Five pivotal players in world trade sought a breakthrough on agriculture yesterday that could help the World Trade Organisation (WTO) meet a looming deadline for wider free trade pacts.
The Geneva-based body is struggling for preliminary accords in key areas, including farm and industrial goods, by the end of July. This would get its Doha Round of free trade negotiations back on track and ease fears it could be delayed months if not years.
Although accounting for only a small portion of global business, agriculture has long been the most sensitive item on the WTO agenda, with poorer nations and leading exporters demanding richer states slash huge farm subsidies, which they say distort trade and keep them out of markets.
Senior officials from leading exporters Australia, Brazil and India, as representatives of the G20 developing country alliance, the US and the EU, were meeting ahead of the start today of three days of talks involving the full WTO membership.
Diplomats said the five hoped for at least some concrete ideas on how to close the gap between rich and poor before the end of this week's WTO session.
"If we want a deal in July, then this week could be crucial," said one trade diplomat who declined to be named. "We are looking for something from these five (members)," he added. The G20, which emerged with force at last September's ill-starred WTO ministerial meeting in Cancun, Mexico, has rejected EU and US proposals for tackling farm import barriers, or market access, a crucial issue, saying they are not generous enough.
Australia, which speaks for the Cairns Group of farm goods exporters, also rejects the EU-US market access blueprint. It is also pressing Washington and Brussels for more detail on offered cuts to domestic subsidies.
On the pillar of the farm talks, export subsidies, the EU is ready to set dates for ending them, but only if the US makes a parallel offer on its export credit programmes. Brussels also wants the state trading concerns of Australia and Canada, which it says are a form of export aid, included.
"There seems to be a willingness to get some sort of understanding, but we are still stuck on market access," said another diplomat from a rich state.
Countries appear to agree the highest tariffs should be cut most, but the problem is how to combine that with the needs of many members to keep some steep defensive barriers.
Rice, for example is a politically highly sensitive issue in Japan, with tariffs reaching over 500 per cent. Amongst developing countries, India says it cannot lower tarrifs too far because over half its one billion people depends on farming.
Besides agriculture, the WTO is also aiming for a framework deal in industrial goods, some new impetus to sluggish talks on services and a decision on whether to widen the round to include negotiations on customs regulations.
The latter issue played a part in triggering the collapse of the Cancun conference, and it is still not clear agreement can be reached.
The Doha Round, which could be worth billions of dollars to the world economy, should have finished by end-2004, but diplomats long ago gave up on that target.
With US elections in November, the rest of this year will be lost if nothing is agreed in July, and diplomats fear that even next year it may be difficult to get things going again.