Global trade talks reached a serious impasse yesterday, with many fingers of blame pointed at familiar targets: the European Union and especially France, which are resisting calls to open Europe's heavily protected agriculture markets.
Two days of meetings in Geneva broke up with no agreement among the most influential countries in the World Trade Organization on the broad outlines of a deal on farm trade, the key issue in the global talks. Rob Portman, the U.S. trade representative, said that while most of the participants offered meaningful concessions toward opening their markets, the E.U. did not -- an assessment echoed by other trade ministers and advocates for the world's poor.
The upshot is that the global talks appear to have reached their gravest moment since the collapse of a WTO meeting in Cancun, Mexico, two years ago. The talks, known as the Doha Round because they began in the capital of Qatar in 2001, are intended to reach an agreement to sharply curtail trade barriers and government subsidies -- especially in agriculture -- among the WTO's 148 member countries. Economists say such an agreement would benefit developing countries in particular because so much of their economies are devoted to farming.
"The failure of the E.U. to put forward a real market access proposal has put the benefits of Doha at risk," Portman said in a conference call with reporters. "I'm not trying to be melodramatic, but we are very close to [a] drop-dead date" for preventing a collapse at the WTO's next major meeting, scheduled for December in Hong Kong.
"We are now down to days," Agriculture Secretary Mike Johanns said. "If something isn't put together by the end of this month, then I do really believe that this Doha Round is in real jeopardy. Certainly the Hong Kong meeting would be in jeopardy."
The E.U. drew an extraordinary amount of invective for allegedly stalling the talks, although the 25-nation bloc blamed other countries for failing to make concessions in areas other than agriculture, such as trade in services.
"The E.U. are the ones putting the [Doha] round under threat, and developing countries will suffer most," said Mark Vaile, Australia's trade minister, according to wire service reports from Geneva.
Oxfam, the international aid agency, said in a press release that "renewed deadlock in world trade talks due to lack of movement by the E.U. could scupper the chances of a deal being done by the end of the year and signal continued suffering for millions of poor farmers." Celine Charveriat, head of Oxfam's Make Trade Fair campaign, said, "Rear-guard action by the French and other E.U. member states is undermining even the minimal progress made."
European farmers have long enjoyed high subsidy payments and trade barriers. The average E.U. tariff on food and agricultural products is 31 percent, compared with 12 percent by the United States, according to the U.S. trade representative's office. France, the E.U. member that is most militant in sheltering its farmers from foreign competition, has tried strenuously in recent days to prevent E.U. Trade Commissioner Peter Mandelson from moving too far in the WTO negotiations.
At a meeting of E.U. ministers earlier this week, Philippe Douste-Blazy, the French foreign minister, said: "We are talking about major sectors of European agriculture. Jobs are at stake and our job is to defend them."
Portman and other top negotiators reacted angrily at the Geneva meetings when Mandelson did not improve on previous offers to open up European agriculture. Other countries and blocs did advance significantly from their previous positions, in response to a U.S. proposal last week to cut subsidies and tariffs, Portman said. They included the Group of 20 developing countries led by Brazil that up to now has resisted lowering barriers, and the G-10, a group of rich nations including Japan, Switzerland and Norway that have some of the most protected farm sectors in the world.
The E.U. lags well behind the G-20, Portman said, on the crucial issue of how many "sensitive" farm products can remain protected after a final deal is made. While the G-20 came close to matching the U.S. position by proposing that rich nations could exempt 1 percent of their farm products from tariff cuts and developing countries could exempt 1.5 percent, the E.U. still wants to exempt 8 percent of all products. Keeping the exemption level that high would wipe out many of the benefits of freer trade, according to the World Bank.
The E.U. proposal "is not being taken seriously," Johanns said.
Mandelson countered that the farm talks could go nowhere until other countries made more ambitious proposals to reduce barriers in areas where the E.U. is most eager to see liberalization.
Noting that Brazil and other developing countries have resisted cutting barriers to trade in services and manufactured goods until they are satisfied with the likely outcome on agriculture, Mandelson wrote in a letter to his negotiating partners: "If this situation continues, it will make it impossible for the E.U. to move further on agriculture because it will be impossible to persuade a sufficient number of our member states to do so." The letter was reported in yesterday's Financial Times.
Portman voiced some sympathy with Mandelson's demand for progress in the other areas, but said: "This round, from its inception, has had agriculture as its centerpiece. The E.U., and the United States, cannot wish that away."
"At this point, the meetings have disbanded," said Portman, who plans to return to Washington today. "But I'm prepared to come back next week, or the week after, or anytime there is a willingness on the part of the E.U. to pull together a market access proposal that meets the requirements of the Doha Round."