WTO drafts proposal for major cuts in farming subsidies

CANCUN, Mexico -- The World Trade Organization issued a draft resolution Saturday to force member countries to cut farm subsidies, but it didn't go as far as many developing nations have demanded and some called it unacceptable.

All 146 members of the global trade organization were reviewing the proposal and were scheduled to discuss and amend it through today. The final document -- put together by the meeting's chairman, Mexican Foreign Secretary Luis Ernesto Derbez -- could have a major impact on the world's farm trade.

Developing countries, led by Brazil, India and China, asked for the elimination of all subsidies for goods being exported, and major cuts in subsidies for domestic farm products. But the proposal appeared to stop short of what they asked.

The document does not set a date for the elimination of export subsidies and offers smaller reductions than the developing countries had demanded of the domestic payments.

"The document is very far from addressing the points we wanted," said Brazilian Foreign Minister Celso Amorim, speaking only for Brazil. "I think we have a lot of negotiation ahead of us."

The proposal "has arbitrarily disregarded views and concerns expressed by us," said Indian Commerce Minister Arun Jaitley.

Other developing countries were harsher. "For the credibility of the WTO, the final text can't look like this," said Hegel Goutier, a spokesman for a grouping of African, Caribbean and Pacific nations.

EU Agriculture Franz Fischler said the bloc was still unwilling to set a date for the final elimination of all export subsidies, but that the paper overall was "a basis we are ready to work with, even though it adds serious headache to the stomach ache we already had."

Canada, which had been one of the strongest proponents of a complete end to export subsidies, said the text was acceptable.

In a statement, U.S. Trade Representative Robert Zoellick said there are "positive elements and there are other elements we will work to improve and clarify." He did not elaborate.

"Now comes the crucial give and take toward a final document," he said.

Four African nations that produce cotton had been asking the WTO to ban cotton subsidies, saying farmers couldn't compete with their counterparts in rich nations despite lower production costs. The draft didn't give them much either.

"It's pretty lousy," said Nicolas Imboden, an adviser to the government of Benin. "They're buying time."

Security was stepped up at the convention center where the meeting was being held.

Guards searched the bags of reporters and nonprofit organizations' members, confiscating anything that seemed to have an anti-WTO slant.

Hundreds of protesters staged an hours-long standoff with police on Saturday, cutting through metal barricades, throwing feces at police and threatening to storm the WTO meeting.

The group dispersed peacefully after several hours, failing to break through police lines. Many still declared Saturday's actions a victory.

"The WTO has definitely failed," protester Rafael Alegria said, drawing cheers from the crowd.

The document also proposes beginning talks in two new areas: improving cross-border transportation procedures and transparency in the awarding of government contracts. A decision on how to start negotiations in the contentious area of investment rules would follow, while the possibility of negotiations on competition policy have effectively been abandoned.

Swiss negotiator David Syz said his country, one of those that had been pressing for talks to start on all four issues, could "live with" the compromise, but it wanted to see a fixed date for the future start of negotiations on investment.

Officials were hoping the document would lead to a breakthrough after four days of difficult talks. WTO members have agreed to try to cobble together a global trade treaty by the end of next year, but they have missed several important deadlines and a failure to agree in Cancun could jeopardize negotiations.

If approved unanimously, the document will set out in detail the system by which governments will negotiate a binding treaty by the end of next year. Poor countries said it was a matter of life and death.

"If (rich countries) don't succeed, there will be some consequences for some part of their population," Goutier said. "If we don't succeed, the consequences will be serious for most of our population."

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Associated Press writer Niko Price contributed to this report.

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