Fast Food Seeks Influence in WTO


By Scott Kilman and Steven Gray

Wall Street Journal
April 19, 2005

U.S. fast-food giants, in a move reflecting the crucial role of agricultural subsidies at the World Trade Organization, are for the first time injecting themselves into trade talks in a big way. A coalition hatched largely by Yum Brands Inc., the Louisville, Ky., operator of Taco Bell, KFC and Pizza Hut restaurants, is trying to recruit Yum's rivals and food processors to lobby for free food trade, as the WTO's Doha Round of trade negotiations heads for a climactic meeting in December in Hong Kong. Fast-food retailers are usually leery of taking sides on controversial issues for fear of upsetting customers.

The Doha talks, which were launched in the Qatari capital in late 2001, have been marked by acrimony both inside the meetings and outside on the streets. Negotiations in Cancun, Mexico, over a 147-nation multi-industry trade treaty broke down in September 2003, amid disputes between poor nations and developed countries over agricultural subsidies.

Starbucks Corp., which witnessed first hand the havoc of street protests during a 1999 meeting in Seattle of trade ministers, said it isn't participating in the Yum coalition, known as the Food Trade Alliance. Closely held Burger King Corp., which is focused on turning around its operations, also isn't participating. But Wendy's International Inc., the No. 3 U.S. hamburger chain, said it might join. McDonald's Corp., the world's biggest restaurant chain by sales, said it "currently" isn't a member of the lobbying group. The National Restaurant Association, a Washington trade group that counts as members Yum, McDonald's, Wendy's and Burger King, said it is a member of the Food Trade Alliance.

The alliance's Web site and printed materials don't identify sponsoring companies, and company officials had little to say about it publicly. Bill Ehrig, who heads government relations for Yum, confirmed in an e-mail that Yum has "taken a leadership role" with the Food Trade Alliance. "We support efforts to lower barriers to trade in processed foods and commodities, ultimately lowering the prices of our ingredients world-wide," wrote Mr. Ehrig, who didn't return phone calls seeking additional comment. Yum has 33,600 restaurants and 840,000 employees in 100 countries. Despite its backers' desire to stay in the background, the Yum-backed group's strategy is to generate publicity about what it sees as the benefits of freer food trade. The group is slated to take its first big public stand today in Geneva, where the WTO has its headquarters.

The group is joining like-minded business organizations from 15 countries to call on trade representatives to lower agricultural trade barriers such as tariffs. The fast-food group also wants the WTO to make it harder for countries to concoct food-safety disputes in order to temporarily close borders to commodities such as chicken and soybeans.

The Food Trade Alliance has hired two public-relations firms with experience in trade issues: PBN Co. in Washington and Strategy XXI in New York. The group has also retained Washington law firm Hogan & Hartson, which has worked on trade issues such as U.S. steel tariffs. Lewis E. Leibowitz, an international-trade lawyer at Hogan & Hartson, is working for the lobbying group. Another member of the firm, Clayton Yeutter, a former U.S. agriculture secretary and U.S. trade representative, is an adviser. The creation of the group allows sponsors to "speak with one voice but stay behind the scenes," Mr. Leibowitz said.

American fast-food companies paid little attention to the Uruguay Round of trade talks in the early 1990s, when the world's major economic powers first tried to impose discipline on farm subsidies and import barriers. Trade barriers have since become a major headache for U.S. fast-food companies because the companies are making big pushes in overseas markets, creating vast supply lines to places such as Mexico, China, Germany and India.

Just more than half of McDonald's roughly 30,000 world-wide units are outside the U.S. Burger King recently opened its first units in Brazil and will soon open its first Chinese unit. Yum's KFC unit arrived in China in 1987, and has since grown to about 1,200 restaurants there. A hodgepodge of tariffs and duties can hamper the ability of these companies to find the least expensive ingredients for their world-wide operations. Costa Rica and Thailand, for example, impose stiff duties on french fries. India has a high duty on pasta. Several nations, such as Canada, tightly control cheese imports.

The Yum-backed group, which largely supports the Bush administration's proposals in the Doha Round to eliminate agriculture-export subsidies and reduce farm trading barriers, secured a meeting last week with Allen F. Johnson, chief agricultural negotiator for the U.S.

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