Friday, November 9, 2007

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An optimistic post on trade

It's no secret that I've been in a sour mood as of late on the future of U.S. trade policy. Today's New York Times story on the House's passage of the Peru FTA didn't cheer me up either, because the takeaway point is that its passage was the exception and not the rule.

Eoin Callan, however, lifts me from complete and total despair with this Financial Times story:

Diplomats from the US and European Union are laying the groundwork for an unprecedented round of bilateral bargaining in which all of the main transatlantic trade disputes would be put on the table and negotiated in one go.

The talks between the world’s two largest trading blocs would link the resolution of billions of dollars-worth of simmering trade disputes and aim to “clear the decks” with one all-encompassing deal, officials said.

The negotiations would tie the fate of a range of US and European industries, including computer manufacturers and producers of genetically modified foods, to a back-and-forth round of bartering that would produce “winners and losers on both sides”, a senior European official said.

The plans appear to have originated in Brussels and coalesced around the Transatlantic Economic Council, which met for the first time on Friday in Washington and brought together senior policymakers from the Bush administration and European Commission....

The chief EU trade negotiator said there was merit in an approach that linked separate trade disputes and “put them on a ledger, marking down each one, three wins for you, three wins for us”.

He said it was easier to achieve a negotiated solution when “you can get a win on both sides” rather than trying to broker a compromise when trade law clearly favoured one side.

A US trade official said: “We’re up to sitting down at the table to talk about these things and trying to negotiate rather than litigate.”

If this works -- and given the interest groups at play, I'd put the odds of success at about 35% -- then it's win-win-win-win-win.

Both the United States and European Union would score some policy victories, and remove some major irritants to the transatlatic relationship.

The business community on both sides of the Atlantic would benefit from greater policy certainty.

Consumers would gain from increased levels of exchange

The biggest winner, however, would likely be the WTO -- because it would save the dispute settlement body from having to decide cases that are way beyond its pay grade.

posted by Dan on 11.09.07 at 08:16 PM


Yup, indeed it will be all round positive development. Otherwise imagine WTO ruling on Microsoft issues, the way EU reined in Mr. Softee. Quite unlikely. The smart comment of the blog is - disputes like that are 'way beyond the pay grade of WTO'. Don't try to tell that to the rambunctious Indian Trade Minister Kamal Nath. It will probably result in he achieving two more notches of higher noise level.

posted by: Umesh Patil on 11.09.07 at 08:16 PM [permalink]

If we do not address the distributional effects of trade then workers will address this at the polls, and we will have more Sherrod Brown-type politicians in Congress. Count on it.

I'm in Michigan today, which has lost manufacturing jobs in both automotive and non-automotive with no replacements. Flint has an unemployment rate of 17%.

But at least we have created plenty of people desperate enough to work at Wal-Mart.

Sometimes really smart people have tunnel vision.

posted by: save_the_rustbelt on 11.09.07 at 08:16 PM [permalink]

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