Mandelson puts US on the spot over cotton

Peter Mandelson, Europe's trade chief, took a high-stakes gamble yesterday to push his plan for a mini-deal to help poor countries in a move that will be seen as an attempt to embarrass the Americans.

The EU commissioner said he had asked the World Trade Organisation to table his six-point plan, which includes a deal to end cotton subsidies, as the first item on the agenda when detailed negotiations begin tomorrow.

Cotton is a raw area for the US, which pays subsidies to its farmers when prices fall, making it impossible for their rivals in sub-Saharan Africa to compete.

But the EU itself came under a three-pronged attack from the US, Brazil and a bloc of small but angry Latin American countries over its stance on everything from farm subsidies to its banana regime.

Ministers from almost 150 countries meet in Hong Kong this week to seek progress on stalled talks, although individual positions appeared increasingly entrenched.

Mr Mandelson said yesterday: "We have asked [WTO chief] Pascal Lamy to consider making the development package that we have been promoting as the first subject in the discussions. I think it would earth these negotiations in the real world [and] would give them a human face."

Asked whether this was a tactic to put the US on the spot, he said: "I am not game playing. What we have proposed is a clear, forward-looking proposal that will help the issue move on. We should avoid the cotton issue being the reason for failure."

The EU has tabled a plan to eliminate all cotton export subsidies and rich countries' import tariffs by 2007 at the latest.

Samuel Amehou, Benin's ambassador to the WTO, said: "The US and EU [farmers] are receiving billions of subsidies and at the end of the day these countries produce far more than they should and our market is flooded with subsidised cotton."

Karan Bhatia, the deputy US trade representative, declined to comment on the proposal. But speaking at a meeting with the four aggrieved African countries - Benin, Burkina Faso, Chad and Malawi - he said the US had offered to eliminate subsidies by 2010 and make "meaningful cuts" in tariffs. "We believe our proposal meets their core demands and there may be an issue that we have on timing and these are issues we are here to negotiate on," he said.

He said the "key issue" was that developed countries move on agriculture - a veiled attack on the EU, which has been criticised for offering less than the US. "We stand ready for a proposal from our developed partners that would enable us to get to that conclusion," he said.

Brazil repeated its insistence that Europe must make a better offer. Celso Amorim, its finance minister who is seen as the leader of the middle-income countries, said: "Unless the European Union is able to improve substantially its offer on agricultural goods, there will not be a successful round."

But Mr Mandelson said the EU, which has already made two offers to reduce its agricultural regime, would not make another unilateral offer. "Another offer on agriculture would simply be pocketed without listing the levels of ambition overall," he said. "It is for others to come up with better proposals in key areas of industrial tariffs and services."

But the EU found itself under attack from three Central American countries that issued a veiled threat to bring down the talks unless Brussels came up with a new offer to overturn its banana regime, which gave tariff-free access to former European colonies, that has been declared illegal by the WTO. Honduras, Nicaragua and Panama demanded the EU negotiate on the regime, which was due to take effect in January, during the talks in Hong Kong.