Farm, manufacturing clash causes G4 trade collapse

POTSDAM, Germany, June 21 (Reuters) An effort to rescue world trade talks collapsed today after Brazil and India said the United States and the European Union were demanding too high a price for cutting their trade-distorting farm policies.

''The exchange rate being asked was too high,'' Brazilian Foreign Minister Celso Amorim told reporters, referring to US and EU demands that developing countries make ''a 58 per cent cut'' in their bound manufacturing tariffs in exchange for rich countries cutting their farm subsidies and tariffs.

Amorim and Indian Commerce Minister Kamal Nath complained that the United States and the EU had struck a comfortable deal for themselves, while making excessive demands on developing countries in both manufacturing and agriculture.

Amorim evoked memories of the World Trade Organisation's acrimonious September 2003 meeting in Cancun, Mexico, which collapsed after developing countries objected to an earlier US-EU proposal for reforming agricultural trade.

''In a way, we are having sort of a Cancun Act II in which the two developed countries or entities found common levels of comfort for them ... but keeping, of course, a very high ambition for us,'' Amorim said.

Both US and EU negotiators said they were prepared to go further on farm subsidies and tariffs than they previously have done. But they complained that Brazil and India refused to offer new market openings in manufacturing in exchange.

''We are prepared to pay a lot - and more than others - (but) we cannot do so for next to nothing in return,'' EU Trade Commissioner Peter Mandelson said.

''It emerged from the discussion on NAMA (non-agricultural market access) that we would not be able to point to any substantive or commercially meaningful changes in the tariffs of the emerging economies.'' US Trade Representative Susan Schwab complained that India and Brazil had offered nothing the developed countries can take back home in exchange for making politically painful farm policy reforms.

''The only way to get to yes in a trade agreement is by being willing to negotiate,'' Schwab said.

REUTERS DS RAI2346