World trade talks revived by ‘encouraging signs’

GENEVA - Troubled global trade talks showed encouraging signs of edging towards a deal on Friday after crunch negotiations among seven key countries produced elements of a compromise, ministers and officials said.

The new proposals breathed life into the make-or-break talks at the World Trade Organisation (WTO) which earlier on Friday were at risk of collapse.

The compromise includes a further cut in the cap on contentious U.S. farm subsidies to $14.5 billion, sources briefed on the talks said.

It also contains changes to proposals allowing developing countries to shield their farm sectors and some industrial goods from the full force of tariff cuts which have been at the centre of this week's deadlocked discussions, they said.

"There has been progress made, yes," EU trade chief Peter Mandelson told reporters.

Mandelson said progress had been made in most areas of the talks, which are focusing on moves to open up trade in agriculture and industrial goods. Asked whether a final deal was in reach, Mandelson replied: "It's possible, it's possible."

WTO spokesman Keith Rockwell said new ideas to narrow gaps between rich and poor countries had emerged in five hours of talks among the seven countries and would be passed to a meeting of ministers from 35 countries on Friday evening, known as the green room.

"There are some very encouraging signs of progress that have emerged, some very interesting ideas," Rockwell told reporters.

"If the green room says yes to it then that is a real breakthrough," said one European official.

But he said a full agreement was still not guaranteed because of a series of other disputes, such as a row among developing countries and the EU about bananas.

Intransigence

Earlier WTO Director-General Pascal Lamy had warned that the talks in the long-running Doha round risked collapsing on Friday if members failed to narrow their differences, following a day of intransigence on Thursday.

"This is the blunt reality ... The situation is critical, edging between success and failure," Lamy told delegates at the talks, according to his spokesman. "Time is running out and the next 24 hours are crucial."

But the seven countries -- Australia, Brazil, China, European Union, India, Japan and the United States -- building on a paper circulated by Lamy, started to shift position.

The new proposed ceiling for U.S. trade-distorting farm supports improved on the offer on Tuesday by U.S. Trade Representative Susan Schwab to cap subsidies at $15 billion.

That figure is one third of the existing ceiling, but twice current outlays, which have fallen because of the surge in world food prices, prompting developing countries to demand real cuts.

The subsidies are important because developing countries say they discourage their own farmers from producing, which has contributed to the current food crisis.

But Schwab and Mandelson say that any moves by rich nations to open up their farm sectors must be matched by greater access for their businesses to markets for industrial goods and services in emerging countries like China and India.

Indian Commerce Minister Kamal Nath frustrated other WTO negotiators on Thursday when he said: "There is nothing which I have in my pocket to give."

The Geneva meeting is seen as a last chance to close the Doha round this year after which it could be delayed further by elections in the United States and India and a change in the European Commission next year.

Lamy has said a successful deal would inject confidence into a global economy beset by soaring fuel and food prices and the credit crunch, while failure could encourage protectionist sentiment and call into question the international community's ability to tackle problems like climate change.