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UPDDATE 2-Key trade ministers end farm meet, no breakthrough

Posted on: Wednesday, 12 October 2005, 05:42 CDT

By Richard Waddington

GENEVA (Reuters) - Key ministers failed on Wednesday to achieve a breakthrough in troubled farm talks, but agreed to meet again next week in a bid to achieve a global trade deal by an end-year deadline, a diplomatic source said.

The source said that ministers from the European Union, United States, Brazil, India and Australia, who had been spearheading the search for accords in agriculture, would come together again in Geneva next Wednesday afternoon and Thursday.

"We have finished for now. There will be another session next week," said the source, who was close to the negotiations.

The European Union had been under intense pressure to agree lower barriers to farm goods after the United States gave a fillip to the negotiations by offering what it called "deep" cuts in its farm subsidies.

"We have not got the breakthrough yet, but on the other hand we have not reached stalemate because they are going to keep trying. There has been no collapse," another diplomat from a leading developing country told Reuters.

The 148-member WTO needs to agree a blueprint for the final stage of its Doha Round in Hong Kong in December, but negotiations are struggling with a host of issues, of which agriculture is the most pressing.

Failure could kill the round, which has been touted as capable -- if successful -- of giving a multibillion-dollar boost to the world economy and lifting hundreds of millions of people out of poverty.

In a new report this week, economists at the Paris-based Organization for Economic Cooperation and Development (OECD) think-tank said the new trade pact the round is aiming to shape would benefit all nations except a handful of developing countries, mainly in Africa.

BALL ROLLING

After months of marking time, a series of ministerial meetings that kicked off on Monday in Zurich appear to have finally got the ball rolling. The United States provided the impetus with its offer of a 60 percent cut in subsidies.

But big difficulties remain. The United States and the European Union -- whose farmers are amongst the world's most protected -- face conflicting demands from trading partners, who urge more liberalization, and from some of their own constituents who want less.

French Trade Minister Christine Lagarde has told the European Union's trade chief Peter Mandelson that he had overstepped the mark in agreeing to deepen subsidy cuts and to consider setting a cap on import tariffs.

Brazil's Foreign Minister Celso Amorim and other developing country leaders say they fear the U.S. offer will not make real cuts and at a meeting late on Tuesday he demanded rigorous definitions of what can be spent and where, diplomats said.

Nevertheless, trade negotiators and analysts said the focus has switched to the EU because without more flexibility on agricultural market access, the road to a deal on Doha at Hong Kong will be blocked.

"The EU seems to have gone as far as it can go for the moment," said one diplomat from another developing country who had been involved closely in the talks.

In a late session on Tuesday, the EU dropped its demand for flexibility within the bands for tariff cuts which will see the highest import duties reduced the most, diplomats said.

The move could ease the task of agreeing a formula for the cuts, although the figures must still be hammered out.

Without a deal on tariffs, Washington says it cannot sell its subsidy plan to Congress, while big developing nations such as Brazil say they would not be able to move on opening their markets for industrial goods, another key area of the round.

Source: REUTERS

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