WTO talks make 'some progress,' but mood sombre

Urgent talks to salvage a global trade deal made "some progress" in the early hours of Thursday, ministers said, but officials warned the mood was dark behind closed doors at the World Trade Organisation.

The ministers from Australia, Brazil, China, the European Union, India, Japan and the United States attempted to address major stumbling blocks that have long dogged the WTO's Doha negotiations, launched in 2001.

"Collectively we think it's worth continuing to make an effort because there was some progress. There are difficulties too," Brazilian Foreign Minister Celso Amorim told reporters.

U.S. Trade Representative Susan Schwab said "a little progress" was made.

Ministers were due to meet again on Thursday afternoon.

"Some issues are nearer solution. Other issues are clearer and better understood. But there is some way to go before the gaps are bridged," European Trade Commissioner Peter Mandelson said as the talks ended shortly before 3:30 a.m. (2:30 a.m. British time).

An official close to the talks said the atmosphere was "sombre" as rich and poor countries remained at odds over steps needed to break the deadlock.

In another sign of the heightened tensions, Brazilian President Luiz Inacio Lula da Silva warned the United States and the EU they were risking a failure of the round, a contrast to more positive comments he has made recently.

"With no effective reduction in U.S. farm subsidies nor an effective opening of the European farm market, there will be no deal and everyone will have to face their responsibilities," Lula was quoted as saying in Brazil by local media.

WTO Director-General Pascal Lamy called ministers from about 30 of the 153 WTO countries to Geneva this week for last-ditch talks on the Doha round which was once billed as a chance to boost the global economy but now risks running out of time.

TALKS TO RESUME

Lamy on Wednesday narrowed the group down further to the seven key rich and poor WTO powers.

They discussed six issues on agriculture and three on industrial goods ranging from cotton subsidies to measures to prevent developing nations from shielding entire sectors from import tariff cuts, WTO spokesman Keith Rockwell said.

Indian Commerce Minister Kamal Nath said progress was made on so-called sensitive products - the complex yet crucial arrangements allowing countries to shield certain farm products from tariff cuts in exchange for admitting a low-duty quota.

Earlier on Wednesday, India said a U.S. offer made the previous day to bring down the cap on America's disputed trade-distorting farm subsidies to $15 billion (7.5 billion pounds) a year represented movement but had to go deeper.

India was quickly criticised from Washington for not responding in kind to its farm offer.

"Now we need to see a reciprocal demonstration of ambition on new market access commitments from our major trading partners, including advanced developing countries like India, Brazil, Argentina and China," said Charles Grassley, a member of the U.S. Senate finance committee.

The exchange encapsulated the dilemma at the heart of the Doha talks. Developing countries want rich nations to open up their markets for farm goods and reduce agricultural subsidies that discourage their own farmers from growing food.

Rich countries accept they must move on agriculture, but want more access to developing country markets for industrial goods like cars and chemicals, or services like banking.

Without a breakthrough on agriculture and industry before the August summer break, the Doha round risks being sidelined by November's U.S. elections and next year's changeover in the U.S. White House and at the European Commission.