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Global Trade Talks Reach an Impasse

Negotiations are halted as the U.S. and Europe spar over agricultural subsidies and tariffs.

July 25, 2006|Joel Havemann | Times Staff Writer

WASHINGTON — International trade talks, launched five years ago to reduce tariffs, quotas and other barriers to commerce worldwide, broke down in Geneva on Monday amid bitter recriminations between the United States and Europe.

Peter Mandelson, the chief trade negotiator for the European Union, charged that the U.S. sabotaged the talks by refusing to scale back domestic farm subsidies, which the Europeans say give American agriculture an edge in international competition.

Top U.S. trade negotiator Susan C. Schwab countered that the European Union had steadfastly refused to open its agricultural markets to foreign farmers.

"They have not been a profile in political courage," she said.

The talks, under the auspices of the World Trade Organization, were launched in 2001. Pascal Lamy of France, director of the WTO, suspended the negotiations indefinitely when officials could not reconcile their differences over agricultural trade.

The so-called Doha round of trade talks, named for the city in Qatar where they were authorized, could be resurrected. The last such global talks, the Uruguay round, were suspended in 1990, four years after they were launched, also in a dispute between the U.S. and Europe over agricultural trade. The negotiations were revived and resulted in an agreement in 1993.

Such an outcome for the Doha round seemed far away Monday.

U.S. business groups reacted with disappointment to the breakdown in the talks. John J. Castellani, president of the Business Roundtable, an association of the chief executives of 160 of the biggest U.S. companies, said American negotiators in Geneva had repeatedly said they would open U.S. markets to greater competition from abroad if trading partners would do the same.

Instead, Castellani said, Europe and other key trading partners chose to "surrender to protectionist pressures and keep their agriculture markets closed."

A group representing U.S. farmers also expressed regret about the scuttled talks.

"Freer and fairer agricultural trading rules would benefit all people of the world," said Bob Stallman, president of the American Farm Bureau Federation.

The European Union issued statements blaming the breakdown on a "rigid stance" by U.S. negotiators to calls for a reduction of government aid to domestic farmers.

Lamy said he decided to suspend the talks after a meeting Sunday of Australia, Brazil, India, the European Union and the U.S. failed to produce any movement on the disputes over agricultural trade.

Agriculture Secretary Mike Johanns, the other ranking U.S. official at the Geneva negotiations, used beef to illustrate what he called Europe's refusal to open its agricultural markets.

Johanns said the Europeans had proposed to reduce their tariff on most imported beef from 80% to 61%, which he termed "still a remarkable blocking of the market." Only 160,000 metric tons of beef would be allowed into the European Union annually without the tariff -- about 2% of the market.

"Can anybody seriously argue [that the proposal] is an increase in trade flow?" Johanns asked.

Mandelson, Europe's chief negotiator, said the Europeans had offered to cut their agricultural tariffs by an overall average of 50% if the U.S. would reduce its farm subsidies.

European Union Agriculture Commissioner Mariann Fischer Boel said, "We were prepared to walk the extra mile if a final deal was within reach. Unfortunately, the U.S. preferred to stand still."

Schwab replied, "We were the only country that put an ambitious proposal on the table."

In October, the U.S. offered to scale back farm subsidies in return for cuts in European tariffs. European negotiators rejected the offer, describing the proposed subsidy cuts as inadequate.

Marcia Miller, a former chairwoman of the U.S. International Trade Commission who as an aide to the Senate Finance Committee staff observed the Uruguay round of trade talks when they broke down temporarily in 1990, said she saw parallels between then and now.

"Multilateral trade negotiations typically go through a series of crises," said Miller, now a Washington lawyer. "This round is no exception. It isn't necessarily the end of the road."

But Gregg Doud, chief economist for the National Cattlemen's Beef Assn., was less hopeful, saying the Doha round involved many more major agricultural producers arguing over the supply of many more products.

"It's pretty hard to be optimistic," he said.

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(BEGIN TEXT OF INFOBOX)

The repercussions

The collapse of the talks could:

* Reinforce protectionist pressures on both sides of the Atlantic.

* Speed bilateral and regional trade deals, which critics say

put developing countries at a disadvantage because they have less collective muscle.

* Increase the number of disputes before the WTO, with the European Union and the U.S. most open to attack because of their farm subsidies.

* Put at risk some of the pledges and progress made in the nearly five years of negotiations.

Source: Reuters

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