Robert Zoellick, freshman appointee to the post of United States' Trade Representative, is a man with a mission. Early into his tenure, he has been assigned the challenging job of winning universal support for the highly controversial new Round of world trade negotiations. He has a tight deadline too: the next ministerial meeting at Doha, Qatar in November. Success in this effort depends on his ability to soften two principal targets. One is the European Union, that is unwilling to cutback significantly on its support to agriculture, and is willing to even talk about the matter only if a whole range of new issues ranging from protecting the environment to reducing foreign investment regulations and implementing a competition policy are implemented. The other is the group of developing countries, led by the "like-minded five", which includes India, Pakistan, Egypt and Malaysia, that has held that no new Round should be considered before a review of the impact of the Uruguay Round (UR) agreement is made and a number of inadequacies in its implementation are addressed.
 
Of these targets, the EU appeared the more difficult nut to crack. Getting it to budge on agricultural support would be difficult, given the crucial role of such support for its farming community. What is more, with the US having provided the lead, the EU has been reforming its Common Agricultural Policy to shift from forms of support that obviously affect prices and trade, to other ostensibly "decoupled" forms of support, such as income transfers and "deficiency payments". In the UR, the US and the EU had come together and manoeuvred to keep such forms of support out of the definition of "trade-distorting" subsidies. Thus, though the total subsidy provided to American and European farmers, a figure captured in the OECD's computations of the "producer subsidy equivalent", has remained high and even increased over the 1990s, these countries claimed to be meeting their Uruguay Round commitments with regarding to reducing tariff support and subsidies provided to their agricultural sector. Further, in an effort to completely legitimise such support to agriculture, the US and EU had ensured the inclusion of a "peace clause" in the Uruguay Round Agreement on Agriculture (AoA) that decreed that no disputes could be raised regarding the "green-box policies" and other AoA conforming support and subsidy measures, during the phase when the agreement was being implemented.
 
The results of these features of the UR, are now proving a thorn in the flesh of Mr. Zoellick. The American farming community is unhappy over the high support afforded to European farmers, despite the massive support it receives from its own government. And the Cairns group of agricultural exporters, which includes Australia and Argentina among others, is keen on enforcing its one point programme when it comes to world trade: the complete freeing of trade in agricultural products. The end-July meet of trade officials in Geneva, was the occasion chosen by Zoellick to try and convince the EU that it must give on this matter. In this effort he found an ally in Pascal Lamy, EU Trade Commissioner and reported long term friend, who is busy working out the quid pro quo needed to win the support of EU members for progress on agricultural trade front. In the event Lamy has come up with a long list of issues that need to be discussed along with reduction of support for agriculture. These include regulation to protect the environment, competition policies and multilateral rules governing investment. Thus the next stage in world trade negotiations should, in its view, not be just about reducing tariffs on manufactures further and reducing trade-limiting forms of support to agriculture, but rather a comprehensive new Round that brings in issues that have hitherto been substantially delinked from trade.
 
The EU stance is both a loss and a gain for Zoellick. A loss because it seeks to bring in issues such as competition policy and environmental protection, that are unlikely to be popular at home. Giant American corporations, that straddle world markets and zealously guard their turf through means fair and foul, as Microsoft has done, would not be too happy if regulations that limit their spread into Europe through mergers and acquisitions are to be discussed. The EU's notion of environmental protection, which includes ensuring food safety, by keeping out genetically modified foods for instance, has already upset American farmers who account for a large share of acreage under GM crops. And these fresh demands to use such grounds to limit trade come at time when US farmers would have to give in to the Cairns group's call to reduce income support.
 
But this loss is no unmixed blessing, since it brings with it the assurance that if some at least of these issues are included in the negotiating agenda, the all-important EU would be willing to go along with the American desire for a new round of trade negotiations. Having registered this gain, Zoellick set out on a whirlwind tour, that brought him to India, with the aim of neutralising the developing country block opposed to a new round before UR implementation issues are discussed. In this effort, Zoellick has three grounds on which to bargain. The first is the claim that any advance on the agricultural front could be of benefit to developing countries that can also demand that some of the other inadequacies of the UR should be addressed in the new round. The second is that with him having won EU support, it is unlikely that the new round can be stalled for long. This would condemn opponents of the round to isolation. In an address to industrialists at New Delhi, he in fact warned that India is likely to be left behind and would lose out at the coming Doha ministerial conference, if it stuck to its opposition to a new trade round. Finally, in New Delhi, he combined the demand for support for a new round with the promise of cooperation on sensitive issues like counter-terrorism, nuclear non-proliferation and human rights. This is nothing but a veiled threat of political boycott if India did not fall in line.