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Splits and acrimony among G4 partners dash trade deal hopes

By Alan Beattie, World Trade Editor

Published: June 22 2007 03:00 | Last updated: June 22 2007 03:00

The chance of a global trade deal being clinched before President George W.
Bush leaves the White House shrank dramatically yesterday with talks between
core negotiating partners collapsing again in division and acrimony.

In a near-exact repeat of events last summer, talks in Potsdam, Germany,
between the four partners at the centre of the so-called Doha round of
negotiations - the EU, US, Brazil and India - broke up with sides still far
apart on cutting agricultural subsidies and goods tariffs.

The collapse makes it unlikely that an outline deal can be agreed before the
summer, a step necessary to complete a detailed agreement by the end of the
year. With the US presidential race starting in earnest next year, many in the
talks believe the political sensitivities in any deal mean no agreement can be
concluded until there is a new incumbent in the White House.

Kamal Nath, the Indian trade minister, accused the rich countries of
arrogance and inflexibility. He told the Financial Times: "It is not just a
question of figures. It is a question of attitude. The US does not realise that
the world has changed." The US and the EU said Brazil and India offered no
serious access to manufactured goods markets in return for proposed reductions
in US farm subsidies and European agricultural tariffs.

The failure of the so-called G4 to broker an outline deal will throw the ball
back to the entire membership of the World Trade Organisation in Geneva, where
the chairmen of the farm and industrial goods talks are preparing draft versions
of a deal. But trade officials were pessimistic.

Manuel Teehankee, the Philippines WTO ambassador, said: "This is not
statesmanlike of the G4. The only way out is to accede to the multilateral
process but, without G4 agreement, it is unlikely to succeed."

Unlike last year's collapse, when the US found itself isolated, the EU
yesterday joined the Americans in demanding bigger cuts in goods tariffs. Peter
Mandelson, EU trade commissioner, told reporters: "It emerged from the
discussion on [industrial goods] that we would not be able to point to any
substantive or commercially meaningful changes in the tariffs of the emerging
economies." He said Mr Nath unilaterally declared the talks over without
consultation.

Additional reporting byEoin Callan

Copyright The
Financial Times Limited 2007

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