WTO talks collapse amid farm row

Geneva -- Marathon talks to salvage a global trade pact collapsed on Tuesday as the United States and India refused to compromise over a proposal to help poor farmers deal with floods of imports.

The World Trade Organisation (WTO) Director-General Pascal Lamy announced the ministerial meeting seeking a breakthrough of the Doha Round had collapsed.

The ministers were "simply not able to bridge their differences ", Lamy told a press conference after the breakup of negotiations by trade ministers from some 35 major WTO members.

The high-level talks ended after nine days and produced no new trade openings for farmers and manufacturers, no global economic boost and no grand deal for Third World development. By all accounts it was a bitter failure.

Chinese Commerce Minister Chen Deming expressed his regret that the talks had broken down over a proposal to help poor farmers cope with import surges, despite flexibility by China on a range of trade areas, according to a statement.

The "tragic failure" is a serious setback to the troubled world economy, Chen said.

China had shown willingness to compromise on a proposal restricting developing countries' ability to shield entire industrial sectors from lower tariff cuts. It had indicated its willingess to liberalise some services sectors, he said.

"In the face of a world economic downturn, serious inflation and imminent financial risks, the failure will have a major impact on the fragile multilateral trading system," Chen told fellow ministers at the trade talks.

The Chinese minister's sentiment was shared by other top negotiators at the talks.

"This is a very painful failure and a real setback for the global economy at a time when we really needed some good news," an emotional EU Trade Commissioner Peter Mandelson told reporters.

Mandelson said it was "a collective failure" for all WTO members, who had expected to achieve a full Doha Round trade deal by the end of the year and give the downturn world economy a necessary boost.

It's "unbelievable" that the ministerial talks failed, and "I am extremely distressed," Brazil Foreign Minister Celso Amorim said.

"For any outside observer ... it must be hard to understand how, after all the progress we made, we were not able to conclude (a deal)," he said.

Indian Commerce and Industries Minister Kamal Nath also said it's "unfortunate" that the talks had failed. But he expressed hope that the remaining issues in the Doha Round could be picked up again.

"It's unfortunate in a development Round we couldn't run the last mile because of an issue concerning livelihood security," Kamal Nath told reporters.

While most ministers tried to avoid a blame game after the collapse of talks, US Trade Representative Susan Schwab pointed her finger at emerging economies India and China.

"Certain members sought increased flexibilities that would have allowed them to apply tariffs that, in some cases, would exceed their current WTO bindings," she said.

But trade sources close to Tuesday's negotiations said that the stiff position of United States actually caused the failure, particularly its stance on cotton subsidies.

According to the sources, Tuesday's negotiations by the "G7" ministers broke up mainly due to sharp differences on agricultural SSM (special safeguard mechanism) for developing countries and cotton subsidies by the United States.

The "G7" refers to the United States, European Union, Japan, Australia, Brazil, India and China, which account for some 80 percent of world trade.

The SSM is a mechanism which allows developing countries to raise farm tariffs if imports surge, thus protecting the interests of poor farmers.

Sources said that six members of the "G7" had reached consensus on the SSM issue, except the United States.

In the G7 meeting, US Trade Representative Susan Schwab also refused to talk about cutting of huge US cotton subsidies, which is a major concern for poor cotton farmers in African countries.

WTO chief Pascal Lamy confirmed at a press conference that the failure was mainly due to sharp differences on agricultural SSM for developing countries and cotton subsidies by the United States.

Cotton was an issue that was "not even negotiated," Lamy said.