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Last Updated: Sunday, 30 October 2005, 12:13 GMT
IMF-World Bank in WTO talks plea
World Bank president Paul Wolfowitz (L) and IMF managing director Rodrigo de Rato
Wolfowitz(left) and Rato are singing from the same sheet on trade talks
The chiefs of the IMF and World Bank have called for a "flexible" approach by states in the run-up to the new WTO trade talks in Hong Kong in December.

The two lenders said success depends on nations dropping "narrow interests".

This comes after a week in which the EU, France, US and others squabbled over farm subsidy reductions ahead of the resumed round of Doha talks.

Europe has offered to cut tariffs on farm goods by up to 60%, but the offer has left Paris and Washington unmoved.

Comprehensive and sharp reduction of (agriculture) tariffs in the largest countries will deliver the greatest development gains
IMF-World Bank statement

France is seeking clarification from Brussels that the new EU offer, made by EU trade commissioner Peter Mandelson, does not exceed his mandate.

"Some important progress has been made in the last few weeks," said the joint statement from Rodrigo de Rato, International Monetary Fund managing director, and Paul Wolfowitz, World Bank president.

"Success will now require key players to set aside their narrow interests, show flexibility and forge the ambitious Doha outcome that the world expects and needs. The stakes are too great to contemplate failure."

'Trade distortions'

They said governments had to "face down interest groups" that would perpetuate high trade barriers benefiting relatively few at a cost to many.

French President Jacques Chirac has said he could veto any further concessions, in the face of France's huge and powerful farming lobby.

Europe's farming subsidies have been blamed by other parties of being one of the main problems hampering the trade talks.

Farm tariffs must not totally dominate talks, say the pair

"It is clear what needs to be done. At the heart of the Doha Round lies agriculture, and appropriately so," said Mr Rato and Mr Wolfowitz, although they did not name any nations or trade blocs.

"The sector remains riddled with trade distortions that penalize consumers everywhere and the many poor in developing countries who earn their living from it.

"Comprehensive and sharp reduction of tariffs in the largest countries will deliver the greatest development gains," they said.

"Trade-distorting subsidies must also be cut, however, and not simply through technical manoeuvres."

Services and manufacturing

While France worries the EU proposals go too far, the US is disappointed both in the level of the tariff cuts and in the exclusions from the tariff cuts, saying they do not go far enough.

US trade representative Rob Portman said the EU's proposal to classify up to 8% of its tariff lines as "sensitive goods", meaning tariffs would not be cut as much, created a loophole.

The US wants the EU to cut the proportion of sensitive products such as beef and poultry to 1% of the total.

But Mr Rato and Mr Wolfowitz went on make an appeal that agriculture should not have a monopoly on the forthcoming round of trade talks.

"Active and fruitful negotiations in services and manufactures are not simply a question of self-interest; they are essential to maintaining the balance of all countries' interests in the negotiations," said their statement.

They said opening of these markets must be accompanied by increased aid for trade to help the poorest countries take advantage of new opportunities.

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