US-EU rifts may threaten launch of trade round By Guy de Jonquières in Berlin
Growing trade conflicts between the US and the European Union may be the biggest threat to the successful launch next month of a world trade round, William Daley, US commerce secretary, said yesterday.
He also issued the gloomiest US assessment, since Washington resumed talks with China last month on its membership of the World Trade Organisation, of their chances of agreement before the WTO's ministerial meeting in Seattle, which opens on November 30.
Reaching a deal by then would be "pretty difficult", because the US was so busy preparing for the Seattle talks. "Every day that passes is another nail in the coffin . . . weare rather overloaded right now," Mr Daley said.
He told the Transatlantic Business Dialogue, a gathering of business leaders and senior trade officials from the US and EU, that it would be "crazy" for the two trade powers to go to Seattle divided by "parochial" disputes over issues such as genetically modified foods and hushkit silencers fitted to commercial aircraft.
"Frankly, I fear the Atlantic alliance might be the greatest threat to getting these (WTO) talks off to a good start," he said, warning that failure in Seattle could cause US-EU trade disputes to run out of control. "It would be ironic if the millennium trade talks were to blow up and become the trade crisis we have tried to avoid."
Nonetheless, the commerce secretary said the tone of relations with Brussels had improved since the installation of the new EU Commission, whose president, Romano Prodi, agreed in talks with US president Bill Clinton this week to co-operate closely to make a success of Seattle. Mr Daley believed the two sides could bridge differences about the agenda for a trade round.
However, David Aaron, US under-secretary of commerce, held out few hopes of a rapid solution to trade conflicts with the EU. He said recent talks with EU officials on hushkits had made no progress and was cautious about prospects for discussions next week on another dispute over data protection rules.
Rick Thoman, president of Xerox and co-chairman of yesterday's meeting, said the benefits of free trade and investment were being put at risk because politicians in the US and EU were increasingly reluctant to defend the case for liberalisation against mounting popular attack.
Businesses and governments were taking an open world trade system too much for granted. That was a "very dangerous assumption" when opponents of globalisation and liberalisation appeared to be gaining the upper hand, and would grow stronger as social upheavals caused by the internet led to more public demands to slow the pace of change.
Pascal Lamy, EU trade commissioner, agreed that popular resistance on both sides of the Atlantic was making trade liberalisation much harder and urged the business leaders to help policymakers by speaking out more boldly in defence of open world markets.
The 120 business leaders, which head companies including Goodyear, Pharmacia & Upjohn from the US, and ABB, Aerospatiale and DaimlerChrysler from Europe, plan to express strong support for the launch of a trade round today.
However, EU officials said the draft business statement went too far in supporting Washington's demands for a relatively narrow agenda and that they were seeking to expand it to include more European proposals.