Negotiations among four key World Trade Organization (WTO) governments over a new global agreement collapsed Thursday, June 21, with India and Brazil blaming US and European unwillingness to cut farm aid and import duties on commodities.
Trade and agriculture ministers from the US, the European Union, India and Brazil began what was to be almost a week of talks on June 19 in Potsdam, Germany, aiming to reach a breakthrough on slashing agriculture subsidies and lowering hurdles for goods crossing borders.
Even though trade chiefs insist a deal is still possible, the collapse may spell the end of the Doha Round of talks.
"It was very clear at lunchtime and was said at lunch that it was useless to continue the discussion based on the numbers on the table," Brazilian Foreign Minister Celso Amorim told reporters. "The decision not to continue with the negotiation was not ours."
The breakdown mirrors last July's collapse, when negotiations among the four government plus Japan and Australia disintegrated, prompting WTO Director-General Pascal Lamy to suspend discussions.
Without a deal among the four governments, the Doha Round that began in late 2001 and has yet to meet any deadlines may fail or be put on hold for years because of elections and ensuing policy changes in the US and India.
Once again, "the ball will now be in the court of Pascal Lamy," Amorim said.
While an agreement among the four governments "would have been helpful to pave the way toward multilateral convergence, helpful does not mean indispensable," Lamy said in a statement.
"The negotiating process is driven by the Chairs of the negotiating groups, who have responsibility to table compromise texts in their respective areas. I now call on the members of the G4 to contribute to the multilateral negotiating process, which will continue as of today in Geneva", added Lamy.
The EU, the US, India and Brazil should now try to reach an agreement along with the remaining WTO governments rather than as a smaller group, he said.
Indian Commerce Minister Kamal Nath said the US offered to cap its overall spending on trade-distorting domestic support at 17 billion US dollars.
Brazil and India, as leaders of the so-called G20 alliance of farm commodity-exporting nations that also includes China and Argentina, are pushing for an annual US spending limit of below 15 billion.
European Union Trade Commissar Peter Mandelson said negotiations blocked when emerging countries refused to offer something in exchange for EU concessions in agriculture.
Brazil and India were apparently unwilling to go far enough in cutting tariffs on non-agricultural goods.
Europe needed to offer more on reducing agricultural tariffs and the US was unwilling to go further in reducing domestic subsidies for agriculture.
"I hope this is not the last exchange of opinions in the G4," said Mandelson who next Monday will be reporting to the Council of Trade ministers in Luxembourg to assess the results of the Potsdam meeting.
"In the last twelve months we've had advances and we've moved in different issues linked with farm negotiations. As EU trade commissar I made it clear that we need a final gesture which leads us to an ambitious, balanced and fair conclusion," he underlined.
The United States has not given up on the WTO Doha round U.S. Trade Representative Susan Schwab said after talks with the European Union, India and Brazil collapsed.
"We certainly have not given up on the process but this is not a happy outcome," she told journalists in Potsdam, Germany.