Page last updated at 13:30 GMT, Saturday, 26 July 2008 14:30 UK

Hope of deal in world trade talks

Protesters in  Manila
Some poorer nations are wary of opening their markets further.

Progress has been made at global trade talks in Geneva and a deal looks possible, negotiators have said.

Earlier, Pascal Lamy, the head of the World Trade Organization warned that the long-running Doha round would fail unless a compromise could be reached.

Delegates have given the emerging deal a cautious welcome though Italy and France have voiced their concerns.

Talks will continue until Wednesday and there are still sticking points that could derail a deal.

"There are still potential potholes in the road...But we are closer to a deal than we have been at any point in the last seven years," Peter Mandelson, EU trade commissioner, said.

"What is emerging is a deal that is not perfect, not beautiful, but is good for the global economy and good for development."

An 'emerging' deal

After four days of deadlock, the compromise emerged from a five-hour meeting of representatives from the US, European Union, Australia, Brazil, India, China and Japan. It was then reviewed by ministers from some 35 countries.

The proposed settlement, brokered by Mr Lamy, calls for cutting limits of European farm subsidies by 80% and US payments by 70% to about $14.5bn.

However, this would not mean the US would have to cut its actual spending on support to farmers, which totalled about $9bn last year.

The compromise proposal also involves cuts in tariffs on agricultural imports and on industrial goods.

However, it would still provide developing countries with some loopholes to protect strategic industries such as automobiles.

Caution

Developing countries like Brazil and India say the US and EU are failing to offer big enough cuts in subsidies and import tariffs, particularly in agriculture.

However, Washington and Brussels both say they have ceded ground and want emerging economies to further open their markets to imports of manufactured goods and services.

The (proposed) deal threatens disaster for millions as developing country markets are forced open in the interests of corporate profits
John Hilary, executive director War on Want

Italian Prime Minister Silvio Berlusconi said he and French President Nicolas Sarkozy had "deep concern" about the plan. French Trade Secretary Anne-Marie Idrac said several European countries still wanted more access to markets in developing countries.

European Agriculture Commissioner Mariann Fischer Boel said: "A huge majority of member states supported the Commission... on the basis of the paper on the table, to continue negotiations."

US Trade Representative Susan Schwab said ministers had reached tentative agreement but added:"I think the biggest concern that we have is that a handful of large emerging markets really threaten this round for the rest of us."

Argentina rejected the proposal, saying it "was not acceptable in its current form".

Indian Commerce Minister Kamal Nath, whose tough position has been blamed for the deadlock, said "there are certain areas of concern, certain areas of consensus".

Bleak outcome?

John Hilary, executive director of the anti-poverty charity War on Want, said the proposed settlement could lead to "a bleak outcome for the world's poor".

EU Trade Commissioner Peter Mandelson in Paris on 5 June 2008
This is the last throw of the dice
Peter Mandelson, EU trade commissioner

He said the proposal allowed developed countries to get away with minimal cuts to their farm subsidies, while at the same time opening up developing country markets to both agricultural and industrial imports.

"Stitching together an agreement between seven states while shutting out all others exposes the lack of legitimacy at the heart of the world trade talks," he said.

"The deal threatens disaster for millions as developing country markets are forced open in the interests of corporate profits."

Trade ministers from around the world began talks on Monday aimed at saving the Doha round, which began in 2001 and aims to liberalise world trade rules by reducing tariffs on imports and industry subsidies.

If negotiators fail to find common ground after this week's meeting, many think the Doha round would be doomed.

It is also not clear that any pledges made by the Bush administration at these talks would be honoured by the new US president who will be elected in November - especially if the Democratic candidate, Barack Obama, wins.




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