Five years of WTO talks crash amid bickering

GENEVA — In the end, there was finger-pointing and plenty of blame to spread around for the collapse of world trade-liberalization talks Monday.

But what it boiled down to is that a deal touted as a way to lift millions of people out of poverty floundered because six of the World Trade Organization's most powerful members failed to agree on trade in farm and manufactured goods.

"We are in dire straits," said Pascal Lamy, WTO director-general after members called a halt to more than five years of commerce-liberalization talks.

There was no new timetable for completing the round. Lamy said he did not intend to propose any new deadlines or a date to resume meeting.

The 25-nation European Union criticized U.S. intransigence over agricultural subsidies for the breakdown, while the United States blamed Brazil and India for being inflexible on cutting barriers to industrial imports and the EU for refusing to make deeper cuts in its farm-import tariffs.

The talks were important for the Northwest economy. Agreement on agriculture was to pave the way for other trade deals on lumber, software and aircraft.

Possible impact of WTO talks' collapse

Lost opportunities: Backers estimated the world's economy stood to gain upwards of $125 billion from the combination of lower import tariffs, reduced farm subsidies and other measures to boost trade globally.

Increased tensions: Protectionist pressures, already felt on both sides of the Atlantic, could be reinforced.

Alternative deals: Major economic powers could turn to individual deal-making, negotiating bilateral and regional agreements that often penalize developing countries which have less collective muscle.

More WTO trade cases: The EU and the United States, the biggest payers of domestic farm subsidies, could face more challenges on agricultural issues. Brazil has already won big cases against the United States over cotton and the EU over sugar.

Progress at risk: Progress made during nearly five years of negotiation could disappear. The EU, for example, had agreed to end all direct subsidies to exporters of farm goods — the most trade-distorting form of subsidy — by 2013.

Source: Reuters

Tom Mick, head of the Washington Wheat Commission, expressed disappointment at their collapse.

"It's just a wicked battle going back and forth," he said. "It turned into a forum to promote your own parochialism. There's no spirit of camaraderie to find a solution."

Federal farm subsidies to the state, which reached nearly $200 million in the last fiscal year, are important to Washington local farmers. Yet the growers were willing to forgo subsidies under certain conditions to reach a WTO agreement.

It's too early to tell what the fallout from Monday's impasse will be, but countries are likely to scramble to make bilateral deals in place of an overarching global accord, a situation Mick doesn't see as ideal.

"Now we're going to see everybody wheel and deal," he said. In the long run, "it will hamper our ability to export," he added.

Washington exports 85 percent of its wheat but faces new competition from countries like Russia and Pakistan, he said.

"If there are no rules, I think we're going to be the losers," Mick said.

Group of Eight

Last week, presidents and prime ministers from the Group of Eight leading industrialized countries called a new trade deal a top priority. But that promise did not translate into real negotiating action during two days of meetings facilitated by Lamy between Australia, Brazil, the EU, India, Japan and the United States.

Now the whole process of agreeing to a binding treaty may have to be put on ice until after U.S. presidential elections in 2008, because President Bush's "fast-track" authority to strike trade deals expires next year.

Without that measure, which requires an up or down vote without amendments, it would be much harder to gain congressional approval in the U.S., the world's largest trading nation.

Bill Center, president of the Washington Council on International Trade, said he didn't think the stalled deal would necessarily have a major impact on the state.

"The impact is going to be more heavily felt in the developing world than it is here in the United States," he said.

Lack of a clear agenda by developing countries kept the talks from moving forward, Center said.

"This is a century-long project to write the rules of trade so they work for everybody," he said. "Now it's going to be delayed, but that's just part of the process."

Analysts have warned that a failure of the Doha round will lead to more bilateral trade pacts between nations, which are not expected to bring as many economic benefits as the multilateral deal.

More disputes

Some ministers also warned Monday that the suspension of the Doha talks, which were launched in Qatar's capital in 2001, might cause an increase in the number of trade disputes being brought to the WTO.

"This is a serious setback, a major setback," said Brazilian Foreign Minister Celso Amorim.

"It is somewhere between intensive care and the crematorium," India's Trade and Industry Minister Kamal Nath said of the Doha round, which aims to boost the global economy by lowering trade barriers across all sectors, with particular emphasis on helping poorer countries develop their economies through export growth.

Nath said "it could take anywhere from months to years" to restart the negotiations, which stalled as poorer countries demanded the EU and United States offer greater cuts in support for their farmers.

The U.S. and EU in turn want major developing countries like Brazil and India to allow more foreign competition in their industrial and services sectors.

But at times, the almost incessant sniping between the EU and the U.S. has appeared the greatest obstacle.

"The United States judged that it would be better for the process to be discontinued at this stage," said EU trade chief Peter Mandelson, adding he was disappointed the flexibility Bush indicated at the G-8 summit was not realized in negotiations.

"Surely the richest and strongest nation in the world, with the highest standards of living in the world, can afford to give as well as take," Mandelson said.

He added that the stoppage in negotiations "was neither desirable nor inevitable. It could so easily have been avoided."

But U.S. Trade Representative Susan Schwab said Lamy told U.S. negotiators there wasn't enough movement among other countries to put additional U.S. offers on the table.

She said the EU was trying to protect itself by blaming the U.S.

"The finger-pointing can't hide the fact that their average tariff is twice as high as ours and that their farm subsidies are more than three times what ours are," Schwab said on a conference call.

U.S. Agriculture Secretary Mike Johanns said proposals by other countries "appeared to be getting lighter and lighter in the last few weeks."

"There was just simply nothing there," Johanns said.

The U.S. indicated to its trading partners it could make greater cuts in its agricultural subsidies, Johanns and Schwab said.

Both declined to say whether Washington had made a concrete proposal.

Mandelson said the meeting broke down when the U.S. maintained its hard-line stance on farm support after all others had outlined where they could compromise.

"The U.S. was unwilling to accept or indeed to acknowledge the flexibilities being showed by others in the room and as a result felt unable to show any flexibility on the issue of farm subsidies," he said.

Plenty of criticism

Advocacy groups criticized both the EU and the U.S. for spending more time fighting one another and less time concentrating on the needs of poorer countries.

"You could give this four weeks, four months, four years or four centuries. It doesn't make a difference," said Matt Grainger, spokesman for international aid agency Oxfam.

"The U.S. and the EU refuse to accept that they have to cut their agricultural support," he said.

Associated Press reporters Andrew T. Robotham and Sam Cage in Geneva and Libby Quaid in Washington contributed to this report.

Seattle Times business reporter Kristi Heim contributed reporting on the state impact.