The European Union and the United States yesterday tried to inject new life into stalled world trade talks by declaring they had agreed between themselves on how negotiations should proceed.
With less than a month to go until a crucial meeting of trade ministers from 146 countries, in Cancun, Mexico, the world's two biggest trading blocs are hoping that by working together they can revive the flagging attempts at trade liberalisation launched in Doha in 2001.
But the EU-US bid was immediately criticised by India's ambassador to the World Trade Organisation (WTO). India is one of the most important of the developing countries, whose support is deemed crucial for the success of the Doha round.
The envoy, Mr KM Chandrasekhar, who was giving the first reaction said: "It is not feasible. It does not take into account our farmers' interests."
Two joint EU-US proposals were presented to the WTO in Geneva yesterday: the more contentious is a paper on how to advance the liberalisation of farm products; the second covers non-agricultural markets.
"The EU and the US intend to live up to their responsibilities as the world's largest trading entities," the European Commissioner for Trade, Mr Pascal Lamy, said. He promised that the proposals would open up markets in all WTO countries, while at the same time offering special treatment for developing countries so that they could benefit from international trade.
But Oxfam, the development non-governmental organisation, accused the EU and US of attempting to present a fait accompli to the WTO and so to over-rule the interests of developing countries.
"Today's agreement is very bad news for developing countries," Oxfam said.
Mr Lamy argues that developing countries stand to benefit from trade liberalisation and that sufficient safeguards can be built in during the talks so as to protect their interests. EU officials pointed out that the EU and US had specifically been asked by a meeting of ministers from WTO countries to try to reconcile their differences.
Failure to advance the farm trade talks has so far cast a shadow over the entire Doha negotiations, which are supposed to be concluded by the end of next year.
The main elements of the farm products proposal are: the EU would agree to eliminate export subsidies on at least the most sensitive products, while the US would have to eliminate its export credits and would accept WTO discipline on its food aid.
On tariffs, the EU and US reached a compromise on how reductions should be applied.
On domestic support for the farm sector, the EU and US propose that they should reduce the most trade-distorting measures by a percentage still to be fixed; the amount of spending on less trade-distorting measures should be capped at 5 per cent of the total value of farm production.
The developing countries and the Cairns group of farm-exporting countries are likely to attack these measures as being too modest.
The EU believes it can "comfortably" meet these obligations after the latest reform of the Common Agricultural Policy agreed in June. But significant differences between the EU and US remain.
The EU wants protection for geographical indicators, such as names like Champagne, Bordeaux and Parma ham, and it wants to be able to reward non-trade concerns such as protection of the environment and the rural way of life.
Yesterday's agreement leaves those concerns unresolved.
EU and US negotiators will now attempt to persuade other WTO members to back their general approach and begin haggling over the exact numbers and percentages to be inserted into the proposal.
