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WTO talks 'going backwards'

The Associated Press

HONG KONG ' Global trade talks were sliding closer to a failure Friday that could damage the credibility of the World Trade Organization. With only two days left in the meeting, the European Union's lead representative said the negotiations were going backwards.

Delegates from the WTO's 149 member nations will try to hash out a draft agreement today that likely will be their last chance to reach compromises on a slew of thorny issues, including opening farm markets, the meeting's biggest obstacle.

But so far, the negotiations have been virtually fruitless. The outlook worsened when smaller nations that grow sugar, bananas and cotton threatened to torpedo any final agreement that didn't protect their farmers.

Deputy U.S. Trade Representative Susan Schwab said the talks will become more intense before the strict Sunday deadline. There is always a cranky phase, she said. Most of the business is done in the last 48 hours.

South Korean protesters ' the most militant of the 10,000 who have come to Hong Kong hoping to block a WTO agreement ' shaved their heads, threw eggs and spray painted graffiti on the U.S. Consulate General building and briefly scuffled with police on Friday.

— Tourists from mainland China also added a new stop to their sightseeing tours in Hong Kong this week: gawking at the WTO protesters. The demonstrations are curious spectacles for the mainlanders, whose Communist government is highly sensitive about such displays and often cracks down on them.

Previous trade-liberalization talks in Cancun, Mexico, in 2003 and Seattle in 1999 collapsed in disarray. Another failure could seriously undermine the WTO's goal of forging a global free trade agreement by the end of 2006, already two years later than originally planned.

Much of the blame for the lack of progress has been pinned on the EU, which has refused to further reduce trade barriers protecting its farming market ' a key demand of poorer nations that depend heavily on agricultural exports.

But EU Trade Commissioner Peter Mandelson said the 25-nation bloc has working hard to broker a deal, and faulted developing nations ' particularly India and Brazil ' for not agreeing to lower their tariffs on industrial goods and services.

It is hard to see where progress can be achieved in Hong Kong if the talks continue in this direction, Mandelson said. The level of ambition, if anything, is going backwards.

Late on Friday, WTO chief Pascal Lamy began circulating a draft of the agriculture section of a final agreement. The draft text, obtained by The Associated Press, suggested 2010 as a date for ending all government payments to domestic producers to promote exports.

The EU has refused to commit to any date, and it remained to be seen how it and other members would react. And since the WTO is a consensus-based organization, even one holdout could doom an agreement.

The banana trade reflects the difficulties involved in this approach. The Group of 77 ' made up of African, Caribbean and Pacific countries, many of whose populations are subsistence farmers relying on crops such as sugar, cotton and bananas ' said they would reject any final deal that ended their preferential access to European markets.

We will not be a party to any consensus that that does not recognize our right to grow bananas, said Charles Savarin, trade minister of Dominica. We must preserve our traditional access to the EU markets.

The EU's system of tariffs and quotas favors Caribbean and African banana producers over large-scale growers in Latin America, preferential treatment the WTO has ruled violates world trade rules. But Savarin said ending that system would destroy their domestic banana markets.

Honduras, on the other hand, has said it will reject any deal that preserves the preferences.

The so-called Doha round of WTO talks was launched in 2001 in Qatar's capital to pay particular attention to poorer nations' trade concerns ' chief of which is agriculture. But developing countries feel that wealthy nations have largely failed to fulfill that pledge.

Mexico's secretary of economy, Sergio Garcia de Alba, said the United States, EU, Japan and other rich nations sent delegates who weren't given enough flexibility to make deals.

They sent their negotiators with papers, but also with straitjackets that don't let them move, Garcia said. This week has turned more into a gripe session than a negotiation.

Mandelson lashed out at that criticism, saying the EU had taken initiative and offered generous cuts, including an average 46 percent reduction in farm tariffs.

He said developing nations seemed to expect the Europeans to settle for fewer opportunities in industrial trade while agreeing to make more concessions in agriculture.

In other words, pay more to get less in return, Mandelson said. We are going to stick to our position.

The U.S. delegation is anxious for progress because of the July 2007 expiration of so-called fast-track authority, which allows U.S. trade ministers to negotiate international deals with little congressional interference. Officials believe they need a WTO treaty finished by the end of 2006 to give lawmakers enough time to deliberate on it.

This 2006 deadline is a real deadline, said Faryar Shirzad, the chief economic adviser for President Bush. We really have to get work done.