EU sounds alarm on trade talks 'complacency'

Talks on freeing up global trade risk failure at the next key stage unless rich and poor nations knuckle down to negotiations immediately, the European Union's trade chief said.

Trade Commissioner Peter Mandelson said a partial deal struck in Geneva last July had kept the troubled Doha round alive but had bred complacency about the prospects of finishing the job.

The World Bank says the Doha round, which aims to lower barriers to global commerce, could lift more than half a billion people out of poverty and trigger growth by injecting billions of dollars into the world economy.

The round, which should have been finished by 2004 but has been dogged by wrangling over subsidies and long-protected markets, reaches its next milestone in Hong Kong in December.

"If at Hong Kong we are not in a position to put in place modalities and frameworks for each category of negotiation and have achieved parallel progress in each, then I will fear for the outcome... and our ability to complete the round in a realistic timescale," Mr Mandelson said in an interview.

The blueprint approved last year set out broad principles for continuing work on areas including agricultural trade and industrial tariffs.

Negotiators must now reach specific agreements on where and by how much farm subsidies and tariffs must be cut and markets opened, the "modalities and frameworks" Mr Mandelson referred to.

"The breakthrough we made in Geneva, while putting the round back on track, also bred a certain complacency," Mr Mandelson said. "To secure progress in Hong Kong we need a greater political impetus now and in the coming months."

Mr Mandelson - a former British politician and confidant of Prime Minister Tony Blair who took up his EU job in November - said he would launch a "call for action" on the Doha round at next week's World Economic Forum meeting in Davos, Switzerland.

A flurry of trade round discussions are expected in Davos both at bilateral level and among the Brazilian-led G20 group of developing nations, which includes heavyweights India and China.

Mr Mandelson called on all sides to put more into the process: the United States on agriculture and the G20 on opening markets for industrial goods to the rest of the developing world.

"Our breakthrough last summer was in agriculture... but we need parallel progress across the board," he said, citing a May deadline for negotiators to reach preliminary agreements on how to liberalise services like banking and power.

Calling the offers made so far to open services "too few and too inadequate", he said the EU would improve its offer and was expecting G20 nations to follow suit - a message he took on a visit to India last week.

Mr Mandelson said the departure of US Trade Representative Robert Zoellick - a Doha round old hand - to State Department could be a hurdle, and he was hoping for signals of commitment when US President George W. Bush visits Europe next month.

He said rich nations must lead the way by spelling out at the Group of Eight industrialised nations' mid-year meeting what they are prepared to deliver.

"G8 will signal to developing countries whether the most advanced economies are really serious about fulfilling the development goals of the round," he said. "For Hong Kong to be successful I believe the developing countries need to go into that meeting with the knowledge of what they are likely to win."