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 New York Times July 24, 2006

Global Trade Talks Are Halted as U.S. and European Union Fail to Agree

By TOM WRIGHT and STEVEN R. WEISMAN

GENEVA, July 24 — Negotiations aimed at reaching a new global trade agreement collapsed today, dealing a blow to the Bush administration’s international economic agenda and touching off a bitter new round of recriminations between the United States and Europe over farm trade barriers.

After two days of discussions, the director general of the World Trade Organization, Pascal Lamy, formally suspended the talks. American trade officials said there appeared to be little prospect of resuming the talks any time soon, probably dooming the chances of a trade accord during President Bush’s remaining time in office.

Negotiators had earlier said that if the outlines of an agreement were not secured by late this month, it would be nearly impossible to negotiate a trade-expanding agreement in time for the United States Congress to vote on it by the middle of next year. President Bush’s authority to negotiate a trade deal and have it put to an up-or-down vote without amendment in Congress expires then.

The failure of the talks was particularly embarrassing because, just last month at a summit in St. Petersburg, Russia, President Bush and other world leaders all called for a redoubled effort to make concessions and break the impasse that has paralyzed trade talks for years.

The two top American negotiators in Geneva — Susan C. Schwab, the United States Trade Representative, and Mike Johanns, the Agriculture Secretary — said they were deeply disappointed by the suspension of the talks, but they recognized that Mr. Lamy had no choice, because there had been no convergence among the parties.

“Unless we figure out how to move forward from here, we will have missed a unique opportunity to help developing countries and to spur economic growth,” Ms. Schwab said. “There was no package on the table that we could have recommended to the President or to the United States Congress.”

Ms. Schwab and Mr. Johanns said that they came to Geneva prepared to make further concessions on agriculture tariffs and what are called trade-distorting subsidies, which protect farmers from overseas competition, but they said that the European Union and some developing countries failed to make similar offers.

Ms. Schwab said in a telephone conference call with reporters that when American officials added up the latest European market-access proposals for farm products, “it became quite clear that there was no there there.”

Mr. Johanns added: “There are no negotiations planned in the future. This round has been suspended.”

But European negotiators declared that it was the United States that had been intransigent. They said that the Americans failed to recognize that the European Union had gone through a series of painful cuts in tariffs and subsidies for their own farmers, and had not matched those steps with fresh concessions.

“Unfortunately the Americans were not able or willing to do their part,” said Peter Mandelson, the chief European Union negotiator. “They preferred to stand still.”

The latest round of global trade negotiations has been sputtering almost since it was begun in 2001 in the city of Doha in Qatar. At the outset, negotiators were hoping to make the talks a centerpiece of the wealthy industrial countries’ commitment to helping the poor countries of the world expand their exports.

The talks became known as the “Doha Development Round” because of their focus on alleviating poverty in countries with goods to sell to Europe, the United States and other wealthy parts of the world. In all, 149 countries were involved in the negotiations, but they tended to be break into blocs of countries with similar interests.

In theory, the wealthy countries were hoping to gain greater access to poorer countries for their manufactured goods and some services, like insurance, in exchange for allowing the poorer countries to export more easily to them.

But the talks foundered over barriers to agricultural trade, not only in Europe and the United States but also among the “top tier” of advanced developing countries, like India and Brazil, which have resisted farm imports because of widespread disquiet among their farmers. This summer, for example, some Indian farmers have publicly committed suicide over their inability to sell their produce at high prices.

Most of the tension was between Europe and the United States, however. Last October, the Bush administration proposed a sweeping set of cuts in both tariffs and subsidies and called on the Europeans to do the same. The Europeans responded with a package of cuts that the United States deemed insufficient.

Trade deals have a history of rough going in Congress, and the Bush administration concluded that it could not get approval for a trade deal unless American farmers could be certain that they could win much greater access for their products in Europe and in India, China and other countries.

The United States offered to cut spending on farm subsidies to $19.7 billion from $47.9 billion now. But European officials said that those figures were misleading and that the United States offer was actually much smaller than that.

President Jacques Chirac of France said about a week ago that the European would not consider further concessions unless the United States agreed to still deeper cuts in farm subsidies.

After the Group of 8 summit in St. Petersburg, Russia, Mr. Lamy held what American officials said was a “confessional” round of talks, in which he asked each party to “confess” privately what it would offer hypothetically if other parties were more forthcoming in their concessions.

The Bush administration was stymied, American officials acknowledged, because the farm bloc in the United States had become so distrustful of other nations’ protectionist practices that they told American officials they could not support a trade deal that did not win them much greater market access.

In June, 57 senators from both parties wrote to President Bush, demanding that the United States make no further offers to lower American barriers until further changes came from Europe.

“An unbalanced proposal that asks U.S. agriculture and rural communities to give more while getting less in market access is unacceptable,” the senators said.

Farm organizations sent the president a similar letter.

Trade officials said these letters reflected the political reality in the United States: that a trade deal would not be approved by lawmakers if it was what they called a “Doha lite” accord, with only limited lowering of barriers on all sides.

Ms. Schwab said today that despite those political constraints, she and Mr. Johanns came to Geneva over the weekend and told Mr. Lamy privately what the United States would do if the Europeans were more forthcoming.

Though only Mr. Lamy knew all the details of what the United States and the Europeans had offered, Ms. Schwab said, it was clear that the gap between the two sides was so great that continuing the talks would be futile.

