Page last updated at 12:09 GMT, Monday, 28 July 2008 13:09 UK

Deal still elusive at trade talks

Negotiators gesture during at WTO session
Talks have stretched into a second week

Rich and poor countries are still struggling to reach a compromise as protracted talks on a global trade pact enter a second week.

While World Trade Organization chief Pascal Lamy said a deal was nearing "closure", divisions remain.

The US said China and India had put the talks "in gravest jeopardy" by failing to agree on trade terms.

Nations have often clashed on farming subsidies and barriers on trade in goods and services since talks began.

The trade round started in 2001 in Qatar's capital.

Their actions have thrown the entire Doha round into the gravest jeopardy of its nearly seven-year life
David Shark, US trade official

Talks had appeared on the brink of collapse last week but Mr Lamy was able to broker a proposed settlement between seven key trading nations late on Friday.

On Monday Mr Lamy was quoted by Reuters news agency as saying: "We're close to closure on what is a very substantive achievement. Let's go that short distance to the summit."

Threat

However, on Monday a US negotiator said that China and India were threatening the fragile pact.

According to Associated Press, US trade official David Shark criticised India for rejecting the package and China for backing out of the terms it agreed to last week.

"Their actions have thrown the entire Doha round into the gravest jeopardy of its nearly seven-year life," Mr Shark said.

He said the US had "swallowed hard and accepted" Friday's compromise proposal.

'Unfair'

China hit back by saying that rich nations were pushing developing countries into special deals on certain sectors while reserving the right to protect sensitive agricultural products.

Indian farmer
China and India fear rich countries will have unfair access to their markets

"Priority sectors highlighted by them include machinery, chemicals and automobiles, in which they enjoy substantial export advantage," Lu Xiankun, press counsellor at China's World Trade Organization mission, told Reuters news agency.

"Naturally, such attempts led to strong and firm reservation by developing members," Mr Lu said

India's ambassador Ujal Singh Bhatia told Agence France Presse that the US accusation was unfair and said that the US only made the claims because it was "not achieving its aims".

French government spokesman Luc Chatel said proposals under discussion at the global trade talks are not acceptable to France as they stand, Reuters reported.

Proposal

The proposed settlement, brokered by Mr Lamy, calls for cutting the limit on 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.

The deal also involves the EU offering 80,000 temporary visas a year for working in the services sector

Bananas

In another area of contention, former European colonies have threatened to block a trade deal to reduce the EU's controversial tariffs on Latin American banana imports.

The African, Caribbean and Pacific (ACP) trade grouping said the 35% cut agreed by EU and Latin American officials on Sunday was unacceptable.

An ACP spokesman said the group would present a counter-proposal on Monday.

EU officials have been trying to review the special trade deals with about 80 ACP countries, which have been in place since the 1950s.

These deals have allowed a range of products, including banana crops from ACP states, to enter the EU with no duty to pay, while Latin American exports were charged.

On Sunday, the EU and Latin American exporters agreed to further reduce the EU's import duty to 114 euros ($179; 90) a tonne by 2016 - a 35% cut.




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