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Trade talks fail over impasse on farm tariffs { July 25 2006 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2006/07/25/business/worldbusiness/25trade.htmlhttp://www.nytimes.com/2006/07/25/business/worldbusiness/25trade.html
July 25, 2006
Trade Talks Fail Over an Impasse on Farm Tariffs
By TOM WRIGHT and STEVEN R. WEISMAN
GENEVA, July 24 — Negotiations aimed at reaching a new global trade agreement collapsed here Monday, touching off a bitter new round of recriminations between the United States and Europe over farm trade barriers and dealing a blow to the Bush administration’s international economic agenda.
After two days of wrangling by negotiators from six leading trade nations and blocs, the director general of the World Trade Organization, Pascal Lamy, formally suspended the talks, declaring that he no longer had hope of overcoming resistance in wealthy countries to sharply reducing domestic protection for their politically powerful farm industries.
With the apparent failure of the negotiations — which have been proceeding in fits and starts for five years — went the hopes expressed recently by President Bush and the leaders of other industrial nations for a deal they have said would create jobs at home while reducing poverty in Asia, Africa and Latin America. The World Bank called a trade deal essential to its goal of alleviating human suffering.
The breakdown in the talks does not mean that the global effort to reduce trade barriers is dead. But there now appears to be little chance of a trade accord being negotiated before the end of President Bush’s term in office.
A deal, its proponents said, would have benefited Americans by greatly expanding the exports of farm products, reducing prices for a variety of food and creating new opportunities abroad for insurers and other financial services providers. Nearly 30 percent of American agriculture products are exported.
But some farmers and their representatives in the United States had grown concerned that whatever new markets were gained would not offset the reductions in government subsidies contemplated by the trade talks. The farm lobby is so powerful in Congress that its opposition would doom the chances of any deal’s winning legislative approval.
American trade officials said that with the suspension of the trade talks, and the wide gap between the United States and the European Union on reducing tariffs and other barriers on farm goods, there seemed little prospect of anyone coming back to the table anytime soon.
“This is a serious failure we find ourselves in, and the question is how do we regroup,’’ the United States trade representative, Susan C. Schwab, said.
The European Union’s agriculture commissioner, Mariann Fischer Boel, added, “It is a big failure and whether it is going to be definitive, only time will tell.’’
The pessimism about future talks was rooted in a timetable laid down by Congress, which gave Mr. Bush the authority to negotiate a trade deal, and get a simple up-or-down vote on it, without amendments. That authority expires on June 30, 2007.
Negotiators had said that without at least the broad outlines of a trade accord in place this summer, it would be hard for Congress to approve it before then. Beyond that, lawmakers in Washington are notoriously resistant to trade deals because they almost always come with a loss of some jobs at home, even when there are price advantages for consumers in products like cotton, grain and sugar, and gains particularly for American exporters.
The failure of the talks was especially embarrassing because at the Group of 8 meeting in St. Petersburg, Russia, earlier this month, Mr. Bush and other leaders had called for a redoubled effort to break the impasse on farm goods. The goal was also to create opportunities for African, Asian and Latin American countries to gain stronger footholds in the global economy by growing more crops for export and developing basic industries that would help put their vast numbers of unemployed and underemployed to work.
The collapse of the current talks at the W.T.O. is unlikely to stop trade from expanding, business groups said, mainly because trading powers like the United States and the European Union will continue to sign two-way and regional trade agreements. But it could introduce a higher level of tension into the global economy and contribute to growing pressures for more subsidies and domestic protection, rather than less.
Before the talks fell apart, the Europeans on Sunday evening had offered to move further than they had previously to reduce tariffs on agricultural imports, European and Indian officials said, but adding that Ms. Schwab and Agriculture Secretary Mike Johanns said the offer did not go nearly far enough.
As a result, the American officials said, they would not formally propose the concessions they said they would be prepared to make to get an agreement. The impasse involved both tariffs and what are called trade-distorting subsidies that enable farmers to compete with farm imports.
