Doha Round in jeopardy as WTO talks collapse

Negotiations among four key World Trade Organisation governments over a new global agreement collapsed today, with India and Brazil blaming it on US and European unwillingness to cut farm aid and import duties on commodities.

Trade and agriculture ministers from the US, the European Union, India and Brazil began what was to be almost a week of talks on June 19 in Potsdam, Germany, aiming to reach a breakthrough on slashing agriculture subsidies and lowering hurdles for goods crossing borders. Today's collapse may spell the end of the Doha Round of talks.

Commerce Minister Kamal Nath said the US offered to cap its overall spending on trade-distorting domestic support at $17 billion. Brazil and India, as leaders of the so-called G20 group of developing countries, are pushing for an annual US spending limit of between $12 billion and $15 billion.

"If this is to be called a development round, we need to correct the flaws in terms of subsidies," Nath said. "There is no logic or equity" in the US offer.

The US now spends $10.8 billion a year on support payments that distort market prices, Nath said. A ceiling of $17 billion would represent "a 50 per cent increase," he told journalists.

Brazilian Foreign Minister Celso Amorim told reporters, "It was very clear at lunchtime and was said at lunch that it was useless to continue the discussion based on the numbers on the table." He added, "The decision not to continue with the negotiation was not ours."

The breakdown mirrors last July's collapse, when negotiations among the four governments, plus Japan and Australia disintegrated, prompting WTO Director-General Pascal Lamy to suspend discussions.

Without a deal among the four governments, the Doha Round that began in late 2001 and has yet to meet any deadlines may fail or be put on hold for years because of elections and ensuing policy changes in the US and India.

Once again, "the ball will now be in the court of Pascal Lamy," Amorim said.

US Trade Representative Susan Schwab has said the US can cut more, but only if advanced developing nations and the EU open their markets to more US farm goods.

The numbers presented by the US on domestic aid exceeded those demanded by the G20 while the EU's tariff-cut offers were insufficient, Amorim said.

"Whatever the version others may try to offer, the major divergences appeared in agriculture," he said.

European Trade Commissioner Peter Mandelson said the 27-nation bloc had made offers without reciprocal efforts on the part of the other governments.

"I firmly believe we constructed a landing range in agriculture which is fair and forthcoming for developing countries and takes to the limit what the EU can do," he told journalists.

Nath said he was "very disappointed" about US and EU calls for developing nations to reduce applied industrial tariffs. According to Mandelson, developing countries were asked to cut "only one in two tariffs by one or two percentage points," a demand he said was "not unreasonable."

Earlier this week, Mandelson said the Potsdam meeting "cannot finish the Doha Round, but it will determine if Doha can be finished."

He said today that the untimely end of the talks, which were supposed to run at least until June 23, doesn't spell the trade round's demise.

"It is not the end of the Doha Round," he said. "It places a very major question mark on the ability of the wider WTO membership to complete this round, but it does not in itself mean that the negotiations cannot be put back on track."

Amorim called today's collapse "a setback," though he, like Mandelson, believes multilateral trade discussions "are not dead."