Mandelson: WTO talks are in trouble

World Trade Organisation talks appeared to be in peril today with the EU trade chief Peter Mandelson saying they were “going backwards,” and cotton, banana and sugar growing nations threatening to reject any trade deal that failed to protect their farmers.

“It is hard to see where progress can be achieved in Hong Kong if the talks continue in this direction,” Mandelson said.

“The level of ambition, if anything, is going backwards.”

The Group of 77 African, Caribbean and Pacific countries, many of whose populations are subsistence farmers relying on crops such as sugar, cotton and bananas, demanded safeguards for commodity growers and continued preferential access to European markets.

Their objections were the latest blow to the WTO talks that have made barely any progress toward agreeing how much to cut trade barriers in any of the three main areas: agriculture, manufactured goods and services.

Since the 149-nation WTO operates by consensus, the controversy could undermine the outcome of the six-day gathering that wraps up on Sunday.

“We will not be a party to any consensus that that does not recognise our right to grow bananas,” said Charles Savarin, trade minister of the island of Dominica.

“We must preserve our traditional access to the EU markets.”

The EU’s system of tariffs and quotas favours Caribbean and African banana producers over large-scale growers in Latin America, preferential treatment the WTO has ruled violates world trade rules.

Caribbean and African countries say ending the preferences could destroy their domestic banana industries, which are mostly small-scale family farms. But Honduras has threatened to reject any global trade deal that preserved the preferences.

Warning that trade talks risk failure, a broad group of nations including India, Brazil and Australia urged fellow trade delegates to re-focus on resolving the “core” issue of farm trade, where talks have been stalemated for months. Talks so far have spent considerable time discussing aid proposals for the world’s poorest countries.

The European Union and US are holding up the talks by failing to offer more cuts in government support for their farmers, members of the Group of 20 leading developing nations and the Cairns Group of major food exporters said in a statement.

“It is time for them to display leadership,” said the groups, which represent 27 nations and more than half the world’s population.

A senior American trade envoy directly involved in this week’s closed-door discussions, meanwhile, said talks were “being held hostage to a failure of our developed country partners to come forward with ambitious offers to agricultural market access” – a swipe at the EU’s refusal to match a US offer to cut duties used to protect farmers from foreign competition.

Mandelson, lashed out at that criticism, saying the EU would not alter its stance.

“We are going to stick to our position,” he said, adding that developing nations seemed to expect the EU to settle for fewer opportunities in industrial trade while agreeing to make more concessions in agriculture.

“In other words, pay more to get less in return,” he said.

In the lone sign of concrete progress at the meeting, negotiators agreed on a draft text for a package that would give 32 of the WTO’s least developed nations duty-free, quota-free access, Indian and Indonesian officials said.

Delegates reached a compromise with limited exemptions insisted on by some countries, including Japan, the US and Switzerland. The US was reluctant to give duty-free access to textiles from Bangladesh, while Japan has problems with putting rice on the list.

“I think its acceptable to all developed and developing countries,” Indonesian Trade Minister Mari Elka Pangestu told reporters.

Delegates expressed frustration with the limited progress.

The US, EU, Japan and other rich nations sent delegates who weren’t allowed to be flexible enough to make deals, said Mexico’s secretary of economy, Sergio Garcia de Alba.

“They sent their negotiators with papers, but also with straitjackets that don’t let them move,” Garcia said.

“This week has turned more into a gripe session than a negotiation,” he added.