and Panama “may or may not get finalized” under the current TPA, Schwab said.

She also defended the administration’s policy of competitive liberalization, under which bilateral negotiations were intended to help move the Doha talks forward. Asked if the suspension of the Doha talks illustrated the failure of this policy, Schwab said she would draw the opposite conclusion because of the successful approval by Congress of a number of FTAs, and the fact that FTA partners have been allies with the U.S. in the WTO talks.

Schwab also said this week that the administration would seek an extension of the generalized system of preferences (GSP) program, but she admitted this will be a challenge given the congressional timeframe and noted that there are precedents for GSP being reinstated after running out, with preferences applied retroactively.

The administration called for GSP’s extension in its budget proposal, and Schwab’s predecessor Rob Portman also called for its extension in February. Senate Finance Committee Chairman Charles Grassley (R-IA) this week said he was not in favor of reauthorizing GSP, but that if he changed his mind, India and Brazil would not be covered by a new GSP.

Schwab said the administration already has authority through the competitive needs limit waivers in GSP to make sure that countries that need GSP the most benefit from it.

Regarding the Doha talks, Schwab continued to insist that the WTO round is not dead yet, and said her meeting this week in Brazil with Brazilian Foreign Minister Celso Amorim is meant to explore how to revive it.

When asked why she continued to press for a Doha deal after a series of missed deadlines and increasing evidence that the main Doha players are too far apart to reach an agreement, Schwab said issues such as the reduction of trade-distorting domestic subsidies can only be dealt with in a multilateral context. She also acknowledged the current dim prospects for success, but suggested the potential gains from an ambitious Doha round are enough to justify efforts even when it appears success is unlikely.

“I believe that there has to be some element of naiveté associated with leadership,” she said. “You have to believe you can accomplish something to lead.”

Schwab said she and Amorim agreed to get together after the breakdown because they decided they had come too far to abandon all the work that had been put into Doha, Schwab said. She approached Amorim after the collapse of the talks after initially trying to talk to EU Trade Commissioner Peter Mandelson, who she said “didn’t want to talk.”

Amorim said after the round collapsed that the talks failed because of a lack of political will, and charged the WTO with having no clear leadership at a moment of crisis.

Delegation sources in Geneva said they expected the talks to be in hibernation at least until after the U.S. mid-term elections on Nov. 7. However, some of these sources said the talks could be frozen for much longer, and acknowledged that it would be difficult to make progress if the U.S. does not have a trade promotion authority law in place that allows the administration to present trade agreements to Congress for up or down votes.