Talks Collapse; Meeting Ends -- Group Will Leave Here Without An Agreement

In a startling turn of events, the World Trade Organization said late last night that it was unable to bridge differences among its member nations and would leave Seattle without a declaration to start a new round of global trade talks.

The failure to get agreement on a new round is an embarrassment to President Clinton and a victory, at least briefly, for the protesters who marched in the street for the past four days opposing the WTO's environmental and labor policies and calling for the organization to be more open.

"What was happening on the street had a powerful influence on what was going on inside," said Don Bonker, a former congressman who now is part of a trade consulting group. "The WTO has been politicized as never before."

After meeting much of Thursday night, all day yesterday and well into last night, the 135-nation trade group said it would adjourn the meeting and resume negotiations in Geneva.

Another ministerial meeting, a high-level session like the one here, would be called in about six weeks, giving time for the holidays and for ministers and staff to work out the differences.

It is possible a new round of talks could begin next year. But it won't happen as a part of the Seattle meeting as originally planned.

The failure to come to agreement here is a sharp blow to the Clinton administration and to U.S. Trade Representative Charlene Barshefsky, the official chair for the meeting.

At the final meeting of ministers, Barshefsky told delegates the remaining issues were "just too complicated" to be resolved quickly.

"It would be best to take a timeout," she said, "and consult with one another and find creative means to finish the job."

Mike Dolan, a leader of the protests, said the coalition of groups that staged the demonstrations were successful.

"There's no `Seattle Round,' " Dolan said. "We still have 400 people in jail. And when we got word to them about this, you could have heard the cheer all the way to the county line."

But even Dolan was reluctant to claim total victory because the talks now shift back to Geneva.

"We can't say that there's no new round yet," Dolan said. "It's off to Geneva, a city I haven't visited, haven't organized in."

Ray Waldmann, chairman of the Seattle Host Committee, said a lot of conflicting demands were brought to Seattle. "We had hoped that, with some goodwill and cooperation, the members could have cobbled something together and gotten out of here with a victory. But that didn't happen."

Clinton came here for two days to push his agenda, but apparently blundered by pushing too hard on the issue of including labor standards in the WTO. That angered many developing nations who make up the bulk of the WTO. Their delegates felt such standards represented a form of U.S. protectionism.

But it was the politically volatile issue of agriculture that was apparently the main sticking point. The United States and the 15-nation European Union, the world's two largest trading areas, were at loggerheads over how far to go in reducing trade barriers in farming.

The U.S., backed by Canada and a group of other agricultural exporting nations, wanted tough language on ending export subsidies in the declaration launching the new round. Europeans, with large farm-subsidy programs, wanted agriculture to be treated differently from other industries to preserve their farm supports.

Talks broke down into messy, contentious wrangling over the nitty-gritty of trade - often revolving around a single word and what it meant - reflecting, in some ways, the chaos in the streets outside.

Decisions in the 135-nation group are made by consensus, but it was clear that finding a consensus around a final document was much harder than originally believed. The meeting had been scheduled to end at 6 p.m. last night, but continued well past 10 p.m.

Developing nations, particularly those in Africa, were angry and frustrated at the process, which they felt once again left them out. The European Union and the United States remained deadlocked on the agricultural issues.

A draft document put together earlier yesterday showed the WTO was ready to begin a minimal round of negotiations on agriculture, manufacturing and services. But then negotiations over agriculture broke down in squabbling between the U.S. and the 15-nation European Union.

Delegates must agree on what is called the official declaration, the document that launches a new round of trade talks as well as outlining the size and scope of the talks.

Even without a final declaration, earlier draft versions seemed to indicate that the U.S. had been forced to give up several prized objectives, especially on labor. Clinton, pressured by the thousands of trade-union members who demonstrated this week, had pressed for the WTO to embrace labor standards.

But the United States apparently failed to get a working group within the WTO to examine how trade affects workers. While it sounds innocuous, a working group is a relatively strong position for the WTO. It means the WTO will seriously study an issue with an eye toward proposing changes in rules.

The setback to trade talks has wide potential ramifications for trade and for businesses in the Pacific Northwest. Among the key areas for trade talks are agriculture, services including electronic commerce and an increase in openness by the often-secretive world body.

If, for example, the WTO does move to reduce export subsidies, wheat growers in the Northwest would benefit. Wheat growers have been hit with some of the worst markets in decades because of low prices and an oversupply of grain.

Export subsidies, especially in Europe, help to distort the price and supply of wheat since growers there are not exposed to the harsh reality of markets. They can produce as much grain as they want, knowing the government will cover their costs.

U.S. growers have some assistance from the government, too. A large farm-disaster relief bill was approved this year, for example.

In electronic commerce, the WTO also apparently had agreed to extend a ban on charging duties until the next ministerial meeting. That was good news for Northwest high-tech and Internet companies that were seeking the extension.

Internet companies such as Amazon.com and traditional companies with strong Internet sites such as REI increasingly are selling overseas. One estimate put the size of the market at about a third of the $5 trillion in sales expected in five years.

The Seattle ministerial meeting was planned to launch the ninth round of global trade talks to lower trade barriers since the creation of the WTO and its predecessor, a group known as the GATT, for the General Agreement on Tariffs and Trade.

At the end of the last round in 1993, the countries agreed to start a new round by 2000, taking up the politically difficult issue of agriculture, as well as services and some other issues.