US offers to end duties to boost Americas trade

www.taipeitimes.com LIBERALIZATION: The US moved to open certain protected industries to foreign competition, but Latin American nations say there are sticking points

BLOOMBERG Thursday, Feb 13, 2003,Page 12

The US proposed to end duties on apparel, textiles and other manufactured goods from the rest of the Americas as a step toward freeing trade in most of the Western Hemisphere. The tariffs would be removed by 2015.

The proposal, while opening some protected industries in the US to increased foreign competition, doesn't address shields for US sugar, cotton, citrus and peanut producers, which many Latin American countries say must be considered for a Free Trade Area of the Americas agreement to be completed on schedule by 2005.

US Trade Representative Robert Zoellick said the most sensitive agricultural issues must be dealt with globally, in negotiations at the Geneva-based WTO. Today's proposal still shows the US is serious about taking on domestic interests to help move the Americas trade accord ahead, he said.

"The US has created a detailed road map for free trade in the Western Hemisphere," Zoellick said at a news conference.

"We've put all our tariffs on the table, and we now hope our trading partners will do the same." The proposed free-trading area has support from corporations such as Citigroup Inc, Procter & Gamble Co and Kellogg Co that are counting on an expanded market for financial services and consumer goods. Caterpillar Inc, the world's largest maker of earth-moving equipment, said it stands to save more than US$13,000 in duties on each grader it exports to Latin America.

The US proposal calls for 65 percent of manufactured goods to enter the US duty-free upon completion of an agreement. The rest are to be phased in over periods of up to 10 years.

The US, Canada and Mexico have been part of the North American Free Trade Agreement (NAFTA) since 1994. Chile and the US signed an accord this year.

Negotiations on the Americas accord began in 1994 with the aim of eliminating trade barriers and setting trade rules in 34 countries. Only Cuba is to be excluded. The hemispheric market encompasses more than 800 million consumers and a trillion dollars in annual commerce.

Zoellick cited a 2001 study from the University of Michigan that said an average US family of four can expect to save about US$800 a year through tariff cuts if the talks succeed.

Some US trading partners are more apprehensive. So is the US textile and apparel industry, the first to lose protection under the George W. Bush administration's proposal.

Brazil's new president, Luiz Inacio Lula da Silva, has said the US wants to use the agreement to "annex" Latin America.

The US and Brazil are chairing the negotiations.

"Agriculture is the principal obstacle to any trade agreement, because it's really the main thing developing countries like Brazil can sell," Jose Augusto de Castro, president of the Brazilian Foreign Trade Association, said.

US duties on imported textiles and apparel are to end five years after the completion of negotiations on an accord, Zoellick said. Other counties will have to offer the same duty-free access to US-made textiles and apparel.

"This goes to one of the points we hear from our apparel industry," he said. "They're willing to compete if it's a level playing field."