World Trade Talks in Trouble as Rich-Poor Rows Rage

By Doug Palmer and Richard Waddington

HONG KONG — World trade talks fell into disarray on Friday as rich nations feuded over long-protected farm markets, and developing countries vowed to block any deal unless they get better prices for bananas, sugar and cotton.

"It is hard to see where progress can be achieved in Hong Kong if the talks continue in their present direction," European Union Trade Commissioner Peter Mandelson said.

"The level of ambition, if anything, is going backwards," he told a news conference on the fourth day of World Trade Organization (WTO) talks in Hong Kong.

The lack of progress augured badly for a long-elusive pact freeing up global business in farm and industrial goods and services that the WTO hopes to wrap up next year, though the tide could still turn before the Hong Kong talks end on Sunday.

"There is always a cranky phase. Most of the business is done in the last 48 hours," said Deputy U.S. Trade Representative Susan Schwab said.

Supporters of the trade deal say it could inject new zest into the global economy and lift millions out of poverty, but detractors say it will only bring more profits for rich nations and their companies at the expense of the developing world.

"It appears that these talks will bring us nothing at all and even drive us further into poverty," said Arvin Boolell, minister of agriculture for Mauritius and a spokesman on sugar for the African, Caribbean and Pacific group of states.

"We will not accept any agreement in Hong Kong that is made at our expense."

In what could be the first step to the creation of a new developing-country alliance, nations representing over 70 percent of the WTO’s 149 states insisted that any deal struck must place their interests at its heart.

Non-governmental organizations applauded the move, saying it could help developing nations punch above their economic weight.

"Now the gloves are off. Poor countries have come together to form an alliance that represents most of the planet’s population," said ActionAid in a statement.

FARM TRADE THE "BIG ISSUE"

Outside the Hong Kong convention center, hundreds of South Korean activists sprayed slogans on the walls of the U.S. consulate and besieged a building housing the Korean consulate, saying their governments were hurting the country’s farmers.

More than 100 farmers, workers and unionists sprayed "Down, down WTO" in red across the U.S. consulate emblem. Beating drums, they shouted that the United States had forced South Korea to buy its farm products and threatened their livelihoods.

The WTO lowered the bar weeks ago for the Hong Kong meeting because of bitter differences between members, particularly over the EU’s refusal to offer lower tariffs on imports of farm goods without concessions on access to developing countries’ markets.

But even the more modest aims for the meeting were provoking tension on Friday, not least a plan to grant quota-free and duty-free access for exports from the world’s 49 poorest nations.

The initiative has stumbled because of Japan’s resistance to opening up its long-protected rice market and U.S. reluctance to allow free access for goods such as textiles and sugar.

U.S. trade officials were assailed at a news conference by West African cotton producers over the $4 billion in subsidies enjoyed by their country’s farmers.

"Cotton is everything for us. We have nothing else in the world market. This misery we are living is because the world price is dropping … and the main effect is from the subsidies," said African Cotton Association President Ibrahim Malloum.

U.S. Trade Representative Rob Portman told Reuters he was optimistic there would be agreements in Hong Kong on the duty-free, quota-free package and on setting a date to eliminate agricultural export subsidies.

The EU has so far resisted pressure to endorse a 2010 date for ending farm export subsidies. It says the United States, Australia, Canada and New Zealand must agree to reforms of their farm export systems before it can move.

"Other countries are not even at first base," Mandelson said.

Mandelson said Europe was also unhappy with the two other core areas of the talks — industrial goods and services, which both big areas of interest for European companies.

He said a formula emerging in Hong Kong for cutting tariffs on industrial goods was "so heavily qualified" it was impossible to see what, if any, further market access it might create.

But the United States sought to pin the blame for blockages in other areas of the talks on the EU’s reluctance to open its markets further to imports of agricultural goods.

"What is holding up the talks is the big issue," said Deputy U.S. Trade Representative Karan Bhatia. "And the big issue is market access in agriculture."

(Additional reporting by Sophie Walker, William Schomberg, Tan Ee Lyn and John Ruwitch)