WTO "G-7" includes China

China gets seat at the World Trade Organization's top trade talks table

GENEVA — China took a seat for the first time in the World Trade Organization's most select negotiating group when seven commercial powers met Wednesday.

The meeting behind closed doors at the WTO's headquarters in Geneva aims to break a stalemate between rich and poor countries over liberalizing trade in agriculture and manufacturing.

China joined the United States, European Union, Brazil, India, Japan and Australia in a "G-7" meeting hosted by WTO chief Pascal Lamy.

"Of course it's important," Sun Zhenyu, China's WTO ambassador told The Associated Press as he made his way to the negotiating room. "We will do our best to help conclude the trade round."

The meeting comes a day after a contentious, seven-hour gathering of over 30 top negotiators ended with Lamy postponing a similar, large-group meeting scheduled for Wednesday.

Officials said the smaller group of seven powers - which account for most of global trade - would look for ways to advance this week's crucial talks on a new global trade pact by examining issues such as U.S. farm subsidy limits and industrial tariffs in emerging markets.

The so-called Doha free trade round has dragged on since its inception in Qatar's capital in 2001. Developing nations want agricultural tariffs and subsidies in rich countries to come down so they can sell more of their produce, while the U.S., 27-nation EU and others seek better conditions in emerging economies for their manufacturers, banks, insurers and telecommunications companies.

Beijing joined the WTO in 2001. Despite rapid trade growth in recent years, it has often taken a back seat in negotiations and allowed Brazil and India to assume leadership roles.

It has never met in such a select group of negotiators, even though its ability to export cheap goods has been a major - if often unspoken - factor in the refusal of allies such as Brazil and India to open up their industrial markets.

The United States made the first significant concession of the week on Tuesday, slicing US$1.4 billion from any previous offer to limit contentious, trade-distorting subsidies to American farmers.

U.S. Trade Representative Susan Schwab told a news conference that Washington was prepared to rewrite elements of its recently passed farm bill to ensure that U.S. subsidies deemed to unfairly enhance the competitiveness of American farmers are limited to $15 billion annually.

While Congress may view the move skeptically, the move shifted pressure to Brazil, India and other emerging economies to come up with a commensurate move. They refused, arguing the U.S. offer did not cut subsidies enough.

"I hope this is not the last offer," said Foreign Minister Celso Amorim of Brazil, which along with India leads a broad coalition of developing countries. "It's a very low level of ambition."

Emerging countries have demanded a subsidy cap closer to $12 billion for the United States, noting that U.S. subsidies have fallen to around $9 billion annually amid higher prices for basic commodities.

The poorer countries charge the payments with providing rich-world farmers an unfair competitive advantage that hinders Third World development. But the Bush administration - and the U.S. Congress - have sought flexibility in case crop prices fall and American farmers need greater support.

Congress recently overrode President Bush's veto to pass a new, five-year farm bill worth $300 billion that maintains and in some cases extends subsidies for American farmers. It could also derail any global trade deal by picking it apart line-by-line, as Bush has lost the power to send Congress a deal for simple yes or no vote.

Negotiators are hoping for agreement this week on a deal that would liberalize world agriculture and manufacturing, setting the stage for an overall trade accord by the end of the year. After years of negotiations and missed deadlines, there is widespread skepticism.