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ANALYSIS-U.S. trade chief wows partners, substance awaited

Published 05/13/2009, 12:47 PM
Updated 05/13/2009, 01:00 PM

* Obama White House seen easing campaign trade stance

* Rhetoric and style play well with partners

* Trade partners waiting to see substance

* As under Bush, U.S. asking emerging powers to do more

By Jonathan Lynn

GENEVA, May 13 (Reuters) - A visit to Geneva by new U.S. Trade Representative Ron Kirk has reinforced impressions the Obama administration is moving away from its tough campaign rhetoric on trade.

But while America's trade partners were impressed by Kirk's conciliatory style, they are still waiting to see the substance. And beneath the kind words the White House is making it clear it will still push hard for U.S. interests.

In last year's election campaign, Barack Obama promised to revise the North American Free Trade Agreement (NAFTA) to include labour and environment standards, boost the enforcement of existing trade deals, consider safeguard restrictions on Chinese imports and put pressure on Beijing to reform its currency policy.

Since taking office in the biggest economic crisis since the Great Depression, President Obama appears to have decided that trade is part of the solution to the economy.

And the first African-American president, who has made reaching out to other countries a hallmark of his foreign policy, has heard other leaders calling for the United States to lead the fight against protectionism and for a deal in the World Trade Organisation's long-running Doha round.

"You can point to lots of things that show the Obama administration realised we are part of the global economy and we can't turn away from that," Christopher Wenk, senior director at the U.S. Chamber of Commerce, told Reuters.

LISTENING MODE

Obama's willingness to water down controversial "Buy American" provisions in the U.S. stimulus package symbolises the more nuanced approach. But pressure remains on him to take a more robust stance against free trade.

"The trade policy President Obama inherited has lost legitimacy. The economic benefits of trade have been oversold and the costs ignored," said economics columnist Bruce Stokes in a blog for the New America Foundation, in which he called for an avowedly self-interested trade policy based on American values.

Kirk's consultations in Geneva will feed into a review now under way of the Obama administration's trade policy.

For Geneva diplomats used to what one described wearily as "the relentless pursuit of market access", Kirk's friendly approach immediately opened reserves of goodwill.

"He's an extremely amicable and personable person. Excellent, outstanding... He made a good impression all round," said one WTO ambassador.

Other countries are still waiting to see what the U.S. policy review will mean in practice, especially for the Doha round, launched in 2001 to help poor countries prosper through trade.

"Thus far what we've heard of the new administration's approach to international affairs is encouraging. But we've yet to see what they will do in the WTO," Faizel Ismail, head of South Africa's delegation to the WTO, told Reuters.

Kirk showed some continuity with the previous George W. Bush administration when he called on the big emerging powers of China, India, Brazil and South Africa to do more to open their markets to secure a Doha deal, saying it was wrong for people to wait for the United States simply to deliver a "silver bullet".

The big emerging countries have much to gain from a deal, and U.S. negotiators need to point to some benefits for American business to push an agreement through the U.S. Congress.

But Ismail argued that Washington is also a huge beneficiary of the WTO's rules-based system that protects its exports and intellectual property, and so it should look to the bigger picture in the negotiations and not allow Doha to fail.

Kirk also had disappointing words for the poorest countries, despite expressing sympathy for their plight in the crisis. He dismissed talk of an "early harvest" of a deal on cotton or special arrangements for poor countries, saying they would have to wait for an overall agreement.

On disputes, Kirk also had a carefully balanced message.

Despite the campaign calls to get tough with countries who break trade rules, Kirk focused instead on how he and EU Trade Commissioner Catherine Ashton had resolved a long-festering dispute about an EU ban on hormone-treated U.S. beef.

They did that because they thought it better to try and resolve rows directly rather than letting their trade relationship be dominated by disputes, he said.

"We've at least set a welcome template between the United States and EU and hopefully some of our other partners will look at that and say we don't have to wait four or five years for all these to move through the dispute settlement process," Kirk told a news conference.

But asked about pork import bans because of swine flu, Kirk warned U.S. trade partners not to take financial advantage of a legitimate health scare for protectionist ends -- a clear sign that the United States was still ready to resort to the trade dispute system.

Further insight into the substance of U.S. trade policy will come when Kirk gives a keynote speech at the U.S. Chamber of Commerce on Monday. He is also due to meet ministers from the Cairns Group of farm exporters in Bali from June 7-9 and from other rich countries in Paris at the Organisation for Economic Co-operation and Development on June 23-24.

(Editing by Mark Trevelyan) (For the full blog by Bruce Stokes, go to http://www.newamerica.net/publications/policy/new_american_trade_policy )

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