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Wednesday, October 20, 1999 Published at 11:42 GMT 12:42 UK

Business: The Economy

World trade talks could stall

Seattle may be the setting for the most acriminous trade round yet

Talks to launch a new round of global trade talks could stall before they get off the ground.

European Trade Commissioner Pascal Lamy says the agenda proposed by the United States for the upcoming World Trade Organisation conference in Seattle is "too narrow to meet the current challenges".

[ image: The last round of talks resulted in many tariff reductions]
The last round of talks resulted in many tariff reductions
He told a French newspaper that considering the American approach, the planned "millennium round" of trade talks is in danger of not being launched.

The EU would like issues like investment and competition discussed at the trade talks, while the USA wants to stick to agriculture and services.

The differences are likely to be discussed at a meeting of world trade ministers in Switzerland next week in preparation for the trade talks, which begin in Seattle on 30 November.

Battle over agriculture

These differences have provoked some opening salvoes between Brussels and Washington.

Franz Fischler, EU agriculture commissioner, said Mr Clinton's criticism of the Common Agricultural Policy, was an attempt to deflect attention from the US's reluctance to negotiate on politically sensitive sectors.

He said agricultural support spending was falling in the European Union but rising in the US.

"These attacks on the EU's farm policy by the US are reminiscent of the rhetoric pumped out during the Uruguay Round, and are a clear attempt by the US to distract public attention from their reluctance to include in the new WTO round sectors which are politically sensitive in the United States.

"The CAP is not responsible for the difficulties being experienced by US farmers as indeed farmers anywhere else in the world," he added.

Meanwhile, US Agriculture Secretary Dan Glickman said that agriculture would be the key test of the success of the trade round.

"Agriculture is probably the most sensitive issue in the talks," he told US farmers on Tuesday. "But it will determine whether the next trade round is successful."

The United States is the world's largest agricultural exporter, but its products have come under increasing attack in Europe as a health risk, with GM food and hormone-treated beef both causing concern.

Prodi flies to Washington

EU Commission President Romano Prodi told the 15 heads of state attending the European Summit in Finland that he planned a meeting with US President Bill Clinton in Washington with the aim of arriving at a "joint position" shared by the Europeans and Americans.

Mr Prodi's spokesman said his meeting with Mr Clinton would send trade negotiators "a clear political message" that free trade was "a treasure that all parties must work hard to defend". It is understood that the meeting will take place on October 27.

Japanese Foreign Minister Yohei Kono has also called for changes to a draft declaration planned for the Seattle meeting.

He told WTO Director General Mike Moore, who has been in Japan for a three-day visit, the draft was "lacking balance" and was advantageous to food-exporting countries.

Much at stake

The European Union and the United States are the two largest economies in the world. They account together for about half the entire world economy.

The EU and the US have also the biggest bilateral trading and investment relationship.

Transatlantic flows of trade and investment amount to around $1 billion a day, and jointly, EU/US global trade accounts for almost 40 % of total world trade.

The EU has said it may be prepared to consider a US proposal for a rapid reduction in tariffs in eight key areas if it was of benefit to EU exporters.

Washington's accelerated tariff liberalisation proposal - which has been endorsed by Pacific rim countries at the Apec summit last month - originally prop would harmonise or eliminate tariffs in eight sectors that account for one third of US exports.

They include chemicals; energy equipment; environmental goods; fish and fishery products; gems and jewellery; medical equipment and scientific instruments; toys; and forest products.

The EU representative in Washington, Hugo Paemen, said:
"We are ready to consider advanced reductions, on condition that it is a balanced deal for us. There have to be reductions in tariffs for products that are of interest to our economies and European exporters."

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