Saturday, July 31, 2004

What a surprise!

The WTO talks broke up in disarray last night, with the developing countries, led by India, rejecting a deal stitched up between the EU and the US. However, the deadline is being extended another 24 hours to see if an agreement can be reached.

Brazil and India had expressed serious doubts about parts of the text, but it was believed that both countries were simply holding out for a better deal as the minutes ticked away to the Saturday night deadline. "The US and the EU were broadly happy, but the developing world is in uproar," one observer said.

Indian officials said the document pushed through by the US would have allowed it to get away with a lower reduction of subsidies and at a slower pace. At the same time, the US had insisted that India should commit itself to reducing its aggregate support for agriculture from five per cent allowed now to nil.

The split had developed on Thursday, when India broke away from the group of five key players comprising itself, the US, EU, Brazil and Australia. The group, called in the arcane vocabulary of the WTO talks NG-5 (Non-group-5), described as such because of their conflicting interests, is dominated by the US and EU. India felt that they were seeking to railroad developing nations into accepting a poor deal.

Celine Charveriat, of Oxfam International, said of the compromise draft that it was unacceptable because it failed to meet the needs of developing countries. "Presented as a breakthrough", she said, "the text on agriculture does little to address the problem of export dumping, instead introducing dangerous loopholes for yet more subsidies, especially from the US."

However, our very own trade and industry secretary, Patricia Hewitt, is trying to persuade developing countries that a deal is in their interests. It is going to be a long day – for her at least.

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