TALKS TO agree a global trade deal have collapsed, raising question marks over the future of the multilateral trading system established by the World Trade Organisation (WTO)
A bitter dispute between the US and India over safeguards to protect poor farmers in developing countries prompted the breakdown after nine gruelling days of negotiations.
"The US remains committed to the Doha round. This is not a time to talk about a round collapsing," said US trade negotiator Susan Schwab when it became clear that no deal was possible. "The US commitments remain on the table, awaiting reciprocal responses."
The Irish Exporters' Association said the failure of the talks was a very grave setback for Ireland and international trade in general. However, the president of the Irish Farmers' Association, Pádraig Walshe, said this country had been spared a damaging agreement which, he said, would have cost €4 billion in losses to agriculture and food industries.
The breakdown in talks means that tariff cuts on imports of farm products such as beef from developing states into the EU market will not now come into effect. But it also means that Irish companies will continue to face barriers when they trade in developing markets.
Diplomats said the failure of negotiators to agree on the basis for a WTO deal in Geneva this week would result in at least a year's delay in the Doha round and could kill it off altogether. No further talks are expected before a US presidential election scheduled for November and analysts have warned that protectionism is taking root in many states.
Peter Sutherland, the Irish chairman of BP and a former director general of the GATT - the forerunner to the WTO - said the failure was bad for the global economy and held serious implications for the WTO institution and the whole concept of multilateralism.
"If states cannot even work together on something as obvious as world trade then how can we effectively address other issues that require a multilateral response such as climate change," said Mr Sutherland, who presided over the last global deal in 1994.
The breakdown in the talks came despite an earlier draft agreement between developed economies such as the EU and US and developing countries over the level of tariff and subsidy cuts in the agriculture and industrial sectors. But a dispute principally between the US and India - which also included Indonesia and China - over a safeguard mechanism to protect farmers in developing states from agricultural imports prompted the collapse.
The mechanism would have enabled developing states such as India to raise tariffs on foreign imports of farm products such as cotton if there was a sudden rise in trade. It wanted the mechanism to be triggered at lower levels than the US in an effort to protect its farm sector. But the US said this was unfair because it had already agreed to reduce the subsidies it pays its farmers in return for getting low tariff access to new markets.
European Commission director general for trade David O'Sullivan said there was a huge sense of disappointment because delegates had snatched defeat from the jaws of victory. "This is a bad result for Europe because we will all be a bit less prosperous as a result," said Mr O'Sullivan.
WTO director general Pascal Lamy said he may try to revive the Doha round but he could not say when or how this would happen. "I will have to discuss this with the members but my initial reaction is not a reaction of 'throw in the towel'," he said.