WTO talks fail to make breakthrough

GENEVA - World Trade Organisation (WTO) states failed again on Saturday to break a deadlock in global free trade negotiations but insisted the "round" was not yet dead.

Major trade powers agreed a more prominent role for WTO chief Pascal Lamy in the increasingly desperate search for compromise in the near five-year-old trade round after two days of talks did not heal a split over farm and industrial goods.

"We have clearly reached something of an impasse here. But does that mean the round is dead? No. We have no intention of giving up hope," United States Trade Representative Susan Schwab told a news conference.

Despite warnings by Lamy that the future of the WTO round hung by a thread, top trading powers were unable to agree on how far rich nations should slash farm subsidies and tariffs and developing countries open their manufacturing markets.

Without a deal this weekend, Lamy had said the WTO could run out of time to finish the Doha round, which also includes complex issues such as services, by the end of the year which is the absolute cut-off.

Calling the meeting neither a "success nor a disaster", European Union trade chief Peter Mandelson said a breakthrough must now come before the end of July.

Heads of government of the so-called G6 - Australia, Brazil, India, Japan, the EU and the United States - which has been taking the lead in negotiations, could soon meet, possibly at the G8 summit later this month in St Petersburg.

The talks stalled late on Friday at the end of the first of an originally scheduled three days of negotiations between ministers from some 60 WTO states who had hoped to settle the core issues that are delaying progress on the overall round.

Developing countries said they would not let rich nations negotiate away the primary purpose of the Doha round - to give economic opportunities to millions living in poverty.

"We are not here to bend backwards to accommodate more market access for industrialised nations. We are not going to allow ourselves to be blamed for any failure," said Zambian Trade Minister Dipak Patel.

The talks pit the European Union and the United States against each other and against leading developing states.

Despite the paralysis, some diplomats talked of a "managed crisis". Few saw the end-June meeting as the moment of truth. Lamy won the new room for manoeuvre he was seeking and the new US trade chief got her baptism in ministerial negotiations after officially taking over from Rob Portman last month.

Diplomats said that Schwab was never going to make concessions her first time out.

Launched in 2001 to boost the global economy and tackle poverty, the round has already missed a series of deadlines.

But without a full trade treaty by the end of 2006, the round faces collapse or hibernation for years, diplomats say. Failure could heighten protectionist pressures.

The United States is resisting pressure to give ground on farm subsidies, which developing countries say prevent them competing on world markets. Talk by the EU that it could be more flexible on farm import tariffs was not enough for a deal.

Developing countries said concessions by the rich WTO states on farm trade are a condition for them to cut industrial tariffs, the other half of a hoped-for bargain in Geneva. But rich state demands on manufacturing were excessive.

- REUTERS