U.S. tries to see positives in trade talks collapse

WASHINGTON (Reuters) - The Bush administration is billing the collapse of world trade talks this week as good news for its drive to renew negotiating powers in Congress, but it is not clear that U.S. lawmakers will see things that way.

"By walking away from a bad deal, we are once again able to show the Congress that we can be trusted," U.S. Trade Representative Susan Schwab said on Thursday after U.S., European, Brazilian, and Indian negotiators abandoned talks in the troubled Doha round of trade negotiations.

Schwab said her refusal to accept an unsatisfactory deal only strengthened the administration's case for renewing "fast track" authority, the law that allows the U.S. president to broker trade deals that Congress votes on with no changes.

Some members of Congress had wanted a breakthrough in the Doha negotiations before to renewing President George W. Bush's current fast-track authority when it expires on June 30.

The failure of the talks this week "certainly doesn't help, but I don't think it's fatal," said Dave Salmonsen, who follows trade at the American Farm Bureau Federation.

He is waiting to see whether Schwab, who is headed to Geneva with U.S. Agriculture Secretary Mike Johanns for consultations with the World Trade Organization's 150 members, will make any progress this summer.

Schwab and Johanns angrily blamed Brazil and India for the failure of the talks in Potsdam, Germany, saying they showed no flexibility in reducing industrial tariffs while asking for even bigger cuts to U.S. farm subsidies.

But India's negotiator, Kamal Nath, said the U.S. position had "no equity ... no logic and no fairness."

Sherman Katz, a trade policy analyst at the Carnegie Endowment for International Peace, said the collapse of the G4 talks simply "kicks the can down the road" for fast track.

"It does say to some in Congress that the U.S. is not going to be a patsy ... There will be a little bit of new respect for Sue Schwab and Mike Johanns," he said.

Even if you accept Schwab's premise about being tough, Sallie James, a trade analyst at the libertarian Cato Institute, said, "I don't think (Congress) wants to be seen giving George Bush any wins right now."

Under the current fast track law, the Bush administration has negotiated bilateral deals with several countries and has taken a major role in the WTO talks.

But some in Congress, increasingly skeptical of trade after elections last fall ushered in a host of anti-trade Democrats, want to whittle down the law to cover only Doha negotiations.

Sen. Charles Grassley, the ranking Republican on the Senate Finance Committee, is hopeful progress can be in made and wants to see fast track renewed.

But even he isn't ready to commit to support for a broader fast-track law beyond the Doha round, an aide said.

"There haven't really been any serious discussions about the renewal of fast track, said Matt Beck, a spokesman for Rep. Charles Rangel, chair of the House Ways and Means Committee.