Threat of walk-out puts trade talks in doubt

The prospect of a deal on trade faded further into the distance yesterday, a leading African country threatened to walk out and Europe's trade chief warned that poor countries could leave Hong Kong empty-handed.

Peter Mandelson, the EU's trade commissioner, said his one modest target for this week's meeting in Hong Kong - a six-point development plan for poor countries - was in trouble.

He accused other countries of engaging in "brinkmanship and bidding up", while observers of the World Trade Organisation negotiations lined up to cast doubt on its chances of success.

The mood soured further when Benin indicated it was prepared to walk out of the talks over the failure of the US to meets its demand to end cotton subsidies.

The last meeting two years ago in Cancun, Mexico, collapsed after a handful of countries walked out over cotton, depriving the WTO of the 100 per cent mandate it needs to strike a deal.

Samuel Amehou, Benin's ambassador to the WTO, said African cotton producers have to compete against vast subsidies paid to US farmers. He said African states would "not accept any consensus that did not take the legitimate interests of the African farmers into account".

He added: "The conference in Hong Kong is the place to hold people to their commitments."

Ibrahim Malloum, the head of the African Cotton Producers Association, said he did not want a repeat of Cancun but added: "We came here to get concrete results, not to hear more proposals that will never be respected."

Officials at the WTO admitted the outlook for a deal was bleak as all the major blocs had shown no sign of movement after the first round of negotiations. Ministers from the 150 member nations have to find some agreement this week or any lingering hopes of striking a full deal by the December 2006 deadline will vanish, putting the future of multilateral trade in doubt.

Mr Mandelson said his offer of a deal for developing countries, including tariff-free access for the least developed countries (LDCs) into rich nations' markets, had run into opposition.

"I'm worried that the LDC package could now be in some trouble," Mr Mandelson said. "If we cannot deliver on this, I really think we should ask what we are doing in Hong Kong."

He hinted that the US, which is worried about a flood of textile imports from countries such as Bangladesh, was opposing the deal. He said he had told LDCs at a breakfast meeting that there was resistance to the proposals for duty-free and tariff-free access.

Karan Bhatia, the deputy US trade representative, said the US believed the meeting should be focused on agriculture, industrial tariffs and services.

One WTO official said there was no sign that any countries were showing signs of flexibility. "People are still sticking to their long-held positions," he said.

Sir Digby Jones, the director general of the CBI and a member of the British delegation, said: "I sense there's a mood of frustration." Brendan Barber, the general secretary of the TUC and a fellow delegation member, said the talks were nowhere near a "tipping point". He said: "There is a degree apprehension of the risks of it failing."