Farm talks may progress at WTO; industry may drag

MANILA, Aug 26 (Reuters) Agriculture holds the key to progress in stalled world trade negotiations, with proposals on opening up industrial trade still facing objections from some developing countries.

The trade talks, launched in 2001 after the Sept. 11 attacks on the United States, resume in Geneva at the World Trade Organization (WTO) on Sept. 3 after the European summer break.

A draft on farm trade circulated ahead of the break offered the best chance of moving ahead, said ministers and officials attending a regional trade meeting in Manila.

None of the WTO's 151 members had significant objections to the agriculture paper. But parallel proposals on industrial trade have fallen foul of some developing countries who say they are being asked to cut their import tariffs by too much.

The talks, known as the Doha round, aim to create new opportunities for trade, boosting confidence in the world economy and allowing developing countries to export their way out of poverty.

''We were pleased that in such a difficult area, countries of wide-ranging interests in agriculture all agreed that the text did create the foundation for moving on,'' said New Zealand Trade Minister Phil Goff.

''That is as good a result as we could have hoped for,'' he told Reuters. ''It takes us beyond where we were previously and it signals the broad areas where we will need to work to find convergence.'' The Geneva talks will therefore initially focus on agriculture, as some WTO members do not even consider the proposals on industry, known in WTO jargon as ''NAMA'', to be a basis for negotiation.

''There would be a need for the chairman of the NAMA group to revisit his paper. Otherwise, it is likely that the disagreement on the NAMA paper may spill over into the agriculture negotiations,'' India's top trade official Gopal Pillai told Reuters.

VOLUNTARY TARIFF CUTS Pillai said India was keen on securing a deal, which could help lift its millions of poor farmers out of poverty, as well as opening up markets for Indian industries ranging from automobile components and pharmaceuticals to business services.

India is already cutting its import tariffs voluntarily as it opens up to the world. Officials from other countries said this could be the basis for a deal on industry, if the actual tariffs set by developing countries such as India were below the official levels they were pushing for.

In the complex negotiations, trade and agriculture are linked.

Many developing countries are unwilling to cut their import tariffs -- opening their markets to developed and other developing economies, unless the United States is flexible about its farm subsidies, which they say distort farm trade.

But Washington wants better access for its farm products in developing countries, and is therefore keen to learn which products will be continue to be protected, before it makes a move.

Clarifying what goes on these lists of special and sensitive products is likely to be an early focus for the Geneva talks, officials said.

There are other complications with agriculture. Officials from developed and developing countries alike expressed concern at the U.S. farm bill working its way through congress. This sets spending and support for American farmers for the next five years, but conflicts with efforts at the WTO to reduce subsidies.

The prize for success is huge.

''Time after time, economic studies have shown that the net benefit of concluding the round is huge for every country,'' Goff said.

On agriculture alone, government will save subsidies while seeing their farmers compete more effectively on export markets.

It would also boost confidence in the world economy, reducing the prospect of a global recession, Pillai said. There is only a short time to make progress. Failure to secure the outlines of a deal in the next couple of months will see the talks caught up in the U.S.

presidential election.

Ministers at Manila hope that next month's meeting in Sydney of 21 world leaders of Asia-Pacific economies, including George W. Bush will give some political momentum to the Doha round talks.

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