US warning on Hong Kong trade meeting

With the Doha global trade talks stalled by US and European discord over agriculture, US lawmakers are warning that domestic political support for the round could be jeopardised if the Hong Kong ministerial meeting next week focuses exclusively on the narrow demands from a few developing countries.

In a strongly worded letter this week to Rob Portman, the US trade representative, a group of senators led by moderate Democrat Dianne Feinstein of California demanded that he state publicly before the Hong Kong meeting that the US will not agree to any increase in visas for skilled professionals as part of the Doha talks. They warned that failure to do so could force them to oppose any final agreement.

The issue is a key one for India, which is under pressure from the US and the European Union to open its heavily protected market for manufacturing goods.

Kamal Nath, India's commerce and industry minister, said on Wednesday he would push the visas issue because of India's strong comparative advantage in services, and said he was disappointed in the response from developed countries.

Mr Portman told the Indian Chamber of Commerce last month that he was hopeful he could persuade the US Congress to agree to increase the number of temporary visas as part of the negotiations. In the previous Uruguay round agreement, the US agreed to bind its annual cap of 65,000 H-1B visas for skilled workers.

But the Senate letter warned that the US should not give India or other developing countries "any false hopes that the administration would be amenable at any time to agreeing to include, bind or modify US immigration policy in trade agreements". Opposition is equally strong in the House of Representatives, largely because of growing concerns over illegal immigration and border security since the September 11 2001 attacks.

Mr Portman is also facing renewed opposition over the negotiations on cotton. Peter Mandelson, the EU trade commissioner, warned yesterday that the talks over cotton could become a flashpoint at Hong Kong.

African cotton producers have been pushing for a separate agreement that would reduce cotton subsidies by the US and other countries. But Saxby Chambliss, the Republican chairman of the Senate agriculture committee, warned in a statement this week that "the continued focus on cotton without an underlying agreement on agriculture and substantial and meaningful market access commitments will not find support in the US Congress".

Mr Portman has tried to address the concerns of the African countries without triggering a backlash from the powerful US cotton industry. He said in Geneva last week that the US had taken significant steps towards reducing its cotton subsidies and was assisting cotton growers in west Africa.

He said there was already an agreement to "deal with the cotton issue in an ambitious, expeditious and specific way, but that it will be part of the agriculture negotiations".

US textile companies and their congressional allies are also rallying against any quick movement to lift all quotas and tariffs on the poorest countries. That initiative is favoured by the EU, which has already removed most barriers to the poorest countries under its "Everything But Arms" initiative.

The US industry, which has fought successfully for quotas on Chinese imports, opposes the scheme because it would further open the US market to some large clothes- producing countries, particularly Bangladesh.