Lamy's Plea to Unblock Talks Falls on Deaf Ears

The United States and the European Union yesterday spurned calls to end the stalemate in global trade talks as six days of negotiations in Hong Kong began with Brussels and Washington at odds over support for farmers.

Amid protests inside and outside the conference hall, Pascal Lamy, the director-general of the World Trade Organisation, warned trade ministers that they had to be "open-minded, bold and courageous" if the talks launched four years ago in Doha were to be concluded successfully next year.

But Mr Lamy's call for negotiators to unblock the stalled talks by taking risks came as Peter Mandelson, Europe's trade commissioner, attacked America's food aid programme as "fake", designed to help US farmers rather than the world's poor.

Rob Portman, the US trade representative, hit back by accusing Mr Mandelson of being obsessed by the food aid issue, part of the complex and acrimonious discussions on agriculture that have prevented progress on a wider WTO agenda including services, industrial protection and help for poor countries.

The G20 - a group of 20 developing nations - called yesterday for an "immediate standstill" on the use of farm export subsidies and a date for their elimination. It said unless a draft deal on cutting the support given by rich countries to their farmers was struck by April the negotiations could founder. The EU has committed itself to eliminating export subsidies over the next decade, but has been under pressure to make deeper cuts in the rest of its package of support for agriculture in order to move the WTO talks forward.

France yesterday made it clear it would veto any fresh concessions from the EU and Mr Mandelson sought to take the initiative by attacking US food programmes and announcing a €2bn (£1.4bn) aid package to help poor countries beef up their capacity to trade.

"The large, structured US programme of in-kind food aid is designed in reality to give support to US agricultural producers. It distorts trade and depresses local production," Mr Mandelson told reporters. "Radical reform of US food aid is an essential part of any agreement we may reach in this round on the elimination of export subsidisation," he said.

Mr Lamy used his opening address to urge negotiators to show flexibility. "Repeating long-known positions, using negotiators' language, refusing to understand the reasons of counterparts and avoiding any risks - including political risks - will get us nowhere. Worse, it might put to risk valuable assets amassed with so much effort by our predecessors in the past. On the other hand, taking a bit of risk - a calculated risk - will mean a chance for improved rules, for a level playing field, for free and fair trade - in short, the best chance for development, the backbone of the Doha round."

Mr Lamy's call was echoed by Sir Digby Jones, director-general of the CBI: "Trade liberalisation is about improving peoples' lives. The least developed countries should have barriers removed unconditionally. This will allow them to access others' markets. But it is also about agriculture. The French government in particular must stop blocking the EU's negotiating position."

Campaign groups were unimpressed by the EU's aid-for-trade package. Oxfam said: "These announcements are welcome but the amounts on the table are wholly inadequate to do the job. They are in no way a substitute for decent trade reform."

John Hilary, director of campaigns at War on Want, said: "No one is fooled by this so-called "development package" - or by the timing of its announcement. Rich countries are trying to buy off opposition to their trade policies by means of a cynical bribe."