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UNITED STATES Why the WTO draft rules add up to a dead end for Doha

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It was supposed to be a starting point. Now it looks like a dead end.

The draft text of World Trade Organization trading rules continues to face resistance, and a recent WTO panel ruling on the use of zeroing has thrown the Doha Round talks into further disarray.

In import duty decisions, zeroing does not give importers credit for products that enter the United States priced higher than their home market price. The practice increases anti-dumping duties in most cases, and the domestic steel industry has mounted a campaign to protect it.

At the end of November, Guillermo Valles Galmes, chairman of the rules committee, presented the much-anticipated document, which WTO director-general Pascal Lamy called "ambitious." That might have been the nicest thing anyone has said about it.

Doha skeptics, including U.S. steel manufacturers and Congressional Democrats, were quick to point out what they perceived as its flaws, saying it would weaken U.S. trade laws and leave domestic industry vulnerable to dumped and subsidized imports. Put another way, it would alter how U.S. companies file trade cases against foreign companies—a system that the steel industry has used frequently and successfully for decades.

Now the influential Committee to Support U.S. Trade Laws (CSUSTL) has issued a detailed indictment of the draft text, saying in the plainest words possible that it is the equivalent of a death sentence for the already troubled Doha Round. "Given that the current draft would significantly weaken U.S. fair trade disciplines in a number of critical areas, we do not view this text as a basis for further negotiations that could lead to an acceptable agreement," said the committee, which represents a broad-based cross-section of major domestic industries, including manufacturing, technology, agriculture, mining and lumber.

The committee's list of complaints is lengthy. It is as critical of what's in the text as what isn't, and it was even opposed to the release of the 98-page document at this time. In short, the committee laments that instead of expanding protection against unfair trade, the draft rules would contract it.

First and foremost, the committee is concerned that the text would weaken U.S. trade laws by mandating that investigators consider the health of domestic industry when determining whether dumping has occurred or not. By that measure, it would be difficult for the U.S. International Trade Commission to renew duties on many steel products, given the health of much of the industry's bottom lines. Currently, the ITC takes a forward-looking approach, examining whether injury is likely to occur in the future.

Meanwhile, the committee scratched its head over why the WTO's leadership, which had to restart the trade talks after some serious breakdowns, would start with such a controversial subject. "CSUSTL is uncertain why this paper has even been put forward now, given the continuing uncertainty about meaningful progress in other areas of the Doha Round negotiations," the committee said. "Surely the rules negotiations, which were never intended to be the lead issue in the (Doha) Round, should not be the lead issue now."

One of the few bright spots for the U.S. domestic industry is that the text would permit zeroing in some circumstances. Although the committee said it didn't go far enough, the text says zeroing would be permitted in administrative and sunset reviews. The domestic industry would like zeroing also to be permitted in new trade cases.

That coincides with a WTO panel ruling in December that zeroing could be used in administrative reviews. That decision was not only a loss for the Mexican stainless steel producers who had brought the case, but for the WTO's appellate body, which has voted against the use of zeroing altogether.

But the panel decision and the draft text has alienated those in favor of freer trade with fewer trade barriers, who say they won't accept the use of zeroing when calculating dumping duties. Indian officials reiterated their strong opposition to zeroing to the Times of India on New Year's Day. If the United States is permitted to continue zeroing, "there will be no Doha Round agreement," top Indian trade officials told the newspaper.


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