World trade talks suspended, maybe for years [audio report]

WTO chief Pascal Lamy

GENEVA - Global free trade talks, billed as a once-in-a-generation chance to boost growth and ease poverty, collapsed today after nearly five years of haggling and resurrecting them could take years.

The decision to halt the World Trade Organisation's (WTO) Doha round came after trading powers failed in a last-ditch bid to overcome differences on reforming world farm trade, which lies at the heart of the round.

"Faced with this persistent impasse, I believe that the only course of action I can recommend is to suspend the negotiations across the board," WTO chief Pascal Lamy told the 149-state body.

Acknowledging suspension could turn into the effective death of the free trade negotiations, Lamy said it was up to WTO members to decide when they were ready to resume and that this could take "not a little bit of time."

The round, launched in the Qatari capital in 2001, stumbled from the start over how far rich nations would go to dismantle their huge farm subsidies and open up their markets.

Indian trade minister Kamal Nath, when asked how long the suspension could last, said: "Anywhere from months to years."

"The round is not dead. I would say that it is definitely between intensive care and the crematorium," he said.

Fourteen hours of talks on Sunday between the so-called G6 -- the United States, the European Union, Brazil, Australia, Japan and India -- yielded no breakthrough despite a threat from Lamy to call a halt without progress.

The European Union, Japan, Brazil and India suggested the blame lay with the United States. The EU and India said Washington had been demanding too high a price for cutting into the some $20 billion it spends annually on farm subsidies.

Accusing the United States of "stone-walling," EU Trade Commissioner Peter Mandelson said: "Surely the richest and strongest nation in the world, with the highest standards of living, can afford to give as well as take."

But the United States was adamant neither the EU nor India had been prepared to offer the sort of access to their markets that Washington needs to make a deal on subsidies worthwhile.

It has said all along it preferred no deal to one that brought it no new business.

"Unfortunately as we went through the layers of loopholes ... we discovered that a couple of our trading partners were more interested in loopholes than they were in market access," said US Trade Representative Susan Schwab.

Lamy warned that a "failure (of the round) would send out a strong negative signal for the future of the world economy and the danger of a resurgence of protectionism."

Despite the debacle, all members of the G6 said they remained committed to the multilateral trading system and to completing the Doha round, even if they could not say how or when the negotiations could be revived.

The crisis recalled a similar breakdown in 1990 during the previous round of free trade negotiations -- the Uruguay Round. That round, launched in 1986, was only finished in 1993.

The Doha round's suspension could speed up bilateral and regional trade deals. The EU has said its priority is Doha but it plans other, more focused deals especially in Asia where the United States has been active.

The WTO had been hoping to complete negotiations on the Doha round, which also includes complex issues such as services and anti-dumping rules, by the end of the year.

But the setback in Geneva left it bereft of a target date and with a host of potentially complicating international events on the horizon, including several elections and expiry next year of US presidential powers to negotiate trade deals.

Brazil's foreign minister said it was important for talks to resume as soon as possible and that progress made so far, including a pledge by the EU to end farm export subsidies, not be removed from the negotiating table.

"The silver lining is that all those who spoke continue to be committed (to the round)," said Celso Amorim. "

Some diplomats expressed surprise that the United States had not made even a cosmetic move to cut it subsidies, saying that this could have put more heat on the EU.

Industrial tariffs, where Brazil and other big developing countries are under pressure, were not even discussed on Sunday.

- REUTERS