Future of trade talks up to Bush, say Europeans

from The Australian

Bronwen Maddox, Brussels

GLOBAL trade talks intended to improve the lives of billions of poor people stood on the brink of failure last night as US President George W. Bush prepared to resume negotiations with Europe.

European Trade Commissioner Peter Mandelson said Mr Bush could either breathe new life into trade negotiations or effectively kill the five-year process.

"We are on a knife-edge," Mr Mandelson said, before the meeting with Mr Bush and US Trade Representative Susan Schwab.

"We have to engage President Bush personally, because this deal can only be done with his authority."

Talks were suspended last July because of international disagreement over cutting tariffs and farm subsidies.

The financial consequences of failing to liberalise World Trade Organisation rules through the so-called Doha Round of talks will be huge, with the World Bank estimating that a deal could generate an extra $US287 billion ($368 billion) by 2015.

The political impact could be even greater.

The talks, which were convened in Doha, Qatar, two months after 9/11, are sometimes known as the Development Round to emphasise the goal of helping the world's poorest people to escape poverty and also to remove a key motivation for terrorism.

Mr Mandelson will meet Mr Bush alongside Jose Manuel Barroso, the European Commission President.

European negotiators will call for the US to cut its maximum annual spending on farm subsidies from $US23 billion to $US15 billion.

In return, they will offer a further reduction in EU trade tariffs.

Mr Bush has repeatedly stated his commitment to the Doha Round, but Mr Mandelson emphasised that the President had a tight timetable to prove he was serious about re-engaging with the talks.

In March, Congress will settle subsidy levels for US farmers and set a figure that could signal the end of meaningful multilateral dialogue.

Mr Bush's own "fast-track" mandate from Congress to negotiate runs out at the end of June and Pascal Lamy, the World Trade Organisation chief, has already said he will need to ask for an extension.

Mr Mandelson's team is hoping for a commitment on extending the mandate in Washington this week, along with a sign from the White House that it is prepared to support cuts in farm subsidies.

Otherwise, Mr Mandelson said, "it means putting Doha on ice until at least a year into the next president's term, so we would be talking about a delay of three to four years from now.

"Even reviving it then would not be a quick or easy thing to do because the confidence of developing countries in the multilateral system would be greatly damaged."

Officials close to Mr Mandelson are even more apocalyptic. "We see this as our last big shot at trying to get the Americans to do something on the Doha Round," one said.

The EU has offered to cut agricultural subsidies by two thirds but Mr Bush, under heavy pressure from the American farming lobby, is reluctant to make the reductions that are demanded by Mr Mandelson unless there are tariff changes that would improve market access for the US in Europe and other parts of the world.

European negotiators admit the EU agricultural tariffs are high but have said they are prepared to go beyond the reduction of 29 per cent that is proposed.

This would be "close to but not all the way to" the 54 per cent reduction demanded by the G20 developing nations, which include Brazil and India. The US wants a 64 per cent cut in EU tariffs.

Mr Mandelson, who is expected to meet the congressional leadership, said: "Democrats want the US to re-engage with the world. And they want to be re-elected in 2008.

"They won't do that if they get a reputation for being anti-business and anti-free trade."