WTO ministers look to capitalise on new optimism

A new sense of optimism surrounded WTO negotiations on a new global trade pact on Saturday amid hopes of a breakthrough after seven years of deadlock.

Ministers from 35 leading nations headed for meetings hoping to finally bridge their differences, with pressure piling on emerging market countries India and Argentina which have signalled opposition to a proposed deal.

"This afternoon's session will be important. India will be looking to see what it can get out of the session to decide whether to ditch discussions," a diplomatic source told AFP on condition of anonymity.

Ministers from 35 leading economies have been meeting at the World Trade Organization (WTO) since Monday to discuss cuts in subsidies and import tariffs with the aim of mapping out a new deal under the so-called Doha Round of WTO talks.

The Doha Round was launched in the Qatari capital seven years ago but has stalled because of disputes between the rich developed world and poorer developing nations on trade in farm and industrial products.

The talks this week looked doomed -- like so many others since Doha began in 2001 -- until a breakthrough late Friday saw the biggest powers find common ground on a draft agreement.

"I think the situation looks strong. I think we can be very hopeful now," said European Trade Commissioner Peter Mandelson as he left talks late on Friday.

The United States warned that a handful of countries could still torpedo the exercise and Argentina said the draft agreement was unacceptable.

"There are a handful of large emerging markets that quite frankly risk unravelling the entire package," said United States Trade Representative Susan Schwab.

She added, however, that while there was "more work to do, it is a path forward."

Indian Commerce Minister Kamal Nath has insisted all week that he will protect his country's millions of subsistence farmers and nascent industry, which are shielded from imports by tariffs levied on foreign goods.

"We're not very happy with the package, primarily on agricultural issues," said Indian ambassador to the WTO, Ujal Singh Bhatia, on Saturday.

Indian newspaper Business Standard reported Saturday that Nath had threatened to walk out of negotiations on Friday.

"We have come with many goodies. We expect to return with many goodies. If not, we'll return with the same goodies we brought," said Bhatia, underlining that India was still ready to walk away.

Mandelson said Friday that he thought the Asian giant would eventually come on board, telling reporters: "I don't think India will be the one to break a world trade round. I really don't."

The talks Friday focused on trade in farm and industrial products -- the two main sticking points of a deal -- but attention is set to turn Saturday to the services sector.

The gathering is due to over-run its original programme, which foresaw an end on Saturday, and continue throughout the weekend and early next week, sources said.

"My opinion is that the chances of reaching an accord have risen to 65 percent from 50 percent," said Brazil's trade negotiator, Foreign Minister Celso Amorim, who said he had accepted the draft agreement.

The marked turnaround Friday emerged after meetings between seven key trading powers -- the United States, the European Union, Australia, Brazil, China, India and Japan.

The talks then widened to a ministerial conference of all 35 key nations invited to Geneva to broker the pact.

Anything approved by the 35 parties would still have to be cleared by all 153 WTO member states. A new pact can only be adopted with unanimity.

WTO Director-General Pascal Lamy had warned earlier on Friday that the talks faced failure unless countries showed flexibility and determination.

Among new proposals he put forward Friday was a further cut in the US annual farm subsidies to 14.5 billion dollars (9.2 billion euros) and a clause to prevent developing countries from shielding entire sectors from tariff cuts, a source told AFP.

Diplomats and negotiators had said that Friday would be make-or-break at the end of gruelling week of bargaining that had produced scant evidence of progress.

China loses WTO car parts dispute

China has been told its tariffs on foreign car parts break World Trade Organization (WTO) rules.

At least 60% of components used in Chinese cars must be made in China or firms pay higher taxes under Beijing's current system.

The international trade body said the practice was protectionist and called on China to change its import caps.

The US, Canada and the European Union complained to the trade body that Beijing had broken the WTO's rules.

The US Trade Representative Susan Schwab said enforcing trade rules through dialogue or litigation was a critical part of the US trade agenda.

"The panel report leaves no doubt that China's discriminatory treatment of US auto parts has no place in the WTO system," she said.

Level playing field

Chinese officials had argued that the country's tariffs were aimed at preventing foreign companies importing whole cars as spare parts to avoid paying taxes.

Analysts said the row over car parts had been a hot issue in the US, because carmaking - already hit by fierce foreign competition and an economic slowdown - is an important American industry.

"We will continue our efforts to ensure that US manufacturers and workers in this and other industries enjoy the benefits of open markets and a level playing field," Ms Schwab said.

The ruling in Geneva brings the global dispute to an end.

In February, the WTO made a preliminary ruling saying foreign-made car parts were in a less favourable position than Chinese-made alternatives.

Developing countries gloomy on WTO farm talks

Brazil and other developing countries have complained that agriculture proposals at the World Trade Organisation do not open up markets enough, dimming prospects of a deal being reached this year. "The options on the table do not seem to fulfil the mandate for substantial improvements in market access."

The G20 group of developing countries said in a statement issued late Friday, referring to proposals on the farm sector. The G20 blamed developed countries, saying: "we have no indication of what those countries are prepared to do" in terms of cutting subsidies.

The WTO's 152 member states remain mired in an impasse over the Doha round, which was failed to make significant headway since it was first launched in the Qatari capital in 2001. Talks are stuck because of disagreements between rich and poor countries over the removal of subsidies and trade barriers for agricultural and industrial products.

WTO Director General Pascal Lamy has repeatedly said a deal is "doable" before the end of the year, but chances of any breakthrough look to be dwindling, with French President Nicolas Sarkozy being particularly unoptimistic. "It would be highly unrealistic to keep wanting to negotiate a deal where we haven't received anything on services, nothing on industry ... and which would cut farm output by 20 percent while 800 million people are dying of hunger," Sarkozy said Friday.