World trade deal 'within reach'

By Michelle Fleury
Business reporter, BBC News, New York

Ms Schwab believes a trade deal can be reached in Geneva

For anyone in business, the idea of spending seven years trying to cut a deal is hard to imagine.

Yet that's how long the Doha round of global trade talks have been going on. So could this finally be the moment of truth. Or will it just slip by?

America's top trade negotiator, Susan Schwab is cautiously optimistic, saying: "I do believe it's doable and I believe it's doable next week."

Ms Schwab and other trade officials from around the world are headed to Geneva this weekend where the negotiations are taking place.

A breakthrough on lowering tariffs and subsidies on farm products, manufactured goods and services could create tens of billions of dollars in benefits, mainly for the world's poorest countries.

But while America is hopeful, it's not prepared to do a deal at any cost.

The US has made it clear it wants to see countries open their services sectors to more foreign companies.

As places like China and India have become more prosperous, demand for services such as finance, telecoms and technology have grown. And the US - which has an advantage in many of these areas - wants to provide it to them.

Deal breaker

But the issue is not a simple one.

In return, developing countries want America to provide more temporary entry work visas for software engineers and other professionals. A hard sell in an election year.

Another possible stumbling block is agriculture.

America is under pressure to cut trade distorting subsidies to its farmers. The draft agreement proposes limits that range from $13bn (£6.5bn; 8.2 euros) to $16.4bn.

Thanks to high food prices, these existing goals look outdated. US farm spending has already dropped significantly.

US farmers fear a trade deal could mean less money

In the light of that, some developing countries think Washington should go further.

But US farmers claim they are being asked to give up more in government support than they would receive in new export income.

US Trade Representative, Susan Schwab says the final level will depend on what others are willing to offer: "We need to bring home a package that has some degree of balance in terms of gives and gets."

A successful conclusion to the talks requires compromise from all parties.

Leadership

Many feel that rich countries, like the US should lead by example.

Others are worried their domestic markets will be flooded by Chinese exports.

China joined the World Trade Organisation in December 2001, after the launch of the Doha round.

President Bush's departure from office could spell an end to a deal

But it has been a huge beneficiary of open markets and unless they play a leadership role America's trade chief says "it is impossible to imagine a successful conclusion to the Doha round".

Whilst obstacles remain, there is a sense of urgency about these talks.

With the US presidential election around the corner, there is a desire to fashion some kind of agreement before George Bush leaves office.

This may seem odd.

The President does not have trade promotion authority (TPA), essential to speed the passage of trade agreements through Congress.

Instead, the hope is to get a special one off extension to the President's trade promotion authority or to at least pass on a finished agreement to the next resident of the White House.

Trade fears

Whoever that is, they may be a lot less committed to trade than President Bush or Clinton before them.

For many working Americans trade is a dirty word.

Nonetheless, most economists have no doubt that the US has benefited hugely from the global reduction of tariffs and the removal of other trade barriers over the last two decades.

Millions of American jobs depend on exports and with things looking shaky at home, they are an even greater driving force for the economy

So while Doha might not be the cure all for America's current housing and financial woes, it is nonetheless vital.