Seeking to regain the high ground on free trade, the Bush administration proposed yesterday that all members of the World Trade Organization eliminate tariffs on industrial and consumer goods by 2015 and exhorted U.S. trading partners to respond with similarly bold initiatives.
The proposal for a "tariff-free world" won praise from major business groups, which said it would ignite the slow-moving WTO negotiations for a new round of steps to lower trade barriers on a global basis.
But a number of trade experts, suspicious that the proposal is a public relations gambit, questioned whether the White House is truly prepared to expose heavily protected industries such as textiles and steel to fully free trade. The politically powerful American Textile Manufacturers Institute, for its part, denounced the idea of eliminating tariffs on manufactured goods worldwide as "an outright gift to China."
At a news conference, U.S. Trade Representative Robert B. Zoellick took the unusual step of emphasizing the benefits that would accrue to American consumers from abolishing tariffs. In the past, U.S. trade officials have tended to stress the gains in jobs and exports that stem from open trade -- and Zoellick did some of that, citing a study predicting that slashing nonagricultural tariffs to zero would generate an $83 billion increase in annual shipments of American goods abroad, about 11 percent above last year's level.
But with two Wal-Mart employees standing nearby holding baskets of goods, including flashlights, pacifiers, disposable cameras, men's sweaters and children's clothing, Zoellick focused on the savings that tariff elimination would mean for shoppers of imported merchandise. Without tariffs, those items, which currently cost $202, would cost $170, he said, adding jokingly: "It's a heck of a price rollback."
The proposal on manufactured goods is the latest of several opening positions that the administration has advanced in the WTO trade talks, which were launched a year ago in Doha, Qatar, with a 2005 deadline. The other proposals concerned trade in services and farm products. The talks have bogged down amid accusations that the United States, European Union and Japan don't appear genuinely willing to scrap the trade barriers and agricultural subsidies that hurt producers of clothing and crops in developing countries. The Bush administration has been the target of particularly severe criticism for adopting free-trade rhetoric while bowing to demands for protection from steelmakers and farmers.
Zoellick maintained that the "far-reaching" zero-tariff initiative ought to entice foreign governments to be more forthcoming in making the concessions that could win the necessary unanimous support for a deal among the WTO's 144 members. "We hope that countries hanging back in some areas will see the benefits," he said.
But he acknowledged that other nations would have to dismantle much higher tariffs than Washington would, citing figures that goods imported into the United States face duties averaging about 4 percent, compared with an average of 40 percent in other countries. Many developing countries insist that they must protect their industries to some extent, so their acceptance of the proposal is highly unlikely, many trade experts said.
"I know people will say, 'Are you being too ambitious?' " Zoellick said. But recalling his experience in the late 1980s as a top State Department official who helped negotiate the reunification of Germany, he said, "People said the Berlin Wall could never come down." He also maintained that poor countries stand to reap enormous gains from the proposal, citing World Bank estimates that free trade in goods would lift 300 million people out of poverty as export opportunities opened up to their industries and farmers.
Among the business groups hailing the initiative was the National Foreign Trade Council, whose president, Bill Reinsch, called it a "historic proposal that is both visionary and realistic."
But a scathing assessment was offered by Kevin Watkins, a policy expert at Oxfam, the development agency that champions the cause of poor nations. "This is an early negotiating gambit, a bit of a PR jaunt," he said.
He noted that although the United States is supposedly offering duty-free access to goods made in sub-Saharan African countries, the amount of apparel that could be shipped to the United States under the plan would be restricted and would have to be made from American fabric. "This doesn't create the impression of a country that's serious about expanding market opportunities for the poorest countries," he said.
J. Michael Finger, former lead economist for trade at the World Bank, agreed. "You put out all sorts of stuff that can get you a headline, and it looks good," he said.
Brink Lindsey, a trade expert at the Cato Institute, credited Zoellick for "laying down the right marker, an ambitious and bold marker that points" the WTO talks "in the right direction." But even without ordinary tariffs, he said, U.S. industries can shelter themselves behind the high duties available under anti-dumping laws. Many WTO members are demanding that the United States make its anti-dumping laws less tilted in favor of domestic industries.
"If the U.S. advances this proposal to zero out tariffs, while fighting intransigently against antidumping reform, that's going to alienate developing countries, because they're going to smell a scam," Lindsey said.