G4 setback requires new route to WTO deal

Trade negotiators were forced to look for a new path on Friday to reach an elusive world trade deal after a meeting between four major trading partners ended in failure.
The collapse of talks between the United States, the European Union, India and Brazil on Thursday at an historic German palace in Potsdam was the latest of several crises in the Doha round of world trade talks, which began in November 2001.
"The ball is now in the court of (World Trade Organisation) Director General) Pascal Lamy," Brazilian Foreign Minister Celso Amorim told reporters after the G4 meeting broke down. "The G4 may not ever be able to reach closure, but that certainly does not mean the end of the round," US Trade Representative Susan Schwab said.
The focus already moved back to Geneva on Friday, with Schwab, Amorim and EU Trade Commissioner Mandelson all travelling to the WTO headquarters to discuss next steps. The G4 setback increased pressure on Geneva-based negotiating chairmen to find compromises without the leading developed and developing countries speaking as one.
Although the Uruguay round of world trade talks took seven-and-a-half years from start to signing of the final agreement, time may be running out on the Doha round if the WTO's 150 members can't reach a breakthrough by the end of July.
The White House's "fast track" trade promotion authority has already effectively expired and the US Congress is unlikely to renew it without significant progress in the talks.
The legislation requires US lawmakers to approve or reject trade agreements without making changes - an important detail since any amendment could unravel a carefully negotiated pact. Schwab has insisted the United States does not need fast track to finish the Doha round, but conceded on Thursday a lost opportunity to win early renewal.
"We had hope that on the basis of a G4 convergence, we would see action on fast track," Schwab said. While the G4 participants resolved at least one divisive issue by agreeing to new disciplines on food aid, they remained divided on the scope of other major agricultural reforms.
They also clashed philosophically on the best way to achieve the Doha Development Agenda's goal of using trade to help boost the livelihoods of people in poor countries. Indian Commerce Minister Kamal Nath told reporters it was unreasonable for the United States and the EU to expect payment from developing countries, in terms of new agricultural and manufacturing export opportunities, in exchange for cutting their trade-distorting farm practices.
"If that is sought, it will not be a development round, it will be the perpetuation of inequities of global trade which have happened for the last 50 years," Nath said. But Schwab argued that cutting farm and manufacturing tariffs in advanced developing countries like India, Brazil and China was as important for boosting global economic growth as US and EU reforms.
"What will generate development and the alleviation of poverty is new trade flows. And you're not going to get new trade flows unless you have market openings," she said.
A limited trade pact may still be possible if Washington can accept fewer new export opportunities than it has sought for nearly six years, said Razeen Sally, trade policy professor at the London School of Economics. "Everyone's expectations has been lowered in the last six months or so, which is why the prospects of a deal is better now than a year ago," Sally said.