Race against time to revive world trade talks

With just two months remaining before a deadline for a framework global trade treaty, ministers from the largest trade powers will gather today to tackle once more the thorny issue of US and EU farm subsidies.

Both US Trade Representative Rob Portman and European Union Trade Commissioner Peter Mandelson – among the ministers from World Trade Organisation members expected to meet in Zurich, the Swiss commercial capital – are under pressure to make difficult concessions, trade officials say.

WTO director general Pascal Lamy has said that the EU and the US will have to make adjustments in agriculture policy if progress is to be made in the present round of global trade talks, which is already well behind an original December 2004 deadline.

Lamy, who will also be at the Zurich talks, believes the EU needs to open its market more to foreign producers while the US should offer to cut the level of financial support it gives its farmers, his spokesman, Keith Rockwell, said.

“Movement in those two areas would be helpful not only for the agriculture negotiations overall, but for the entire round,” he said.

A ministerial meeting in Paris last month failed to break the deadlock, although the EU took a step in that direction, presenting a detailed, but tentative, offer to cut import tariffs at talks with Portman and ministers from India and Brazil.

That move put the US under pressure to make concessions of its own, but Washington has so far resisted demands to come up with an offer to cut market-distorting farm aid, saying it first wants to see moves by trade partners to reduce agricultural import tariffs.

“We have responsibilities as large as the EU has,” a senior US government official, who refused to be named because the US was still formulating its response, said ahead of the talks. “But we have to (make concessions) in a context where other countries also have to make the appropriate contributions.”

At a Hong Kong summit scheduled for the end of the year the WTO’s 148 members are supposed to agree on an outline for a global trade deal.

EU farm reforms adopted in 2003 will convert the bulk of the bloc’s production subsidies into animal-welfare and environmental-management grants to farmers - deemed far less trade-distorting under WTO rules.

Washington envisages no such change to its current subsidy regime, which provides payouts to farmers when prices fall, allowing US producers to charge artificially low prices.

Washington’s trade partners say the cuts they are seeking would mean changes to the 2002 US farm bill, which comes up for renewal in 2007. After that, a new global trade treaty would be harder to negotiate, diplomats say.

Some trade negotiators, however, were already downplaying the Zurich talks, saying that while ministers would have a chance “to talk candidly”, they would not progress to the nitty-gritty of numbers and formulas for slashing tariffs and cutting trade-distorting subsidies. But others were demanding results.

Crawford Falconer, a New Zealand diplomat who heads the WTO’s agriculture committee, said he was disappointed with the lack of progress in recent days.

“If there’s no demonstrative political movement next week, we’ll be condemned to the same kind of journey around the house,” Falconer said.

The Doha round – named for the Qatari capital where it was launched in 2001 - is set to conclude next year. It sets out to boost the global economy by lowering trade barriers across all sectors – with particular emphasis on developing countries.