Global trade talks collapsed Sunday as poor countries balked at proposals by rich nations that would make it easier for corporations to do business around the globe, while refusing to cut agricultural subsidies for farmers in wealthy countries.
The 146 trade ministers had spent five days in World Trade Organization talks, but in the end were unable to agree on much of anything.
The failed negotiations dealt a setback to President Bush's ambitious trade agenda - which has bipartisan support on Capitol Hill - and to White House plans to negotiate a Free Trade Area of the Americas by 2005.
Trade ministers from 34 nations in the hemisphere are scheduled to meet in Miami in late November to discuss progress on the effort, but the newest development could mean the White House faces an uphill battle.
Brazil, the largest country in Latin America, led the drive to pry open U.S. agricultural markets.
PLACING BLAME
``There was just a fundamental difference over key issues,'' said Richard Bernal, a long-time Jamaican trade diplomat.
``Everybody has to take some of the blame.''
U.S. Trade Representative Robert B. Zoellick blamed others for being unwilling to compromise.
``Some countries have to decide if they want to make a point or make progress,'' said a weary Zoellick after a last-ditch effort to salvage the meeting failed.
But he said it was unclear what impact the WTO collapse would have on the FTAA negotiations.
``We are now offering another opportunity to create something across the Americas,'' Zoellick said, adding that the United States would be willing to negotiate more trade agreements with individual nations in the hemisphere if the FTAA initiative faltered.
A U.S. industry representative said negotiating on a regional or nation-to-nation basis might be the best solution.
``We do have to ask ourselves whether it's worth it to put all of our energy into the WTO or whether we should say the time has come to emphasize bilateral trade negotiations,'' said Frank Vargo, vice president for international affairs at the National Association of Manufacturers, which represents 14,000 companies in the U.S. including General Electric Co. and 3M Co.
ASSERTIVE STANCE
Sunday's events marked a new assertive stance on the part of developing countries, which say they have gotten little benefit from opening their markets to foreign imports.
They also complain that Europe and the United States have failed to reciprocate. Observers pointed to this new North-South face off as one of the biggest changes to emerge from the talks. U.S. and European negotiators had predicted that the so-called ``Group of 21'' trade bloc of poor countries would split. But led by Brazil, China, India and South Africa, the bloc held.
Talks broke down over demands by the European Union that the global trade body expand trade negotiations to include investment rules that set out broad new rights for corporations while constraining domestic laws, opening up government contracts and changing rules over unfair trade practices.
New constraints could extend to outlawing minority set asides in local contracts. The United States supports most of those issues, many of which are included in the FTAA negotiations, but U.S. trade negotiators said market access was the major goal.
OBJECTIONS SOUNDED
The objection from developing countries is that these new issues will add new financial burdens to negotiations, are complex and are highly intrusive in domestic policies.
Most of the talk focused on agricultural issues, especially the emotional appeal from poor countries in West Africa that cotton subsidies in Europe and the United States were making paupers out of small farmers in Benin, Bukina Fasso, Chad and Mali.
But negotiators admitted that the negotiations snagged on the investment issues and the ministers never even opened bargaining over farm rules.
Although the collapse damages the prestige of the WTO and key negotiators, trade talks are not dead.
Negotiators now return to Geneva, the headquarters of the WTO, for new talks. But there seemed to be little hope of reaching an agreement by 2005 as scheduled.
Nongovernmental organizations like the Sierra Club, Oxfam, ActionAid, and the Our World Is Not For Sale coalition hailed the breakdown as a major victory.
``For the first time ever the developing countries got their say,'' said Lori Wallach, director of Public Citizen's Global Trade Watch.
``The outcome is not surprising. The agenda is unacceptable.''
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