Bipartisan Majority of U.S. Senate Cautions Bush Against New Concessions in WTO Talks

A bipartisan majority of U.S. senators called on President Bush April 16 to oppose any further concessions in the World Trade Organization agriculture negotiations, saying that other WTO members have still not done enough in terms of offering enhanced market access for U.S. farm products.

The 58 senators said in a letter to the president that their support for any WTO agreement will depend on achieving a "balanced" outcome in which greater market access and the elimination of export subsidies provide net gains for U.S. farmers and ranchers in relation to reductions in trade-distorting domestic support.

"We cannot support a deal that directly reduces net farm income through steep cuts in farm programs in return for minimal market access gains whose effect on farm gate receipts is speculative at best," the senators wrote.

The United States has come under increasing pressure in recent weeks to offer further reductions in trade-distorting domestic support beyond those contained in its standing proposal in the WTO talks, tabled in October 2005 (186 DER A-26, 09/27/05
<http://pubs.bna.com/ip/BNA/DER.NSF/9311bd429c19a79485256b57005ace13/776
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Baucus Cites Special Goods Exemptions

But the 58 U.S. senators--led by Sen. Max S. Baucus (D-Mont.), chairman of the Senate Finance Committee--said that the current U.S. offer would require "substantial" cuts in U.S. farm programs but that other WTO members have failed to propose significant reductions in tariffs and continue to insist on exceptions for sensitive and special products that would "render meaningless" the modest reductions that they have proposed.

"[W]e urge you to direct your negotiators not to make further concessions on domestic support," the senators wrote to Bush, "but instead to insist that our trading partners put forward ambitious market access proposals that will produce sufficient market opening to ensure that any final deal will generate increased net income for America's farmers and ranchers."

Baucus said that, with the letter to the president, the Senate has spoken out forcefully against any WTO agreement that fails to promote the survival and success of U.S. farms and ranches through exports of agricultural products.

"I've said many times that no deal ... is better than a bad deal for America's ranchers and farmers," Baucus said.

Gretchen Hamel, a spokeswoman for the Office of the U.S. Trade Representative, said in response to the senators' letter that the administration agrees that "additional market access, for America's farmers and ranchers, has been, is and will continue to be critical to a [WTO] agreement."

Schwab's Meetings

The letter from the senators to Bush came as U.S. Trade Representative Susan C. Schwab and her team were returning from a series of meetings with fellow trade ministers from the European Union, Australia, Brazil, India, and Japan in New Delhi the week of April 9, where it was agreed that ministers would work toward the successful conclusion of WTO negotiations by the end of this year (71 DER A-30, 04/13/07
<http://pubs.bna.com/ip/BNA/DER.NSF/9311bd429c19a79485256b57005ace13/ef9
830bc022164fb852572bc000e6539?OpenDocument> ).

After meeting April 12, the trade ministers from the so-called G-4--the United States, the EU, Brazil, and India--said in a joint statement: "[B]y intensifying our work, we can reach convergence and thus contribute to concluding the [WTO talks] by the end of 2007" (72 DER A-6, 04/16/07
<http://pubs.bna.com/ip/BNA/DER.NSF/9311bd429c19a79485256b57005ace13/3b7
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The ministers said that they have agreed to hold a series of senior-official and ministerial meetings in the weeks ahead, including a ministerial meeting in mid-May to assess progress and to give further instructions to their negotiators.

"We are pleased to note that the meeting in New Delhi inaugurates a new phase of our discussions," the ministers said.

Financial Services Firms Want Attention

Meanwhile, the chief executives of 20 leading global financial institutions wrote to President Bush April 16 saying that financial services have not been receiving the attention they deserve in the WTO talks.

"[W]e respectfully urge the administration to make the expansion of market access for financial services firms a first-tier priority in all trade negotiations--both bilateral and multinational efforts--especially the [WTO talks]," the chief executives wrote. "By promoting greater access to competitively priced capital and world class financial products and services, freer trade in financial services helps create a more vibrant and competitive financial marketplace and, therefore, a more productive and dynamic global economy."

The executives--from companies such as Allstate Corp., Citigroup Inc., The Goldman Sachs Group Inc., Morgan Stanley, and Wachovia Corp.--said that U.S. financial services providers, "despite their success," continue to face significant obstacles abroad, including foreign ownership limitations, license quotas, product and service restrictions, client restrictions, non-transparent regulations, and restrictions on the cross-border supply of services.

"Such obstacles can be effectively addressed through enhanced market access agreements within the [WTO] framework, and better member compliance with those commitments," the executives wrote under the auspices of the Financial Services Forum. "We respectfully urge you to make every effort to secure such commitments, particularly from large emerging-market countries."

Lamy Wants Quick Breakthrough

WTO Director-General Pascal Lamy, in a related development, said April 14 that a breakthrough in the talks will be needed "soon" or the WTO members will be forced to confront the "unpleasant reality of failure."

"Failure of the [talks] would strip the global economy of one of its most powerful and enduring sources of strength and stability," Lamy said in a speech at the annual spring meetings of the International Monetary Fund and World Bank.

Lamy, who is due to meet U.S. officials in Washington later this month to discuss the talks, said that a breakthrough in the negotiations "in the next few months" would send a much-needed message of confidence--"that we remain committed to open markets and multilateral rules and that the foundations of the global economy are reinforced."

"We are not attempting to do the impossible," Lamy said. "Success is entirely within reach. The challenge is less technical, than political. It is about leadership, about compromise, about countries recognizing their common interest in success and the collective costs of failure. As in other rounds, U.S.-EU leadership is indispensable. Unlike previous rounds, leadership from key emerging players and ownership by developing countries is now just as important."