In global trade talks that have largely centered on the conflicting interests of rich and poor nations, a dispute between the United States and Europe over farming is throwing negotiations dangerously off course.
The showdown, played out in Geneva this week and likely into the autumn, could help determine whether the Doha round of trade talks will make a major leap toward its scheduled conclusion next year or risk collapsing.
On the surface, Europe and the United States would seem to have little to fight about. Political leaders in Europe and the United States agree that farm trade must be made fairer for developing countries and that barriers must be reduced.
But the two are unable to agree on how to get there, each unwilling to make concessions on issues such as tariffs and subsidies until the other moves first.
Washington's chief agriculture negotiator, Allen F. Johnson, casting doubt on the European Union's willingness to reduce its tariffs, said in an interview that without more E.U. action such as cutting tariffs and subsidies, "it's hard to see how others, including the U.S., can push their own reform."
E.U. officials use similar language, saying that they think their own proposals take them "off the hook" and that the ball is in the U.S. court.
Agriculture has long been the focus of the current round of talks, which also includes opening manufacturing and services trade. According to a World Bank study late last month, almost two-thirds of the economic gains that would come from dismantling all merchandise trade barriers would come from agriculture. Poor nations, many of which rely on farming, are reluctant to make concessions in areas important to the United States and the E.U. until they are convinced the richer players are making farm concessions first.
"The only people who can really break the standstill are the U.S. and the E.U.," said Amy Barry, trade specialist at aid group Oxfam International.
Talks this week were supposed to produce a plan for a final Doha package. Ministers from the 148 member nations of the World Trade Organization were then to fill in the details at a meeting in Hong Kong in December. The risk is that that much of the preparation for the Hong Kong meeting will not be done, raising the prospect that the meeting could go nowhere and make it all but impossible to complete trade talks by late next year.
Finishing Doha next year is vital to the negotiators. They fear that in 2007, when the administration's fast-track power over trade deals is set to expire, Congress will have vastly increased powers to block U.S. approval.
Europe maintains that it has taken steps toward compromise that the United States has not matched, agreeing in China earlier this month to begin work on a new tariff-cutting formula that appears to make the biggest cuts to tariffs on products with the highest levies.
The E.U. wants the United States to further limit domestic subsidies, focusing especially on countercyclical payments the government makes to farmers when prices fall. Such payments swing widely but can be large. In 2003, they amounted to $655 million. But they then jumped to $5.6 billion in 2004. The United States has offered to limit such subsidies, but only if the E.U. will follow suit.
Europe also is eager to see the United States overhaul its food-aid program, which, in E.U. eyes, amounts to a production subsidy. Under the U.S. program, the government buys food such as corn from its farmers and donates it to poor countries. Europe says the United States should instead consider new policies such as providing poor nations with money they could use to buy food closer to home.
The United States says that as it provides 60 percent of the world's food aid, it would be foolish to end the program, especially during talks that are supposed to help the poor.