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Wednesday, July 14, 1999 Published at 13:09 GMT 14:09 UK

Business: The Economy

Green light for US trade policy

The World Trade Organisation in Geneva regulates world trade

The World Trade Organisation (WTO) has given its seal of approval for US trade policy.

World trade wars
It says that the openness of the US economy has boosted competitiveness, and praises the country for resisting protectionist pressures.

And it singles out the US for being prepared to run such a large trade deficit - amounting to $233bn in 1998 - in order to boost world trade during the Asian crisis.

In its Trade Policy Review the WTO says that "imports have helped to satisfy consumer demand resulting in lower prices and wider consumer choice."

[ image: Launching a new trade round could still be tricky]
Launching a new trade round could still be tricky
But the report warned that the huge trade deficit had "provoked allegations in the United States that some foreign producers are engaged in 'unfair' trading practices" leading to protectionist pressures.

These were most recently in evidence when the US Congress narrowly avoided passing legislation - which would have breached international trade law - imposing quotas on steel imports.

"By and large, the administration has resisted such pressures, much to the benefit of the multilateral trading system," it added.

In its response, the US government said that it was committed to free trade.

Its policy "is based strongly on the premise that removing barriers and distortions to global trade enhances wages, job creation, higher living standards and growth potential for the United States and its trading partners alike".

Free markets

In its report, the WTO said that the domestic market in the US was also relatively free of barriers to competition.

"The United States is not only open to international trade and foreign investment, its markets are relatively free from regulations and other internal government measures that can unduly distort competition", the report said.

The trade policy report, which is produced every two years, will be reviewed by other members of the WTO. The US is expected to come under criticism for curbs on both steel and lamb imports.

But the US itself called for other countries to respect WTO decisions. The Deputy US Trade Representative, Susan Esserman, said:
" It is imperative that other countries also respect and promptly comply with WTO panel and appellate body rulings."

The EU has still not accepted a WTO ruling, allowing the import of hormone treated beef from the US. In return, the Washington government is now preparing punitive tariffs worth $116m.

Issues remain

The WTO warned that any further development of protectionism could undermine global economic recovery.

And it said that there were still pockets of protectionism in the United States, most notably in the agriculture and transport sectors of the economy.

It also criticised US trade barriers to developing imports. The latest plan by the Clinton administration to liberalise trade with Africa is held up in Congress.

And further trade liberalisation could prove more difficult. The next round of trade talks is due to start in Seattle in November, but the US Congress has put the negotiating team on tight reins by refusing to authorise "fast-track" procedures for approving any deal.

That could make any deal hostage to sectional interests in Congress.

The WTO itself is still leaderless, nearly three months after the term of its director-general ended.

The organisation is planning a last-dtich attempt to resolve the deadlock between Thailand's candidate, Supachai Panitchpakdi, backed by Asia, and New Zealander Mike Moore, backed by the United States and both developing and industrialised countries, at a meeting on Thursday.

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