Trade row will bring `sleepless nights' in Seattle

AS WORLD Trade Organisation delegations start flooding into Seattle for the largest international trade meeting ever, negotiations on how to rewrite the rules of global commerce are stalled.

A deal could be held up by long-running enmities over agriculture, or by new rifts on how to handle everything from e-commerce to genetically modified food. But the most salient issue may be the new-found assertiveness of some developing countries, led by India and Pakistan.

The WTO has the whole of next week for its 135 member nations to agree on an agenda for a new round of trade talks that would last three years. The groundwork was supposed to have been done in Geneva, but disputes over several high-profile issues prevented progress and no draft agreement was struck.

It was exactly the same at Punta Del Este in Uruguay, when the last round of trade talks was launched in 1986. But it does open the prospect of a very tricky week.

"It is going to be enormously difficult and we are going to spend some seriously sleepless nights in Seattle next week," said Mark Vaile, the Australian Trade Minister.

The US - which holds elections next year - wants the talks to be focused on farm trade and a few industrial sectors as well as the backlog of follow- up issues from the last round. The European Union (which negotiates for Britain) and several other nations want a more ambitious Millennium Round which includes policies on labour standards, the environment, competition, services and all industrial products.

The most difficult disagreements arise on farm goods. The Cairns Group, agricultural exporting nations led by Australia, wants to eliminate all farm subsidies completely.

America also wants a steep cut in subsidies, though it is unlikely to press this as hard as the Cairns Group.

Europe opposes this, saying it is politically impossible, though it is committed to reductions in subsidies. It also argues that farm goods are "multi-functional" - they are linked to the environment, food security and rural life - and cannot be treated in the same way as car engines or machine tools. The different groups came close to a deal on the agriculture section at the weekend, but the EU then backed away.

There is also a very tough range of issues relating to the previous round, and it is here that the biggest problems may ultimately lie. Some developing countries want to reopen the commitments they made in the 1993 Uruguay round because they are too onerous, but the US refuses.

Some also want to tighten the rules against anti-dumping - the use of punitive tariffs when an importing nation suspects an exporter is selling goods at below market price. This is aimed at America, which uses anti- dumping policy often and with little rationality.

But a group of developing nations, led by India and Pakistan, is adamant that the US and the EU must open their markets much faster to textiles. They are worried that as China enters the World Trade Organisation, its textiles will push theirs out of the market. They believe that Brussels and Washington are stalling on market opening.

There are also disagreements over environmental and labour issues. For America, a key priority is to establish some form of global labour standards to ensure that well-paid, secure jobs in the West are not lost to cut- rate, unprotected labour, sometimes involving children or prisoners. Europe wants new environmental standards. Developing countries are sceptical or hostile to both.

Nonetheless, the WTO's top official is still hopeful. "I think it will be done," said Director-General Mike Moore. "Seattle will not fail."