Dispute over farm tariffs stalls world trade talks

High-level talks to hammer out a new deal on world trade have hit a roadblock on negotiations over the crucial issue of state support for agriculture.

High-level talks to hammer out a new deal on world trade have hit a roadblock on negotiations over the crucial issue of state support for agriculture.

Detailed negotiations over a complex deal to bring rules on farm tariffs in Europe and Japan in line with poorer parts of the world broke up last week without agreement.

The next meeting is not scheduled until mid-April, putting in jeopardy an unofficial 1 August deadline to get a rough outline on paper before a full meeting of ministers of all 148 member countries of the World Trade Organisation in December.

The chair of the agriculture negotiations, the New Zealander Tom Groser, warned in February that a formula needed to be agreed "within weeks" to ensure the WTO talks stayed on track.

The delay comes amid growing signs that talks over other keys areas, such as trade in services and access by poor countries to life-saving medicines, have made little progress.

Trade officials are striving to get a basic deal on the table before December's Hong Kong meeting, which is seen as the last chance to seal a deal before the end of 2006.

Current talks began in 2001 but collapsed at the last ministerial meeting in Mexico in 2003 amid recriminations between rich and poor countries.

Although talks restarted in July last year after the European Union offered to stop directly subsiding farm exports, analysts say agriculture remains the most contentious issue.

The latest problem is an agreement to convert tariffs expressed in a fixed monetary value, such as $1 an item, into a so-called ad-valorem system that expresses the tariff as a percentage of the product's value. The conversion formula is crucial as products deemed to have the highest percentage tariffs face the sharpest cuts in duty. Iain MacVay, the head of European trade at the law firm Steptoe & Johnson, said: "The main issue is that in the process of conversion there may be a skewing of the negotiations."

The issue threatens to divide on geographical lines as the vast majority of non ad-valorem tariffs are used by the European Union, Japan, Norway, Switzerland and Bulgaria.

The group of 20 nations, which includes trade powerhouses such as China and Brazil, is keen to ensure the formula leads to significant tariff cuts to boost their access to markets.

Luiz Felipe Seixas Correa, Brazil's candidate to be the new director general of the WTO, said it was urgent a deal was brokered in the coming weeks. Mr Seixas Correa, who was in London yesterday, said: "If you do not find a clear, fair and transparent and verifiable procedure you cannot deliver market access. If you stopped the agriculture negotiations there would be large repercussions through the whole negotiating space."

Mr MacVay said there was little sign of progress on other issues. "There's real concern about the lack of progress in services. There's lots of pressure but lots of nothing happening," he said. "Access to medicines has been delayed and issues that the Europeans think important make zero signs of progress."