U.S. farm programmes spared as WTO talks collapse

By Doug Palmer

GENEVA (Reuters) - A new $289 billion (146 billion pounds) U.S. farm bill, which has survived two veto attempts, was spared again on Tuesday when nine days of intense efforts to rescue a world trade deal ended in failure.

"It's no use beating around the bush, this meeting has collapsed," World Trade Organisation Director General Pascal Lamy told reporters on Tuesday. "Members have simply been unable to bridge their differences."

Trade ministers representing around 30 key WTO players were in Geneva to try for a breakthrough on farm and manufacturing trade issues at the heart of the world trade round launched nearly seven years ago in Doha, Qatar.

Tuesday's failure could delay an agreement in the talks for two or more years because of the upcoming U.S. presidential election and other international leadership changes.

U.S. Trade Representative Susan Schwab faced pressure from Congress to insist on new agricultural export opportunities in developed and developing countries to offset any farm subsidy cuts the United States would have to make.

EU Trade Commissioner Peter Mandelson said the European Union, in contrast, had "never sought to be paid for reform of our farm subsidies by receiving market access in developing country farm markets" and looked instead for gains in foreign manufactured goods and services markets.

Early last week, Schwab offered to cap annual overall U.S. spending on trade-distorting farm subsidies at $15.0 billion, down from $48.2 billion under current WTO rules.

A compromise package proposed by Lamy set the ceiling at about $14.5 billion, but India and other developing countries said that was still twice current U.S. spending levels because of high commodity prices.

"COME HOME"

Senate Agriculture Committee Chairman Tom Harkin, an Iowa Democrat, said last week the Doha agreement taking shape would require at least some cuts in new U.S. farm legislation.

President George W. Bush criticised that law for raising crop subsidy rates at a time of high international food prices.

He vetoed it twice because of a clerical error the first time he received it, but was overridden each time by Congress.

A leading U.S. farm-state lawmaker, shortly before the talks collapsed, urged U.S. negotiators to "pack their bags and come home" rather than settle for a bad deal.

"The proposal that was tabled last week raises concerns, primarily because after seven years of negotiating, we still don't see sufficient improvements in market access for U.S. agricultural products, manufactured goods and services," said Sen. Charles Grassley, an Iowa Republican.

To the frustration of many trade ministers, the talks foundered over developing country demands for a new tool to protect their farmers against import surges.