WTO head rules out deal on Doha round before 2009

REUTERS - The World Trade Organisation (WTO) dropped plans on Friday to seek a breakthrough for a new trade deal this year, risking an increase in protectionism as the world economy suffers its worst crisis in a generation.

WTO Director-General Pascal Lamy told members he had decided against calling trade ministers to Geneva this month to push for a deal in the WTO's seven-year-old Doha round, because they were not showing enough political will to narrow differences.

The decision means ministers were unable to meet a call by leaders of the G20 rich and emerging nations last month to reach an outline Doha deal by the end of this year to help counter the financial crisis by warding off protectionism.

It also promises an uncertain period for international trade, the lifeblood of the global economy, as the world navigates the worst economic crisis since the 1930s.

Lamy clearly decided that the prospects of a successful meeting were not high enough to invite ministers now. That formally leaves the Doha round still in progress, but economists say it will be much harder to reach a deal next year when the world economy will already be in a much worse state than today.

But Lamy left political leaders, such as British Prime Minister Gordon Brown who has pushed hard for a deal, the opportunity to save the talks over the weekend.

"Leaders have expressed a desire but this has not translated into enough will at this stage," Lamy told a meeting of key WTO ambassadors.

"Unless this dramatically changes in the next 48 hours this is the reality from Geneva," he said, a participant in that meeting told Reuters.

The next steps for negotiations will be discussed at a meeting of the WTO's general council on Dec. 18-19.

The U.S. ambassador to the WTO, Peter Allgeier, said a ministerial meeting was unlikely now to take place while George W. Bush is president, and the next moves were likely after President-elect Barack Obama takes office on Jan. 20.

"We're very disappointed but we also agree that that is a prudent conclusion to draw given the gaps that still exist in some crucial issues," Allgeier told reporters.

Sensitive issues

Lamy had previously indicated that a meeting could be held this weekend. But on Monday, after meeting key WTO ambassadors to discuss revised negotiating texts on agriculture and industrial goods issued on Saturday, he decided that further consultations were needed on three sensitive issues.

These were proposals to create duty-free zones in some industrial sectors such as chemicals, a proposal to safeguard farmers in poor countries from surges in imports, and cotton subsidies -- all of which touch on key U.S. interests.

Brazil's foreign minister Celso Amorim told reporters that the United States was making excessive demands, when, as the source of the financial crisis that Doha deal would help solve, it should be showing the most flexibility. But Allgeier denied the United States had refused to budge.

Lamy told ambassadors that major trade players were not willing to spend the political capital to narrow differences over the sector deals and farm safeguard issues.

"It has been a tough week, trying and trying again, which is, I believe, my responsibility," Lamy told WTO members. "But at the end of the day the responsibility to compromise lies with you."

Lamy spent the last three days in one-on-one conversations and conference calls with ministers and top officials from the United States, China, India, Brazil and other trade powers to try and narrow the gap on those issues, trade officials said.

Estimates of the value of a Doha agreement vary widely. Some advocacy groups say it would damage the interest of developing countries, although poor nations have been among the loudest calling for a deal.

A study last month by the International Food Policy Research Institute (IFPRI) said more than $1 trillion in world trade could be at risk if Doha was not concluded soon -- $336 billion in increased trade from lower tariffs and subsidies in a deal, and $728 billion in lost sales as countries hike tariffs to ceilings allowed under previous deals.