WASHINGTON — Trade negotiators from 147 countries forged an agreement on a framework Sunday to move the stalled global trade talks forward, keeping alive the goal of further slashing trade barriers around the globe.
Among the key deals reached by World Trade Organization negotiators were parameters for cuts on tariffs, reductions in the subsidies that rich nations pay to their farmers and special attention to cotton subsidies.
Coming off of a marathon five-day negotiating session at the WTO headquarters in Geneva, trade ministers claimed they had finally overcome the specter of Cancún. The three-year global talks collapsed last September in that Mexican city when a group of developing countries squared off against the U.S. and European Union, primarily over agricultural issues.
“Today’s decision is a crucial step for global trade,” said U.S. Trade Representative Robert Zoellick in a statement. “After the detour of Cancún, we have put the WTO negotiations back on track.”
Zoellick said the next step will be to “negotiate the speed limits for how far and how fast we will lower trade barriers,” in agriculture, industrial products and services. The talks also aim to harmonize complex and costly Customs rules around the world.
The nations of the WTO agreed a decade ago to drop their quotas on textiles and apparel on Jan. 1. After the final quota phaseout, tariffs will remain the primary tool to regulate imports of those products. U.S. textile mills see tariffs as their last protection against competition from cheap imports, while importers see them as an artificial increase in costs.
Rich nations agreed to significantly cut or eliminate tariffs on industrial goods, a trade that’s worth about $6 trillion worldwide.
WTO member countries agreed to negotiate a tariff-cutting formula that requires bigger cuts on higher tariffs.
The U.S. asserted this formula would be beneficial to U.S. manufacturers because foreign tariffs on industrial goods average 40 percent while U.S. tariffs average 4 percent.
Textile executives were concerned about the clause in the framework that gives developing countries longer implementation periods and “flexibility” on a certain percentage of their tariff lines.
“The number-one objective of trade promotion authority was reciprocal market openings,” said Jock Nash, Washington trade counsel for Milliken & Co., in a phone interview Sunday. “Half of our trade deficit is with developing countries. It will be real problem if we don’t negotiate this correctly.”
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Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, called the agreement “A big step forward in moving the international negotiations and removing barriers to agriculture and industrial products.”
Rich nations also agreed to cut their subsidies to farmers, which developing countries claim depress global agricultural prices and destroy their livelihood. The framework also calls for a complete elimination of agricultural export subsidies.
Negotiators also achieved a breakthrough on cotton, which contributed to the Cancún collapse. Under the deal, cotton would be included in the overall agricultural negotiations but receive special attention for cuts in subsidies, which was a compromise to African nations, which claimed they can’t compete against U.S. and EU subsidized cotton on the world market.