Global talks on trade under the World Trade Organization (WTO) collapsed with developing nations led by India blaming the developed nations led by the US for intransigence in cutting back farm-subsidies in violation of the Honk Kong Agreement. Trade experts say that the WTO would have to make several backroom deals to create a consensus draft but that is expected to take several months to achieve.

Last month, WTO Director-General Pascal Lamy revealed that he had a proposal which could be used as a last resort. Lamy also indicated that the differences between the two groups were not large and unbridgeable. Developing nations have been refusing to yield on industrial tariffs if the developed nations do not yield on farm subsidies and services access.

The Hong Kong WTO Ministerial meeting last year had pegged year end as the deadline to conclude the so-called Doha round but almost all interim deadlines have been missed and it is no surprise that the whole world trade mechanism will collapse by end of the year. The 2006 end deadline arises from the expiry of the US President’s Fast Track Authority in 2007 and the unlikely extension of this authority from a Congress that is seeking reelection early next year. An appearance of capitulation by the US Administration will mean an electoral rout for the Republican Party in the next elections.

Commerce and Industry Minister Kamal Nath says the failure of these talks has filled him with “sadness and a sense of loss. Nath says that all developing countries are unanimous in refusing to compromise the livelihood and food security of their subsistence farmers to provide market access to agricultural products from developed countries.