Is it time for TAFTA? Or what? A conversation with Robert Zoellick.

• Position: Economy and Trade - Transatlantic Free Trade Association - Interview

The Doha round is in the doldrums. There are many reasons for the stalemate, including the absence of a decisive breakthrough on dismantling agricultural subsidies either in the European Union or in the United States. Economic nationalism is resurgent in many EU member states. The U.S. Congress coming into office in January will be controlled by the Democrats and contain more--and more vocal--protectionists.

Advocates of further trade liberalization know their goal, but they are in a quandary about how to get there. The obvious option is to press on for a deal in the Doha round of talks under the auspices of the World Trade Organization (WTO) to achieve a global deal on opening markets and cutting subsidies. The political challenge remains unchanged--how to stretch domestic support for reciprocal concessions, without overreaching and outrunning domestic political support for a deal. There is little reason for optimism that the barriers are being lowered, meanwhile the political clock is running out on the leaders in France and in the United States. With French elections coming in May and the U.S. President's special negotiating authority due to lapse unless it is renewed by summer, Doha could be dead in 2007.

An obvious alternative for everyone would be renewed emphasis on bilateral and regional trade deals. In many ways, these are the enemy of the greater good of global trade agreements. But in practice, might a regional pact--especially a Transatlantic deal--remind the WTO's members that a global stalemate will not only stifle growth but also goad the richer nations to turn to their own narrower interests? All these questions have surfaced in the suggestions that it might be time for a TAFTA. The idea has caught the imagination of German Chancellor Angela Merkel: prudently, she explains that it could only be considered in a situation where Doha seemed doomed. But she also seems interested in the idea as a dramatic initiative that could help revivify Transatlantic unity.

Few people are as well-qualified to analyze and "contextualize" this idea as Robert Zoellick, now a senior executive at Goldman Sachs, after years in policymaking jobs in several U.S. administrations. He was part of the small team that masterminded U.S. policy on German reunification under President George Bush. In the current Bush administration, he was the top aide in the State Department as Deputy Secretary under Condelezza Rice. He has also been the U.S. Trade Representative dealing with these issues of global commerce, including negotiations between Washington and the EU. In November Mr. Zoellick spoke with European Affairs. The following are edited excerpts from the conversation.

Zoellick is wary of TAFTA for two reasons. One is the risk of jeopardizing Doha, which he believes is still achievable if negotiators will move from posturing to mutual concessions in a mood driven by the looming risk of the talks' collapse. Secondly, Zoellick contends that the Transatlantic economic tissue is already so dense--so rich and so sophisticated--that any improvements in it (except for agriculture) are already beyond the reach of classical free-trade deals. In his view, it is time to look for subtler measures--such as fine-tuning the two sides' approach to regulatory and other non-tariff questions--that could boost Transatlantic business. This modified approach would amount to a new degree of public-private cooperation in ironing out the problems restricting major liberalization in the Transatlantic market place. He calls for an approach of "building blocks" of changes in sectors identified by the business world as problematic.

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