Sending a powerful message to the world's richest countries, India has rejected a long-sought deal to cut global trade barriers on the grounds that it wouldn't have protected poor farmers.
The deal fell apart in Geneva yesterday after India, one of the new standard bearers of an emboldened developing world, balked at U.S. demands that countries limit emergency tariffs to shield their farmers from sudden import surges.
The collapse of talks for the third time in seven years provoked a wave of recriminations and finger pointing.
Indian Trade Minister Kamal Nath, saying he was speaking for a collection of more than 30 developing countries, insisted he wasn't willing to sacrifice the "livelihood of poor and subsistence farmers" for the sake of a deal.
The United States accused India and China of ignoring a global food crisis and turning back the clock on free trade by decades. The World Trade Organization (WTO) estimated the deal would have boosted trade by as much as $130-billion (U.S.) a year.
U.S. Trade Representative Susan Schwab called India and China's stand "unconscionable" at a time of soaring food prices.
"In the face of a global food price crisis it is ironic it came down to how much and how fast nations could raise their barriers to food imports," Ms. Schwab told reporters in Geneva.
The collapse of the talks after 10 days of intense negotiations all but rules out a deal this year, and perhaps much longer as political fatigue and looming elections in the United States and elsewhere get in the way.
And getting them back on track may require a new consensus on globalization between rich and poor countries.
"The days when Western countries can swing a deal are over," said Lawrence Herman, a trade lawyer at Cassels Brock & Blackwell LLP in Toronto.
Indeed, Canada was excluded from the main discussions in Geneva, leaving Trade Minister Michael Fortier to spend the past week in bilateral talks with other trade ministers.
In the interests of speeding up negotiations, WTO chief Pascal Lamy had designated seven trading "powers" to hammer out a deal for everyone else. They were the United States, the European Union, Japan, Australia, Brazil, India and China - representing a cross-section of developed and developing countries. The plan was to get a deal among those powers, and then present the text to the full WTO.
Yesterday, Mr. Fortier said Mr. Lamy shouldn't bother getting ministers back together until the seven have a consensus.
Mr. Fortier, echoing several of his counterparts from the 153-member WTO, talked optimistically about resuming talks in the "not-so-distant future."
But he also said Canada, like the United States, would forge ahead with bilateral free-trade deals to expand access for its exporters in Europe, South Korea and elsewhere.
"Canada is a trading nation, and the growth and prosperity of our manufacturers, service providers and agricultural producers are improved by access to new markets," said Mr. Fortier, who has been on the job slightly more than a month.
In spite of the official optimism, trade experts said the so-called Doha round, launched in 2001 in Qatar, is effectively over, further marginalizing the 14-year-old WTO.
"For all practical purposes, the Doha round is dead," said Arturo Porzecanski, an economist at American University in Washington.
And that's a shame, he said, because a WTO deal would have helped curb soaring global food prices by cutting the subsidies and quotas that bog down agricultural trade.
Just as importantly, the failed talks stand out as a missed opportunity to deal with the key impediments to freer trade in agriculture, and many emerging areas, such as services. The round would also have begun the process of dismantling protectionist trade rules.
"No question this is a lost opportunity, for international business," Mr. Herman said. "There were just way too many unresolved issues to deal with in 10 days."
A disappointed Mr. Lamy said negotiators were "85 per cent" of the way toward a deal.
"Anyone coming from another planet, they would not believe after all the progress we made we were not able to find agreement," said Brazilian Foreign Minister Celso Amorim, visibly shaken. "It's unbelievable, unbelievable, that we failed over this one issue," he said.
But Mr. Fortier and other ministers acknowledged there was a multitude of unresolved issues standing in the way of a deal, suggesting a breakthrough was still a long way off.
Canada, like nearly all other countries, has fought to keep key sectors outside the WTO umbrella. Canada, for example, has insisted that the supply management system, which regulates dairy and poultry production, be kept off the table. It has also jealously guarded the right of the Canadian Wheat Board to be the sole seller of Canadian wheat on world markets, over the objections of the United States and the EU.
The WTO estimates the deal envisaged in Geneva this week would have boosted trade in farm products to the tune of $35-billion a year and the industrial sector by $95-billion a year. The biggest commercial prize was seen to be the freeing up of trade in services such as banking and telecommunications.
Canadian poultry and dairy farmers, who had insisted on continued protection of their sector, said they were simultaneously disappointed and relieved at the talks' collapse.
"The talks didn't seem to be favouring our interests so I guess no deal is better than a bad deal," said Mark Davies, chairman of the Canadian Turkey Marketing Agency.