“When we talked to Lamy yesterday, as things started getting pretty rocky, he acknowledged that it would not be useful for the U.S. to put its flexibilities on the table at this point, because they would be pocketed and there would not be convergence,” Ms. Schwab said.

Steven R. Weisman reported from Washington for this article, and Tom Wright reported from Geneva. Brian Knowlton contributed reporting from Washington.

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July 6, 2006

News Analysis : Few Good Choices in North Korean Standoff

By DAVID E. SANGER

The Bush administration has tried to ignore North Korea, then, reluctantly, to engage it, and then to squeeze its bankers in a manner intended to make the country's leader, Kim Jong Il, personally feel the pinch.

Yet none of these steps in the past six years has worked. So now, after a barrage of missile launchings by North Korea, President Bush and his national security advisers found themselves on Wednesday facing what one close aide described as an array of "familiar bad choices."

The choices have less to do with North Korea's newest missile — which, as Mr. Bush pointed out on Wednesday, "didn't stay up very long and tumbled into the sea" — than with the bigger question of whether the president is prepared to leave office in 2009 without constraining an unpredictable dictator who boasts about having a nuclear arsenal.

"We're at the moment when the president has to decide whether he wants an unconstrained, nuclear North Korea to be part of his legacy," said Jonathan D. Pollack, a professor of Asian and Pacific studies at the United States Naval War College who has spent much of his career studying North Korea and its improbable strategies for survival.

"Until now, the attitude has been, 'If the North Koreans want to stew in their own juices, let them,' " Mr. Pollack said. "But it's becoming clear that Mr. Bush may leave office with the North Korean problem much worse."

Dealing with North Korea has frustrated every president since Truman. But it has proved particularly vexing for Mr. Bush because his administration has engaged in a six-year internal argument about whether to negotiate with the country or try to plot its collapse — it has sought to do both, simultaneously — and because America's partners in dealing with North Korea each have differing interests in North Korea's future.

On Wednesday, rejecting pressure from the Bush administration, China and Russia said they would not get behind an American drive to bring sanctions against North Korea, saying they favored less punitive actions.

It was the latest disappointment in a string of attempts to enlist China to help moderate the North. Still, answering questions on Wednesday, Mr. Bush expressed no interest in dropping his objections to one-on-one talks with the North, a government he once said he "detests."

Another alternative for Mr. Bush would be take a hard line that might risk an escalation of the half-century-old confrontation between the United States and North Korea. But such a tack is now complicated by the widespread assumption that even if the North does not have the ability to launch a nuclear weapon, it now probably possesses enough extra nuclear fuel that it may be tempted to sell some to a terrorist group or another state.

That is Mr. Bush's biggest concern, and late last year the National Security Council ordered a study of the likelihood that Mr. Kim, in his effort to seek attention or gain negotiating leverage, would threaten to do it. The results, according to a senior administration official who would not speak for attribution about intelligence matters, were inconclusive.

But so far the North has only dared to offer reminders, like the test firings while Americans were celebrating the Fourth of July, that it possesses weapons that could destroy Seoul or threaten Japan, including American forces based there. The launchings were only the second time that North Korea had tested an intercontinental-range missile that, depending on whose numbers one believes, could eventually hit the United States. (The last such test launching was in 1998, and as Anthony H. Cordesman of the Center for Strategic and International Studies put it Wednesday, "both failed dismally.")

To many experts, the missile tests fit into a pattern: whenever Mr. Kim has concluded that he was not getting attention to his demands, he has staged a crisis. His father, Kim Il Sung, did so in 1994, and won an agreement from the Clinton administration that later fell apart. Kim Jong Il did so in 2003, as American troops were flowing toward Iraq, when North Korea threw out international inspectors and reprocessed the 8,000 spent nuclear fuel rods into what the Central Intelligence Agency says is enough bomb-grade material for six or more weapons.

At that time, top Pentagon officials briefed Mr. Bush on his military options, including bombing the North's nuclear facilities. "It didn't take very long," one official deeply involved in that briefing said, "because it was pretty clear there wasn't an acceptable military option — or at least, a risk anyone was willing to take."

But Mr. Bush came to office appearing to have already determined that he would not negotiate, either. He often said that he distrusted North Korea's government and detested how Mr. Kim treated the North Korea people. In the first months of his presidency, he refused to endorse South Korea's "sunshine policy" of luring North Korea out of its shell with economic incentives. Yet the isolation strategy ultimately failed: North Korea kept producing plutonium.

Mr. Bush then reversed course, reluctantly agreeing to engage with the North Koreans at a distance, through six-nation talks convened by China and joined by Japan, South Korea and Russia. An agreement in principle was reached in September, calling for disarmament for security guarantees and eventual aid, but with no timetable. Even before the ink was dry, the North Koreans were interpreting it differently than the other signatories were.

Mr. Bush has most recently bet that China would eventually tire of the North Korean antics and enforce some discipline. Mr. Bush repeated that he and Jiang Zemin, China's former leader, had agreed that a nuclear North Korea was "unacceptable." But the reality, administration officials acknowledge, is that China fears a collapsed and chaotic North Korea more than it fears a nuclear-armed North Korea.

That could change now. The Chinese warned the North Koreans not to fire the missiles; the fact that Mr. Kim dismissed that warning is bound to anger China's leaders.

But so far, Mr. Bush has not been able to harness his partners into coordinated pressure on the North. If that changes soon, at the United Nations Security Council and around the world, it could be that the president will finally have a way forward.

North Korea Vows to Continue Missile Tests