A crucial meeting of the World Trade Organization’s four most powerful members has failed, officials said Thursday, dealing a major setback to efforts at reaching a new global commerce pact.
“It was useless to continue the discussions based on the numbers that were on the table,” Brazilian Foreign Minister Celso Amorim said after the talks ended two days ahead of schedule.
Brazil and India criticized the United States for its failure to offer deep enough cuts in the billions of dollars of subsidies it pays annually to American farmers.
The European Union and the United States said the two emerging economic powers refused to offer new market opportunities for manufacturing exports. Brussels and Washington added, however, that they were pleased with each other for showing flexibility.
“Trade agreements should generate new trade and lift people out of poverty,” U.S. Trade Representative Susan Schwab said. “Unfortunately what we have here today was not going to generate new trade.”
The White House said President Bush was disappointed that an opportunity to expand trade had been blocked.
“Large economies like Brazil and India should not stand in the way of progress for smaller, poor developing nations,” deputy press secretary Tony Fratto said.
The global talks known as the Doha round aim to add billions of dollars to the world economy and help poorer countries developing their economies through new trade flows. But negotiations have struggled since their inception six years ago in Qatar’s capital, largely because of wrangling between rich and poor countries over eliminating barriers to agricultural trade.
EU Trade Commissioner Peter Mandelson said the failure of the talks in Potsdam, Germany, “places a very major question mark over the ability of the wider membership of the WTO to complete this round.”
Indian Trade Minister Kamal Nath blamed U.S. unwillingness to cut its farm subsidies as the reason for the collapse of the talks.
Officials with knowledge of what happened in the talks said earlier this week that the U.S. indicated it was willing to limit its trade-distorting farm subsidies to $17 billion (12.7 billion euros). Brazil insisted on a figure somewhere below $15 billion (11.2 billion euros), according to the officials. The difference was closer than what the two countries have publicly stated.
Critics of the subsidies say they unfairly deflate international prices, making it impossible for poorer nations to develop their economies by selling their agricultural produce abroad.
Nath said the U.S. offer was unrealistic, considering it paid out an estimated $10.8 billion (8.1 billion euros) last year in trade-distorting subsidies. The U.S. proposal allows for an increase in subsidies by 50 percent, he said.
“There is no equity in this. There is no logic. There is no fairness,” he said.
U.S. Agriculture Secretary Mike Johanns said the U.S. had offered “real cuts” that would force Washington to make changes in its farm policy.
Offers by India and Brazil, he said, were “so far away, so lacking in any market access, it just literally cast a chill over all the discussions all week.”
“I could have done cartwheels off the roof of this building, and I’m not sure I would have gotten any response whatsoever,” Johanns added.
Washington has demanded that Brussels and major developing countries provide greater market access for American farm exports in exchange for the subsidy cuts. Both the U.S. and the 27-nation EU have said their agricultural concessions must be matched by moves to open up markets for manufacturing exports.
Mandelson also criticized India and Brazil for failing to offer concessions on industrial goods.
“We cannot negotiate with ourselves,” Mandelson said.
The four powers do not have a mandate to negotiate on behalf of the all of the WTO’s 150 members, but as their positions cover the range of positions in the Geneva-based commerce body, agreement by them on some of the outstanding farm trade and manufacturing questions was seen as a key test of whether an overall trade deal can be reached.
WTO negotiators are trying to agree on the framework of a deal by the end of July, leaving enough time for the technical work on a final accord by year-end. Failure over the next six weeks could set the whole process back until 2010, as subsidy and tariff concessions are generally seen as unlikely in 2008, when U.S. elections will be held, and 2009, when Indian elections are scheduled.