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WTO seeks to restore confidence in trade pact talks

business Updated: Jun 23, 2007 11:54 IST
WTO

World Trade Organisation (WTO) chief Pascal Lamy sought on Friday to restore hope in a Doha free trade pact, saying negotiations would carry on in Geneva despite the collapse of key talks between four major powers.

Lamy said the failure of ministers from Brazil, India, the United States and European Union to bridge their differences in Potsdam, Germany, this week did not mean the long-sought accord could not be clinched.

"You now have a unique opportunity to demonstrate that this deal can be successfully closed," he told a meeting of the Trade Negotiating Committee, the WTO's Doha steering group, in Geneva.

"The need now is for urgent action to restore confidence that these negotiations can and will be finished successfully."

The Potsdam meeting broke up at the half-way stage on Thursday after developed and developing nations were unable to agree on how much to cut farm subsidies and industrial tariffs.

Lamy, a former EU trade chief, said while an accord between the four powers would have helped, the WTO's 150 member states would keep up talks aimed at reaching a draft deal by August.

He has repeatedly warned that without a breakthrough soon, the nearly six-year-old free trade round could be put on hold for several years or fail altogether, risking more protectionism and trade disputes.

Launched in the Qatari capital in 2001, the WTO's Doha talks aim to generate an agreement on boosting cross-border commercial flows and easing poverty by giving developing countries more chances to trade. But the round faced problems from the start, mainly over the highly sensitive issue of agriculture.

Washington and Brussels have demanded that any deal that significantly cuts agriculture protections must open new export markets around the world in farming, manufacturing and services.

Developing economies, who are looking for new opportunities to export their farm and manufacturing goods, argue it is unfair for rich nations to seek big new market access in return for cutting trade-distorting farm subsidies and tariffs.

"SEE WHAT WE CAN DO"

In Potsdam, Commerce and Industry Minister Kamal Nath said that the United States had told the closed meeting it was ready to drop its ceiling for farm subsidies to an annual $17 billion from the some $22.5 billion it had been offering.

But both Brazil and India said this was still more than Washington now spent and were unwilling to move on industrial tariffs or on opening up their own farm markets further.

U.S. Agriculture Secretary Mike Johanns said the United States and EU had both made "good faith" efforts in the talks, while Brazil and India had arrived assuming that the four powers would not come together.

"Unfortunately, they weren't there to negotiate," he said.

Brazilian President Luiz Inacio Lula da Silva told British Prime Minister Tony Blair by telephone on Friday that his country would press on with efforts to secure a deal.

"Brazil won't abandon efforts to finalise the round in a balanced way. It will continue to contribute to work in Geneva with the other WTO members," a spokesman in Brasilia quoted him as saying.

US Trade Representative Susan Schwab said Washington was similarly not prepared to give up on an agreement.

"The US will work with any country or any group willing to try to bring this together," she said.

Still, a senior Indian trade official, who did not wish to be identified, said wrapping up the round by year-end would prove very difficult. "It needs a miracle," the official said.

At Friday's steering group meeting in Geneva, Lamy said he did not believe setting short-term deadlines would be helpful but asked member states to "put your cards on the table over the coming weeks in Geneva" to advance the beleaguered negotiations.

The chairs of the WTO's negotiating committees on farm and industrial goods will soon present draft proposals for bridging differences in those issue areas, as previously planned, to further nudge the talks along.

But New Zealand's WTO ambassador Crawford Falconer, who chairs the agriculture negotiating group, said his paper would not be released next week as first anticipated in order to let the dust settle in the wake of Potsdam.

"A farmer doesn't plant his field in the middle of a hurricane," he said.

(Additional reporting by Surojit Gupta and Unni Krishnan in New Delhi, Ray Colitt in Brasilia, and Robert Evans in Geneva)