Doha Unfinished

World trade talks miss one deadline and may not be complete in 2005. Is a manufacturing free-trade agreement an alternative?

Three years after it was launched in Doha, Qatar, 15 months after being all but scuttled at a divisive meeting in Cancun, Mexico, and five months after the 147 members of the World Trade Organization (WTO) agreed to give it another try, the latest round of world trade negotiations remains far from finished. A great deal is at stake for American business -- especially manufacturers. U.S. firms exported $597.6 billion worth of goods to the rest of the world during the first nine months of 2004. And imports of goods -- including $139.9 billion from China alone -- totaled $1.0793 trillion, according to U.S. Commerce Department figures.

But with only a month left in 2004, it looked as if WTO negotiators would miss their original Jan. 1, 2005, deadline for completing a comprehensive agreement covering manufactured goods, services and agriculture. And it's unlikely they will achieve an accord during the next year, suggested Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy group. "You have a new [trade negotiating] team in Europe. I don't know if you're going to have a new team on the U.S. side. But the issues are pretty hard to bridge in any case, and given the political dynamics, I just don't think it's going to happen in the next year."

In the meantime, Duesterberg expects a second-term Bush administration to be "more of a proponent of free trade than even the first Bush administration -- certainly [more than] a Kerry administration" would have been. However, he believes there'll "probably" be more action on regional trade pacts than on multilateral agreements like Doha. For example, says Duesterberg, "I think we could see the CAFTA ratified," referring to the pending Central American Free Trade Agreement among the U.S. and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras and Nicaragua. And he suggests South Korea could begin bilateral negotiations for a free-trade agreement with the U.S., a pact that "conceivably" Japan could join. (In mid-November, the White House trade office announced the administration would begin bilateral free-trade negotiations with the Middle East nations of Oman and the United Arab Emirates.)

Could the U.S. and other WTO members agree on an alternative if they do come up short on the comprehensive Doha pact? "Maybe" there could be a free-trade agreement for just manufacturing, says Duesterberg. "But I'm not quite sure how to handicap that. I guess I'd see more progress on the regional and bilateral front."

Nevertheless, two templates for an agreement limited to manufacturing, which accounts for nearly 60% of world trade, do exist. One is a three-step U.S. proposal to eliminate tariffs on all consumer and industrial products by 2015. The other is the manufacturing portion of this past July's agreement among WTO members to get the Doha Round back on track. It calls for increased market access for such products as cars, computers and consumer goods as well as for broad cuts in tariffs by a formula that would cut higher tariffs faster than others.

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U.S. international trade (billions of $) Jan.-Sept. 2004
Imports Exports Surplus (+) or Deficit (-)
Goods 1,079.3 597.6 -481.7
Services 215.7 252.8 +37.1
Total 1,295 850.4 -444.6
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