WTO talks falter amid EU subsidies row

Negotiations to launch a new round of talks on trade liberalisation looked in danger last night after the European Union dug in its heels over its demands that any deal include rights to protect the environment and subsidise its farmers.

As the World Trade Organisation talks moved into their third day today there was little sign of movement by any of the major economic blocs over the key issues that divide the conference – farming subsidies, environmental protection and demands for new rules to protect investors in developing countries from bad competition and investment practices.

WTO spokesman Keith Rockwell said it was "by no means certain" that the gaps, which divide both the rich and poor but also Europe and America, could be bridged.

The WTO hopes its 142 members can hammer out a deal in time for the planned closing ceremony tomorrow, which advocates say would lead to the creation of $400bn (£240bn) of new wealth of which $150bn would flow into developing countries.

The mood was buoyed over the weekend by the decision to admit China, the most populated country in the world, into the WTO, a move that many say will open up new business opportunities for the West.

However, the hurdles to an agreement seemed as high as ever last night. A senior WTO spokesman said none of the participants had shifted their positions in opening sessions of the negotiations.

In broader terms poorer countries want greater access to western markets for goods such as textiles and agriculture, an end to farming subsidies in the US, EU and Japan, and the right to break drug patents.

The US is looking for greater access and progress in opening up the developing world to services such as banking and telecoms but wants no undermining of intellectual property law. The EU, as well defending its Common Agricultural Policy, wants the right to block the import of foods it deems unsafe and wants to set "core" standards on labour conditions and environmental protection.

Pascal Lamy, the EU trade commissioner, used his visit to the Greenpeace ship Rainbow Warrior 2, to issue a defence of European policy. "We care about other things than just the price of food," he said. "We also have non-trade concerns – for example food safety is more important than the safety of footwear."

Mr Lamy also defended its policy of export subsidies to its farmers – something the draft text of the declaration specifically demands must be "phased out". "Countries who have a long-commitment to the landscape and nature like [subsidies] because that is the way they have always had their agriculture." However developing countries want the declaration hardened up to include the word "elimination".

But the EU is looking increasingly isolated as the US, whose own farming support is allowed under WTO rules, said agriculture could be "linked to other issues" – a hint the EU may be bought off. "The EU is a member of the WTO but sometimes it feels a bit lonely," Mr Lamy said.

However, he won support from Britain over its need for clarification on whether existing multilateral environmental agreements (MEAs) over issues such as trade in ozone-depleting agents had supremacy over WTO rules.

Michael Meacher, the environment minister, said: "There has not been a clash but there's a serious potential for a serious difference of view on the efficacy of MEAs when there's a transfer to WTO rules."

Mr Meacher said consumers deserved to have properly labelled food but said the challenge was to convince the developing world that this was not a front for "green protectionism".

Opposition to launching a trade round on the terms in the draft declaration is being led by Tanzania, Brazil and India, whose industry minister, Murasoli Maran, described the WTO as "not necessary ... and an evil".