International trade talks fail

Wednesday, July 30, 2008

GENEVA -- After coming tantalizingly close to a historic trade deal, World Trade Organization talks collapsed Tuesday in a blow to seven years of efforts to open up the global economy.

Once promised as a recipe for lifting millions of people out of poverty, the end to nine days of high-level talks left no new trade openings for farmers and manufacturers, no global economic boost and no grand deal for Third World development.

"This is a very painful failure and a real setback for the global economy when we really needed some good news," said Peter Mandelson, the European Union's trade commissioner.

His disappointment was shared by top negotiators from the United States, Brazil and India, who have played leading roles since the World Trade Organization launched its current trade round in the Qatari capital of Doha in 2001.

Faced with global unrest from rising food prices, credit problems from shaky financial markets and the threat of economic downturn, negotiators hoped that a deal this week to open farm and industrial markets would go some way to alleviating these problems.

The talks had made greater progress than they had in years. The talks hit a snag over an obscure "safeguard" for protecting agricultural producers in the developing world from a sudden surge in imports or drop in commodity prices.

While farm import safeguards currently exist in rich and poor countries, they are rarely used and reflect only a minute portion of the billions of dollars in manufacturing, farm and services gains the WTO's Doha trade round was supposed to create.

"In the face of global food price crisis, it is ironic that the debate came down to how much and how fast could nations raise their barriers to imports of food," said U.S. trade representative Susan Schwab, who resisted attempts by China and India to ensure a loophole for developing countries allowing them to increase farm tariffs as part of an agreement.

Schwab called the measure "blatant protectionism."

India's trade minister, who was blamed by a number of rich and poor countries for his intransigence this week, said the U.S. demands were unreasonable.

"It's unfortunate in a development round we couldn't run the last mile because of an issue concerning livelihood security," Kamal Nath told reporters.

The most significant WTO meeting in three years aimed to pull off a broad compromise that, in short, would have let poor countries sell more produce to rich countries while giving the U.S., 27-nation EU and Japan new chances for their manufacturers and service providers in the emerging markets of Brazil, China and India.

This was the tradeoff that eluded a WTO ministerial meeting in Cancun, Mexico, in 2003, and Hong Kong two years later. Gatherings in Geneva in 2006 and Postdam, Germany, last year also failed to produce the breakthrough, but pressure was higher because of the likelihood that the United States and other key trading powers would lose interest amid administration changes over the next couple of years.

"I am extremely distressed," said Foreign Minister Celso Amorim of Brazil, which broke with many developing countries by accepting a would-be deal last week brokered by WTO chief Pascal Lamy. "It was hanging on a thread. The thread didn't hold."

Schwab appeared downcast when she first began to brief reporters. She said negotiators were "so close" last week, but then stopped speaking. Asked if the entire Doha trade round was over, she answered: "I didn't say that."

Before abruptly walking away, Schwab said she was disappointed that Lamy's package "is not going to carry the day."

U.S. officials were bitter after agreeing under the deal to limit U.S. farm subsidies deemed to unfairly distort international trade to under $14.5 billion. Although it is still above actual payments to American farmers, it was a far lower level than Washington had ever accepted and seemed to gain the support of all 153 WTO members.

Some took the U.S. movement as an important step, noting that it came after a contentious five-year, $291 billion farm bill that maintained and even extended a number of U.S. subsidy programs. But others noted that offers were made without any congressional weight, citing President Bush's lack of a "fast track" authority to submit a trade deal to Congress for a yes-or-no vote.

India's Nath at one point called Schwab an "impostor."

The debate over farm subsidies has taken on added significance amid the recent spike in food prices around the world. Poorer nations say the payments distort global farm markets and hinder the development of sustainable agriculture in the Third World.

But without a final deal, Europe will not be required to open up its farm markets to emerging powers in Latin America and elsewhere. Brazil, China, India and other fast-growing developing nations won't have to ease access to manufacturing imports from the rich world. And the U.S. will not have to make any tough decisions now on the billions of dollars in farm subsidies it pays out each year to American growers of cotton, soybean, rice and other staples.

"For any outside observer, someone coming from another planet, it must be hard to understand how, after all the progress we made, we were not able to conclude" a deal, Brazil's Amorim said.

The EU's Mandelson, who also tried to bridge differences at the end, said it was a "collective failure."

"But the consequences will not be equal," he said. "They will fall disproportionately on those who are most vulnerable in the global economy, those who needed the chances and the opportunities most from a successful trade round, those from the developing countries who really needed and deserved a break. I am afraid they have not received that today."

Associated Press writers Alexander G. Higgins and Eliane Engeler contributed to this report.

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