"Grave risk" world trade talks to fail: WTO's Lamy

By Doug Palmer

WASHINGTON (Reuters) - Nearly a decade worth of work to reach a world trade deal is on the verge of "failure," World Trade Organization Director General Pascal Lamy said on Saturday in a plea for countries to rise above their own narrow interests for the good of the global economy.

"The WTO system is in grave risk of not being able to conclude a round started almost 10 years ago," Lamy told members of the International Monetary Fund just a few months after Group of 20 leaders urged negotiators to strike a deal by the end of this year in the long-running talks.

Lamy, in a prepared text of his remarks, said the negotiations were "stalling on the last hurdles" of the Doha round of world trade talks launched in late 2001 with the goal of helping poor countries prosper through trade.

He asked finance ministers attending this weekend's meetings of the IMF and the World Bank "to go back to your capitals and ask your leaders to consider the cost of failure of these negotiations, both from a micro perspective, as from a macroeconomic point of view."

The urgent appeal came as chairs of key WTO negotiating committees were expected to present new documents next week in Geneva showing wide gaps in the negotiations on agriculture, manufactured goods and services at the heart of the talks.

The failure of intensified efforts since the start of the year to bridge those differences has caused many to wonder the point of continuing the nearly 10-year-old talks -- and some to conclude they are already dead.

The United States, which has been under pressure since the start to agree to deep cuts in its farm subsidies as part of a deal, has pressed big emerging countries such as China, India and Brazil to make better offer to open their markets to more agriculture, manufactured goods and services exports.

Trade ministers from those countries, meeting this week with Russia and South Africa, rallied around a July 2008 draft WTO text they said offered "a delicate balance of trade-offs" but the United States says it fails to provide enough new export opportunities to make the deal attractive.

On Tuesday, European Trade Commissioner Karel De Gucht said there was "no reason to be optimistic" about the chances of success in the Doha talks and said the European Union had to start thinking instead about "Plan B," an apparent reference to more bilateral and regional free trade deals.

U.S. Trade Representative Ron Kirk a day later accused China, India and Brazil of shirking their responsibility to further open their markets, not just for the benefit of the United States but for poor countries that make up the bulk of the WTO's 153 members.

"No three economies have benefited more from trade liberalization over the last 10 years than China, India and Brazil. That's a good thing," Kirk said in a speech.

"If I can just be blunt, the question is whether they are willing to walk in the room, close the door and hammer out a deal," Kirk said.

Lamy did not blame any individual countries in his remarks, but urged governments to "look at the wider picture and keep some distance from narrow national interests."

Countries can't afford to take for granted the rules-based world trading system that has prevented a repeat of the tit-for-tat trade actions that many blame for the Great Depression, Lamy said.

"We are not only just forgetting the lessons of the distant past, but also of the recent past, when the system shielded us from worst economic woes," Lamy said.

(Reporting by Doug Palmer; editing by Leslie Adler)