“We are ready to be flexible,” Mr. Johanns said. “There just was nothing there to grab onto to let us take that step.”
But European negotiators said that Washington had been intransigent in not recognizing that the European Union had gone through a series of painful cuts in tariffs and subsidies for its own farmers. They also said the prospective American concessions were not as significant as the Americans contended they were.
“Unfortunately, the Americans were not able or willing to do their part,” the European trade commissioner, Peter Mandelson, argued. “They preferred to stand still.”
The United States maintains that the Europeans are far more protective of their farmers and need to do much more because their tariffs on farm products are already twice those of the United States. The Bush administration had called on Europe to cut average farm tariffs by 66 percent and for big developing nations like India, Brazil and China to reduce them by 44 percent.
The Americans also proposed to cut those subsidies that most violate the principle of free trade by 60 percent. But the Europeans said this cut left intact certain subsidies and price supports, long part of American farm programs, to help farmers cope with periodic economic slumps.
Mr. Lamy, the World Trade Organization chief, had spent the week since the St. Petersburg meetings in fruitless private consultations with various trade envoys, asking them what they would be prepared to give up if others made similar concessions. He declined, though, to blame one side or the other.
“There are no winners or losers in this assembly,” he said. “Today, there are only losers.”
Developing nations like Brazil and India have been demanding that the big industrial nations tear down tariff walls and eliminate billions they spend annually protecting their farmers before the third world begins to open markets to Western manufactured goods and services.
Given the history of rough going in Congress for trade deals, the Bush administration concluded that it could not get approval for an agreement involving cuts in help to American farmers without those farmers’ being assured of more access for their products in Europe, India, China and elsewhere.
The administration considered itself stymied because the farm bloc has become so distrustful of protectionist practices overseas, including the use of health and safety standards in Europe, that it warned officials against a trade deal that only incrementally improved exports.
In recent years, the European Union has reduced subsidies to farmers, defying what has always been a powerful bloc, particularly in France but also in Britain, Germany and other countries. In the end, Europeans made common cause in blocking further tariff cuts with countries like India and Indonesia, where farmers are also powerful.
India’s trade minister, Kamal Nath, said after the talks collapsed that it was unacceptable for his country to reduce aid and price supports for farmers, because the long round of talks, begun in Doha, Qatar, in 2001, was supposed to help poor nations more than rich ones. India has been jolted by news of farmers’ committing suicide in recent months.
It was not clear where any trade discussion might go now. The World Trade Organization, founded in 1995 in an effort to deepen trade liberalization begun after World War II, could become a forum for an array of complaints filed by farmers and manufacturers in its 149 nations.
But the Bush administration said it remained committed to the W.T.O. and would try to see if there was interest in reviving the talks later this year. Ms. Schwab said such efforts would take weeks and probably months. It is theoretically possible, though unlikely, for Congress to extend Mr. Bush’s negotiating authority past next year or to give a future president such authority in 2009, continuing the Doha process.
Christine Lagarde, the French minister for foreign trade, was quoted by Agence France-Presse as saying in Paris: “There have been other rounds before Doha that lasted much longer than foreseen, which dragged on, and one cannot rule out this being the case for the Doha round. For now, we are somewhere between a long delay and failure.”
Trade has continued to grow in recent years despite wrangling at the World Trade Organization. Worldwide merchandise exports, which exclude services, increased to $9.12 trillion in 2004 from $6.45 trillion in 2000, according to W.T.O. statistics.
But the worry, said Celine Charveriat, head of Oxfam’s fair trade campaign, is that two-party agreements leave out the poorest countries, many of them in Africa, that the Doha round was supposed to help.
“We are concerned,’’ she said, “that the European Union and the United States will turn to damaging regional trade agreements to break open developing-country markets.”
Tom Wright reported from Geneva for this article and Steven R. Weisman from Washington.
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