WTO Farm Talks End in an Impasse

World Trade Organization members concluded three days of informal talks unable to heal a rift over agricultural tariffs and subsidies that threatens wider efforts to liberalize global trade.

“There was a huge divergence of views” on agricultural trade, said Yoriko Kawaguchi, Japan’s foreign minister, after the meeting in Tokyo ended.

Twenty-two WTO members rejected the Geneva-based organization’s latest proposal to lower import tariffs on agricultural products and cut farm subsidies as a basis for fresh talks because the European Union, Japan and other members objected. The U.S. says the proposal doesn’t go far enough.

WTO members have until March 31 to decide on a framework for an accord on agricultural trade. They will hold meetings next week with Stuart Harbinson of Hong Kong, who wrote the rejected plan, in an effort to hammer out proposals acceptable to all.

“The gaps are still rather large,” Harbinson, chairman of the agriculture negotiations, said at the meeting in Tokyo. “I expected a very harsh reaction. Somebody has to try and break the deadlock.”

Harbinson’s new draft will have to reconcile the views of members eager to lower agricultural barriers such as Brazil, Australia and Canada with those of the EU and Japan, which want to protect their farmers from overseas competition through tariffs.

The rejected draft called for a 50% cut in export subsidies within five years of a WTO agreement and their elimination within nine years.

“We made it very clear that for us it is unbalanced,” said European Trade Commissioner Pascal Lamy at a news conference. “Non-trade concerns are a grave concern for us.”

Harbinson’s first draft, released last week, also proposed a cut of as much as 60% in all forms of subsidies the WTO allows to farmers and a 25% to 60% cut in import tariffs.

Japan imposes a 490% levy on imported rice.

Japan’s farming union, which has 9 million members, said last week that the country already imports 60% of its food. It urged the government to resist moves to lower agricultural charges and said it agreed with the EU’s stance on maintaining tariffs.

“It requires a great deal more work on market access,” said Canadian Trade Minister Pierre Pettigrew. “We want much stricter rules on export subsidies and production subsidies -- they are the real problem,” he said.

Failure to reach a compromise threatens a wider agreement on lowering trade barriers to products ranging from industrial equipment to financial services worth an estimated $700 billion. This accord must be concluded by January 2005. All 145 WTO members meet in September in Cancun, Mexico.

“I want to go to Cancun with a significant degree of agreement, not to use Cancun to solve problems,” said Supachai Panitchpakdi, director general of the WTO, after the meeting ended.

Points of disagreement include import duties and quotas Japan imposes on foreign rice in a bid to support rural communities that represent the bedrock of support for Japan’s ruling Liberal Democratic Party.

According to the U.S., the Japanese government “sacrifices Japan’s strength on the altar of rice,” said U.S. Trade Representative Robert Zoellick at a news briefing. “Japan needs to face the reality” that its farmers make up 2% of the economy and 1.8% of the population, he said.

The Tokyo meeting also failed to produce new proposals to resolve an impasse on an agreement to allow poor countries access to cheap drugs.