The United States and Europe traded barbed comments yesterday after three days of WTO talks exposed deep divisions on agriculture and other issues that could put the latest round of world trade liberalisation in jeopardy.
Putting a brave face on things, the head of the World Trade Organisation said there was still hope of meeting a March 31st deadline for reaching an agreement on farm trade reforms.
"I can say that things are moving, have moved, although we're not seeing the final agreement," the WTO's director-general, Mr Supachai Panitchpakdi, said after the talks.
But Europe and Japan remained resolutely opposed to more drastic cuts in tariffs and export subsidies proposed by the United States and other big exporters, and the two main camps in the talks traded critical comments after the final session.
US Trade Representative Mr Robert Zoellick singled out Japan, the host nation, for criticism and said both Japan and Europe were allowing relatively small special interest groups to block progress on world trade that would benefit their economies.
"In our view they are sacrificing Japan's strengths on the altar of rice," Mr Zoellick said, adding that Japan's farmers - protected by rice import tariffs of 490 per cent - were holding the rest of the economy "hostage".
Mr Zoellick also said the success of the current Doha round of trade liberalisation depended on whether "a few key capitals in Europe can look over the hedgerows to see the big picture of the world economy".
Failure to meet the March 31st deadline would reduce the chances of the overall set of WTO negotiations - on agriculture, services, manufactured goods and other sectors - being wrapped up by the target date of January 2005.
The US criticism came a day after ministers from more than 20 WTO members sent back to the drawing board a compromise plan drafted by chief WTO negotiator Mr Stuart Harbinson, after it failed to please either of the two main camps.
Mr Harbinson said he hoped his second draft, to be written in the coming weeks, would be able to find a better compromise.
"I hope that they will take this paper and really start discussing with each other and trying to find ways to narrow the differences," he said.
Mr Harbinson's original plan called for an average cut of 60 per cent in import tariffs on farm goods now protected by duties of more than 90 per cent.
While Washington and other free-trade advocates saw the proposed cuts in tariffs and export subsidies as not enough, Europe and Japan said the plan was weighted too far in favour of the big exporters.
EU trade commissioner Mr Pascal Lamy hit back at Washington, saying the United States was guilty of distorting trade through its own agriculture subsidies. "We want the US system to be less trade-distorting. It is trade-distorting, and the money they're piling up year after year in the budget makes it even more trade-distorting," he said.
Both the European Union and the United States pledged last year at trade talks in Doha, Qatar, to reduce tariffs and subsidies which hinder world commerce.
But relations have been undermined by a spat over tariffs on steel imports imposed by President George W Bush's government last March, by EU grievances over US export subsidies and US anger over the Brussels ban on genetically modified foods.
Developing countries are increasingly frustrated at the lack of access for their farm imports to developed world markets, particularly in highly protected Europe and Japan.
"The conservatives want to preserve a system that basically for other goods we surpassed decades ago," said Mr Albert Trejos, Costa Rica's minister of foreign trade.
"The language of these last couple of days has been somewhat dismaying."
There was a glimmer of hope for progress on the vexed issue of allowing developing countries access to life-saving drugs.
Washington's demand that extra restrictions be placed on the kind of diseases to be covered has already caused the WTO's 145 member countries to miss an end-2002 deadline on the issue. - (Reuters)
