Negotiations among four key World Trade Organization (WTO) members over a new global agreement collapsed with India and Brazil blaming American and European unwillingness to cut farm aid.
“Talks have failed as India refused to dilute its stand on agricultural market access,” said Union commerce minister Kamal Nath. “There was no question of India making any compromise,” he added.
Trade and farm ministers from the US, the European Union, India and Brazil began what was to be almost a week of talks on 19 June in Postdam, aiming to reach a breakthrough on cutting agriculture subsidies and lowering hurdles for goods crossing borders.
The breakdown mirrors last July’s collapse, when negotiations among the four governments and Japan and Australia disintegrated, prompting WTO director-general Pascal Lamy to suspend discussions. Without a deal among the four governments, the Doha Round, that began in late 2001 and has yet to meet any deadlines, may fail or be put on hold for years because of elections and ensuing policy changes in the US and India. However, in a statement issued after the collapse of talks Lamy said that the talks “will continue in Geneva.”
Nath said the US offered to cap its overall spending on trade-distorting domestic support at $17 billion. Brazil and India, as leaders of the so-called G-20 group of developing countries, are pushing for an annual US spending limit of between $12 billion and $15 billion.
“If this is to be called a development round, we need to correct the flaws in terms of subsidies,” Nath said. “There is no logic or equity,” in the US’s offer, he added. The US now spends $10.8 billion a year on support payments that distort market prices to its farmers, Nath said. A ceiling of $17 billion would represent “a 50% increase,” he added.
US trade representative Susan Schwab has said the US can cut more but only if advanced developing nations and the EU open their markets to more US farm goods.
The current round of global talks aims to add billions of dollars to the world economy and lift millions of people out of poverty through new trade flows. But negotiations have struggled since their inception six years ago, largely because of wrangling between rich and poor countries over eliminating barriers to agricultural trade.
The issue of farm tariffs is politically charged in a number of European countries, particularly France. Critics of the subsidies say they unfairly deflate international prices, making it impossible for poorer nations to develop their economies by selling their agricultural produce abroad.
On Wednesday, officials said India held firm in defending its agricultural sector from foreign competition. “India cannot afford to strike any global deals at the expense of the farming community,” said Satyavrat Chaturvedi, a spokesperson for the Congress party, the largest constituent of the ruling United Progressive Alliance (UPA) government.
“The developed nations now clearly know that they cannot ignore the demands of Brazil, Russia, China, and India,” said D. Raja, national secretary of the Communist Party of India. However, trade analysts said India stood to lose because of the failure of the talks. “Because of the bad state of Indian agriculture, we have no negotiating position,” said Biswajit Dhar, a professor and head, Centre for WTO Studies, Indian Institute of Foreign Trade. “The situation for us now is that because of the failure of talks we are not going forward in areas of (our) strength, especially services.”
Another trade analyst, who did not wish to be identified, said “the stakes in a more global trade order are that much more” for a country that is “expanding” its economy rapidly. “In that sense the collapse (of talks) is a loss to India,” he added.
The four powers do not have a mandate to negotiate on behalf of the all of the WTO’s 150 members, but as their positions cover the range of positions in the Geneva-based commerce body, agreement by them on some of the outstanding farm trade and manufacturing questions was seen as a key test of whether an overall trade deal can be reached.
(Bradley S. Klapper of AP, PTI, and Mint’s Sangeeta Singh contributed to this story.)