'Big divergences' push WTO talks towards crisis

Talks to salvage a global trade deal faced a crunch point on Thursday after three days of scant progress, and French President Nicolas Sarkozy said he would not sign a deal in its current form.

Rich and poor countries remained at loggerheads as to who must make the next move and officials said it would become clear on Thursday whether it was worth pursuing the talks.

Collapse could add more years of delay to the World Trade Organisation's Doha negotiations to bring down barriers to exports worldwide.

"What I see is big divergences still. We'll see during the day if it is possible to bridge these gaps," Argentina's chief negotiator Nestor Stancanelli said as he arrived at WTO headquarters on the shores of Lake Geneva.

The talks were originally due to run until Saturday but delegates say they will either flop before then because of the deep differences or drag on well into next week.

"We are potentially closer than we have ever been to a deal, but the final steps are the hardest and still look formidable," said EU Trade Commissioner Peter Mandelson on his weblog.

France's Sarkozy, concerned about scaling back the EU's farm import tariffs for little return, said he would not to sign up for the deal currently on the table.

"We will not sign this agreement that is on the table if it is not modified," Sarkozy told reporters in France. He has previously criticised Mandelson's handling of the WTO talks.

The so-called development round, launched in the Qatari capital in 2001, is meant, among other things, to make it easier for developing countries to export farm produce by reducing rich countries' subsidies and import tariffs on agricultural goods.

The United States and the European Union have made offers on agriculture, but are pushing developing countries to open their borders for imports of industrial goods like cars and chemicals, and services like banking and telecommunications.

BLEAK ASSESSMENT

Without a breakthrough before the August break, the Doha round risks further years of delays due to next year's changes at the U.S. White House and at the European Commission.

A European diplomat said trade talks often needed a crisis to get to a breakthrough. "All parties will have think very hard about their role in any negotiating failure," he said.

A U.S. industry representative said Washington negotiators gave lobbyists "a pretty bleak assessment" of the talks.

Supporters of the round say it is needed more than ever to give a rare, positive signal to a slowing global economy.

Japan's exports unexpectedly shrank in June for the first time in nearly five years, data showed on Thursday.

Brazilian President Luiz Inacio Lula da Silva dropped his recently optimistic tone to warn the United States and the EU they risked bringing down the round because their offers on farm subsidies and tariffs fell short, Brazilian media said.

Japan said it wanted to shield more its agricultural products, such as rice, from big import tariff cuts.

U.S. Trade Representative Susan Schwab has urged developing countries to come forward with offers of their own after she offered to cap trade-distorting subsidies to U.S. farmers at $15 billion a year, a level many countries still consider too high.

Schwab said a group of key ministers had made "a little progress" at talks which ended shortly before dawn on Thursday.

The ministers from Australia, Brazil, China, the EU, India, Japan and the United States are due to meet again at 4:00 pm (1400 GMT) to see if they can break the deadlock.