Wednesday, April 19, 2006

Hopes for Trade Talks Dim After Personnel Switch
Hopes for Trade Talks Dim After Personnel Switch
By Paul Blustein
Washington Post Staff Writer

By switching his chief trade negotiator yesterday, President Bush sent a gloomy signal to many trade experts and policymakers about the prospects for achieving significant gains in trade talks with foreign countries anytime soon.

The announcement that Bush was naming Rob Portman to become head of the Office of Management and Budget showed that in just 11 months as U.S. trade representative, Portman has established himself as one of the administration's rising stars. But the personnel change comes as global trade negotiations are in serious trouble, with a major deadline just weeks away. The loss of Portman leaves the talks without a chief U.S. negotiator whose genial manner, combined with his political skill and mastery of detail, has impressed counterparts from other nations.

As a result, the move was widely viewed as indicating that the administration holds little hope for securing a far-reaching deal in the talks this year and possibly for much longer than that. The negotiations, known as the Doha round, were launched at a World Trade Organization meeting in 2001 with the avowed aim of substantially lowering trade barriers and changing trade rules in ways that would provide developing countries with much greater benefits under the international trading system. But vast differences continue to divide major players including the United States and European Union, especially over the issue of how much to lower tariffs on agricultural products, and pessimism has deepened recently that WTO members can strike a framework agreement by April 30 as they pledged last year.

Yesterday's news fueled worries that the talks might collapse or at least fall into a long state of paralysis, even though those fears were tempered somewhat by the announcement that Bush was nominating Susan C. Schwab, a seasoned trade hand who is one of Portman's deputies, to replace him.

"For this administration, it is important to get its act together, and that trumped the WTO negotiations," said Claude Barfield, a trade specialist at the American Enterprise Institute. "The White House must think that Portman brings something to the team that is beyond trade. I don't want to come across as criticizing Sue -- she certainly brings a vast intellectual knowledge to the job. It's just that changing leaders at a critical time is bound to have some impact."

"It's bad news as far as the Doha round is concerned," said Sen. Charles E. Grassley (R-Iowa), chairman of the Senate Finance Committee, which oversees trade policy. He added, however, that "if there's not a major breakthrough within the next 30 days, I don't think it makes much difference who is trade representative," and that Portman is "very much the kind of person we need as an OMB director."

Critics of the administration's trade policy jubilantly asserted that the implications could go even beyond the WTO talks. They said the move reveals a lack of confidence on the administration's part that it will secure congressional approval for new bilateral trade agreements with countries such as Peru and Colombia.

"This does not bode well -- ha, ha, ha! -- for Bush's trade agenda. What a tragedy," said Lori Wallach, director of Public Citizen's Global Trade Watch, a group founded by Ralph Nader. "You don't take out a very effective player like Portman, who has good relations in Congress and on the international scene, when this whole agenda stands on the precipice, without knowing what that means."

Portman and Schwab were at pains to head off such conclusions in their comments yesterday at a news conference with Bush, in which they emphasized the top priority the administration places on the Doha round and its determination to complete other trade agreements. Business groups, meanwhile, issued a slew of statements praising Schwab and voicing confidence that she could pick up where Portman is leaving off.

The praise cited Schwab's record as both a practitioner and student of trade policy. She started as an agricultural negotiator for the trade representative's office in the late 1970s and served as legislative director for former senator John C. Danforth in the 1980s, then headed the Commerce Department's U.S. and Foreign Commercial Service under President George H.W. Bush. She worked for Motorola Inc. from 1993-95 and was dean of the University of Maryland School of Public Policy before becoming deputy trade representative in November.

"Susan Schwab is an excellent choice," said John Engler, president of the National Association of Manufacturers. "She will be a strong and effective voice for leveling the international playing field."

But the announcement came atop a scathing assessment of the prospects for the Doha round by Rep. Bill Thomas (R-Calif.), the chairman of the House Ways and Means Committee, who is Grassley's counterpart on trade policy in the lower chamber. In an April 3 speech, Thomas urged the administration to acknowledge that it had "irreconcilable differences" with the E.U., which has been blamed by many WTO members for blocking progress in the talks. European officials have balked at making steep cuts in agricultural tariffs, which the United States and other nations argue would open major new export opportunities for farmers in poor countries.

The E.U. reacted to word of Portman's reassignment with a caustic suggestion that Washington had diminished the chances for a deal. "We will, of course, manage without him, but at this stage in the round, it would have been easier to manage with him," said Peter Mandelson, the E.U. trade commissioner, in a statement.

The big question now, trade analysts said, is whether the talks can end in agreement some time next year. Another huge obstacle looms then -- the expiration in June 2007 of "trade promotion authority" (TPA), the U.S. law that the administration had to fight hard for in 2002 so it could negotiate trade pacts. Because of complex implementation problems, that authority would have to be extended -- a highly uncertain prospect -- to allow for congressional approval of a Doha round accord.

The change of U.S. trade negotiators "confirms that it's highly unlikely that the round will end this year, but putting in an experienced deputy still puts us in a position to work out the hard details of the negotiation over the next 12 to 18 months," said Jeffrey Schott, a scholar at the Institute for International Economics. "Still, that opens up the TPA debate. Sue has a lot of experience in Congress, but more on the technocratic level -- she obviously doesn't have the same sort of relations that Rob Portman has."