WTO Talks Must Not Become `Tug of War,' Rachid Says

By Jennifer M. Freedman

July 21 (Bloomberg) -- Wealthy nations must resist allowing make-or-break talks at the World Trade Organization this week from becoming a ``tug of war'' between the demands of domestic pressure groups and the needs of poor countries, Egypt's trade chief said.

Trade ministers from about three dozen key governments including the U.S., China, the European Union and Brazil kicked off talks in Geneva today, seeking to clinch a deal to break down market barriers in agriculture, manufactured goods and commercial services.

The U.S., the EU and Japan are seeking wider markets for their manufactured goods, saying developing countries such as India and Brazil must cut tariffs on industrial goods or risk destroying almost seven years of global trade talks. Developing nations are determined to pry open the rich world's markets for exports of commodities such as rice, beef and wheat.

``As the end of trade talks approaches and the `lobbying' begins in earnest, it is vital for developed countries not to leave it to others to fight the development corner,'' Egyptian Trade Minister Rachid Mohamed Rachid said in a statement as the talks began. ``Members must resist the temptation to use the week's negotiations as a tug of war between what they want and what they are prepared to concede.''

`Real Value'

EU Trade Commissioner Peter Mandelson and U.S. Trade Representative Susan Schwab say emerging nations will be on the spot this week to open their markets or risk scuttling the talks -- the last chance to strike a deal before the U.S. presidential election. The discussions will focus on potential tariff and subsidy cuts on agricultural and industrial goods.

Speaking today at the opening session of the talks, Mandelson said he believed an agreement would be fair to emerging economies.

``There will be an unprecedented development outcome in farm reform, and the new goods trade flowing from the package should also bring real value for developing countries,'' he said. ``But we will also not allow explicit development questions such as preference erosion, cotton, aid for trade or a crucial global extension of duty-free quota-free market access to slip off the agenda.''

For the summit to be a success, the WTO's 152 members will have to agree on so-called modalities -- the key percentages for tariff cuts that would form the basis for any comprehensive deal.

Fuel, Food Prices

Slowing growth in advanced economies and high food prices that threaten increased starvation in the southern hemisphere give added urgency to the talks, which have been dogged by tensions between rich and poor since they began in Doha, Qatar, in 2001.

``Soaring fuel and food prices are a stark reminder of the continuing inequalities of global agricultural trade,'' Rachid said. ``Developed countries are today responsible for the greatest distortions in the global trading system.''

Repeated appeals by political leaders worldwide have failed to lock up a deal. In the latest declaration, heads of the Group of Eight industrial powers earlier this month pressed for an ``ambitious, balanced and comprehensive'' accord.

A breakthrough in WTO talks ``would infuse confidence in a world economy buffeted by high food and energy prices as well as financial strains,'' World Bank President Robert Zoellick said yesterday.

When the talks started, the World Bank estimated that a deal would inject as much as $850 billion annually into the global economy. The refusal of trading powers in the northern and southern hemisphere to make significant concessions has whittled that figure down to $50 billion to $100 billion, WTO Director-General Pascal Lamy said last week.

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