The U.S. Senate’s delay in voting on a key China trade bill has some Japanese officials fretting about whether it will kill the chances — if any — of a breakthrough at the Group of Eight summit in Okinawa toward launching a new round of global trade negotiations.
The bill, which would grant China permanent normal trade relations as part of its bid to join the World Trade Organization, was already passed by the House of Representatives on May 24, despite stiff opposition from labor unions and human-rights advocates.
The China trade bill’s passage itself is virtually assured in the Senate. But although the Senate was initially expected to vote on the bill by the end of this month, it has been delayed, possibly until after the G8 summit, partly because annual spending bills took priority.
The Okinawa summit of the G8 nations — Japan, Canada, Britain, Germany, France, Italy, Russia and the United States — will be held over three days starting July 21.
“Until after the China trade bill’s passage by the full Senate, the U.S. administration of President Bill Clinton will never take a flexible stance on the new round of global trade liberalization negotiations,” one senior Japanese trade official said, requesting anonymity.
“The Clinton administration does not want to give unnecessary ammunition to Senate opponents of the China trade bill by giving any indication of a softening in its stance on the new WTO round,” the official said.
The new round of global negotiations was initially supposed to be launched early this year under the auspices of the WTO, the Geneva-based body that regulates international commerce. But it has not yet been launched due to the collapse of a key WTO meeting in Seattle in December.
At that meeting, more than 130 WTO member nations failed to set a specific agenda for the new round, due to sharp differences over labor protection, as well as antidumping rules, agriculture and other issues.
In the face of strong pressure from domestic labor unions and human-rights advocates, the Clinton administration insisted at the Seattle meeting that the issue of trade and labor should be discussed in the new round. This angered many developing countries, which claim the U.S. stance is “disguised protectionism” aimed at curbing their exports and protecting domestic jobs.
The antidumping issue also sharply pitted the U.S. against Japan and some other countries.
Japan insisted on putting a review of antidumping rules on the agenda to prevent what it sees as protectionist abuse of the rules by the U.S., as exemplified by a series of bilateral steel disputes, but the Clinton administration, under strong pressure from the domestic steel industry and labor unions, rejected the Japanese demand.
Although the G8 leaders are expected to vow in Okinawa to work together toward an early launch of the new WTO round, it is still uncertain whether they will be able to set a specific target date for the launch because of differences not only among industrialized countries but also between industrialized and developing countries.
The U.S. and the 15-nation European Union agreed at a bilateral summit in Lisbon at the end of May to seek to get the new WTO round launched by the end of this year.
But the Organization for Economic Cooperation and Development, the 29-nation, Paris-based body often dubbed the “club of the richest,” failed at its annual ministerial meeting this week to set a specific target date.
“It is still possible that the G8 leaders will agree in Okinawa to set the end of year target for launching the new round,” a senior Foreign Ministry official said, on condition of anonymity.
But the official acknowledged that even if the G8 summit in Okinawa sets a yearend target, there would be no guarantee that the new round will actually be launched by then.
Perhaps the more important issue is whether the G8 leaders will be able to go even further by making specific proposals or commitments that could bring a breakthrough toward the early launch of the new round.
Aside from the China trade bill, the Clinton administration is unlikely to budge on labor or other sensitive issues in a politically charged election year, especially at the risk of alienating domestic labor unions, which traditional favor the Democratic presidential candidate.
“Objectively speaking, there is almost no chance of the new WTO round being inaugurated by the end of this year,” said a senior source at the Ministry of International Trade and Industry.