Despite AIA Optimism USTR Change Raises Doubts on Doha Round

April 24, 2006

The American Insurance Association has issued a bulletin commending outgoing United States Trade Representative (USTR) Rob Portman for his leadership on trade negotiations. The AIA also welcomed his successor, Deputy USTR Susan Schwab, President Bush’s nominee to replace Portman, and indicated it is looking forward to working with her.

“It’s a wonderful decision by the White House,” stated Leigh Ann Pusey, AIA senior vice president, government affairs. “Having served in a previous White House and also in the U.S. Congress, Mr. Portman has seen public policy from many different perspectives and is well-qualified for this new challenge.”

David Snyder, AIA vice president and assistant general counsel, praised Schwab’s experience, noting that it should “help make for a smooth transition in leadership at the USTR. We welcome Ms. Schwab and urge the United States government not to miss a beat at this critical time for global trade negotiations.

He also noted: “Services represent most of the world’s developed economy, yet negotiations focused on trade in services have been stuck in neutral for several years. This delay in services negotiations stunts the growth of insurance and denies its benefits to countries most in need. “Among the major trade negotiation priorities are further insurance market openings in China and Korea, and productive offers at the World Trade Organization.”

Editor’s Comment:
Despite the AIA’s upbeat take on Portman’s departure, and Susan Schwab’s competence, the change does not bode at all well for the upcoming crucial trade talks. The “Doha Round,” named after the city in Qatar, where they were launched in 2001, has essentially been stalled since the failure of the Cancun summit meeting in 2003, when differences between the developed and the developing and poorer nations prevented any agreement.

The differences persist, although a meeting in December did produce a sort of compromise. The industrialized world – mainly the U.S., Europe and Japan – agreed to talk more about their continuing subsidies on agricultural products, which, at least theoretically, will be reduced or even eliminated by 2013. The developing countries are demanding nothing less in return for further opening their markets to financial and insurance services.

Unfortunately the U.S., Europe and Japan, who provide the bulk of those services, also have the strongest farm lobbies. Their leaders have consistently resisted any change in the subsidies on which many of their members increasingly depend. The farm sector’s voices (and votes) in countries like France, Japan and in many U.S. states remain adamantly opposed to any proposals to modify the current payment system or to further open markets to foreign competition.

Any real chance of achieving a breakthrough depends on the leading trade negotiators – Schwab from the U.S. and Peter Mandelson from the EU – making and being able to force through a major change in agricultural policy, for which they have no clear mandate.

Despite her apparent ability, Schwab has neither the close working relationship with the President and Congress that Portman did, nor the international clout of former USTR’s Robert Zoellick, Mickey Kantor or Charlene Barshefsky. She is essentially a technocrat, and her appointment at this critical time in the negotiations makes any real breakthrough seem less, not more, likely.

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