Farm dispute imperils WTO vision to free up trade

Nusa Dua (Indonesia) (AFP) - India on Wednesday rejected a proposed World Trade Organization package, casting a cloud over a high-stakes conference meant to revive faltering efforts to liberalise global commerce.

Trade ministers from WTO members are meeting on the Indonesian resort island of Bali in hopes that agreement on the modest package could sustain the WTO's stumbling 12-year-old drive to slash trade barriers.

But New Delhi fears the accord could endanger its efforts to support farmers and subsidise food in the huge nation.

Its position is believed to be supported by many other developing countries who fear opening their agricultural markets.

"Yes, we have rejected it," commerce minister Anand Sharma told reporters, shortly after telling the 159-member WTO that the matter is "non-negotiable."

Delegates warned that failure to reach even a limited accord during the four-day Bali talks could spell doom for the WTO's "Doha Round" of talks on slashing global barriers to commerce.

'Debilitating blow' for WTO

"Leaving Bali this week without an agreement would deal a debilitating blow to the WTO as a forum for multilateral negotiations," said US Trade Representative Michael Froman.

EU Trade Commissioner Karel De Gucht told reporters the situation in Bali had put him in a "sombre mood."

The talks are set to end on Friday.

The WTO launched the Doha Round in Qatar in 2001 to pursue its vision of an open trading environment fair to both rich and poor countries.

It would seek to overhaul commerce by setting a global framework of rules.

But protectionist disputes between rich and poor countries, and the WTO's insistence that an accord be unanimous, have made progress frustratingly elusive.

Meanwhile, alternative regional pacts between major trading nations including the 12-nation Trans-Pacific Partnership pushed by Washington have emerged, threatening the WTO with obsolescence.

New WTO chief Roberto Azevedo of Brazil has warned such arrangements cannot protect the interests of the world's poorest countries -- a key WTO objective.

Chances for success in Bali have increasingly centred on India's position on food security.

India passed a landmark National Food Security Act in August that will expand the buying of grain from farmers at subsidised rates, and sell it to consumers at prices reduced even further.

Facing tough elections next year, it fears a WTO requirement limiting subsidies to no more than 10 percent of agricultural production could threaten its efforts to provide cheap food for its hundreds of millions of poor.

Storm clouds over Bali

The Bali package would exempt India from challenges to its subsidies for four years, but New Delhi wants a blanket exemption until a permanent solution is negotiated.

That is expected to be opposed by others including the United States.

Azevedo has cited estimates that the Doha Round could create tens of millions of jobs and perhaps $1 trillion in new economic activity.

And speaking in Geneva, former UN secretary general Kofi Annan said a trade-deal was a "low-hanging fruit" that would benefit millions around the world.

"This is especially important for Africa with its 54 nations ? several of them landlocked ? where the current, complicated procedures of transporting goods across borders increase costs, reduce productivity and hinder regional trade," Annan, who is now Chair of the Africa Progress Panel, said.

"If we do not get a deal in Bali, then we face the risk that rich countries focus on trade deals between themselves, thereby excluding lower income countries who need this trade the most."

Pulling back from the Doha Round's lofty goals, the "Bali package" being considered this week focuses on a handful of specific issues including agriculture, simplifying customs procedures and measures to help least-developed countries.

Azevedo has said a modest deal in those areas could keep Doha on life-support for a later push.

"Right now I fear the opposite is true. The storm clouds of failure are right on us. Ladies and gentlemen, this is crunch time for the WTO," said De Gucht.

Ministers, however, stressed that hope for an eleventh-hour deal in Bali still flickered and delegation sources indicated diplomacy was gearing up behind closed doors.

Azevedo, who took over in September, declined to address the Indian minister's statement.

"Right now, no comments on anything. We are working," he said.