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Global Trade Talks Collapse Over Farm Aid

By BRADLEY S. KLAPPER
The Associated Press
Monday, July 24, 2006; 5:07 PM

GENEVA -- WTO members called a halt to more than five years of commerce liberalization talks Monday as differences over farm aid proved unbridgeable.

Pascal Lamy, director-general of the World Trade Organization, said a deal billed as a recipe for lifting millions of people worldwide out of poverty would not be reached by the end of the year and there was no new timetable for completing the round.

"We are in dire straits," Lamy said after six of the WTO's most powerful members failed to agree on steps toward liberalizing trade in farm and manufactured goods. He said he did not intend to propose any new deadlines or a date for negotiators 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.

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 George W. 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.

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.

Some ministers also warned Monday that the suspension of the Doha talks, which were launched in Qatar's capital in 2001, might also 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 that 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 that he was disappointed that 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, adding 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 that it could make greater cuts in its agricultural subsidies, Johanns and Schwab said. But both declined to say whether Washington had made a concrete proposal.

Mandelson said the meeting broke down when the U.S. maintained its hardline stance on farm support programs 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.

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."

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

© 2006 The Associated Press