By  on June 22, 2007

Crucial trade talks among the U.S., the European Union, Brazil and India broke down on Thursday, dealing another blow to the six-year effort to reach a new agreement intended to pump billions into the worldwide economy.

The discussions in Potsdam, Germany, collapsed because of discord as to whether the U.S. and EU would make deep enough cuts to farm subsidies and import duties on commodities.

"Unfortunately, what we have here today was not going to generate new trade," U.S. Trade Representative Susan Schwab said at a news conference with U.S. Agriculture Secretary Mike Johanns. "There were more barriers put up to dialogue than the talks could sustain."

Schwab said the position taken by Brazil and India would harm developing nations.

"The biggest losers from the current status of negotiations will be the dozens and dozens of developing countries who need to be exporting, not just to the mature markets of the developed world, but also to the markets of the advanced developing countries," she said. "And that includes countries like Brazil, like India, like China."

However, Celso Amorim, Brazil's foreign minister, and Kamal Nath, India's minister of commerce and industry, said offers on cuts to tariffs and agricultural subsidies fell short of their expectations. Brazil and India declined to accommodate the demands by Washington and Brussels over market access for industrial goods, especially in the case of Brazil, and agricultural products and industrial goods in the case of India.

"It was useless to continue the discussions based on the numbers that were on the table,'' Amorim said.

In a bid to save the talks, World Trade Organization Chief Pascal Lamy has called a special meeting for today of the 150 countries taking part in the overall negotiations, known as the Doha Round.

The talks launched in November 2001 in Doha, Qatar, with the aim of lowering barriers to global trade in goods and services valued at more than $14 trillion a year. The aim was to generate billions for the global economy and help poorer nations to develop. However, major differences between rich and poor countries over how to lower agriculture subsidies, and also tariffs for both farm and industrial goods, including textiles and apparel, have derailed discussions several times.Negotiators had been trying to establish a framework for an overall deal by the end of July in order to reach a final accord by the end of this year. After that, elections in the U.S. and India and potential policy changes could further stymie the talks.

Several WTO ambassadors, speaking on the condition of anonymity, said the prospects in the short term were gloomy. Top diplomats who took part in the Potsdam conference described the atmosphere as one marked by "a lot of brinksmanship and a lot of pretty cold shouldering."

Peter Mandelson, EU trade commissioner, said in a statement, "We would not be able to point to any substantive or commercially meaningful changes in the tariffs of emerging economies as a reasonable return on what we are paying into the round."

In Geneva, the G90 — a group that includes poor countries from Africa, Asia and the Caribbean — released a statement echoing Schwab's contention that it stood to lose the most from the breakdown.

U.S. textile groups were not disappointed by the impasse.

"If you study what had already been agreed to in the text, U.S. manufacturers were going to be asked to pay a heavy price under this round through the sharp reduction of U.S. duties without full reciprocal treatment on the part of many WTO trading competitors," said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. "The handwriting was already on the wall: If [U.S. negotiators] were going to draw a tough line on agriculture, U.S. manufacturers were going to be made to pay a price for that." — With contributions from Kristi Ellis, Washington, and Ross Tucker, New York

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