WTO talks called off

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WTO chief Pascal Lamy has formally suspended talks on a multilateral trade deal, bringing five years of negotiations to an end. Major trading powers, including the EU are blaming the US for the collapse.

Market access: No deal means Europe and the US will lose new access to the markets of emerging economies like China and Brazil for their exported industrial goods and services. It also means that agricultural exporters will miss out on the deepest farm tariff cuts ever offered by the EU. And furthermore, failure also means passing up on the recent multilateral agreement to grant duty-free quota-free market access to all Least Developed Countries. 

Trade distorting subsidies: The US and the EU will be able to continue subsidising their agricultural production, thereby artificially enhancing their competitiveness, leading to over-production and dumping, which hurts poor farmers in developing countries. 

WTO credibility: Failure could inflict a serious blow to the credibility of the international trading system and the WTO as an institution. The Dispute Settlement Body, which is currently the only supranational body capable of rendering compulsory judgements on disputes between countries, could be undermined. 

Return of bilateralism: Failure could signify the return to a system of bilateral agreements and FTAs in which the large would be able to strong-arm the small and where the multiplication of trade rules and tariffs would generate higher transaction costs and damage the trading and investment environment. 

EU Trade Commissioner Peter Mandelson expressed “profound disappointment and sadness” at the news of suspension of the talks, saying “it could so easily have been avoided” and blaming the US for being “unwilling to accept, or indeed to acknowledge, the flexibility being shown by others in the room” and causing the talks to be discontinued. 

EU Agriculture Commissioner Mariann Fischer Boel said that it would be possible to pick up the talks again in the future but added “to be honest, I don't think this will happen very quickly. There is no new deadline”. The EU was ready “to walk the extra mile if a final deal was within reach. Unfortunately, the US preferred to stand still”, she said, adding that “we will continue to do all we can to assist our partners in the developing world”. 

The U.S. was the sole government among the six not to improve its offer, Indian Commerce Minister Kamal Nath said. 

But U.S. officials said the fault lay with other countries. "Unfortunately things became clear yesterday that 'Doha light' seems still to be the preferred option of some of the participants," said US Trade Representative Susan Schwab

“We have missed a very important opportunity to show that multilateralism works,” said WTO Director-General Pascal Lamy. He said that this represented a lost opportunity to integrate more vulnerable members into international trade, “the best hope for growth and poverty alleviation”; and warned of the negative impact on the world economy with the possible resurgence of protectionism. “Let me be clear:", he added, "there are no winners and losers in this assembly. Today there are only losers.”

The European Services Forum said that developed and developing countries will miss out on enourmous potential economic gains because "services have once again been taken hostage of agriculture" even though the latter "represents only 8% of world trade and 2% of developed countries economy". 

According to Oxfam, the US and the EU must “make fundamental changes to their offers” in order to contribute to the growth of poorer countries. “The cost of further delay continues to be enormous... The EU and the US remain free to subsidize their biggest agricultural producers and continue dumping, while developing countries continue to struggle to ensure survival of subsistence farmers and break into rich Northern markets.” said Oxfam. 

Greenpeace and Friends of the Earth Europe  both view the collapse of talks as good news for the world’s poor and the environment, calling on world leaders to use “this opportunity … to build a new global trade system based on equity and sustainability”. "The WTO failure today proves, yet again, that the time of bulldozing the interests of the developing world has passed," said Daniel Mittler, Trade Policy Advisor of Greenpeace International. "Multilateral alternatives to the WTO exist. Now is the time for governments to explore them," he concluded. 

The Doha Development Agenda, launched in November 2001, in the Qatari capital, Doha, aimed to free global trade by cutting industrial and agricultural tariffs and by reducing farm subsidies, with a special focus on achieving concrete benefits for developing countries. 

The initial target was to finalise the negotiations by the end of 2005, so that the agreement could be approved by the US under the fast track procedure, without having to undergo lengthy debate within Congress. 

Although some progress was achieved along the way - notably in Hong Kong in December 2005, where rich nations agreed to eliminate all of their farm export subsidies by 2013 and to allow quota and tariff-free imports from all least developed countries – a final deal remained elusive. 

Successive deadlines were missed and, at the July 2006 G8 meeting in St-Petersburg, leaders of the world’s biggest economies pledged to give their trade negotiators the flexibility they needed to reach a compromise deal, deciding to hold last ditch talks during the weekends of 23-24 and 28-29 July 2006. 

However, on 24 July 2006, WTO Director General, Pascal Lamy formally announced the suspension of the talks, following the refusal of the United States to make bigger cuts to its farm subsidies if the EU and emerging developing countries such as India, China and Brazil did not reduce their tariffs on agricultural and industrial products respectively. 

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