Late night deal rescues trade talks from failure

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Ministers and officials reached a long-delayed deal last night to save world trade talks from collapse. Talks in Geneva on agricultural subsidies involving five of the world's largest trading blocs, including the EU, had threatened to stall because of objections from Brazil and India.

But shortly after midnight, the 147 members of the World Trade Organisation (WTO) reached agreement to end export subsidies on farm products and cut import duties ­ a move which opens the way to full negotiations in September. "It is a good deal for everybody," said the Brazilian Foreign Minister, Celso Amorim. "It's a good deal for trade liberalisation. It is also a good deal for social justice ... with the elimination of subsidies."

The document commits nations to lowering import duties and reducing government support in the three major areas of international trade ­ industrial goods, agriculture and service industries such as telecommunications and banking. The deal will set back in motion the long-stalled "round" of trade liberalisation treaty talks that were launched by WTO members in Doha, Qatar, in 2001, but delayed by the collapse of the body's ministerial meeting in Cancun, Mexico, last year.

Within the EU, France had opposed proposed cuts in farm subsidies, but was abandoned by its usual allies, Germany and Italy. Several African states were also objecting to the proposals because they failed to tackle cotton subsidies, and because Kenya and others were resisting proposed rules on customs and import procedures to stamp out corruption.

Talks on world trade collapsed in Cancun, Mexico, last September after the poorer nations refused to sign up to a deal that would have allowed the EU to continue dumping subsidised agricultural produce on world markets and would have protected the US's subsidised cotton growers. And there were fears that if yesterday's talks failed, the process would be stalled for months while the US presidential election were under way and the EU awaited the appointment of new commissioners.

The cotton subsidies have provoked angry opposition in West Africa and were roundly criticised by the British Government in a White Paper published by the Department of Trade and Industry last week. It pointed out that the $3bn (£1.6bn) a year subsidy paid by the US government to its cotton industry is greater than the entire output of the African state of Burkina Faso, which is almost wholly dependent on cotton exports.

"The payments to about 2,500 relatively well-off American farmers have the unintended but nevertheless real effect of impoverishing some 10 million rural poor people in West and Central Africa," the document warned.