BERLIN, July 1 (Reuters): Treasury Secretary Henry Paulson said Tuesday the United States and Germany agreed that a breakthrough in Doha round of trade talks would help control food inflation around the world.
Paulson, speaking at a news conference in Berlin with German Economy Minister Michael Glos, also said the two countries agreed there were "no obvious short-term solutions" to high oil prices. He added the current oil price was a function of supply and demand.
"There's no doubt that both our countries as well as the world are feeling the burden of high oil prices and high food prices," Paulson said after a breakfast meeting with Glos.
He is later meeting with German Chancellor Angela Merkel and European Central Bank (ECB) chief Jean-Claude Trichet on a five-day trip to Europe and Russia, where rising inflation tops the policy agenda.
"We agreed that a breakthrough in Doha would help us in the food area," Paulson said. "Policies that restrict trade in food products aren't helpful. Export controls aren't helpful."
Regarding oil prices, Paulson said he and Glos agreed that little could be done in the short term, but more investment was needed in alternative energy and reducing fuel consumption, as well as increasing oil production to help bridge the gap to newer technologies.
Paulson also said German and other European banks were still dealing with common credit problems and were supportive of the coordinated policy responses between the United States and Europe.
"A number of the German banks are dealing with the same issues that the US banks are dealing with and the banks around Europe, which have to do with too much leverage-maybe more than what was perceived to be the case earlier-dealing with complex products, and are still in the process of repricing risk.
He said both German banks and European banks are supportive of actions recommended by the financial stability forum and the US President's working group on capital markets for more market discipline, better risk management and some regulatory changes.
Earlier report says: A move for the United States to lift a Cold War-era restriction on trade with Russia when it joins the World Trade Organisation (WTO) will face opposition in Congress, US Treasury Secretary Henry Paulson said Monday.
Russia, which started its bid to join the global trade watchdog in 1995, aims to finish work on a multilateral agreement opening the way for membership later this year. It has already struck a bilateral membership deal with Washington.
Russia's WTO membership would require Congress to establish permanent normal trade relations with Russia by removing it from the dwindling list of countries subject to trade restrictions under the so-called Jackson-Vanik amendment.
"It will not be easy. There will be opposition in the Congress (to removing the amendment) but I think it will be important to try," Paulson told the Ekho Moskvy radio station during a visit to Russia.
The Jackson-Vanik amendment, approved in 1974, tied normal trade relations with the Soviet Union and other centrally planned economies to the rights of Jews and other religious minorities to emigrate freely.
Russia has been in compliance with the conditions set out in the Jackson-Vanik amendment since 1994.
But some lawmakers in the United States have tied lifting the Jackson-Vanik amendment to Russia improving its record on human rights.
US lawmakers have insisted that Moscow finish negotiations on joining the WTO before they vote to lift the measure. Paulson said he did not know when the amendment would be lifted.
The United States is currently as large a trading partner for Russia as Finland, accounting for about six per cent of Russian foreign trade in 2007. Both Moscow and Washington want to boost trade.
Paulson is in Moscow for talks with Russia's top leaders that some observers say could help shift the focus of a sometimes frosty US-Russia relationship towards the more productive areas of trade and investment.
Congressional refusal to lift the amendment would not block Russia from joining the WTO. But it would allow Moscow to legally deny US companies from sharing in the market-opening concessions it has made to join the world trade body.
Paulson, who discussed the WTO entry negotiations with his Russian counterpart Alexei Kudrin Sunday, said the talks were nearing their end.
