Democrat election win 'threatens world trade talks'

The Democrat victory in recent Congressional elections in the USA could damage the prospect of agreement in talks on world trade, European trade commissioner Peter Mandelson warned today.

Mr Mandelson urged the new Democrat majority on Capitol Hill to co-operate with President George Bush’s Republican administration on trade and not to retreat into protectionism when they take their seats next month.

Despite yesterday’s announcement of a new review of the EU’s bilateral trade arrangements, Mr Mandelson insisted that the multilateral talks at the World Trade Organisation remained his “top priority“.

But he acknowledged that the chances of breaking the stalemate in the so-called Doha round at the WTO may have been harmed by Democrat success in last month’s elections.

And he warned that a lurch towards protectionism on the part of the Americans would have “very, very serious” consequences for the global economy.

The Doha round is designed to open up global trade, particularly for developing countries, but talks have foundered on the reluctance of the rich world to give up subsidies for its farmers.

Asked on BBC Radio 4’s Today programme whether he was concerned that the shift in the balance of power in Washington could see the US swing towards protectionism, Mr Mandelson responded: “Many fear that, because quite a few of the Democrats were elected to Congress for the first time on what were perceived to be anti-free trade campaign platforms.

“Also, the administration hasn’t exactly enjoyed huge bipartisan support in Congress for a lot of their trade negotiations, and they have stoked up quite a lot of Democrat opposition.

“Also, I suppose it has to be recognised that the Democrats aren’t in the mood for doing President Bush any favours.

“I think this is an unfortunate when it comes to the multilateral trade round, because this is very important for the world; for the global economy but also for the strength of the WTO and the cause of multilaterism as a whole. I hope the Democrats will take a more internationalist view.

“I hope they will conclude that it is important for the US to re-engage with the international community and to use the WTO as a means of doing that, and they will recognise that if they participate in failure at these talks, not only will the economic costs be very great – particularly for developing countries - but the consequences for the international trade system and how it operates, I think, will be very, very serious indeed.

“So I hope for all these reasons the Democrats will approach this in a bipartisan spirit and will work with the administration and not against it.”