WORLD / Wall Street Journal Exclusive

G-8 leaders push for trade deal
By YOCHI J. DREAZEN, GREG HITT (WSJ)
Updated: 2006-07-18 12:31

http://online.wsj.com/public/article/SB115315974629208823-g_WK6IyKOeT_9RXir7MoX9mARJY_20060724.html?mod=regionallinks

STRELNA, Russia -- The Bush administration said it would work with Brazil and other major economic partners to salvage a global trade pact endangered by domestic and international opposition.

Trade wasn't formally on the agenda of this year's Group of Eight summit, but the leaders of Brazil, India and China -- all involved in the trade talks -- were invited to a series of meetings with G-8 leaders here. In private sessions, the three leaders emphasized that time is running out on the Doha Round of trade talks.

The latest push for compromise faces significant hurdles. The U.S. couldn't work out details of a separate deal that would have cleared the way for Russia to join the World Trade Organization.

The Doha Round is more complicated than the narrower Russia deal. The U.S. wants cuts in tariffs to increase market access abroad for American farmers. Europe is resisting, while demanding that the U.S. agree to cuts in domestic farm subsidies. The two camps are pressing middle-income developing nations, such as Brazil and India, to open their markets to industrial goods made by the U.S. and Europe, a move they have been loath to support. No major players have come to terms with how to meet the demands of the world's poorest countries, which want a greater foothold in the world economy.

"The political costs of reaching a deal still significantly outweigh benefits for virtually every one of the major players," said Grant Aldonas, a trade official in President Bush's first term.

Exchanges among leaders at the summit underscored divisions. Brazilian President Luiz In¨¢cio Lula da Silva told reporters that trade negotiators were largely out of ideas for resolving the impasse in negotiations and emphasized the importance of having heads of state "make a political decision, whatever might it be."

President Bush said "we're committed to a successful Doha round" and sent U.S. Trade Representative Susan Schwab to Geneva yesterday for hastily organized talks with the European Union, Brazil, Japan, India and Australia.

WTO Director-General Pascal Lamy, who was at the summit in Russia, flew to Geneva to lead the meeting, scheduled after G-8 leaders Sunday gave negotiators one month to agree on a framework for completing the five-year-old trade talks. Mr. Lamy has been working to revive talks since an end-of-June negotiating session collapsed. Last week, Mr. Lamy led a series of meetings with major players, including Brazil, the EU, the U.S. and India, aimed at exploring bottom lines outside of the group sessions. Last night in Geneva, negotiators agreed to a new timetable for discussions, including at least two face-to-face meetings of key trade ministers before the end of the July.

"There is a sense of resolve," Ms. Schwab said.

Launched in the Qatari capital of Doha in 2001, the talks are more than 18 months behind schedule. If negotiators craft a framework deal, months of negotiations remain to flesh out the details. U.S. officials feel those details must be wrapped up by year end to give Mr. Bush time to push a pact through Congress before his trade-promotion authority expires in mid-2007. Trade-promotion authority bars Congress from amending any trade deal and guarantees the president an up or down vote on the initiative.