World trade gets new lease on life

Keep the bicycle moving - or it will fall over and crash.

That was the basic rationale behind a successful late-night negotiating session between members of the 147-nation World Trade Organization in Geneva this weekend that resulted in keeping complicated global trade talks rolling forward - and maybe even shifting into a higher gear.

It's the second time in the past year that the "bicycle" of talks - as trade observers call it - nearly stalled and tipped. The first was in Cancún, Mexico, in September, when developing countries stalked out of talks because of what they saw as intransigence on the part of rich traders like the US and Euorpe.

The new agreement is a promise by rich and poor nations to consider politically tough concessions - like lowering trade barriers and reducing subsidies to farmers - in the future. It means the 60-year tradition of global trade talks won't fall apart - good news for globalization's backers.

If the talks had imploded, observers warn, the world risked being plunged back into a time like the 1930s, when the American and global recessions were prolonged by an absence of international cooperation on trade. It also means serious trade talks will resume early next year, after the US election. And, in the meantime, it means Democratic presidential nominee John Kerry lost a foreign-policy issue with which to criticize President Bush.

"It's a real shot in the arm," says Peter Draper of the South African Institute for International Affairs here. It allows the WTO to put the current round of talks "into a state of suspension for six months" while the US has its election and the EU shuffles its trade staff. And, he says, "When things get back under way next year there will be a fairly solid framework from which to start."

Or, as EU trade commissioner Pascal Lamy put it: "I said in Cancún the WTO was in intensive care. Today not only is it out of hospital, it is up and running."

For all its tentative wording, the new trade deal does augur for dramatic movement in the future.

One major concession would mostly affect the European Union - home of massive subsidies to farmers: If the current round of talks is completed, the agreement reads, all subsidy payments to farmers for exported products will be eliminated "by a credible end date." Observers say this date could be around the year 2020.

Another potential concession, although vaguely worded, commits the US to aim for "ambitious" and "expeditious" cuts in subsidies to cotton farmers. Currently the US give some $3.9 billion in assistance to about 25,000 cotton farmers. The WTO recently ruled that this aid is illegal - though the US has been reluctant to change, because cotton farmers have big political clout.

African nations, particularly the four big West African cotton producers - Benin, Senegal, Burkina Faso, and Mali - agreed to back off on their demand for separate negotiations on cotton. In return they'll get extra assistance from institutions like the World Bank. "They were basically bought off," says Mr. Draper.

Another breakthrough: Poor nations agreed to move toward cutting - or at least capping - tariffs on agricultural and industrial goods. This is the main reason the US and EU are negotiating with poor countries, as it will provide millions of new customers for their exporters.

But some observers see the whole trade-talks milieu as having gotten so complicated that it obscures - and perhaps sabotages - real progress. Trade expert Michael Finger at Trinity University in San Antonio, Texas, has studied the topic for decades. He says he recently spent an entire day wading through a section of a recent agreement - and was no clearer on what it meant.

That, he says, hints that much of the impetus for the talks, at least for the US, is political, not economic. Mr. Finger figures US Trade Representative Robert Zoellick's marching orders were to just keep the talks alive.

"The moment the thing falls apart, that's a political negative," he says. Someone like Senator Kerry "can make a point in a political stump speech against an administration" that has let the world-trade regime collapse." But the price for the US of keeping the talks alive wasn't high, he says. The administration "hasn't lost any constituency" - like cotton farmers - "on this because none of it is legally binding."

Indeed one of the more telling phrases in the new document is this: "[A]dditional negotiations are required to reach agreement."

So the bicycle rolls on.

• Wire services were used in this report.