THE BREAKDOWN of talks aimed at agreeing a global trade deal yesterday leaves serious question marks hanging over the Doha round of World Trade Organisation (WTO) talks, writes Jamie Smyth.

After seven years of stop-start negotiations since getting under way in 2001, WTO director general Pascal Lamy made no secret of the fact that this ministerial meeting marked a "decisive phase" in the talks.

With a US presidential election taking place in November and a new EU trade commissioner likely to be appointed next year, all the delegates knew that failure this week would delay the round by a year and possibly torpedo it altogether.

So, when shortly before 6pm in Geneva yesterday US trade negotiator Susan Schwab relayed the news that nine days of gruelling talks had broken up without a deal, it was no surprise that she looked visibly shaken. A bitter dispute between the US and India and China was the main cause of the failure for negotiators to agree the basis of a WTO deal and the blame game quickly started with diplomats briefing against one another.

The specific issue that caused the talks to collapse was something called a special safeguard mechanism, which enables developing countries to raise tariffs on farm products when there is a sudden surge in foreign imports.

Indian commerce minister and chief WTO negotiator Kamal Nath said the mechanism must be strong enough to protect millions of subsistence farmers in India that could be swamped by a flood of US imports.

But the US wanted to restrict the use of the safeguard mechanism to ensure that India could not use it to keep out imports of US agricultural products, particularly cotton. For US cotton farmers, getting access to new markets through a WTO deal was critical because a deal would have set tougher limits on the state subsidies they could receive.

Both sides blamed each other for the collapse in the talks. But diplomats from other regions involved in the talks noted that the US policy seemed to revolve around ensuring that its farmers could make back every dollar they lost in subsidies by exporting to developing states.

"The US made a massive miscalculation by forming the view that every cut in subsidies had to be accompanied by a gain in exports," said one diplomat.

The EU, in comparison, offered cuts in its farm subsidies and tariffs in exchange for access to the developing states' industrial and services markets.

EU trade negotiator Peter Mandelson will probably be bitterly disappointed by the failure of the talks, which for several days got closer than ever before to laying the basis for a comprehensive deal.

There is now a real danger that the Doha round will be put on ice for at least a year or collapse altogether.

In this scenario the EU will probably pursue a range of bilateral or regional trade deals rather than rely on a multilateral deal, which may never emerge.

For Irish farmers the collapse of Doha would provide a short-term gain as tariffs will remain on agricultural imports from countries such as Brazil. But it is possible that future bilateral agreements or a new multilateral deal will involve even higher tariff cuts.

Global trade talks: the background

WHAT IS the Doha development round?

It is the latest round of World Trade Organisation (WTO) negotiations aimed at liberalising global trade in agriculture, industrial products and services.

Talks began in November 2001 with participants pledging to emphasise the needs of developing states.

How would a deal work to liberalise trade?

The 153 member states in the WTO would agree to cut the tariffs they levy on imports and the subsidies they pay to support domestic industry and farmers, both of which can distort global trade.

They would also try to eliminate non-tariff barriers such as complicated rules that make it difficult for foreign companies to get access to new markets.

Why has the latest round of ministerial talks collapsed?

Ministers from 35 countries meeting in Geneva yesterday failed after nine days of talks to reach agreement on the basis for a final WTO deal.

The key issue that led to the collapse of the talks was the terms of a special safeguard mechanism that would enable some developing states, such as India and China, to protect farmers from surges in imports.

The US and India blamed one another for the collapse.

Who are the winners and losers from the collapse?

Irish farmers will breathe a sign of relief as a planned 23 per cent cut in tariffs on foreign beef imports into the EU will not take effect.

But European manufacturers and services firms will find it more difficult to access fast- growing developing economies such as China and India. The WTO system governing world trade may lose credibility and it is further gloomy news for the world economy.

Is it the end for the Doha development round?

After seven years of talks, ministers will not want to signal that the round is dead. But the upcoming US presidential election means that the resumption of WTO negotiations probably cannot begin for at least a year. Some analysts speculate that the delicate compromises agreed this week will unravel in the meantime.

What are the benefits of a global trade deal?

Supporters of global trade deals say they stimulate economic growth, reduce prices for consumers and create new jobs.

The WTO estimates the 1995 Uruguay round trade deal added between $109 billion and $510 billion to world income.

NGOs such as Oxfam however say they often benefit rich states more than less developed economies by enabling their firms to compete with those in the developing world.