Rich nations 'renege on pledge to reform trade and help poor'

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Talks aimed at freeing world trade and lifting millions out of poverty looked set for failure last night after negotiators failed to bridge a gulf between rich and poor nations.

A draft agreement to be signed by 148 World Trade Organisation members shattered hopes that the European Union and US had given in to developing countries' demands on the aid they hand out to their farmers.

It also failed to heed poor countries' pleas to scrap plans to start new negotiations on a single global package of laws on foreign investment and domestic business competition systems. Ministers last night began a marathon negotiation process in the hope of hammering out a new text that can be signed before the meeting ends tonight.

Pressure groups reacted with fury, saying that rich countries had reneged on promises to deliver a "development round" of trade negotiations that would benefit poor countries, who say that farming subsidies and tariffs make it impossible for them to compete globally.

Claire Melamed, the head of trade policy at Christian Aid, said: "If this text were agreed, it would finally confirm the death of the development round."

The draft shows that huge tracts of a compromise plan drawn up by the EU and the US, which was bitterly condemned by all other countries, have survived the intense negotiations of the past 12 hours. The new text will test the skills of the G21, a powerful coalition of developing countries that took the US and EU by surprise in the Mexican resort of Cancun, where the meetings are taking place, by arguing strongly for deeper cuts in farm protection and an agreement to delay negotiations on investment and competition until the round is completed in 2005.

The G21, which joins traditional farm exporters such as Brazil and Argentina and Asian powerhouses India and China, has become the principal counterweight to Washington and Brussels.

Developing countries, led by India, also argue that they simply do no have the resources to start negotiations on new issues when there are just 15 months left before the December 2004 deadline.

The publication of the draft suggests that the key players had pulled back from a bitter war of words. Celso Amorim, Brazil's Foreign Minister and the key player in the G21, said: "The climate of the meetings was significantly better than the previous day."

Peter Allgeier, the US deputy chief trade representative, said the talks had entered the stage of "give and take". A key issue will be demands by four African countries that wealthy nations cut subsidies they say are driving them out of business.

Meanwhile, protesters tried to break through the security cordon by tying a telegraph pole to a rubbish bin to use as a primitive battering ram.

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