commodities
terça-feira, fevereiro 17, 2004
wsj 17feb04
very critical on the trade pact signed with australia, a protectionist one (removes sugar from the deal, includes poultry which is minimal and puts an 18yr timeline for beef...)
REVIEW & OUTLOOK
Aussie Rules
The U.S. and Australia signed a new trade pact this month, and normally that would be good economic news. But the fine print in this deal is worth debating because it could end up doing the free-trade cause a lot of long-run damage.
Yes, tariffs will decline on numerous goods, enough so that the National Association of Manufacturers estimates an annual gain of $2 billion in U.S. manufacturing exports Down Under. We're not ones to let the perfect be the enemy of the better, especially on trade. And this deal is better than the status quo, even if it does phase out U.S. quotas on imported beef over an interminable 18 years.
But here's the catch. U.S. Trade Representative Robert Zoellick browbeat the Aussies into accepting an exemption for sugar imports as the price of a deal. This is a terrible precedent for future trade-opening negotiations, and it may even jeopardize the ratification of this one. It is also one more sign that the Bush Administration is giving up on its ambitions to liberalize world agricultural trade.
In Australia, the sugar provision has become the symbol of a bullying U.S. happy to impose a bad deal on an ally. Before the U.S. excluded sugar, Australia's Center for International Economics had anticipated the benefits: "For the U.S. the main gain is in the manufacturing sector ... For Australia the largest gains are in sugar and dairy."
So it's no surprise that opposition leader Mark Latham is now indicating that his Labor Party may try to block the agreement, according to press reports, "claiming that it does not appear to be in the national interest." He accused the government of Prime Minister John Howard, a loyal Bush friend, of "dimish[ing] our free-trade credentials."
Ratification by the U.S. Congress is also far from certain. Dairy producers are already whining that sugar got a sweet deal while they must accept some small increases in import quotas; they'll join the usual labor and textile interests in fighting the Australia pact on Capitol Hill.
Even many traditional free-trade voices are down on the Aussie deal. The National Cattlemen's Beef Association wrote Mr. Zoellick on February 2 pledging to oppose any agreement with exclusions. The Grocery Manufacturers of America, as well as wheat, corn, and rice growers, pork producers, and the egg and poultry council have also objected. All of these groups know that the sugar lobby is advertising that the Aussie deal is "the template" for future trade talks: The most powerful lobbies can protect their markets but everyone else can still get "free trade." Right.
More likely, other U.S. farm lobbies will press for their own exemptions. And if foreign countries have to accept the sugar exemption, they will demand that some of their own markets get shielded as well. Thailand is in line to become another bilateral U.S. trade partner, and it will want sugar included. If it isn't, then the Thais will want their pork and rice markets put off limits to U.S. exports.
The Bush defense of all this is politics, that this is an election year and that sugar has clout in Florida and Louisiana and other states President Bush needs to be re-elected this fall. Certainly the Democrats, who have all but abandoned free trade since Bill Clinton moved to Harlem, are no help.
But then Mr. Zoellick would have been better to wait until after the election to complete this accord. The Doha Round of trade talks collapsed in Cancun last year over agricultural tariffs and subsidies. The U.S. hopes to revive those talks, but the Australia deal will only cheer the protectionists. If the Bush Administration won't face down the sugar lobby even for a free-trade friend like Australia, then what chance does the rest of the world have?
Updated February 17, 2004
