Trade powers struggle to save WTO round

The United States, the European Union and emerging economic heavyweights tried again on Tuesday to bridge huge differences and unblock a trade deal aimed at delivering a boost to the world's flagging economy.

On the second day of crunch talks at the World Trade Organisation, delegates were hoping for movement from richer countries to help break the deadlock.

"People are expecting a number today to get the process going," an EU diplomat said, referring to hopes the United States would announce a long-awaited figure for a new ceiling for its farm subsidies.

The week-long negotiations are seen as the last chance to save the seven-year-old Doha round of trade talks before November's U.S. presidential election which would put further talks on ice, possibly for a couple of years.

Billed as the 'development round', the new wave of trade liberalisation is supposed to help poorer countries by opening markets to their exports and reducing rich countries' subsidies.

India said the latest proposals were still skewed in favour of rich countries, and developing countries needed to protect their subsistence farmers and their infant industries.

"We hope that these flaws would get addressed, balance will be restored. during the course of the negotiations. Then and then alone can the final outcome fully reflect the development dimension of this round," Gopal Pillai, the top civil servant in India's commerce ministry, told delegates.

Pillai is heading the Indian delegation after Commerce Minister Kamal Nath returned to New Delhi for Tuesday's confidence vote over civilian nuclear cooperation with the United States that could trigger a snap election.

Many delegates in Geneva say defeat for the Congress-led government could spell an early end to the trade talks, given India's pivotal role in the negotiations.

Nath is due back in Geneva on Wednesday.

The United States and the European Union - both of which have strong farm and industrial lobbies - have called on emerging countries like Brazil, India and China to offer more.

"I have to say that after (Monday's) meeting I am less optimistic than before," Egyptian Trade Minister Rachid Mohamed Rachid told Reuters after no tangible progress was made.

Failure at Geneva would not only be a blow for trade liberalisation but some analysts say it would also put greater doubt over multilateral talks such as the attempt to find a successor to the Kyoto Protocol on global climate change.

"FALSE APPEARANCE OF PROGRESS"

Negotiators are walking a line between trying to move the talks to a conclusion and ensuring they do not alienate powerful lobbies at home. A group of U.S. senators sent a letter to U.S. trade chief Susan Schwab warning her not to give too much.

"At a time when our economy is slowing, there couldn't be a worst time to entertain foreign countries' attacks on our domestic trade laws," said Republican Senator Olympia Snowe, one of the signatories of the letter.

"We are making it clear that the false appearance of progress and momentum is not an acceptable trade-off for weakening our trade laws and damaging our economy," Snowe said, noting Congress would oppose such a deal.

Latest WTO proposals would require the United States to cut trade-distorting farm subsidies to a range of $13 billion to $16.4 billion a year (6.4 billion to 8 billion pounds) from a current ceiling of $48.2 billion.

The range is above current U.S. spending on subsidies of about $7 billion although the handout figure is low because global foods prices are so high.

The EU is under pressure to cut its farm tariffs and limit the number of "sensitive" products that would be shielded from the deepest tariff cuts.