*{The Trade Malaise: Will US Leadership Prove the Cure? [http://www.weforum.org/site/knowledgenavigator.nsf/Content/The+Trade+Malaise%3A+Will+US+Leadership+Prove+the+Cure%3F?open&topic_id=300350000&theme_id=300]

            05.04.2001

            USA Meeting 2001}

            David Sanger, Senior White House Correspondent, The New York Times, USA, reflected on the two sides to Seattle -- the anti-globalization protests in the street and the objections of the developing nations upstairs in the meeting rooms. He then asked each of the panellists to reflect on the current trade situation and the role of the United States. 

            Jagdish Bhagwati, Professor of Economics and Political Science, Columbia University, USA, underscored that we should avoid degenerating into a world of bilateral and regional agreements at the expense of the multilateral trade framework. He stated that the developing world has embraced the World Trade Organization (WTO), but that negotiating labour standards will still prove challenging. 

            Jim Kolbe, Congressman from Arizona (Republican), described the US political environment on trade policy. He noted that the Bush administration is clearly committed to the notion of free trade, but it is not necessarily a preference at this stage. All the recent activity on the trade front -- FTAA, Jordan, Fast Track, etc -- is unlikely to change the underlying long-term direction of US trade policy. The Democrats will insist on either economic or trade sanctions. In his view, the real question is not what type of sanctions but rather whether sanctions are necessary in the first place. 

            Günter Burghardt, Ambassador of the European Commission to the United States, emphasized that the real challenge is to develop an effective multilateral system. He noted that Pascal Lamy and Bob Zoellick have actively been discussing trade responsibilities on the bilateral, regional and global levels -- which is especially important as US/EU trade accounts for more than half of all global trade. US leadership is part of the cure, but Europe is well positioned to take on a more pronounced role. EU economic growth rates have increased due to intra-European trade, and the introduction of the euro paper currency will have a profound psychological effect and contribute to further stabilization. 

            Mark Vaile, Minister for Trade of Australia, observed that labour and environmental issues are still a major challenge to the future of the multilateral system. He emphasized that US leadership is critical, and that certain issues should be cleared and better prepared in advance of attempts to launch the next trade round. Another failure to launch a trade round would be a significant setback. He stressed that we should not view the progress made in negotiating bilateral trade agreements as undermining the multilateral system, but rather as a foundation for the multilateral system.

            Luhut Pandjaitan, Minister of Industry and Trade of Indonesia, stressed that all countries must be involved in drafting multilateral agreements to lend transparency and legitimacy to the process. In his view, the divide between the developed and developing world over labour and environmental issues is overstated. He added that perhaps the divide over agriculture is also overstated as well. 

            Stuart Eizenstat, Fellow, The Woodrow Wilson International School for Scholars, USA, refocused the panellists on the question of how the administration could be granted Fast Track Authority (FTA) from Congress and advance the multilateral trade agenda. On the one hand, he observed that the timing is poor. Tax cuts are a priority for the Bush administration, and they will need to focus on that issue first. In this sense, Eizenstat believed that it would be very difficult for the administration to be granted FTA before November. Strained ties with labour organizations are also a downside factor. On the other hand, Eizenstat sensed the beginning of a sea-change in the attitude of developing countries in Davos in January. He believed that the attitude is changing because of the larger slowdown in the world economy and because the developing countries realize that the EU and US have alternatives (like EU-Mexico agreement, FTAA, etc.) that could divert trade from the developing world. The developing world is not going to sit on the sidelines anymore. He also observed that there is a balance in negotiation between the developed world and the developing world. For example, the more the developed world puts antidumping policy on their side of the negotiating table, the more likely the developing world is to put labour and environmental standards on their side. Indeed, the WTO already has a working group on the environment.

            In response to a question on the banana dispute between the US and the EU, several panellists stated that this issue distracts from the substance of the debate and therefore needs to be resolved as soon as possible. Eizenstat closed the session by stressing that we should not repeat the mistakes of Seattle. We should first do more upfront preparation for the launch at Qatar and second we should not try to negotiate everything upfront. He also observed that FTA is not required to launch a trade round -- FTA is much more related to the Free Trade Agreement of the Americas (FTAA).
                       *{Contributors:       Bhagwati Jagdish
                  Burghardt Günter
                  Eizenstat Stuart E.
                  Kolbe Jim
                  Pandjaitan Luhut B.
                  Sanger David E.
                  Vaile Mark}