WTO seeks to avert deadlock

The world's leading trade powers were yesterday seeking to avert a head-on confrontation with developing countries over agricultural reform that threatens deadlock at this week's World Trade Organisation (WTO) ministerial meeting in Cancún.

The US, the European Union and Japan, under pressure from the newly formed Group of 21 developing countries to make deep cuts in farm subsidies and trade barriers, are fighting back by seeking to exploit differences between the group's members. "We are not quite sure of the glue that binds them, beyond wanting their voices to be heard," a senior US trade official said.

The group's members diverged widely in their attitudes to liberalising farm trade, with some enthusiastic and others out mainly to protect their own farmers.

The group has united around its opposition to lowering developing country trade barriers. Some western diplomats say that, if it sticks to that position, it will condemn this week's meeting to failure and destroy prospects for progress in the Doha Round, possibly for years.

The emergence of the G21, led by Brazil, India, China and South Africa, has alarmed several EU members which believe it threatens the EU's position. But they are split on how best to respond.

The European Commission has told member-states it believes the group will not hold together and that the EU should maintain its stance against the total elimination of export subsidies and for limited reductions in domestic support and tariffs.

However, some members believe the group's unity will be strengthened unless the EU goes some way to meet its demands. They say flexibility by the US and EU will undermine the group's cohesion.

The group is struggling to turn its broad goals into a detailed negotiating position. It refused to meet top US and EU negotiators yesterday, saying it needed more time to work on strategy.

Mr Celso Amorim, Brazil's foreign minister and co-ordinator of the group, also indicated that continuing consultations between its members could slow this week's talks, saying it would need time to negotiate a final ministerial declaration.

However, he added: "If something happens at this meeting, it will be largely because of the change in dynamics created by the Group of 21."

"Domestic and export subsidies in developed countries depress prices and incomes throughout the world, cut into export earnings of competitive exporters and increase food insecurity in developing countries.

"They only generate dependency on one side and deprivation on the other," he said. - (Financial Times Service)