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New York Times

U.S. Resists Plan to Remove Tariffs for Poor Nations. By DAVID E. SANGER. April 8, 2000.

WASHINGTON, April 8 -- The Clinton administration is opposing a World Bank proposal that would increase exports from the world's poorest and most indebted nations for fear that it would inflame sentiments in Congress against President Clinton's efforts to spur international trade, particularly with China.

The proposal, pressed by the leaders of the World Bank and the International Monetary Fund in preparation for their meetings here next week, would allow some of the poorest nations of Africa, Latin America and Asia to sell goods to the United States and other Western nations without facing any tariffs or import quotas. That could provide a huge economic advantage for those developing countries, going significantly beyond the administration's efforts to get Congress to forgive their debts as they undergo economic reforms.

The administration's opposition to the proposal comes at an awkward moment, as demonstrators critical of the international lending institutions assemble for a week of protests during their meetings. Many of the protesters believe that the financial groups do too little on behalf of the poorest nations. [Page 4.]

But as the trade proposal was argued out behind the closed doors of the World Bank and the I.M.F., the administration worked behind the scenes to scuttle it, said World Bank officials involved in the negotiations. Those officials said they believed that the White House feared that if they made such a commitment, it would undercut the delicate support for the Africa trade bill, which has been stuck in Congress, and that any promise of further opening America's markets could undermine the huge effort to convince Congress to normalize trade with China.

"We are really caught in the middle here," one senior administration official said on Friday, explaining why the White House had refused to endorse a plan that would aid some of the most struggling nations, including Senegal, Nicaragua, Congo, Kenya, Honduras and Nigeria, which pose little competitive threat to American firms.

"The best way to lift nations out of poverty is through trade," the administration official said. "But doing the right thing here is not easy. We can't even get far more modest measures through the Hill."

Charlene Barshefsky, the United States trade representative, said she had been unaware of the efforts to water down the World Bank effort. But she said that "the United States has a long record of support for and delivery of preferential trade privileges for least-developed countries."

"For the poorest countries, the United States, working with Europe, Japan and Canada, have proposed an initiative" that would take much the same approach within the World Trade Organization, she said.

Such a program, however, would likely be narrower in scope and be enacted only after the Africa and China issues are already voted on in Congress.

The administration's quandary underscores the enormous economic tensions that will be on display in Washington in coming days. Poor nations will argue, as they did during the Seattle trade meetings three months ago, that the United States and other rich nations are using their enormous prosperity and technology to grow rapidly at the expense of countries being left far behind by economic globalization. That view is essentially endorsed in several reports prepared for the spring meetings of the World Bank, which fights poverty, and the I.M.F., which intercedes in economic crises.

During his radio address today, President Clinton briefly mentioned his hope that Congress would agree to gradually wipe away the debt of the poorest nations.

But in Congress, where labor unions and others have argued against further opening of American markets at a time of record trade deficits, there is enormous resistance to removing tariffs or quotas that protect American industries from low-cost manufacturing abroad.

For example, the Africa trade bill, which passed the Senate last November but never passed the House, now includes requirements that African nations hoping to export more clothing to the United States duty free must buy American fabrics. Few of the countries could afford to do so, making the market opening relatively worthless to African weavers or small manufacturers. (Africa's trade with the United States is comparatively small. The entire continent exports about $13 billion in goods to the United States each year, roughly what Japan exports here in a month.)

But without such trade restrictions, members of Congress from textile-producing states say they would have to vote against the Africa bill. And the World Bank and I.M.F. proposals would have essentially undercut the bill's protections for American companies, committing the United States, Europe and Japan to unrestricted import of clothing, footwear or other goods from the most indebted nations.

Administration officials said that any such end run around Congress would inflame many members, especially Democrats, thus threatening the passage of the Africa bill and China's entry into the World Trade Organization, two main elements of Mr. Clinton's agenda for his last year in office.

Documents being prepared for discussion at next week's Washington meetings are implicitly critical of how little the world's wealthy nations have done to keep the divide between rich and poor from increasing.

A draft of one such paper, provided to The New York Times by the World Bank, notes that during the Seattle meetings, the head of the bank, James D. Wolfensohn, and the recently retired head of the I.M.F., Michel Camdessus, called on major nations to spur imports from the poorest nations. The paper describes the strategy as a way to reverse the declining trend in foreign aid flows to these countries.

The paper refers to the critical importance of matching debt relief with efforts to encourage exports that earn hard currency.

But diplomats involved in the drafting of the reports say that the wording was toned down at the insistence of the United States and, to a lesser degree, France and Japan. They all have a huge sensitivity to opening their markets, particularly for agricultural goods, and particularly in election years, one senior World Bank official said. Instead of strongly recommending market openings, the report now simply notes that ministers may wish to comment on the subject.