Bush, Koizumi trade letters on trade

By Alex Frew McMillan CNN Hong Kong

DOHA, Qatar -- U.S. President George W. Bush has written to his counterpart Junichiro Koizumi, asking Japan to smooth the way for a new round of trade talks.

Koizumi has replied with a letter of his own. He says Japan is ready to cooperate with the United States at World Trade Organization talks.

Ministers from the 142 WTO members and newcomers China, Taiwan and Vanuatu open a five-day meeting in Doha, Qatar, today.

In his letter, Koizumi repeated Japan's position on three key areas: agriculture, anti-dumping rules and the handling of AIDS drug patents, Kyodo News reports.

The leader said progress could be expected on agriculture if farm goods are discussed as part of broader negotiations, Kyodo stated.

Bush urges Japan to be flexible

Koizumi was replying to a missive from Bush asking Tokyo to do its part to launch a new free-trade round.

It was brought to Koizumi just ahead of the WTO meetings that begin today, Jiji news agency reports. Bush urges Japan to be flexible on touchy issues such as agriculture trade, Jiji states.

Agriculture will be one of the most heated topics of discussion in Doha, where the divide between rich and poor WTO members will dominate talks. U.S. officials have hinted that Japan's unwillingness to budge on farm goods could be the reason they fail.

Bush and Koizumi, both relative newcomers at the helm of the world's two biggest economies, already share a warm relationship. It has been strengthened by their cooperation on the fight against terror.

Japanese ships en-route in war

The two leaders met most recently at last month's Asia Pacific Economic Cooperation session in Shanghai, where Koizumi gave Bush a hand-inscribed arrow that he had crafted as a symbolic weapon in the war.

Three Japanese ships are now en route to support the U.S.-led war in Afghanistan, the first time since World War II that Japanese military vessels have left its waters.

Bush has now written to Koizumi asking for aid on the trade front. The WTO talks will run through Tuesday.

Many members are desperate to get a new round of free-trade talks off the ground, to build on the 1986 Uruguay Round and wipe out the failure of the last WTO session.

Bush and others are particularly keen to launch a new round after the September 11 attacks. Ministers say it's vital to show the forces of globalization and free markets are alive and kicking, even after the World Trade Center towers were brought down.

Zoellick warns on Japan's refusal to budge

The biggest stumbling block is greater access of farm goods. Developing countries say their produce is not treated fairly in developed nations.

Critics claim the United States, the European Union and Japan spend $1 billion a day, the size of the U.S. defense budget, propping up uncompetitive farm industries. Those countries also cap the amount of farm imports they accept.

Developing countries are insisting they get greater access for their produce, if they are expected to open up their own markets to multinationals. The issue has united countries as disparate as India, China, Indonesia, Australia and Argentina.

Robert Zoellick, the U.S. Trade Representative, warned that Japan risks scuppering the Doha talks. He said recently that Japan "has just said no to everything" in preparing for the WTO.

Japan has a powerful farm lobby. The ruling Liberal Democratic Party gets much of its support from rural areas, and likely wants to keep that vote at a time its economy is slumping.

Japan, South Korea most protectionist in Asia

France, chief among E.U. nations, and the United States are highly protective of their farm industries. In Asia, Japan and to a lesser extent South Korea are the most closed.

Japan's tariffs on imported rice, for instance, are some of the highest in the world, at 390 percent.

Quotas on shiitake mushrooms, spring onions and tatami-mat rushes have landed Japan in a trade dispute with China. A third set of talks collapsed this week in Tokyo without resolving the issue.

China has blocked Japanese imports of cars, cell-phones and air conditioners in response. It says it will take up Japan's quotas with the WTO. South Korea finally relented after a similar battle over Chinese garlic.

Japanese intransigence on agriculture could condemn the WTO talks to failure. It will take all 142 members and the three newcomers to sign off on a new round of talks.

The language on agriculture will likely be carefully shaped to avoid offending either side. Critics say that robs it of any value, after developed countries reneged on Uruguay Round promises.

Some Japanese observers say Zoellick may be lining up a scapegoat if the WTO talks fail to launch a new round. The United States also supports its farmers heavily with subsidies.

Its farm lobby has successfully defended those in the past and would staunchly oppose any attempt to cut American quotas on overseas produce.

The last WTO meeting broke down in Seattle in 1999 when the United States and the European Union failed to agree on key issues.