Mandelson says WTO clash with US fundamental

July 26 | Updated: Jul 27 2006, 05:30am hrs
European Union trade commissioner Peter Mandelson said the US has to take a hard, fundamental look at what it can do to cut farm subsidies and revive World Trade Organisation talks that collapsed this week.

Mandelson said that US unwillingness to make any new offer in cuts to spending on its farmers led Pascal Lamy, director-general of the WTO, to suspend the five-year-old talks aimed at dismantling market barriers and stimulating global economic growth.

The US has to take a hard, fundamental look in the whole agricultural area of what theyre prepared to put in for the very large demands they are placing on others, Mandelson said in an interview today. It isnt a spat between the EU and US, Mandelson said of the disagreements with the US over who is to blame. If it was only a spat it would be less fundamental.

The US on Tuesday said Mandelsons comments about American inflexibility were false and misleading and US trade representative Susan Schwab said she had tried to conduct talks without resorting to blamesmanship and finger-pointing.

While US negotiators said the administrations agriculture proposal would have resulted in a 60% reduction in subsidies, a WTO analysis concluded that loopholes might actually have permitted farm supports to American farmers to rise to $22.7 billion a year from the current $19.6 billion.

The EU trade chief says that while the US may have understandable political reasons for its position, its demands were completely out of proportion to what it was willing to offer. A trade deal was expected to pump at least $96 billion into the global economy, according to World Bank estimates.