Bush Trade Agenda Faces Key Tests in 2003

3 Jan 03(3:07 PM) |  E-mail Article to a Friend By Doug Palmer

WASHINGTON (Reuters) - U.S. trade negotiators must clear a number of difficult hurdles this year to achieve their goal of concluding two major new trade agreements by the end of President George W. Bush's first term, analysts say.

Although trade talks have a history of slipping past their deadlines, U.S. trade officials hope to make the most of the next 24 months to finish talks on a new World Trade Organization agreement to lower trade barriers in agriculture, services and manufactured goods.

The United States also hopes to complete negotiations on a proposed Western Hemisphere free trade zone in the same time frame, dispute ongoing turmoil in South America.

The WTO talks suffered a serious setback in late December, when negotiators failed to agree on provisions to guarantee poor countries that lack a pharmaceutical industry would have access to cheap life-saving drugs.

"This has put the U.S. in a pretty awkward political position on a highly emotional issue," said Ed Gresser, a trade policy analyst at the Progressive Policy Institute. "Until it's fixed, it's going to make it a lot harder for the U.S. to get support" on its priority issues in the WTO talks.

Other countries have accused the United States of blocking the deal at behest of its big drug manufacturers, which want to make sure patent waivers for generic manufacturers to supply the drugs are limited to HIV/AIDS, malaria and tuberculosis.

Developing countries are pushing for a broader list.

WTO members will try again in February to reach an agreement. If they are not successful, the issue could block progress on other issues and dim prospects for the WTO's next ministerial meeting in September in Cancun, Mexico.

In March, WTO members are supposed to decide on the basic framework for advancing agricultural trade talks.

Countries are still far apart, with Japan and the European Union resisting pressure from the United States and the developing world for significant agricultural reform.

HARD CHOICES

Failure to meet the March deadline could add one more item to the Cancun meeting, where members are already facing difficult decisions on whether to expand the scope of the WTO talks into areas such as investment and competition policy.

It would also bode badly for the proposed Free Trade Area of the Americas. The United States has balked at regional demands that it trim the $19 billion it spends annually on domestic farm subsidies unless Japan and the EU also agree to curb their farm spending as part of a new WTO pact.

Continued economic difficulties in Argentina and political turmoil in Venezuela have cast a pall over the Western Hemisphere talks. However, that could prompt Brazil to play more of a leadership role, even though new President Luiz Inacio Lula da Silva expressed skepticism about the proposed trade pact during last year's election campaign.

Sherman Katz, a trade scholar at the Center for Strategic and International Studies, said Lula already was showing signs of a more accommodating approach to the trade talks.

"We've already begun to see Lula come back to the center some. Politics is politics anywhere and statements made in an election to get votes are often not statements that lead to dramatic policy changes," Katz said.

At the same time, Bush's decision to send chief U.S. trade negotiator Robert Zoellick to Lula's inauguration on Monday was a sign of strong U.S. interest in working with the new leftist president to forge the trade pact, he said.