U.S. decries "hostage-taking" in trade talks, sees hope on IT deal

By Leigh Thomas

PARIS (Reuters) - A global agreement to cut red tape in world trade, which could be worth hundreds of billions of dollars to the world economy, is being stymied by some countries' "hostage-taking", a top U.S. trade official said on Wednesday.

Diplomats at the World Trade Organization have become increasingly pessimistic about striking a global trade deal at a meeting in December in the Indonesian resort of Bali, despite deliberately setting an unambitious target in hopes of reviving confidence in moribund global trade talks.

"We are not on track at this point to have Bali be successful," Deputy U.S. Trade Representative Michael Punke told Reuters on the sidelines of an OECD meeting in Paris.

Success at Bali is widely seen as the key to unlocking the stalemate that has all but killed the wide-ranging Doha round of trade talks, which collapsed in 2008 and was effectively abandoned at the end of 2011.

Punke said that put a "real premium" on the proposed Bali deal, which would make limited reforms to agricultural subsidies for developing countries and to special treatment afforded to the poorest countries under the WTO rules, as well as setting a new standard for customs procedures and red tape, known in WTO jargon as trade facilitation.

"We're worried right now specifically in the area of trade facilitation because there's been this phenomenon of hostage-taking, which means basically a handful of countries are holding up the trade facilitation negotiation and not even allowing technical work to take place," he said.

Punke said he was not going to point fingers because there was "broad recognition" about which countries were causing the problem. He has previously criticised India for proposing a "non-starter" as part of the Bali deal: a reform that would let farmers in emerging economies enjoy almost unlimited agricultural subsidies.

COMPUTER PRODUCTS

One side effect of the demise of the global trade talks has been a splintering of negotiations into regional deals and attempts by a subset of the WTO's 159 members to go further with liberalising trade in certain areas.

One such area is computer products, which have evolved hugely since 29 WTO members agreed to eliminate tariffs on certain IT products under an information technology agreement (ITA) in 1996. Now 76 ITA signatories, accounting for 97 percent of global IT trade, are trying to increase the number of electronic goods that can be shipped duty-free.

According to internal WTO documents on the ITA negotiations seen by Reuters, at the time of the most recent formal ITA meeting in March, products that were proposed to be covered by the expanded agreement included set-top boxes, LED modules, touch screens, multi-chip integrated circuits and multi-component integrated circuits.

Many other products were put forward by ITA member countries but the list has been whittled down since then as the 76 members hope to agree unanimously on a single list.

Punke said there was hope for "a lot of progress even by this summer".

"We never like deadlines or predictions but the ITA discussion has been moving along in a very constructive way and it has not been subject to this hostage-taking that we've seen in other parts of the discussion in Geneva. There is no reason logistically why we couldn't wrap up the ITA discussion sooner rather than later."

(Writing by Tom Miles; Editing by Alison Williams)