USTR - Committed in Cancun
Office of the United States Trade Representative

 

Committed in Cancun
09/08/2003
The Wall Street Journal

By Robert B. Zoellick

As the U.S. economic locomotive picks up speed, the 146 members of the World Trade Organization have an opportunity to spark other engines to build global momentum. This week's meeting of the WTO in Cancun is a midpoint on the growth track first laid at the Doha Ministerial in November 2001. Doha established goals for lowering barriers to global trade and development by 2005. At the Cancun meeting we will seek to specify the negotiating frameworks for attaining the Doha goals. Given the diversity and number of participants, this is no small challenge.

The Doha Development Agenda aims to connect the energy of globalization to a widening network of development through four circuits. First, development depends on global economic growth, and freer trade accelerates growth. Over the course of the past decade, exports accounted for 27% of U.S. growth. World Bank research
points out that during the 1990s, incomes in developing countries that lowered trade barriers the most grew three times faster than earnings in countries that remain closed.

With more open markets, American workers, farmers, and consumers will gain from lower costs, a healthier global economy, and the freedom to buy and sell around the world. The two major U.S. trade agreements of the 1990s -- the Uruguay Round and Nafta -- increased the income of an average American family of four by $1,300 to $2,000 a year. Yet the U.S. has supplied much of the world's purchasing power over past years. America is supporting over $500 billion of international sales in excess of U.S. exports, because U.S. growth has outpaced that of the other major economies.

The global economy needs more balanced growth. The Doha negotiations could encourage the European Union and Japan to reallocate resources from agricultural toward more poductive enterprises and to undertake structural reforms. Freer trade would enable developing countries to raise living standards, attract investments, manage debt service, and earn a place in global sourcing networks.

Second, people in Latin America, Africa, and Asia want to sell their products to developed countries. If three major continents -- encompassing some five billion people -- cannot prosper, we will all pay the price. That is one reason why the U.S. has proposed to slash subsidies and tariffs on farm goods and eliminate tariffs and non-tariff barriers on manufactured goods. The World Bank estimates the elimination of barriers to manufactured and agricultural products would boost global income by over $830 billion, with two-thirds of that gain accruing to developing countries. The U.S. has also pointed to the potential gains of a freer services trade, with a minimum of $900 billion for developing countries alone, according to the World Bank.

Third, developing countries that lower their barriers to trade benefit both their own consumers and other developing countries. About 70% of the tariffs that developing country exporters pay are imposed by other developing countries. Roughly three-quarters of the trade gains for developing countries can only be achieved by cutting their own barriers.

Finally, the WTO should customize solutions to address particular problems of development. India needs to reassure its millions of subsistence farmers. Africa needs assistance to strengthen the rule of law and support small business. Small island economies, particularly in the Caribbean, face unique challenges. We can consider longer time frames for liberalization and special adjustment provisions in such cases. This year the U.S. is devoting some $750 million to help developing countries build their capacity to benefit from trade. Both the World Bank and the IMF have pledged to help.

If, however, attention to the special problems of some developing countries were interpreted as a general license to avod trade competition by some 120 self-determined developing economies, we would create a modern mercantilism that fails the cause of development. Strong economies and a healthy trading system depend on a broad-based willingness to import as well as export. The WTO will only be successful if developed and developing countries both assert their individual interests and accept a sense of mutual responsibility.

Some developed countries seek cuts for manufactured goods, but not for agriculture. Some developing countries call for the reverse. A few of our partners seek to add new issues to the negotiations. Too many countries argue that others should open to competition but that they themselves cannot. So the Cancun meeting may only end up compelling participants to recognize that successful multilateral negotiations in the WTO require a common understanding on how to combine ambition and compromise.

The U.S. is promoting ambitious results in all three core areas: agriculture, manufactured goods, and services. These are the sectors that will drive the global economy and development. Over past months, the U.S. has led the process of translating initial demands into realistic negotiating approaches. To help give impetus to the Cancun meeting, we overcame the gap between developing countries that were concerned about immediate access to critical medicines and the companies that invest in developing life-saving drugs for the future. We worked with the EU, Canada, and other developed and developing countries to outline plans to cut tariffs and non-tariff barriers for manufactured goods.

After encouraging the EU to reform its Common Agricultural Policy, we thrashed out a draft framework to cut agricultural subsidies and tariffs. This approach commits to deeper cuts than achieved in the last global trade negotiations -- if others give American farmers a fair chance to compete, too. And we have worked with all our trading partners to craft a balance of interests.

***
President Bush has demonstrated his commitment to fight for freer trade so that Americans can compete on a level playing field. He worked with Congress to restore authority to negotiate trade packages for an up-or-down vote. The U.S. now has free trade agreements with six countries, is negotiating with 14 more, and is pressing ahead to establish free trade throughout the Western Hemisphere. As our coalition for openness expands, other countries from diverse regions are embracing the president's vision of "a world that trades in freedom." Therefore, our aim in Cancun points straight at the Doha target: The United States wants to open global markets across-the-board, to expand a virtuous circle of trade and economic growth for developing and developed economies that can strengthen one another.

Mr. Zoellick is the U.S. trade representative.

Copyright 2003 Dow Jones & Company, Inc.

 
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