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Trade talks back on track

Davos, Switzerland, Jan. 27 (Reuters): Major powers agreed on Saturday to resume global free trade talks, suspended six months ago because of deep divisions. British Prime Minister Tony Blair said a deal was now “more likely than not”.

Blair’s optimism contrasted with cautious words from trade negotiators after a meeting of some 30 trade ministers decided that the time has come to revive the long-troubled discussions at the World Trade Organisation (WTO).

WTO chief Pascal Lamy said the ministers had concluded that the moment was ripe to get “back to full-negotiating mode” after the US, the European Union (EU) and other key members reported progress in recent bilateral talks.

“I believe we are back in business,” EU Trade commissioner Peter Mandelson told Reuters after the discussion on the fringes of the annual World Economic Forum gathering in the Alpine resort of Davos.

Launched in 2001 to calm an anxious world economy after the September 11 attacks and to ease poverty, the Doha round collapsed last July over the politically sensitive issue of farm trade.

Lamy called a halt to the negotiations, saying ministers needed time to reflect. But the EU, the US and other key states such as Japan and Brazil have indicated that they may be ready to make some of the concessions that Lamy had said are key to a breakthrough.

Business groups around the world have also stepped up calls on governments to reach an accord. A deal requires Washington to make deeper cuts in farm subsidies, the EU and some leading developing country importers, such as India, to accept lower farm tariffs and for developing countries as a whole to slash industrial duties.

“I emerge from these meetings with a real sense of optimism but also a sense of realism about all the work ahead,” US trade representative Susan Schwab said.

However, it is not clear just how far the US administration can offer cuts to a farm subsidy system that was created during the Depression and costs some $20 billion a year. Brussels is also under pressure from France and other big EU agricultural states not to give more ground over tariff cuts.

“I think it is now more likely than not, though by no means certain, that we will reach a deal within the next few months,” Blair told business leaders in Davos.

“Countries are moving closer together; there is a re-ignition of political energy and an increased recognition of the dire consequences of failure,” Blair added.

The WTO chief had maintained that what had been agreed in five years of negotiations amounted to more liberalisation and opening of trade than anything achieved in multilateral talks before.

Not only would this be lost, but the global trading system could suffer a crisis of confidence if the Doha became the first trade round to fail, Lamy and other leading officials warned.

Brazil’s foreign minister Celso Amorim said his country was willing to be flexible in renewed talks so long as the US and Europe confirmed “big signals” on reforming farm trade.

“My impression is that they have leeway to move,” Amorim said, referring to US farm subsidies. “I see a positive disposition, but whether they’ll come to the extent we need them still has to be seen,” he added.

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