Mandelson's pledge as world trade talks collapse

Europe's Trade Commissioner Peter Mandelson last night vowed not to leave poor countries in the lurch after the collapse of world trade talks in Geneva.

He was speaking after the latest effort to reach a deal ended in a bitter blame game between America and the EU over farm subsidies.

Trade negotiators from America, the EU, Japan, India, Brazil and Australia gathered in Geneva on Sunday to break years of deadlock over the so-called Doha Round of global trade liberalisation.

But last night US trade negotiator Susan Schwab made clear Washington was making no more farm subsidy concessions. Then she stunned the others by attacking the EU, India and Japan for not doing enough.

Yesteray morning when the talks reconvened to see what could be salvaged, World Trade Organisation Director-General Pascal Lamy suspended the Round as the recriminations began.

Getting negotiations back on track will take months, with no more negotiations until at least after the America mid-term elections in November.

Mr Mandelson warned: "We have missed the last exit on the motorway.

"I want to express the profound disappointment and sadness of the member states of the EU that the talks are having to be suspended today. This is neither desirable nor inevitable. It could so easily have been avoided."

The meeting had been "the best of its kind - until it became the worst."

Mr Mandelson added: "Having been mandated by heads of government at the G8 to come together to indicate further flexibility, I felt that each of us did - except the United States.

"The US was unwilling to accept, or indeed to acknowledge, the flexibility being shown by others in the room and, as a result, felt unable to show any flexibility on the issue of farm subsidies."

The cost of failure would be political as well as economic:

"We risk weakening the multilateral trading system at a time when we urgently need to top up international confidence not further damage it, and do what we can to stabilise the world - not create additional tension and uncertainty."

Agreement on the Doha Round has been one of Prime Minister Tony Blair's top priorities, to end world trade tensions which have helped deepen the rift between the rich and poor nations.

In return for greater access to western markets for their agricultural produce, the developing world would open its markets to manufactured goods.

But developing countries claimed the EU and US were not cutting domestic farm subsidies or lowering import tariffs enough to allow them to compete.

America, in turn, wanted swifter and greater access to manufactured goods markets in developing countries.

Mr Mandelson defended the EU's record tonight, saying cuts in trade-distorting farm subsidies of 75% were potentially on offer: "I only wish the US would begin to match what the EU is doing."

He told the World Trade Organisation before flying back to Brussels: "We will not allow the world trading system to enter into a period of hibernation. Above all we will not allow the poor countries to fall victim of it."

He promised to try to salvage elements of the stalled talks which directly affect developing countries, including multilateral "Trade for Aid" deals, and duty-free and quote-free trade access for so-called Least-Developed Countries (LDAs).

Oxfam blamed both the US and the EU for the failure of the talks:

"These talks are going nowhere because the US and the EU refuse to stop dumping by cutting real money from their agricultural support, while demanding that developing countries continue to open up their markets" said Celine Charveriat, head of Oxfam's Make Trade Fair campaign.

Christian Aid said the lack of a trade deal was a "terrible blow" for the world's poor: "It seems that the selfish intransigence of the US and Europe has finally wrecked any chance of a successful outcome for these trade talks which were meant to help developing countries" said Claire Melamed, Christian Aid's senior trade analyst.

But John Hilary, Director of Campaigns and Policy at War on Want, said the lack of a deal benefited the poor: "The collapse of the trade talks is good news for the world's poor. The deal on the table would have caused great damage to developing countries.

"The EU and US must shoulder the blame for destroying the so-called Development Round, as they have continued to demand massive concessions from developing countries while refusing to set their own houses in order."

CBI Director-General Richard Lambert said the situation was as serious as it could be: "The collapse of the talks puts the whole multilateral trading system in jeopardy and fuels the damaging protectionist tendencies that are increasingly emerging around the globe.

"The collapse is undoubtedly a major setback for UK businesses, but if this is allowed to become the final chapter in the story of the Doha Round, it is the developing nations that will have lost out the most."

A defiant Ms Schwab insisted Washington was still fully committed to a "multilateral" trading system.

But a US Congress mandate to President George Bush to continue talking expires at the end of this year - with virtually no time now to agree a trade deal and get it ratified in Washington.