U.S. blames Brazil, India for failure of G4 talks

WASHINGTON (Reuters) - U.S. officials said India and Brazil were to blame for the breakdown on Thursday of trade talks that some were billing as a final chance to spur the Doha round toward completion.

"While the U.S. and EU were prepared to make significant contributions, there was a lack of flexibility, indeed a rigidity, when it came to advanced developing countries who were present," U.S. Trade Representative Susan Schwab told reporters by phone just hours after the senior-level talks in Germany ended in acrimony.

"We had two countries, India and Brazil, which I don't think really chose to negotiate," added Agriculture Secretary Mike Johanns.

The meeting in Potsdam of Brazil, India, the United States and the European Union, known as the G4, was billed as a chance to hammer out an agreement on trade in agricultural and manufactured goods and services that could be used a springboard for a new world trade deal this year.

While New Delhi's negotiator, Kamal Nath, said an "attitude change" was needed to move the round forward, Johanns said Brazil and India were asking for impossible concessions.

"They picked numbers that were so out of the realm of possibility in realm of manufacturing market access ... They adopted that attitude from the beginning and it cast a chill over the entire week," Johanns said.

"To have the goal posts moved like that ... really marked the end of the day," Schwab said.

Their comments echoed from the White House, where a spokesman said President George W. Bush was disappointed that countries like Brazil and India were blocking the hopes of smaller, poor countries.

'ABSOLUTELY' STILL POSSIBLE TO GET DEAL IN '07

Johanns said the talks had made real progress, pointing to a new consensus among the G4 negotiators on food aid donations, which are covered by the talks.

Headway also was made, he said, on sensitive products, which are goods developed countries can shelter from tariff cuts, including discussions of tonnage of crops that qualify for quotas. Less progress was made on special products, which developing countries can protect; those have been Washington's particular bone of contention with India.

After the talks collapsed, diplomats and trade officials warned it could be hard to meet a year-end goal for a deal. But Schwab tried to put a bright face on things.

She heads now for Geneva, where she'll meet with WTO boss Pascal Lamy and others in a bid to overcome the G4 deadlock. Negotiators from India and Brazil will also be there.

"Absolutely ... It can still be done this year," she said.

The end of the talks several days early casts another shadow over the Bush administration's trade agenda. Not only has Bush advocated a Doha deal, but he's also hoping to see Congress approve four bilateral trade deals in the hopper.

Timing is tight. The administration may have to fight tooth and nail to get its trade negotiating powers, called fast track, renewed when they expire at the end of the month.

Schwab said the G4 acrimony could improve the odds that skeptical lawmakers will renew fast track.

"By walking away from what was ... by any measure a bad deal," she said, "we are showing the Congress that we are to be trusted."