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Last Updated: Sunday, 2 July 2006, 10:22 GMT 11:22 UK
Trade talks in 'crisis situation'
WTO chief Pascal Lamy
Pascal Lamy has warned that the situation is now bleak
World Trade Organization boss Pascal Lamy has warned that the ongoing failure to establish a new global trade deal has now hit a "crisis situation".

He was speaking after the latest talks between global trade ministers ended without a breakthrough in Geneva.

The core stumbling block remains the extent to which the richest nations cut their agricultural protectionism.

"The gap is as wide as the Grand Canyon," warned Japan's Agriculture Minister Shoichi Nakagawa.

Developing nations such as Brazil and India continue to argue that the developed countries - particularly the US and European Union (EU) members - are not offering up enough reductions to farm subsidies and import tariffs.

The US and EU counter that they are prepared to make significant concessions, and that the developing countries are in turn not going far enough on opening up their markets to manufactured goods.

Time running out

"I will not beat about the bush," said Mr Lamy. "We are now in a crisis."

EU trade minister Peter Mandelson
If we don't turn things around in the next two weeks, we will not make a breakthrough this summer and then we will be facing defeat
EU trade boss Peter Mandelson

With the so-called Doha round of trade talks already long delayed, trade ministers currently have until the end of July to agree on outline proposals, ahead of the final deal being signed by the end of this year.

The timing is a real concern, as a year from now the special authority US President George W Bush has to negotiate trade deals will expire.

After that it will be harder for him to get congressional approval, and if the US cannot deliver on whatever its negotiators might agree, other countries will not want to either.

EU concessions

EU Trade Commissioner Peter Mandelson, who is negotiating on behalf of all EU member states agreed that things looked bleak.

"If we don't turn things around in the next two weeks, we will not make a breakthrough this summer and then we will be facing defeat," he said.

While the EU has previously been singled out for not making enough concessions on agricultural protectionism, at Geneva it was the US who got most of the blame, particularly in regard to its ongoing farming subsidies.

Mr Mandelson by contrast, said the EU was now ready to go beyond its existing offer of a 46% cut in agricultural tariffs by moving closer to the 54% cut proposed by the G20 block of developing countries.

Trade Ministers will now meet again later this month.

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