By Tom Miles
"What we are seeing today is the paralysis in negotiating function of the WTO, whether it is on market access or on the rule-making," Lamy told the WTO's Trade Negotiations Committee, according to a transcript of his remarks.
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WTO members have been trying to salvage a deal from a decade of fruitless talks on the Doha Development Agenda, which was billed as the next leap in global trade liberalization but which collapsed earlier this year.
They had hoped to work out a smaller deal in time for a ministerial meeting in December, partly to liberalize trade but also just to prove that such a deal could be done.
The bottom line for a smaller deal was a trade package which would benefit the least developed countries (LDCs). But the WTO members could not even agree on that because many countries, including the United States and China, wanted an "LDC-plus" deal, with some extra elements thrown in.
And just agreeing on what those extra elements should be eventually proved too difficult.
"I have to share with all of you what I sense is a collective assessment that the LDC-plus package as we framed it in May is not taking shape as we would have wished," Lamy said.
U.S. Ambassador Michael Punke said the only way a deal could have been done was if "all major players" were ready to make "meaningful contributions."
"As we feared, participants have proven much more comfortable in talking about what others can give than in talking about what they can contribute themselves," he told the meeting, according to a transcript of his remarks.
"I understand instinctively the temptation to say 'Let's keep trying'. We would certainly be ready to do that if we saw some prospect that entrenched positions would change - but we do not."
Lamy said he the most practical and realistic way forward was to concentrate on tackling non-Doha issues at the ministerial meeting and to have a broader discussion about where the Doha negotiations would go next. That meant abandoning the LDC deal, which would "suck oxygen" out of the other efforts.
"I would urge you to use the summer break to reflect and come prepared to fully engage in an 'adult conversation' over 'what next'," Lamy told the WTO delegates. "Moving, so to say, from the 'negative list' of what you cannot do to a 'positive' list of what you intend to do."
Lamy did not apportion or accept blame, but WTO members decried the failure of the deal, and many said they still wanted to see at least a basic LDC deal by December.
China's WTO ambassador Yi Xiaozhun said that if the WTO failed to reach any kind of LDC deal by December, the organization's credibility would be compromised, according to an official who was present in the meeting.
(Editing by Alison Williams)