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Lukewarm response to US offer

WTO members regrouped yesterday at the body's headquarters, a day after the US and EU won little support for subsidy-cutting plans aimed at kick-starting talks on liberalizing international commerce.

A gathering of trading nations in Zurich on Monday did little to break the enduring deadlock in the WTO's four-year-old Doha Round negotiations.

Officials have warned that failure in meetings this week could jeopardize the WTO's crucial summit in Hong Kong, which is meant to draft a multilateral accord cutting subsidies, customs duties and other barriers to world trade.

With the summit just over 60 days away, the 148 WTO members are desperate to avoid a replay of their 2003 bust-up at a summit in Cancun, Mexico, which mired their talks for more than a year.

At the Zurich talks, which brought together around 15 WTO members, a proposal by US Trade Representative Rob Portman received an angry reception from Japan, and was met with caution by developing countries including India and Brazil.

Japan rejected the US plan on grounds that it would not go far enough in reducing Washington's assistance to its agricultural sector. Tokyo said it would come up with an alternative proposal later this week in Geneva, where the WTO is holding more talks.

Portman's plan calls for a 60 percent cut in the subsidies the US is allowed to pay its farmers under WTO rules and an 83 percent reduction by the EU and Japan. The EU and Japanese cuts should be higher because they are currently allowed more payouts, he said.

The variant proposed by the EU foresees a 70 percent reduction, plus a cut of up 60 percent in Brussels' customs duties on farm goods, another bone of contention.

But Japanese Agriculture Minister Mineichi Iwanaga told reporters: "Japan is not able to accept the US proposal on domestic support as a basis for further discussion because the extent of the reduction the US is willing to make on its own domestic support is insufficient, in our view."

Japan is among countries seeking to protect their farmers from far-reaching liberalization in the WTO talks.

Portman said he had made the US offer in a bid to "jump-start" the Doha Round, which has struggled since its launch in Qatar in 2001.

The US and the EU have in particular been pushing each other for concessions and have been under pressure from developing countries to do more to open their markets.

Under the US plan, rich nations would end farm subsidies by 2023, after a phase-out starting in 2008.

Defense of national interests in agriculture has been central to the stalemate at the WTO, and governments are anxious to see something in return for concessions.

"The offer we are making is contingent on significant efforts by our trading partners," including greater access to their markets, Portman said.

Countries including Australia, Canada and Mexico welcomed the proposal as a good first step.

Developing countries and campaigners say government support for US and EU farmers enables them to offload produce at artificially low prices, meaning unfair competition for poor producers.

Oxfam criticized Portman for focusing on permitted, rather than real, spending.

Brazil's Foreign Minister Celso Amorim was wary.

"The US has moved on domestic support. That's positive. But I don't think it's enough," he said. "There was no clear movement on the European side on the question of market access."

Indian Trade Minister Kamal Nath said he also wanted to see more substance.

Freeing up the farm trade has been a key stumbling block in the Doha Round, although talks on industrial goods and services, such as insurance and banking, are likewise far from a breakthrough.
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