WTO Talks End in Deadlock, Frustration Up Sun Feb 16,12:12 PM ET
TOKYO (Reuters) - The United States and Europe traded barbed comments Sunday after three days of WTO talks exposed deep divisions on agriculture and other issues that could put the latest round of world trade liberalization in jeopardy.
Putting a brave face on things, the head of the World Trade Organization (news - web sites) said there was still hope of meeting a March 31 deadline for reaching an agreement on farm trade reforms.
"I can say that things are moving, have moved, although we're not seeing the final agreement," WTO Director-General Supachai Panitchpakdi told reporters after the talks.
But Europe and Japan remained resolutely opposed to more drastic cuts in tariffs and export subsidies proposed by the United States and other big exporters, and the two main camps in the talks traded critical comments after the final session.
U.S. Trade Representative Robert Zoellick singled out the host nation for criticizm and said both Japan and Europe were allowing relatively small special interest groups to block progress on world trade that would benefit their economies.
"In our view they are sacrificing Japan's strengths on the altar of rice," Zoellick said, adding that Japan's farmers -- protected by rice import tariffs of 490 percent -- were holding the rest of the economy "hostage."
Zoellick also said the success of the current Doha round of trade liberalization depended on whether "a few key capitals in Europe can look over the hedgerows to see the big picture of the world economy."
Failure to meet the March 31 deadline would reduce the chances of the overall set of WTO negotiations -- on agriculture, services, manufactured goods and other sectors -- being wrapped up by the target date of January 2005.
The U.S. criticizm came a day after ministers from more than 20 WTO members sent back to the drawing board a compromise plan drafted by chief WTO negotiator Stuart Harbinson, after it failed to please either of the two main camps.
Harbinson said he hoped his second draft, to be written in the coming weeks, would be able to find a better compromise.
"I hope that they will take this paper and really start discussing with each other and trying to find ways to narrow the differences," he told reporters.
Harbinson's original plan called for an average cut of 60 percent in import tariffs on farm goods now protected by duties of more than 90 percent.
EU SLAMS US "DISTORTION"
While Washington and other free-trade advocates saw the proposed cuts in tariffs and export subsidies as not enough, Europe and Japan said the plan was weighted too far in favor of the big exporters.
EU trade commissioner Pascal Lamy hit back at Washington, saying the United States was guilty of distorting trade through its own agriculture subsidies.
"We want the U.S. system to be less trade-distorting. It is trade-distorting, and the money they're piling up year after year in the budget makes it even more trade-distorting," he said.
Both the EU and the United States pledged last year at trade talks in Doha, Qatar, to reduce tariffs and subsidies which hinder world commerce.
But relations have been undermined by a spat over tariffs on steel imports imposed by President Bush (news - web sites)'s government last March, by EU grievances over U.S. export subsidies and U.S. anger over Brussel's ban on genetically modified foods.
Developing countries are increasingly frustrated at the lack of access for their farm imports to developed world markets, particularly in highly protected Europe and Japan.
"The conservatives want to preserve a system that basically for other goods we surpassed decades ago," said Albert Trejos, Costa Rica's minister of foreign trade. "... The language of these last couple of days has been somewhat dismaying."
HOPE ON DRUGS
There was a glimmer of hope for progress on the vexed issue of allowing developing countries access to life-saving drugs.
Washington's demand that extra restrictions be placed on the kind of diseases to be covered has already caused the WTO's 145 member countries to miss an end-2002 deadline on the issue.
In a bid to break the impasse, Brazil floated a plan on Saturday that would allow the World Health Organization (news - web sites) to decide whether poor countries had the capacity to manufacture generic drugs themselves to tackle public health crises.
If not, they would be able to set aside patent rights and import copies of drugs developed by major pharmaceutical companies based in richer states from manufacturers in countries like India, Thailand and Brazil.
But Zoellick declined to comment specifically on the idea, saying there had been no formal proposal. (Additional reporting by Tim Large)