G4 talks collapse, throw trade round into doubt

By Doug Palmer and Laura MacInnis

POTSDAM, Germany (Reuters) - Talks between four of the world's big trade powers collapsed on Thursday, throwing the future of global WTO talks on free commerce into deeper crisis.

The United States and the European Union, representing rich nation interests, and Brazil and India, for the developing world, were quick to blame the other side for the collapse of the meeting which had been scheduled to run until Saturday.

Diplomats and trade officials had warned it would be hard for the full 150-member state World Trade Organisation to meet an end-July target for a deal, without a preparatory agreement by the so-called G4 group of trade powers.

But ministers insisted that despite the severe setback, the near six-year-old WTO negotiations -- seen as a bulwark against creeping protectionism -- were not yet dead.

"Potsdam, once again, was not very successful," Brazil's Foreign Minister Celso Amorim told a news conference. "It was useless to continue the discussion on the basis of the numbers put on the table."

The four were attempting to overcome deep differences over how far to open up agricultural and industrial markets and cut rich nation farm subsidies.

"It (the failure) places a very major question mark on the ability of the wider membership of the WTO to complete this round," EU Trade Commissioner Peter Mandelson told journalists. "(But) it does not in itself mean that the negotiations cannot be put back on track," he added.

WHITE HOUSE POINTS AT BRAZIL, INDIA

The White House accused Brazil and India of standing in the way of a deal that -- it said -- would help smaller countries.

"The president is disappointed that certain countries are blocking an opportunity to expand trade," spokesman Tony Fratto said. "Large economies like Brazil and India should not stand in the way of progress for smaller, poor developing nations -- but that appears to be what happened in Germany this week."

WTO boss Pascal Lamy has warned that without a breakthrough by August, the negotiations could be put on hold for several more years or even fail altogether.

Lamy quickly called a meeting of the Doha round's steering group, the Trade Negotiating Committee, for Friday afternoon in Geneva to underline that the search for an accord continues.

"I now call on the members of the G4 to contribute to the multilateral negotiating process, which will continue as of today in Geneva," he said in a statement.

Amorim and India's Commerce and Industry Minister Kamal Nath were due to fly to Geneva. U.S. Trade Representative Susan Schwab was also considering making the trip, officials said.

Launched in the Qatari capital in late 2001, the round aims to lift millions out of poverty through more trade. But it has faced problems from the start, mainly over agriculture, which is a highly sensitive political issue almost everywhere.