India and the European Union on Friday vowed to work hard to restart stalled global trade talks by 2007, but New Delhi stuck to its guns over protecting vulnerable Indian farmers.
"Indian agriculture is not commerce it is largely subsistence. As I have said we can negotiate commerce but we cannot negotiate subsistence," India's Commerce and Industry Minister Kamal Nath said after meeting EU trade chief Peter Mandelson.
The Doha round of World Trade Organisation talks collapsed in July, mainly due to an impasse over farm subsidies among six key players - the European Union, India, the United States, Australia, Japan and Brazil.
The talks were launched in 2001 in an ambitious attempt to ease poverty and boost global growth. They are expected to resume by early next year but so far there is no clear sign the differences can be narrowed.
"Both India and EU are committed to the multilateral negotiations and successful completion by 2007," Nath told a news conference. "We will work together to fulfil the developmental mandate and we also work together to substantially reduce the subsidies which lead to distortion."
Without a deal in early 2007, the round could be put on hold for years as US President George W. Bush's powers for "fast-track" approval of trade deals expire in July and a new Democrat-run Congress is unlikely to want to extend them.
Brussels and New Delhi have said most of the blame lies with Washington for making demands that other countries cannot match, especially on agriculture. The United States says offers on the table fall far short of its ambitions.
"We both think that, on Doha, resumption of work in Geneva is necessary and welcome," Mandelson said. "The first signals of real flexibility now in the coming weeks and months from all sides will hopefully allow a political resumption of the negotiations proper."
Mandelson said both the EU and India had decided to begin negotiations on a wide ranging bilateral trade and investment agreement, and senior officials from the EU will begin talks with Indian officials in New Delhi next month.
"Our trade is doing well but it could do much better that is to the mutual benefit for both Europe and India," Mandelson said. "Now this agreement, the bilateral agreement which we are going to negotiate between us, will be a building block for an ambitious WTO agreement."
EU exports of goods and services to India were worth some 25 billion euros ($32 billion) in 2005, less than 2 percent of its total exports despite India's size, and EU officials say this is a sign of the barriers to trade that still exist in the country.
Mandelson and Nath said both sides were discussing the EU calls to bring down high tariffs and taxes on wines and spirits. India had been given until the end of this week to address the issue or face action at the WTO.
"The EU has raised it over the last two years very strongly and we have also some concern in terms of not merely revenues but in terms of certain reciprocity," Nath said.
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