- The Washington Times - Monday, August 25, 2003

Trade negotiators yesterday struggled to find a compromise on a global trade deal as the clock winds down to a crucial meeting next month in Cancun, Mexico.

The World Trade Organization’s 146 members want to spur economic growth and development in poor countries by reducing subsidies and tariffs for agriculture, manufacturing and services. But they have not been able to agree on a formula to do that.

Delegates in Geneva yesterday commented on a much-anticipated text, released Sunday night, that ministers would sign when they meet Sept. 10-14 in Cancun. The paper would set the agenda for the final leg of trade negotiations.

Carlos Perez del Castillo, chairman of the WTO’s governing council, pushed governments to agree on an end to subsidies that distort farm prices and to lower tariffs on all goods.

The WTO’s 146 members, who are still staking out negotiating positions in the run-up to Cancun, said Mr. Perez del Castillo’s 21-page text is flawed.

“In some cases, he hit the mark by improving texts that were presented earlier. In other cases, he missed the mark in the hopes of forging consensus,” said Richard Mills, spokesman for the U.S. Trade Representative Office.

Negotiators have had limited success reaching consensus thus far — they have missed all significant deadlines since the last major meeting for trade ministers in November 2001.

Failure to reach an agreement at Cancun would recall 1999’s meetings in Seattle, when trade ministers left empty-handed and protesters disruputed meetings.

“Cancun represents an important mid-point in the negotiations — it is not the end of the negotiations. It is about narrowing the issues and making sure that we can proceed to finalize agreements,” Mr. Mills said.

The ultimate goal is to boost world economic growth with an agreement before January 2005.

Topics under negotiation include access to medicine for poor countries, lower industrial tariffs, food labeling, and agricultural subsidies and exports.

Agriculture, the centerpiece of the talks, was completely stalled until the United States and European Union earlier this month offered a compromise proposal.

Since then, five additional proposals from individual or groups of countries have surfaced. Brazil is leading a bloc of 17 countries, including China and India, with one set of alternatives.

Agriculture has most divided WTO members. Countries like Australia and Brazil, for example, criticized the joint U.S.-EU proposal as not doing enough to limit subsidies.

Mr. Perez del Castillo called for countries to eliminate export subsidies but did not set a deadline, frustrating some WTO delegates.

“When you look at the ambition we are seeking in agriculture, it just doesn’t stand up,” Australian Ambassador David Spencer said from Geneva, according to the Associated Press.

“So far I can tell you that I like our proposal much better,” said Brazilian Ambassador Luis Felipe de Seixas Correa, AP reported.

The 15-nation European Union and the United States pay farmers some of the heaviest subsidies in the world. The United States pays farmers about 18 percent of farm receipts, while the EU figure is 36 percent, according to a study by the Organization for Economic Cooperation and Development.

The U.S.-EU plan does not eliminate subsidies, but shifts them from production-based formulas, which severely distort commodity prices, to less trade-distorting types of aid.

Developing country farmers complain the subsidies lower world prices and rob them of a decent living.

Protectionism and subsidies by industrialized nations cost developing countries about $24 billion annually in lost agricultural and agro-industrial income, according to a study released yesterday by the International Food Policy Research Institute, a Washington-based group funded by other governments and private foundations.

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