WTO negotiators battle on, differences still deep

By Doug Palmer and William Schomberg

GENEVA (Reuters) - The United States sought to kickstart efforts to rescue a global trade deal on Tuesday by offering to cut a ceiling on its contested farm subsidies, but leading developing countries said it was not enough.

U.S. Trade Representative Susan Schwab announced Washington was ready to cap its trade-distorting farm subsidies at $15 billion a year, on condition countries like Brazil and India also make concessions to save the World Trade Organisation talks.

"This is a major move, taken in good faith with the expectation that others will reciprocate and step forward with improved offers in market access," Schwab told reporters.

The long-awaited U.S. move came on the second day of a week-long push by ministers for a breakthrough on farming and manufacturing -- core trade issues that have dogged the WTO's nearly seven-year-old Doha round of world trade talks.

Developing countries have long complained that huge U.S. subsidies squeeze their farmers out of the market, reducing food supplies and contributing to the recent spike in global prices.

But high prices have lowered U.S. spending on farm programs that encourage production -- which distort trade -- to about $7 billion last year, well below the $48.2 billion allowed under existing WTO rules.

Schwab said Tuesday's offer would require the U.S. Congress to rewrite new farm legislation. President George W. Bush vetoed a 2008 law that boosts subsidies but was overridden by Congress.

Tom Harkin, head of the Senate's Agriculture Committee welcomed the U.S. move, saying in a statement it showed the United States was ready to negotiate in good faith and complete the round but other countries now had to make concessions too.

Stressing the value of the new offer, Schwab said U.S. trade-distorting support was $18.9 billion in 2005 and close to $25 billion in both 1999 and 2000, before the food price surge.

But the move failed to impress some WTO players key to the complex trade-offs needed this week to prevent the Doha round being put on hold, possibly for a couple of years.

Supporters of a WTO deal say it could send a morale-boosting signal to the slowing global economy.

OFFER FAILS INDIA'S "LAUGH TEST"

"My immediate response is it doesn't pass the 'laugh test'," a senior Indian official told Reuters.

Brazil said it wanted deeper cuts. "This is only the second day of the talks here, so we imagine there is room for maneuver to reduce them further," a Brazilian diplomat said.

Brazil and India are key to the negotiations because the United States and the European Union want big developing economies to open up their markets in industrial goods as well as farm products in return for their agriculture reforms.