The EU's Pascal Lamy may be ready to strike a deal
Trade negotiators have worked through the night to reach a compromise deal to ensure that poor countries have access to medicines.
The text reportedly accepted by a ministerial working group states that the World Trade Organisation's intellectual property rights accord, known as TRIPS, "shall not prevent (WTO) members from taking measures to protect public health".
Developing countries had opposed the United States and Switzerland, demanding the right to override patents and have open access to cheaper generic drugs in times of a health crisis.
Many developing countries say they cannot afford the cost of expensive drugs needed to treat diseases like Aids and malaria.
Health emergency
Developing countries like Brazil and South Africa want the right to produce or import cheaper generic versions of the drugs, a move that may violate international trade rules.
A senior official from the European Union said that it had been constructively engaged in negotiations on medicines and that a draft text was being submitted to "higher authorities".
But the official called other countries to "show a willingness to be flexible" in other areas of negotiation.
A senior US trade official confirmed that "yesterday was a day of good progress" but said that there was no deal yet on intellectual property rights.
However, "the pieces are beginning to fall into place" for an overall deal to launch a new round of trade talks, he added.
A deal on cheap access to medicines, which developing countries feel deeply about, could help smooth the way for agreement on other difficult issues.
Trade talks at the crossroads
As the talks enter their final two days, prospects for launching a new trade round are improving.
Trade ministers want to start a fresh round of talks to help boost the world trading system at a time when economic growth is faltering and international cooperation has moved up the agenda following the terrorist attacks on the US.
But disagreements persist on the scope of the new negotiations, and whether to include issues like investment and the environment.
There is also deep disagreement about how far to liberalise agriculture, with the European Union opposed to phasing out export subsides.
The chairman of the WTO council will present a new draft plan of negotiations later on Monday, which will have to be approved in a formal vote on Tuesday.
EU role under scrutiny
The EU has already tried to claim credit for forging a deal on medicines, saying it is playing the role of honest broker between the US and developing countries.
But Harvey Bale, the head of the International Federation of Pharmaceutical Manufacturers, told BBC News Online that he was very disappointed by the EU which "was not being an honest broker."
He accused the EU negotiators of backing poor countries' demands in order to gain support for their ambitious programme of trade issues, which includes adding the environment, investment and competition policy to the agenda.
The UK Trade Secretary Patricia Hewitt denied suggestions that the UK was out of step with other EU countries to support its pharmaceutical industry.
"We are determined that poor people get the medicines they need" she said.
Meanwhile the US was putting forward its own proposals to developing countries for a 10-year exemption from patent protection for the world's poorest countries, and an additional five year moratorium on making a trade complaint in relation to HIV/Aids drugs in Africa.
Environment hopes
The EU was also working to ensure that environmental issues were included in the negotiations for a new trade deal - but so far has been finding little support from other countries.
On Sunday Pascal Lamy, the EU trade commissioner, visited the Greenpeace ship, the Rainbow Warrier, in a bid for support from the green lobby.
Speaking on the ship, he said that the only way to resolve to tensions between trade and the environment was to negotiate over the differences.
The EU wants to ensure that countries have the right to "eco-labelling" and it wants to introduce the precautionary principle into international trade law.
That means that countries would be allowed to wait before implementing trade rules to ensure that a full environmental assessment was made.
The EU feels isolated in its desire to put environmental issues on the international trade agenda, but it has strong support at home because of consumer fears about 'mad cow disease, or BSE, and GM foods.
Members of the European Parliament have threatened to block any deal that fails to include provisions on the environment.
It is the kind of pressure that makes reaching a trade deal so difficult.