June 21 (Bloomberg) -- Negotiations among four key World Trade Organization governments over a new global agreement collapsed today, with India and Brazil blaming U.S. and European unwillingness to cut farm aid and import duties on commodities.

Trade and agriculture ministers from the U.S., the European Union, India and Brazil began what was to be almost a week of talks on June 19 in Potsdam, Germany, aiming to reach a breakthrough on slashing agriculture subsidies and lowering hurdles for goods crossing borders. Even though trade chiefs insist a deal is still possible, today's collapse may spell the end of the Doha Round of talks.

``It was very clear at lunchtime and was said at lunch that it was useless to continue the discussion based on the numbers on the table,'' Brazilian Foreign Minister Celso Amorim told reporters. ``The decision not to continue with the negotiation was not ours.''

The breakdown mirrors last July's collapse, when negotiations among the four government plus Japan and Australia disintegrated, prompting WTO Director-General Pascal Lamy to suspend discussions. Without a deal among the four governments, the Doha Round that began in late 2001 and has yet to meet any deadlines may fail or be put on hold for years because of elections and ensuing policy changes in the U.S. and India.

`Ball in Lamy's Court'

Once again, ``the ball will now be in the court of Pascal Lamy,'' Amorim said.

While an agreement among the four governments ``would have been helpful to pave the way toward multilateral convergence, helpful does not mean indispensable,'' Lamy said in a statement today. The EU, the U.S., India and Brazil should now try to reach an agreement along with the remaining WTO governments rather than as a smaller group, he said.

Indian Commerce Minister Kamal Nath said the U.S. offered to cap its overall spending on trade-distorting domestic support at $17 billion. Brazil and India, as leaders of the so-called G20 alliance of farm commodity-exporting nations that also includes China and Argentina, are pushing for an annual U.S. spending limit of no more than $15 billion.

``If this is to be called a development round, we need to correct the flaws in terms of subsidies,'' Nath said. ``There is no logic or equity'' in the offer by U.S. Trade Representative Susan Schwab.

U.S. Offer

The Bush administration now spends $10.8 billion a year on support payments that distort market prices to American farmers, Nath said. A ceiling of $17 billion would represent ``a 50 percent increase,'' he told journalists.

Schwab has said the U.S. can cut more, but only if advanced developing nations and the EU open their markets to more U.S. farm goods.

The numbers presented by the U.S. on domestic aid exceeded those demanded by the G20 while the EU's tariff-cut offers were deficient, Amorim said. ``Whatever the version others may try to offer, the major divergences appeared in agriculture,'' he said.

Schwab and U.S. Agriculture Secretary Mike Johanns questioned whether Nath and Amorim were even prepared to negotiate during the talks. The ``rigidity'' of Brazil's and India's position ``seemed quite different from the positions of the G20,'' Schwab said.

Not `an Iota'

Since the start of the Potsdam meeting, Amorim and Nath ``didn't move an iota from the point we started at two years ago,'' Johanns said. ``We stretched and it seemed to me they grabbed. I could have done cartwheels off the roof of this building and I'm still not sure I would have got a response.''

The EU, on the other hand, ``showed this week it was ready to stretch,'' Schwab said. ``The only way you get to a trade agreement is willingness to compromise.''

European Trade Commissioner Peter Mandelson said the EU still has ``a final move left in us to reach a final, balanced equitable conclusion in agriculture,'' though he insisted that the 27-nation bloc has made offers without reciprocal efforts on the part of the other governments.

``I firmly believe we constructed a landing range in agriculture which is fair and forthcoming for developing countries and takes to the limit what the EU can do,'' he told journalists in Potsdam.

Nath said he was ``very disappointed'' about U.S. and EU calls for developing nations to reduce applied industrial tariffs. According to Mandelson, developing countries were asked to cut ``only one in two tariffs by one or two percentage points,'' a demand he described as ``not unreasonable.''

Doha Isn't Dead

Earlier this week, Mandelson said the Potsdam meeting ``cannot finish the Doha Round, but it will determine if Doha can be finished.'' Today, he said the untimely end of the talks, which were supposed to run at least until June 23, doesn't spell the trade round's demise.

``It is not the end of the Doha Round,'' he said. ``It places a very major question mark on the ability of the wider WTO membership to complete this round, but it does not in itself mean that the negotiations cannot be put back on track.''

Amorim called today's collapse ``a setback,'' though he, like Mandelson, said WTO discussions ``are not dead.'' German Economy Minister Michael Glos also said the derailing of the Potsdam talks is ``not the end'' of the trade round.

Schwab agreed, saying the U.S. ``is not giving up on the Doha Round.'' Even if the four governments meeting in Potsdam are ``never able to reach closure, that doesn't mean the end of the round,'' she told journalists.

Still, former U.S. Trade Representative Clayton Yeutter said negotiators are now battling the clock and may simply run out of time to get a deal.

``They may have another 30 days to piece things together, but that's all,'' he said by telephone from Washington. ``It's very disappointing, because it looked like they had some momentum.''

To contact the reporter on this story: Warren Giles in Potsdam, Germany, at wgiles@bloomberg.net

Last Updated: June 21, 2007 11:21 EDT