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Marathon trade negotiations collapse

WTO chief Pascal Lamy says he will try to revive the Doha Round of trade talks but is not sure how and when Keystone

Nine days of talks aimed at salvaging a global trade accord have collapsed after the United States, China and India failed to reach a compromise on agricultural tariffs.

This content was published on July 29, 2008 - 21:22

World Trade Organization chief Pascal Lamy on Tuesday evening informed ministers from some 35 countries meeting in Geneva that the marathon discussions were effectively over.

Neverthelesss, he said that he would attempt to revive the so-called Doha round of talks but cautioned it was not possible to say how or when negotiations might restart.

"I will have to discuss this with the members but my initial reaction is not a reaction of 'throw in the towel'," Lamy told reporters.

Swiss Economics Minister Doris Leuthard on Tuesday evening said she was "very disappointed" with the breakdown. "We were not far from an agreement," she said, and called the failure a negative signal for the world economy.

Countries from the 153-member trade body had been meeting at the WTO's headquarters in an attempt to rescue the negotiations, which had been launched in the Qatari capital in 2001.

A dispute between the US and China and India over farm import safeguards had ended any hope of a breakthrough, officials said. Since their inception, the talks have repeatedly stalled amid divisions between rich and poor countries.

Without a final deal, Europe will not be compelled to open its agricultural market to emerging powers, while countries such as Brazil, China and India will lack easy access to Western markets.

In Switzerland, apart from the government's response, two very different reactions emerged following the announcement that talks had failed.

Relief and disappointment

"We are relieved by the breakdown," Hansjörg Walter, the president of the Swiss Farmers' Association, told Swiss television. His group says farmers here would have taken a hit of between 30 and 50 per cent had proposed trade liberalisations gone through. Swiss dairy farmers are among the most heavily subsidised in the world.

"For Swiss farmers, this means a better outlook on the future," he added. "At the same time, reforms in Switzerland are continuing further. We will aim to stay competitive and in particular to be responsive to the needs of consumers."

The representative for Switzerland's business community said the collapse of talks was a blow to both Switzerland and to the rest of the world.

"This is a black day for the Swiss economy," Gerold Bührer, the president of the Swiss Business Federation, economiesuisse, said. "Switzerland lives off exports. Every second franc comes from exports. Ninety-five per cent of employees in industry, the service sector and in finance are directly or indirectly dependent on exports."

Bührer says that higher tariffs will continue to stay connected with certain industries, and that the country will have to forge more bilateral trade agreements.

Switzerland reached a record trade surplus of SFr9.7 billion ($9.55 billion) in the first half of 2008, according to figures released by the Federal Customs Office in July.

"Frazzled"

Delegates were said to have been pushed to their physical limits during the closed-door talks, with the mood swinging between pessimism and optimism.

"You could see they are getting really frazzled," said one official just before the talks broke down. "They have been working around the clock."

The Doha Round of talks were supposed to have concluded in 2005 and while officials now say that they may not restart for another three to four years, Washington said it remained open to discussion.

"The US remains committed to the Doha Round," said a visibly frustrated US Trade Representative Susan Schwab. "This is not a time to talk about a round collapsing. The US commitments remain on the table, awaiting reciprocal responses."

swissinfo with agencies

Doha Round

Launched in the Qatari capital in November 2001, the WTO's latest liberalisation talks known as the Doha Round have struggled to overcome many countries' fears of exposing sensitive agricultural and manufacturing industries to more competition.

The negotiations broke down in July 2006, well past the original deadline of January 2005.

Despite, the key elements for an overall deal are now relatively clear. The US would cut its farm subsidies, blamed by poor countries for squeezing their farmers out of the market.

The EU would open its protected market for food by cutting agricultural tariffs, giving developing country food exporters such as Brazil new opportunities.

And developing countries would cut their industrial tariffs, opening their markets to manufacturers in rich countries. Other elements would include a boost to trade among developing nations and liberalization of services such as banking and telecoms.

But developing countries want waivers to tariff cuts to protect their subsistence farmers and fledgling industries, while rich nations say they cannot sell the sacrifices being asked of them unless they can point to gains in market access elsewhere.

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