Analysis: Slim chance of success for "Doha Lite" trade talks

GENEVA (Reuters) - A decade of talks for a global trade deal that could add billions to world prosperity have led negotiators to a dead end, and even plans for a scaled-back deal to benefit the world's poorest states promise no easy exit.

Faced with the fact that talks will reach no conclusion for several years due to divisions between leading trading powers and upcoming elections, the head of the World Trade Organization called on negotiators on Tuesday to focus on a preliminary deal for now that would grant concessions to least-developed nations.

"The price of having allowed the talks to drag on is that the search for a perfect deal has ruined the chance of a decent deal," said Bruce Stokes, senior fellow at the German Marshall Fund, an independent Washington-based think tank.

The so-called Doha round of trade talks was launched in 2001 under the banner of easing global poverty and unrest, recruiting stars from Bono to Madonna and creating unprecedented grass-roots calls for fair free trade.

Concessions to poor countries were planned and provisionally agreed in 2004 as a small yet central part of a vast trade agreement that the World Bank in 2009 said would contribute $160 billion to world prosperity, boosting sales from food and cars to telecoms and insurance.

But years of frustrated negotiations, fear of emerging economies' export muscle and an unwillingness to grant one-sided concessions -- even temporarily -- at a time of economic malaise have stalled the talks indefinitely and mean that even a "Lite" version of the Doha accord focused on poor countries has little chance of success.

"Your legislative body will ask, what did you get in return? Will the U.S. Congress approve such a deal? Will the European Parliament approve this?" said Shahid Bashir, Pakistan's negotiator at the WTO.

COTTON AND TEXTILES

Pascal Lamy told the WTO's 153-nation membership that they would have to scale back their expectations and focus on the achievable prizes for now. Divisive but lucrative issues such as freeing trade in industrial goods would have to wait, he said.

However, a limited version would require at least limiting rich-country cotton subsidies that hurt West African farmers. And it would see rich countries admit duty-free all but 3 percent of imports from the world's least developed countries.

On the face of it these are small concessions, with support from a large part of the WTO membership. U.S. cotton farmers, moreover, have needed fewer subsidies as prices have risen - the Department of Agriculture expects payments to cotton farmers to total $921 million in 2011, down from $5.7 billion in 2005.

But negotiators and industry experts in Geneva and Washington expect opposition to a deal that locks in concessions for many years and does not weigh them up with other gains.

The European Union and China also subsidize cotton growing, though it is unclear to what level.

Duty-free status for goods from least-developed countries are another difficult issue.

Boosting poor countries' textile exports in particular, this could raise opposition from U.S. and EU textile sectors fearful of making job-intensive industry vulnerable to more competition.

It may also provoke opposition from poor countries who would see existing preferences eroded by competition from booming textile exporters Bangladesh and Cambodia.

The European Union has struggled for more than six months to push past India and European textile makers a temporary duty waiver for Pakistani textile exporters in the wake of last year's floods -- a hitherto unsuccessful attempt that does not bode well for a WTO deal that similarly guarantees no quick payback for concessions.

"A duty free deal was supposed to be in exchange for other things. It was tied up to what would happen in the textile sector for other players," said Cass Johnson, president of the U.S. National Council of Textile Organizations.

"NO PLACE FOR PHILANTHROPY"

Echoing such concerns, U.S. trade negotiator Michael Punke on Tuesday signaled the United States would need a broader agreement to make a small deal worthwhile.

"We do not subscribe to the notion that there is yet any consensus on this question (of what should be covered by a limited package), including the issue of whether any particular issue is in or out for December," he told WTO negotiators.

Trade ministers will meet in Geneva in December in an attempt to find a solution.

Several negotiators have already suggested adding more issues into the deal -- such as environmental rules, customs procedures, non-tariff barriers or farm payments -- reopening the wider debate over issues that made Doha stall.

"We keep getting back to the point that there can be no deal unless we do the entire deal, yet as we have seen there is no scope at the moment for the entire deal. We are trying to square the circle once again," said one trade negotiator.

Questions over the feasibility of even a limited package are raising questions over the future of the WTO and demands that it limit its work to that of an arbitrator of trade rules, disregarding questions of poverty or development.

"A development agenda should never have been introduced into the WTO in 2001," said a person familiar with the issue.

"The WTO is about mercantilist interest, and there is no space for philanthropy. It's dog-eat-dog according to a set of rules. You're either a player or you're not a player, and if you are not a player, you should get out of the way."

(Additional reporting by Charles Abbott and Doug Palmer; Editing by Alison Williams)