US urges last-ditch WTO trade agreement, India won't budge; body's effectiveness questioned

BALI, Indonesia – Chances of a breakthrough in global trade negotiations dimmed Wednesday as India refused to budge on food subsidies that are an obstacle to an eleventh-hour agreement at a World Trade Organization summit.

U.S. Trade Representative Michael Froman urged the WTO’s 159 member economies to work past their differences to finalize a slimmed-down deal to boost trade.

“Let us not sugar coat reality: Leaving Bali this week without an agreement would deal a debilitating blow to the WTO as a forum for multilateral negotiations,” he told dozens of trade ministers gathered at the summit on the Indonesian resort island. “If that happens, the unfortunate truth is that the loss will be felt most heavily by those members who can least afford it.”

But Indian Trade Minister Anand Sharma left little hope for a breakthrough. His government opposes a provision that could endanger subsidies for grains under an Indian policy to feed its poor.

“Agriculture sustains millions of subsistence farmers. Their interests must be secured,” he said. “For India, food security is non-negotiable.”

European Union Trade Commissioner Karel De Gucht said India’s concerns should not be a deal breaker.

“It should be possible to find a solution to this remaining sticking point. Provided that everybody is showing the necessary flexibility,” he said.

The talks will either produce a deal that could boost global trade by $1 trillion or possibly spell the end of the WTO’s relevance as a forum for negotiations after a decade of inertia.

The idea behind the agreement is that it would level the playing field by forcing all countries, rich and poor, to follow the same trade rules, benefiting everyone. With fewer trade barriers, goods and services of all types would be more affordable, creating more employment and business opportunities.

The WTO estimates that easing customs barriers would increase total world trade to $23 trillion from its current estimate of $22 trillion.

Critics of the WTO rules, though, say they may hinder countries from setting their own priorities in environmental protection, worker rights, food security and other areas. And they say sudden reductions in import tariffs can wipe out industries, causing job losses in rich and poor countries.