World Trade Talks Fail, Threatening a New Era of Protectionism ; BUSINESS ANALYSIS
Philip Thornton Economics Correspondent, The Independent (London, England)
The world was on the brink of a fresh outbreak of trade wars and protectionism yesterday after five years of fraught negotiation over a new trade deal ended in failure.
Hopes that a new agreement would create $300bn (pounds 162bn) of wealth and drag millions of people out of poverty were in tatters after a meeting of the major powers dissolved into bitter acrimony.
Last-ditch talks between the six most powerful trading blocs collapsed after they failed to strike a deal to slash farm subsidies, the issue that has threatened to sink the talks since they were launched in 2001.
The failure opens the way to an increase in trade wars and protectionism that will slow economic growth and worsen global poverty, experts said. It will also trigger a fresh round of bilateral trade deals that would favour rich countries at the expense of small nations.
It marked the end of five years of fraught negotiations and experts warned that several more years would pass before new talks could begin.
Richard Lambert, director-general of the CBI, said: "This is as serious as it could possibly be. The collapse of the talks puts the whole multilateral trading system in jeopardy."
The six most powerful trading blocs -the EU, US, Brazil, India, Australia and Japan - suspended talks after just 14 hours of a planned two-day session.
The meeting had been called after the heads of state of the Group of Eight rich nations used their annual summit in Russia to order trade negotiators to return to the bargaining table.
Ministers from the "Big Six" immediately began a round of mutual recrimination while anti-poverty campaigners accused rich countries of sacrificing the livelihoods of the world's poor to meet their own political agendas.
Peter Mandelson, the EU's trade commissioner, blamed the US, saying it was the only country to fail to respond to the G8's call. "The US was unwilling to acknowledge the flexibility being shown by others and, as a result, felt unable to show any flexibility on farm subsidies," he said.
Brazil also suggested the US was most at fault for the collapse of the talks on Monday, saying negotiations on farm subsidies had made least progress.
India and Japan also joined in the fray. Kamal Nath, the Indian finance minister, said all countries improved their offer "except one country".
The US trade representative Susan Schwab, who has been under domestic pressure not to give more ground, said the EU was trying to protect itself by blaming the US. "Their average tariff is twice as high as ours and their farm subsidies are more than three times what ours are," she said.
Hopes of a trade deal had come to rest on a three-way deal - dubbed the "golden triangle" by Pascal Lamy the head of the World Trade Organisation, which arbitrates the negotiations. Under his plan, the EU would have cut its tariffs on farm imports, the US would have cut its domestic agricultural subsidies, while developing countries would have opened up their industrial goods markets to the West.
The US has demanded that countries cut tariffs by more than 60 per cent, but was attacked over its $22bn-a-year farm budget.
The EU agreed to eliminate export subsidies by 2013 and raised its offer to cut tariffs to 51.5 per cent from 39 per cent but was attacked by both the US and the G20 middle income states for not going further.
Meanwhile the G20, which said the Doha round had been intended to help the least-developed countries, insisted rich countries should move first before they offered concessions.
Their stance was backed by anti-poverty groups who accused the rich countries of wallowing in a "welter of selfishness". …