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The International Herald Tribune - June 22, 2007 By Carter Dougherty A high-level meeting aimed at salvaging sputtering global trade talks collapsed on Thursday as the United States and the European Union fell out with India and Brazil over plans to slash agricultural subsidies and tariffs. The four members of the World Trade Organization were trying to break a persistent deadlock that has bedeviled the Doha round of negotiations since 2001: How deeply rich countries will slash the domestic farm subsidies that have distorted trade in commodities like cotton, sugar and corn. The failure of the talks appears to have defeated the strategy of bringing together the United States, Europe, Brazil and India - a grouping known as the G-4 - to resolve major differences before turning to the entire membership of the WTO, which comprises 150 countries. Brazil and India, two countries that have assumed a leadership role for much of the developing world, rejected American and European advances as insufficient to warrant opening their markets to more imports of the industrialized world's goods and services. The United States, in turn, charged that Brazil and India had arrived at the talks, being held in the German town of Potsdam, outside Berlin, with virtually no negotiating flexibility. Now, the U.S. trade representative, Susan Schwab, will head to Geneva, where she will meet with the WTO director general, Pascal Lamy, and appeal to other developing countries to pressure Brazil and India for new concessions that would jump-start the round. "We are absolutely determined not to give up on the Doha round," Schwab said. "It may be that the G-4 process does not get us there." The breakdown Thursday, though a serious blow, does not appear to have triggered the same level of despair as a similar episode last August, when Lamy officially suspended the Doha round. Though Lamy said in a statement on Thursday that an agreement in Potsdam "would have been helpful," he held out hope that other members could resuscitate the negotiation. "Helpful does not mean indispensable," Lamy said. "This negotiation is an endeavor among the 150 members of the WTO." Peter Mandelson, the EU trade commissioner, likewise acknowledged the setback even as he underscored the heavy burden WTO members now face. "It is not the end of the Doha round," Mandelson said. "It places a very major question mark on the ability of the wider WTO membership to complete this round but does not in itself mean that the negotiations cannot be put back on track." U.S. officials placed the blame the deadlock in Potsdam squarely, and explicitly, on the shoulders of Brazil and India, two countries that they said showed no flexibility at all when the meeting, which was supposed to have lasted through Saturday, began on Tuesday. "They adopted that attitude from the beginning and it cast a chill over the entire week of the discussions," said Mike Johanns, the U.S. secretary of agriculture. U.S. officials said they sounded out various negotiating scenarios with Brazil and India but received no hints that they would scale back their own trade barriers. "Large economies like Brazil and India should not stand in the way of progress for smaller, poor developing nations - but that appears to be what happened in Germany this week," Tony Fratto, a White House spokesman, said. Kamal Nath, the Indian trade minister, said the United States had offered to cap its domestic agricultural subsidies at $17 billion, considerably lower than the $22 billion it had offered before, but still well above the roughly $11 billion that American farmers are currently receiving. Nath said that offer had "no logic or equity," a point his Brazilian counterpart, Celso Amorim, echoed. "It was useless to continue the discussion on the basis of the numbers put on the table," Amorim said. Fights among the major trading nations has traditionally spelled the end of global trade talks, since other countries can avoid making their own concessions as long as the biggest players are split. But Schwab said that she would appeal to other developing countries by making the argument that Brazil and India - as well as China, which was not present in Potsdam - are serving their interests badly. Brazil, Schwab said, is a major agricultural exporter while India is strong in services and China is a manufacturing powerhouse. If other developing countries are going to compete with them, the more advanced nations like Brazil and India need to reduce their trade barriers as well, she argued. "When you are in the leadership circle you have to lead by example and that's not what we are seeing," Schwab said. Mandelson also said Doha was worth an extra effort following the failure in Potsdam, but he insisted that the 27-nation EU has so far made extensive concessions with no reciprocity. "I firmly believe we constructed a landing range in agriculture which is fair and forthcoming for developing countries and takes to the limit what the EU can do," Bloomberg quoted him as saying.

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