Differences emerged between developing countries over a key issue in the World Trade Organization (WTO) farm talks, a crucial part of struggling global free-trade negotiations.
At stake is the degree to which poorer food-importing countries can protect their farmers in any eventual tariff-cutting WTO deal by designating certain products as “special”.
Pakistan, backed to a greater or lesser extent by a number of developing country farm exporters such as Brazil, Uruguay and Thailand, proposed a plan to limit these special products.
But in a closed-door meeting, it met strong resistance from big food-importing countries such as India and Indonesia, diplomats said.
“We are seeing some of the negotiating blocs begin to crumble,” said one Latin American diplomat referring to developing country alliances that have been an important feature of the WTO negotiations so far.
Farm trade has long been a major stumbling block to any new free-trade agreement. WTO chief Pascal Lamy says a deal must be concluded this year or the negotiations could fail completely, dealing a severe blow to the multilateral trading system.
India and Indonesia have millions of subsistence farmers, who they say, could be ruined by import surges.
WTO hopes to wrap up a global trade deal by the end of this year, but the political calendar, especially in the US, is encouraging some of the major actors to play a waiting game.
After plunging into the deep freeze last year, WTO’s “Doha round” of talks seems to have perked up after a flurry of high-level contacts in recent weeks.
But as Lamy underlined on a visit to Washington this week, which was dominated by meetings with members of Congress, time is of the essence and there is “no plan B” should Doha fail.
WTO members face an uphill battle to conclude a deal before 30 June, when US President George W. Bush’s “Trade Promotion Authority” (TPA) to speed such pacts through Congress, expires.
Speaking after talks on Wednesday with the US trade representative Susan Schwab, Lamy said the Doha round was “nearing crunch time” on the pivotal issues of farm trade and industrial market access.
“We need Congress to be aware that activity, motion, determination, progress in a renewal of Trade Promotion Authority is important for the momentum in the negotiations,” he said.
The WTO chief said it was up to the big developing countries to play a breakthrough role along with the two most powerful players in the process, the US and the European Union (EU).
Only through concessions from the likes of India and Brazil can the US Congress even entertain the idea of renewing TPA. “It’s much easier to do that with something on the table than in a sort of vacuum,” he said.
This month in New Delhi, Schwab and trade chiefs from the EU, India, Brazil, Australia and Japan said they believed that through harder work, “we can reach convergence and thus contribute to concluding the round by the end of 2007”.
The Doha round, launched in 2001 in the Qatari capital, has repeatedly missed deadlines as wealthy and developing nations have struggled to strike a deal on opening up trade in agricultural and industrial goods, and services.
The meeting marked the first time the leading trade powers had assembled for talks since the Doha discussions collapsed last July.
Even if a quick breakthrough can be achieved, and that remains an open question, the TPA issue is a major complicating factor.
The Democratic-led Congress shows little appetite for handing Bush a new fast-track authority, and thus from June is likely to regain the power to take apart any trade deal line by line.
And as noted recently by Max Baucus, the Democratic chairman of the Senate’s powerful finance committee, there is still less incentive to renew TPA without the impetus of a Doha deal on the horizon.
“Obviously the content of the outcome is more important than a specific deadline and I suspect Pascal heard that from the (Capitol) Hill,” Schwab said. “Let’s step up the pace to see if we can get this done and shoot for the end of the year, give or take,” she added.
Reuters contributed to this story from Geneva.