WTO Dispute Leaves Talks on Global Trade at Impasse

By Jennifer M. Freedman

July 29 (Bloomberg) -- World Trade Organization talks entered their ninth day as a standoff between India and China on one side and the U.S. on the other threatened to derail efforts to reach a global accord liberalizing commerce.

Progress in the Geneva negotiations ground to a halt yesterday as the U.S. accused the two nations of refusing to open their fast-growing markets to foreign competition and snubbing a compromise on agriculture and industrial goods. One of the main sticking points is the trigger for special safeguards, which would enable developing countries to raise agricultural tariffs to protect their farmers in case of a surge in imports.

WTO chief Pascal Lamy and trade ministers from seven governments, which together represent 80 percent of global commerce, resumed discussions today in a bid to resolve the impasse. Ministers from some three dozen key nations met earlier today and delegates from all 153 WTO members will meet informally later in the day.

``Many ministers'' have already left Geneva, said Samiha Fawzy, first assistant to Egypt's trade minister. ``This is not a good sign.''

There is ``a delicate balance that we achieved on Friday night, and I'm very concerned'' that the positions taken by China and India'' will jeopardize the outcome of this round,'' U.S. Trade Representative Susan Schwab said in Geneva yesterday. ``There's a real risk because those countries are advocating selectively reopening the package.''

New Proposal

India and China refuse to accept key elements of a compromise put forth by Lamy four days ago and refined by ministers over the weekend, according to the U.S. India never endorsed the proposal and China is now ``backtracking'' in its support, Schwab said.

Yesterday, India accepted a revised proposal by Lamy on the safeguard measures. The U.S. has yet to endorse the change.

Under Lamy's initial compromise, when imports of an agricultural product rise 40 percent, duties can be imposed -- a level India argued was too high to protect its farmers. The latest proposal removes the threshold and permits a developing nation to apply the measure to any farm imports if the product is shipped in quantities or at prices that cause ``demonstrable harm'' to a country's ``food security, livelihood security and rural development needs.''

China, the world's fourth-biggest economy, dismissed the U.S. criticism, saying concessions have been made that demonstrate its commitment to a global trade deal and willingness to compromise.

`Tried Very Hard'

``We have tried very hard to contribute to the success of the round,'' WTO Ambassador Sun Zhenyu said yesterday. It's U.S. rigidity in areas such as sensitive products and trade-distorting farm subsidies that is impeding the talks, he said.

Relations between developing nations have also deteriorated in the last week, Egypt's Fawzy said. Groupings such as the G-20 alliance of farm commodity-exporting countries have crumpled as governments focus on their own national interests, she said.

``Developing countries are not as homogenous as before,'' she said. ``The differences and the gaps between the different developing countries are huge. Each country is looking for its own national interests, not the collective interests of the group.''

Industrialized nations' negotiating strategy now is designed to protect domestic industries from Chinese exports, Fawzy said.

``It's not China that's going to lose, it's the other developing countries,'' she said.

To contact the reporter on this story: Jennifer M. Freedman in Geneva at jfreedman@bloomberg.net