Doha talks push ahead but sticky issues persist

WASHINGTON (Reuters) - Agriculture negotiations in the World Trade Organization's Doha round are slowly moving forward but serious divisions remain on surge protections and goods that will be sheltered from tariff cuts, a senior U.S. trade official said on Wednesday.

The official, speaking on condition of anonymity, said it was too soon to bank on a meeting by late March of trade ministers from the WTO's 150 member nations, as some had envisioned, a step that would consolidate over six years of fractious talks and produce a close-to-final deal.

While negotiations among trade bureaucrats in recent months have helped narrow differences, the official said, major obstacles remain.

Those include, from the U.S. perspective, the quantity of products that each developing country would be allowed to shelter from full tariff cuts, along with special surge protections for developing countries.

Washington has long argued that developing countries like India are asking for too much in holding on to tariffs that protect certain goods from international competition.

If too few products in those countries actually feel the effect of tariff cuts, "you really could potentially cut out any trade growth for that country," the official said.

But poorer nations maintain the tariffs will ensure their poorest citizens aren't swept away by a torrent of subsidized goods from abroad.

The so-called special products for developing countries -- and their corollary for rich nations, called sensitive products -- have been one of the stubborn agriculture issues that have kept a new world trade deal at bay since 2001.

Crops and food may account for a small share of world trade, but agriculture is a surprisingly sensitive issue in many countries when it comes to making trade concessions.

In the United States, for example, lawmakers are loathe to give up too much on farm subsidies and other issues in a Congress that represents farm voters from every state in the Union.

DEAL ON FOOD AID CLOSE

The Bush administration continues to insist that an agreement is possible this year in the round, which is also tied up in negotiations on industrial trade and other issues.

One industry official, who also requested anonymity and is well versed in the talks, said negotiators were "within striking distance" of an agreement.

All eyes will be on Crawford Falconer, chair of the Doha agriculture talks, when he issues a new negotiating draft in the next few weeks.

The U.S. trade official said he expected the next Falconer paper would reflect the progress made in recent months to narrow the gaps in countries' positions.

"We are going to see a text that is a very large improvement" in terms of pinning down consensus, he said.

There has been little change in recent months on the issue that has perhaps been the most contentious: farm subsidies.

Poor countries want to force rich nations such as the United States, Japan, and European nations to scale back generous subsidies which can depress market prices worldwide.

Under the most recent Doha draft, the United States would have to cut overall farm subsidies to between $13 billion and $16.4 billion a year, far lower than a current cap of around $48 billion and below the most recent U.S. offer.

Yet U.S. subsidy spending has dropped in step with soaring crop prices. Total subsidies were at most $11 billion in 2007.

What is now needed to clinch a deal, the official said, are difficult decisions on subsidies by U.S. Trade Representative Susan Schwab and her counterparts at a ministerial meeting.

Negotiators are closer to an agreement on food aid donations to needy nations, another issue on the Doha mandate.

The only major problem areas that remain, he said, are on nonemergency aid and monetization, a practice popular in the United States in which aid groups sell crop donations in poor countries and use the proceeds to fund development work.