US, EU sparring sours world trade talks

By Doug Palmer and John Ruwitch

HONG KONG (Reuters) – The United States and the European
Union sparred on Wednesday over farm subsidies, food aid and
measures to help the world’s poorest countries, souring world
trade talks that were already in trouble.

EU Trade Commissioner Peter Mandelson warned that the World
Trade Organization (WTO) may even fail to achieve the one goal
that seemed within reach for the group’s Hong Kong meeting — a
package of measures to help Least Developed Countries (LDCs).

“I’m worried that the LDC package could now be in some
trouble,” Mandelson said. “If we cannot deliver on this, I
really think we should ask what we are doing in Hong Kong.”

South Korean anti-globalization protesters tried for a
second day to reach the venue of the WTO meeting, but they were
beaten back by riot police with pepper spray and batons.

There was no repeat, however, of the violence that marred a
2003 meeting in Cancun, Mexico, where talks on a deal to reform
world trade and lift millions out of poverty almost collapsed.

The December 13-18 Hong Kong meeting was initially intended
to approve a draft free trade treaty freeing up business in
farm and industrial goods and services.

That plan was abandoned because of differences between rich
and developing countries — particularly over the EU’s
resistance to further cuts in import tariffs on farm goods —
though the 149 nations of the WTO still hope to reach a deal by
the end of 2006.

U.S. Trade Representative Rob Portman, speaking on the
second day of the conference, warned that the world would slip
back into damaging protectionism without progress on the trade
round.

“I believe either we move forward or we risk moving
backward toward protectionism that will stunt economic growth
and harm the developing world most,” he said.

Portman called for a date to be fixed at Hong Kong for
ending farm export subsidies, which are mainly used by Europe,
but the EU stuck to its guns that Washington reform its food
aid first.

The EU says food aid subsidizes U.S. farmers by
guaranteeing them a market for their crops. It wants all aid to
be in cash, a call which has been echoed by aid organizations
such as Oxfam.

“LIFE OR DEATH ISSUES”

US food aid chief Andrew Natsios blasted Europe’s position,
noting current global food aid contributions were “woefully
short” of even emergency needs and endangered by the stance
taken by EU trade leaders.

“We don’t think these negotiations should be the place that
life or death issues should be decided unless experts are at
the table, and they’re not,” he told reporters.

With little prospect of a breakthrough in the row over
market access for farm goods, WTO states had come to Hong Kong
keen to at least wrap up a trade support package for poor
nations.

A key part of the plan is duty-free and quota-free access
to the world’s biggest economies for exports from its 49
poorest.

But officials say Washington has balked at allowing poor
exporters free access to sensitive areas such as textiles,
sugar and cotton, and Japan does not want to open up its rice
market.

“There are limits to how far we have to go politically,”
one U.S. trade official said. “Some areas are just too
sensitive.”

Washington and Tokyo are also worried about making the
agreement a permanent concession, which could not be modified
with changes in their domestic economies.

Other measures in the development package include more
“aid-for-trade” to help exports from poor countries.

On Wednesday the United States said it would double its
aid-for-trade grants to developing countries to $2.7 billion
per year by 2010, and Japan has already promised to provide $10
billion to help poor countries develop their export capacity.

But Oxfam questioned the sincerity of the offers, saying
much of the money was aid that had already been promised and so
would be diverted from other programs.

“In each case, most of the money would come from existing
aid budgets, forcing poor countries to decide between trade and
spending on basic essentials like medicines and education,” it
said in a statement.

“Aid for trade is needed … but it must not be a
substitute for fairer trade rules,” it added.

Brazil, which has spearheaded the developing countries’
drive to win more access for their farm goods, slammed the
“remnants of feudalism” and “unacceptable privilege” of rich
nations.

“Rich countries cannot expect to receive payment for what
they should have done anyway long ago,” Foreign Minister Celso
Amorim said. “Poor countries cannot wait for another 20 years
to see true reform in agricultural trade. The time to act is
now.”

(Additional reporting by Richard Waddington, William
Schomberg and Sophie Walker)