EU has ten days to convince as global trade talks founder

http://asia.news.yahoo.com/051023/afp/051023220953top.html

GENEVA (AFP) - Trade officials have warned that global trade talks are close to breaking point, leaving the European Union with ten days to either resolve a bitter internal rift or convince partners in the WTO to tame their demands on farm import barriers.

The 25-nation EU was at the heart of a battle over further cuts in tariffs on farm produce during a week of intense talks at the World Trade Organisation ahead of the trade body's ministerial conference in Hong Kong.

Crawford Falconer, the New Zealand Ambassador leading the agricultural negotiations, warned Friday that he only had another ten days to put together a draft agreement that would be ready in time for the conference on December 12.

"The process is on life support right now," Falconer told reporters.

"It's probably another 10 days before the doctor decides to switch it off or not," he added.

After France convened an EU meeting earlier in the week to rein in the bloc's top negotiator, Peter Mandelson, the former British minister found himself in a tricky position when he later met four other WTO heavyweights -- Australia, Brazil, India and the United States.

The group of "Five Interested Parties" represents a cross-section of interests at the WTO, and any compromise it beats out stands a better chance of being accepted by the full 148 strong membership of the trade body.

Decisions in the WTO are taken by consensus, so any package needs unanimous support.

The European trade commissioner is under pressure in the five to improve on his offer of a 20 to 50 percent cut in duties on agricultural imports.

The biggest demand so far comes from the United States, which wants the EU to cut tariffs by 55 to 90 percent.

Mandelson also faces internal pressure, especially from France, one of the EU's top farm producers and a prime beneficiary of the bloc's Common Agricultural Policy, not to go to far.

The spat has driven the WTO's Doha round to deadlock once more, despite a brief flurry of hope when major trading powers suddenly started putting improved offers on the negotiating table earlier this month.

After missing several deadlines in recent years, the talks on freeing up world trade, which were launched in the Qatari capital in 2001, are meant to be largely completed in Hong Kong.

The last WTO ministerial conference in Cancun, Mexico in 2003 faced a similar target. It collapsed, triggering a deep north-south rift largely over agriculture that paralysed the ground-breaking WTO talks for almost a year.

Senior US Trade Representative Rob Portman warned that spectre of Cancun was looming once more while Australian Trade Minister Mark Vaile also voiced disappointment.

"France and other EU members have taken the EU to the brink of collapsing the round," Vaile said Thursday.

The United States wants a deal on farm tariffs before other issues in the talks are dealt with, such as farm export subsidies in rich nations, or industrial goods and services.

In contrast, the European Union believes it is the only top member to have made concessions since the beginning of the round four years ago. It is demanding progress in return on issues such as industrial goods.

Brussels is expected to make a new offer on farm tariffs during a telephone conference of the five WTO heavyweights in the coming week, according to US officials.

However, Mandelson, who is now hemmed in by a group of experts appointed by the EU's governments to oversee any new steps, has not confirmed the meeting.

Despite the spotlight on the EU, other flashpoints re-emerged over the past week.

Wealthy but small agricultural importers, such as Japan, South Korea and Switzerland, warned that they would not shy away from blocking a deal that did not allow some protection for "sensitive" domestic produce.

West African nations also heralded the failure of the Hong Kong gathering unless rich countries -- notably the United States -- halted financial support to cotton growers.

They argue that such support harms the interests of farmers in poor countries, and is precisely the kind of barrier that the Doha round was meant to overcome.