World trade talks have collapsed. The Financial Times' Alan Beattie and Frances Williams explain:

A last-ditch meeting in Geneva of the six core “Doha round” negotiators – India, Brazil, the US, EU Japan and Australia – broke up amid recriminations over irreconcilable differences about farm liberalisation. The US continued to argue for big cuts in farm import tariffs to open up markets for its farmers, a demand fiercely rejected by the European Union, Japan and India, who said America had first to go further in offering to cut agricultural subsidies.

The Doha round, which began in November 2001, will now enter indefinite suspension unless and until a consensus within the World Trade Organisation’s 149 member countries can be found to revive it.

Last year, the World Bank estimated that global gains from trade liberalisation would equal roughly $287 billion, of which $86 billion would accrue to developing nations, lifting at least 66m people out of poverty. Activist groups including Greenpeace and Oxfam were quick to condemn both Washington and Brussels for intransigence over agricultural subsidies, saying that rich-world self interest is leaving the poor to suffer.

Without further progress at the WTO, those keen on liberalising trade will focus on regional and bilateral agreements. These are already proliferating... just about every one of the WTO's 149 members is a party to a regional trade agreement of some sort.

But these smaller agreements are a poor substitute for global progress. While they improve flows within the deal, they distort markets by favouring certain countries over others, even if their goods offer less economic value. The proliferation of special regulations, which companies must spend time and money to understand, does nothing to free up trade generally.

Historical experience provides a little hope but not firm ground for optimism. The previous “Uruguay round” of trade talks was in essence suspended in 1990 after similar disagreements between countries. Arthur Dunkel, then director-general of the WTO’s predecessor organisation, continued to take soundings among member countries and produced his own “Dunkel draft” suggestion for a final deal a year later, leading eventually to a final agreement in 1994.

But the current situation differs from 1990 in two respects: Pascal Lamy, the WTO’s director, has already been deeply involved in trying to get countries to agree, and because the White House is likely to lose the “fast-track authority” granted by Congress when it comes up for renewal next year.

WTO members can continue negotiating, but if the world’s largest economy cannot pass trade deals through its legislature, it seems unlikely the talks will have any urgency.

UPDATE: Simon Lester has a good roundup of who is blaming who for the collapse of the talks.