Bush frees trade reins

By BRIAN FALLOW

In the small hours of Saturday morning (Washington time) United States lawmakers took bolt cutters to the ball and chain which for the past eight years have hampered US presidents' ability to do trade deals.

Before rising for its summer recess, the House of Representatives passed (by 215 votes to 212) a bill giving President George W. Bush trade promotion authority or "fast track".

Without fast track, Congress could take apart any trade agreement negotiated with the United States, including any outcome of the World Trade Organisation round.

With fast track, Congress still has the right to accept or reject a trade agreement, but not to amend it.

It means that trade negotiators can have reasonable confidence that the US will be able to deliver its end of the bargain.

The bill, which the Senate is expected to pass this week, represents a compromise struck by representatives of the House and the Senate to reconcile earlier, but different, versions of the legislation that each had passed.

It includes a generous package of measures for workers who lose their jobs because of foreign competition, including health insurance and job training.

It dropped the controversial Dayton-Craig amendment attached in the Senate which would have ruled out any changes to US anti-dumping and countervailing duty laws.

US use of its trade-remedies legislation is a sore point for many developing countries (and New Zealand sheep farmers), and they are looking for progress on the matter in the WTO's Doha round.

"It was a real poison pill and the President said he would veto the legislation rather than sign it with Dayton-Craig," said Trade Minister Jim Sutton. The bill's passage was welcome news, he said.

Its progress through the Senate should be a formality, Sutton said, given that the bill is a compromise agreed by representatives of both houses.

"Then we are expecting an early announcement of which countries are in the first tranche for negotiations of bilateral free-trade agreements," he said.

"We would like to be there, but realistically, Australia will get up before we do.

"Hopefully that will make it easier for us because the logical way for this to go would be parallel and contemporaneous negotiations," Sutton said.

But it was impossible to say if enough people in Washington shared that view.

The executive director of the Trade Liberalisation Network, Stephen Jacobi, said: "This is a major advance in Bush's trade policy, another step in getting hold of the ability to negotiate, both in the WTO and with bilateral partners.

"It means we really have to get on with it, in terms of our own preparations for lobbying in the US."

Progress on fast track comes hard on the heels of the US announcement late last week of its wish-list for the agricultural component of the Doha round, which was launched last November.

The United States is calling for the abolition of export subsidies and deep cuts to both domestic support and tariffs, all within the first five years of an agreement.

The proposals were greeted without joy by European and Japanese farm ministers, meeting in Japan on the weekend.

Fast track and the agricultural proposals represent a turnaround from a series of setbacks to hopes of US leadership on the free-trade agenda: steel tariffs, an impost on softwood imports from Canada (its partner in the North American Free Trade Area) and a Farm Bill which stepped up subsidies to US farmers.

Jacobi suggests that the outlook for the US economy, in light of the parlous state of the stock market, has changed.

Bush had stepped up pressure on legislators to pass fast track to underpin confidence in the economy.