25 Jul 2008

Hopes of reaching world trade deal revive

8:59 pm on 25 July 2008

Ministers hailed an emerging trade deal on Friday, as compromise proposals revitalised deadlocked talks at the World Trade Organisation.

But they warned that much work was still needed to get full agreement on the delicately crafted proposal.

"What's on the table is not perfect, it's not beautiful, but it's finally put together what will be a genuine boost for the world economy and particularly good for developing countries," European Union trade chief Peter Mandelson said.

"There is an emerging deal but not a done deal," Mr Mandelson said after a make-or-break meeting of ministers.

The optimistic tone was a remarkable turnaround from the gloom at the WTO earlier in the day, when Director-General Pascal Lamy warned the Doha round of talks were on the brink of collapse because of the refusal of countries to negotiate.

And it represented an endorsement of Mr Lamy's strategy of restricting the talks to seven key countries to crack open the toughest issues, ranging from caps on farm subsidies to limits on special treatment for developing countries.

Compromise proposals

One of the key elements in the compromise was a cut in US farm support to $US14.5 billion, improving on Tuesday's offer from United States trade representative Susan Schwab of $US15 billion, one third of the current ceiling but double current outlays which have fallen as food prices soared.

Developing countries say US and European subsidies deter their own farmers from producing, contributing to the current food crisis. They also object to the high level of protection that rich country farmers enjoy.

But rich countries want improved access to the markets for industrial goods and services in emerging nations such as Brazil, India and China in return for freeing up their own farm sectors.

And developing country food exporters such as Thailand and Brazil differ from importers like India and Indonesia who want to keep barriers up to protect their subsistence farmers.

"No one is happy with every detail," Australian Trade Minister Simon Crean told reporters. "But there is acceptance in the main that as a package it's the basis for moving forward and as a package it has to be accepted in the totality, not trying to pick apart aspects of the details."

Indian Commerce Minister Kamal Nath, whose tough stance earlier in the week was blamed by many colleagues for the deadlock, sounded more cautious, saying: "There are certain areas of concern, there are certain areas of consensus."

Ms Schwab said ministers had reached tentative agreement on the way forward, but added: "I think the biggest concern that we have is that a handful of large emerging markets really threaten this round for the rest of us."

And Argentina, an important food exporter, with strong reservations about the industry aspects of the talks, said the document "was not acceptable in its current form".

Another hurdle is likely to arise on Saturday, when Mr Mandelson presents the package to the 27 European Union member states.

On Saturday negotiators will also look at the prospects of liberalising services such as banking and telecommunications.