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Last Updated: Thursday, 13 October 2005, 22:27 GMT 23:27 UK
Lamy calls for trade 'compromise'
Pascal Lamy
Pascal Lamy says all sides need to make sacrifices
The US and Europe must make further concessions if an outline deal on a global trade treaty is to be reached, the world's top trade official said.

Pascal Lamy, head of the World Trade Organization (WTO), said progress had been made in recent talks but further compromises were needed on both sides.

The US has offered a 60% cut in farm subsidies if Europe makes deeper cuts.

But France is angry about proposed cuts to European farm subsidies, claiming EU members were not properly consulted.

Modest progress

US and EU officials are under intense pressure to secure an outline deal for lowering global trade barriers at December's summit in Hong Kong.

Plans to reduce and, in some areas, scrap agricultural subsidies and import tariffs remain the main obstacle to an agreement.

We are doing better than the Americans on subsidy reduction but we have to focus on tariff reduction
Peter Mandelson, EU Commissioner

Mr Lamy said he believed recent trade talks had gained new momentum, describing Monday's US offer to cut farm subsidies by 60% as a "politically significant contribution".

However, he warned that more progress was needed on tackling import tariffs and warned that time was running out to establish a workable framework for a trade agreement in time for the summit.

"My own sense is that the engines of the negotiating plane have been switched on again," he said on Thursday.

"But I am not sure it is enough to take us to the right approach zone."

Studying proposals

US proposals for a 60% cut in farm subsidies and a 90% reduction in farm import tariffs should be closely studied, EU Commissioner Peter Mandelson said on Thursday.

Mr Mandelson - who is leading trade talks on behalf of the European Union - called for a "common policy approach" between the US and Europe to reduce trade distorting financial support for agriculture.

"We need early concrete steps to start translating that vision into practice," he said.

President Jacques Chirac
France is worried about the direction of the trade talks

"We are doing better than the Americans on subsidy reduction but we have to focus on tariff reduction."

Some EU members believe proposed reforms to agricultural subsidies should be part and parcel of a radical overhaul of the EU's Common Agricultural Policy.

French concern

However, such proposals remain highly contentious.

The French government is reported to be angry about Brussels' handling of the trade discussions, claiming that Mr Mandelson made offers about opening access to EU markets without first consulting member states.

Le Monde newspaper reported that President Chirac had written to European Commission president Jose Manuel Barroso to express his concern about the direction of the talks.

The newspaper said President Chirac had asked for discussions "to continue in a spirit of transparency".

He also called for a "reorientation" of the trade talks "in order to come back to the spirit of Doha and to reach in 2006 a balanced deal that is acceptable to France".

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