Even WTO director General Pascal Lamy suggested supernatural powers might be required to conjure up a wide-reaching agreement on the difficult issues facing the 149-country body. Just days before the meeting began, the focus of the trade talks was already shifting away from agricultural subsidies -- a topic on which the group is hopelessly split -- toward the only slightly less fraught issue of trade development help to the world's poorest countries.


"Short of a magic wand," Lamy said in his opening address on Tuesday, "I can only give you my best advice: be open-minded, be bold, be courageous. Enter the cave of the tiger and leave Hong Kong with a prize in your hands, the assurance that the Doha Development Round" -- the 2001 meeting which set the WTO development agenda and which set as a goal the increase in trade with the developing world -- "has a real chance of coming to a happy end."

But finding that a happy end to the conference could be just as challenging for WTO negotiators as sorting through Lamy's mysterious metaphors. On one side of the divide is the European Union, which has proven deeply reluctant to consider steep cuts to agricultural subsidies within the 25-nation bloc. And on the other, the United States faces strong domestic opposition to any proposed reduction of cotton subsidies and likewise wishes to maintain certain exceptions to free textile trade.

"Unwilling to compromise"

One of those pessimistic that the WTO can reach any sort of deal on agricultural subsidies is Nobel economics laureate Joseph Stiglitz, former chief economist at the World Bank and author of "Globalization and Its Discontents." In Hong Kong to deliver a series of lectures related to world trade and globalization, Stiglitz -- in a telephone interview with SPIEGEL ONLINE -- said that it is "unlikely there will be any agreement."
 
One of the biggest problems from Stiglitz's point of view is that neither the United States nor the European Union has been willing to make the necessary compromises. "If they used the ingenuity and cleverness that they've used to blame each other to try to develop a better agreement for developing countries, then I think there'd be a lot more progress," Stiglitz said.

Such progress, Stiglitz made clear, begins with coming up with an agreement on agricultural subsidies. The European Union came under intense pressure in the run-up to the WTO talks to reduce agricultural tariffs, but the 25-member group refused to do so unless developing states pledged to open up their markets to manufactured goods. But while this row plays a major role in the current WTO stalemate, Stiglitz says the US position on cotton is just as damaging.

"I think the American position on (cotton) is totally unacceptable," he said. "The subsidies go to 25,000 very, very rich American farmers and do damage to 10 million farmers in Sub-Saharan Africa and around the world. This is the worst example of corporate welfare. It's not about the small family farmer, it's about large corporations. It's a violation of the principle of market economics."

Baby steps rather than giant strides

The gridlock has meant that the goal of reaching a final deal by the end of 2006 will be difficult if not impossible, but WTO officials are still expressing optimism. Any deal is likely to be less than a sweeping abolishment of all subsidies, however. Voting within the group is structured in such a way that any member country can veto the agreement -- leading to baby steps rather than giant strides.

Indeed, Stiglitz says the proposals that have been made to help poor countries are not terribly far-reaching. "The studies I have seen have shown that the likely gains to most of the developing countries from what has been proposed are very, very small," he said, arguing that allowing more migration would be much more effective. "The global gains in efficiency from allowing more migration of labor are orders of magnitude greater than the gains from capital-market liberalization or freeing capital flows," he said.

That, though, is unlikely to happen any time soon, as longer as the citizens of the rich world including the EU and United States continue to fear poor immigrants. Until that changes, it may remain difficult for WTO negotiators to find their way out of the cave of the tiger.