WTO chief says compromise needed in trade talks, signs of EU row appear

GENEVA (AFP) - WTO chief Pascal Lamy warned that further compromise was needed to reach an overall accord on global commerce, as a potential EU internal row threatened to complicate talks just two months ahead of a crucial ministerial meeting in Hong Kong.

Although he hailed efforts to break a deadlock in trade liberalization negotiations here this week, Lamy stressed that time was running out.

A WTO ministerial meeting in Hong Kong lies two months away, but the organisation's 148 trading nations have just "days" to get ready, he said.

That gathering, December 13-18, has been called to approve the broad outlines of a multilateral agreement to tear down trade barriers, an objective set four years ago by WTO ministers meeting in Doha, Qatar.

Lamy said plans put forward this week by the European Union and the United States, as well as by developing countries and other groups in the WTO, had provided "new momentum" in the lead-up to Hong Kong.

But he stressed that participants had to do more to ensure success in Hong Kong.

"My own sense is that the engines of the negotiating plane have been switched on again," Lamy told reporters.

"But I'm not sure it's enough to take us to the right approach zone. The ambition is to start gaining altitude, to reach the right corridor."

WTO nations have been desperately trying to galvanize the Doha talks, which have been foundering since their launch in late 2001.

Lamy has repeatedly urged them to settle at least two thirds of their differences by Hong Kong if they are to finish the round in 2006.

But they are still far from a breakthrough in negotiations on trade in agriculture, industrial goods and services, such as insurance and banking.

The process on Thursday appeared to be further clouded by French displeasure at bargaining tactics at the WTO adopted by the EU executive commission, which negotiates on behalf of EU members.

A French spokesman said Foreign Minister Philippe Douste-Blazy telephoned British counterpart Jack Straw on Wednesday to complain that the commission had made offers on opening access to the EU agriculture market "without prior consultation with member states."

Britain currently holds the rotating EU presidency.

France, among the principal beneficiaries of EU farm subsidies, has been unsettled by an offer from European Trade Commissioner Peter Mandelson to slash agriculture subsidies and tariffs.

Paris contends that Mandelson overstepped his brief in making the offer, which it believes violates a memorandum signed by EU states requiring consultations before any significant concessions on the issue.

France on Tuesday slammed a counter proposal by the United States that would call for even deeper subsidy cuts by the EU as "unrealistic."

In another development French President Jacques Chirac, in a "personal" letter to EU commission head Jose Maniel Durao Barroso, urged that the WTO negotiations take place in transparency and remain faithful to the spirit of the Doha round, a statement from the French presidency said.

The newspaper Le Monde in its Friday editions added that Chirac warned the commission against making excessive concessions on the issue of agricultural trade.

Trading nations are trying to avoid a replay of their disastrous 2003 ministerial meeting in Cancun, Mexico, which collapsed as rich and poor countries faced off -- notably over trade-distoring government subsidies offered farmers in rich countries.

The United States, the EU and other blocs of countries have all proposed subsidy and tariff cutting plans here this week but common ground has proved elusive.

Lamy nonetheless said the United States had made a "politically significant contribution" by proposing to cut its agricultural subsidies.

But key players must do more in the equally contentious area of import duties on farm goods, he said, declining to identify them directly.

In a further complication, negotiators said there was more disagreement Thursday, with the EU wanting to scale up talks on services and industrial goods, with Brazil, India and the United States insisting Brussels must first settle the farm duties issue.

Trade ministers are due to hold talks again in Geneva next week to try to iron out differences.