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Monday, July 18, 2011

World Bank President Robert Zoellick: U.S. ‘dumbing down’ global trade talks

World Bank President Robert Zoellick is urging the United States to take the lead in pushing the moribund Doha-round free-trade talks forward. He said open trade is the best way to help the struggling global economy. Zoellick delivered his blunt assessment at a World Trade Organization meeting in Geneva on Monday.

Zoellick said practically everybody in the world is in dire economic straits. He noted Europe is struggling with the eurozone. The United States is bogged down with debt and deficits, and is in desperate need of a growth strategy. He said Japan is coming out of a nuclear disaster and is struggling with low growth.

“So, it seems to me that in addition to the work on sovereign debt and deficits, the world needs a global growth strategy," said Zoellick. "And, opening trade drives growth. It is the best driver of structural forms that the world has seen. We have seen it with proven effectiveness all throughout the past 60 or 70 years. So, why not revive Doha?”

That is a question more easily asked than answered. Zoellick has invested a lot of his time and his capital as a trade negotiator in Doha. He helped launch the Doha Round of free-trade talks in 2001, and remains deeply disappointed that 10 years later an agreement remains elusive.

The Obama administration indirectly shifted the blame for Doha back on Zoellick, saying that the talks were stymied because of how they were “initially structured” under a framework Zoellick helped develop when he worked for Bush.

That structure has also been criticized by Zoellick’s successor, former U.S. trade representative Susan Schwab, who in a recent Foreign Policy article said the talks were “doomed.” Administration officials said the framework in particular gives now-powerful developing countries such as China too much flexibility to keep parts of their economy closed.

“The Obama administration has been the chief proponent of greater ambition in the Doha round,” said a senior administration official who spoke on the condition of anonymity. “Unfortunately, in part because of the manner in which the negotiations were initially structured, there has been little appetite for that sort of ambition by other major trading partners.”

The current talks began in 2001. But instead of the encompassing trade pact initially envisioned, negotiators are now seeking a narrower deal, acknowledging that they cannot resolve disputes such as demands by developing nations for cuts to U.S. farm subsidies and U.S. demands for more access to service, agricultural and other protected markets in places such as India and Brazil.

Zoellick argued that the administration’s unwillingness to cut farm and ethanol subsidies, for example, made little sense when the United States is looking for ways to rein in public spending. “It’s a missed opportunity for a pro-growth strategy at a time when the U.S. — and the world — could use one,” Zoellick said, arguing that leaders of major nations as a whole seemed to “think small” when it came to Doha.

He included his former boss, Bush, in the group.

Zoellick’s term expires next year. He has not indicated whether he wants to stay in the job, which by tradition is chosen by the United States, one of the bank’s major funders. The Obama administration recently played down speculation that Secretary of State Hillary Rodham Clinton wants the job.

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