Leaders set deadline for trade breakthrough

G8 leaders have made a last-ditch attempt to breathe life into stalled world trade talks supposed to lift millions out of poverty by ordering negotiators to kick-start the moribund process within a month.

The Doha round of trade talks, launched in 2001, was supposed to slash agricultural, industrial and service sector tariffs but has ground to a halt with all sides refusing to make the necessary compromises. A final agreement was scheduled to be reached by the end of this month, but Pascal Lamy, the director general of the World Trade Organisation, has admitted that the negotiations are "in crisis" and that more time is needed to get a deal.

Yesterday, he got another couple of weeks and a new mid-August deadline to revive the process after G8 leaders meeting in St Petersburg called for a "concerted" effort to reach an agreement by the end of this year.

Anti-poverty campaigners have warned that the talks are in danger of collapse. Negotiations have been hampered by US and European Union reluctance to cut the subsidies they pay their farmers and by a general lack of willingness in the 149-nation World Trade Organisation to compromise.

The idea of the talks is to tear down trade tariffs that are imposed on agricultural goods in order to allow farmers in the developing world a chance to compete with subsidy-rich farmers in the developed world.

The World Bank says a trade deal would pump $96bn (£52bn) into the global economy and give a much-needed impetus to free trade.

The French President Jacques Chirac said the talks appeared to have gone off the rails. "I am worried about the drift," he said during lunch at the G8 Summit. "We have lost sight of the needs of poor countries, particularly Africa, while the justification of the whole exercise was development."

Anti-poverty campaigners also expressed dismay. "It's disappointing to see that on substance there is simply no progress," the development charity Oxfam said in a statement. "The United States and Europe continue to mouth the rhetoric of development without offering the necessary policy reforms."

Russia, the summit host, had problems of its own with trade talks. It had hoped to clinch a deal to join the WTO at the summit to boost its already booming economy. However, thge US, the last country standing in its way, refused to sign a deal with Moscow because of Russian restrictions on its meat imports.