WTO Talks Break Down Over Farm Aid, Jeopardizing Deal

Negotiations among four key World Trade Organization governments over a new global agreement collapsed today, with India and Brazil blaming U.S. and European unwillingness to cut farm aid.

Trade and farm ministers from the U.S., the European Union, India and Brazil began what was to be almost a week of talks on June 19 in Potsdam, Germany, aiming to reach a breakthrough on cutting agriculture subsidies and lowering hurdles for goods crossing borders. Today's collapse may spell the end of the Doha Round of talks.

``It was very clear at lunchtime and was said at lunch that it was useless to continue the discussion based on the numbers on the table,'' Brazilian Foreign Minister Celso Amorim told reporters. ``The decision not to continue with the negotiation was not ours.''

The breakdown mirrors last July's collapse, when negotiations among the four government plus Japan and Australia disintegrated, prompting WTO Director-General Pascal Lamy to suspend discussions. Without a deal among the four governments, the Doha Round that began in late 2001 and has yet to meet any deadlines may fail or be put on hold for years because of elections and ensuing policy changes in the U.S. and India.

U.S. Offer

Indian Commerce Minister Kamal Nath said the U.S. offered to cap its overall spending on trade-distorting domestic support at $17 billion. Brazil and India, as leaders of the so-called G20 group of developing countries, are pushing for an annual U.S. spending limit of between $12 billion to $15 billion. The U.S. has said it can cut more, but only if advanced developing nations and the U.S. open their markets more to U.S. farm goods.

``If this is to be called a development round, we need to correct the flaws in terms of subsidies,'' Nath said. ``There is no logic or equity'' in the U.S. offer.

Nath said he is ``very disappointed'' about U.S. and EU demands for developing nations to reduce applied industrial tariffs.

European Trade Commissioner Peter Mandelson said earlier this week that the Potsdam meeting ``cannot finish the Doha Round, but it will determine if Doha can be finished.''

When the talks caved in last year, the EU, Brazil, India and Japan blamed U.S. unwillingness to cut farm subsidies. Mandelson said at time that his U.S. counterpart was unwilling ``to accept or even acknowledge the flexibility of others shown in the room.''

Amorim said today's collapse is ``a setback,'' though multilateral trade discussions ``are not dead.''

source:www.bloomberg.com