In the Next Round

By Pascal Lamy And Robert B. Zoellick
July 17, 2001

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By Pascal Lamy And Robert B. Zoellick | Washington Post

If the press, the pundits and some politicians are to be believed, a yawning chasm has emerged between the United States and the European Union. The standard theory is that without common Cold War aims, competition between the United States and the EU will lead to conflict, acrimony and even alienation. Is this a scenario we are doomed to play out regularly, in such forums as this week's G-7 economic summit in Genoa?

We respectfully suggest that this is nonsense -- at the G-7 or anywhere else. The United States and the European Union are working closely together in many areas. A key shared goal is to remove the stain of the failed Seattle trade talks, and help to launch a new round of global trade negotiations this November. Why? Because we have a shared responsibility for the international economic system. Developing countries cannot expect to fare as well as the United States and the EU in a system of unbridled bilateralism. They would do much better under a multilateral trade round. Indeed, a new round is perhaps one of the most useful contributions we could make to the alleviation of global poverty, providing it is really a round for both growth and development.

As the two biggest elephants in the global economy, the EU and the United States need to get our act together on trade. Our governments are natural partners with a rich history of cooperation; now is the time to cash in the chips and build on that history.

It's time to recognize a simple fact. If the European Union and the United States do not work together to launch a new round of global trade negotiations, it will not happen. We of course cannot set this course alone: The world has changed, and we can no longer clear a path for everyone else. But if we are in conflict, others will dodge the tough political and economic questions they too must face. They won't get off the fence until we do.

The case for launching a new round is clear. If we get the other policies right, open trade should lead to better jobs, the spread of ideas and investment and to open, more confident societies. But although we like to stress the upside of globalization, we need to address the worldwide fears and anxieties that accompany it -- particularly when the economic slowdown means added strain on employers, workers and families everywhere.

So we need to commit not just to more of the same in the next round. We need to create a framework for negotiating the reduction of trade barriers while also strengthening and extending the rules of the international trading system. In addition, trade policy must do more than show it is not a malign force. It must make a material difference to the poorest of the world's populations.

Building a fairer, rules-based trading system is a key way to help integrate these nations into the world economic system. By extending the benefits of trade liberalization to the developing world, we facilitate economic and political cooperation, and help lay the foundation for a future of sustainable prosperity.

Special preferential trade liberalization measures are good first steps: the EU's "Everything but Arms" Initiative, for example, which provides quota-free and tariff-free access to the EU market for exports from least-developed nations, and America's African Growth and Opportunity Act, which provides duty-free access to the United States for nearly all goods produced in 35 nations of sub-Saharan Africa. Yet we need to do more. If the exports of developing nations are shut out of our markets, we shut the doors on their future.

We recognize that a number of developing countries have real concerns about their ability to implement previous trade agreements. We will continue to work with them and with the WTO leadership to assist this process. In addition we are meeting today with President James Wolfensohn of the World Bank to explore how development finance can complement trade-expanding policies by building developing country capacity.

Launching the round means crossing national, party and ideological boundaries. Even though one of us is an American conservative and the other a European socialist, we have commonly held values, and we must pursue our trade agenda in a way that is consistent with those values. For example, both the European Union and the United States are using the flexibility afforded by the major international trade agreement on intellectual property to enable countries and companies to help deal with tragic pandemics such as HIV/AIDS.

As the United States and the EU move forward, we appreciate that the trading system needs to respect national differences that reflect the decisions of sovereign governments. In some areas, we may be able to agree to harmonize rules. But it is more likely that we will need to work to achieve a compatibility of distinctive regulatory systems. We must seek and develop international rules -- including, where appropriate, in new areas -- both to counter discrimination against foreign goods and services and to promote transparency and consistent treatment.

Finally, we recognize that for all our close cooperation and shared interests -- U.S.-EU trade in goods and services last year exceeded a half-trillion dollars in value -- disputes between the United States and the European Union are inevitable. But we have shown that we can solve long-running trade disputes, such as bananas and wheat gluten. And given the stakes -- Europe and the United States have seen that regression on trade can have dire economic and political consequences -- we will continue to manage our differences through reason, negotiation, respect for each others' political constraints, and particularly by compliance with WTO rules.

But good intentions take you only so far in life. These good intentions will be repeatedly tested and challenged in the weeks and months ahead. We believe the European Union and the United States -- and all the members of the WTO -- can and must work together to launch a new global trade round this November. For the WTO, and all of its members, the potential reward for success is great. The price for failure would be painfully high.

Pascal Lamy is the European Union commissioner for trade. Robert B. Zoellick is the U.S. trade representative.

NOTICE: In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving this information for research and educational purposes.

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