labels: Economy - general, World Trade Organisation
Free trade hopes fade as WTO talks collapse news
30 July 2008

Kamal NathMumbai: Hopes of free trade ended with the collapse of the nine-day WTO ministerial talks as the developing countries led by India and China refused to buckle under US pressure and yield on the issue of safeguards to farmers against a import surge.

Pascal Lamy, director-general of the World Trade Organisation declared defeat on Tuesday. ''There is no use beating about the bush. This meeting has collapsed,'' he said.

While India and China insisted on protection for their poor farmers against a surge of imports from the rich countries, whose farm goods exports are heavily subsidised, the US, facing an economic downturn, was not ready to yield ground.

China blamed ''selfish" wealthy Western countries for the failure, while Japan pointed the finger at India and China, the two fastest growing economies. Japan blamed the two growing economic powers for not shouldering greater responsibilities in the WTO.

China's official Xinhua news agency said the negotiations at Geneva collapsed because the United States and the European Union were not prepared to scrap huge subsidies they pay their farmers.

Not only that the US and the EU were protective of their farm lobbies, they also put huge pressure on poor countries to cut tariffs on industrial imports and throw open their financial services markets to Western banks and insurers.

"This selfishness and short-sighted behaviour has directly caused the failure of this WTO ministerial meeting, which will have a number of serious consequences," Xinhua said.
Chinese commerce minister Chen Deming also gently chided India for what he called the "tragic failure'' of the talks.

He said talks had floundered over differences between two countries meaning US and India - over a proposal to help poor farmers cope with import surges.

The US tried to stretch too far in harping on better access for service sector and lower tariffs for manufactured goods and better farm-market access (i.e., lower tariffs on food products) while not matching cuts in its trade-distorting subsidies. The farm lobby in the US has the muscle power to see that the US Congress pass a new $300 billion farm bill over President Bush's veto.

Americans anyway were getting a better deal from a Doha deal that gave their industrial goods and services better access to emerging markets.

But, New Delhi has dismissed the idea that India had been obstructionist.

Commerce and industry minister Kamal Nath rued the collapse of the talks, but, he said there was nothing much to discuss as the US and the EU stood firm on not negotiating their stand.

''It is unfortunate that in a development round we could not move because of the issue of livelihood security. G 33 and the developing countries are concerned about the issues which affect the poor and subsistence farmers," he said.

Kamal Nath said the higher threshold on which Washington insisted would risk ''the livelihood of millions of farmers" in his country.

''I kept saying 'No, I don't agree' at every point, I come from a country where 300 million people live on $1 a day and 700 million people live on $2 a day. So it is natural for me, and in fact incumbent upon me, to see that our agricultural interests are not compromised. You don't require rocket science to decide between livelihood and commercial interests," Kamal Nath was quoted as saying.

Kamal Nath said he still had faith in the institution of WTO, adding, all work that has been put in will remain intact and we will take this up and move forward.

Amidst a blame game by the bigger players like the US and the emerging giants like China and India, smaller countries like the Philippines said they would suffer most.

''It's a fight among what the United States wants, what China wants, what the US wants of other big countries - and it is difficult for a third country like us," Eduardo Ermita, executive secretary to Philippines trade minister, said.

A worried India Inc blamed the US, the European Union, India and Brazil for the collapse of the trade talks

''The the big loser now was multilateralism. The responsibility should be shared jointly by India, Brazil, the US and the European Union,'' said TK Bhaumik, chairman of the economic affairs panel of the Associated Chambers of Commerce and Industry.

''It is a big setback for multilateralism and it is now clear that multilateralism has no future," Bhaumik said.

The WTO has clearly failed to clear the several fault-lines running through the talks negotiators failed to reconcile the different political and economic priorities of the body's 153 members.

The mood has, in fact, turned to bilateralism and China, especially has formed new links with other WTO members, especially developing countries.

Chile and Australia also signed the latest two-way deal in Canberra, shortly after the WTO talks broke down.

Australian foreign minister Stephen Smith, however, said his country would let the dust settle on global talks and then try to work a way forward.

A failure of the talks would also affect a global deal on more complex issues like climate change and soaring food and energy prices.

The developed and developing nations have been at loggerheads ever since the WTO talks began in Doha in 2001. The latest round comes at a time when inflation is high and global economy is sagging.

A successful conclusion of the Doha Round of trade talks was expected to give a $100 billion boost to global commerce.

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Free trade hopes fade as WTO talks collapse