EU says poor countries risking damage to WTO push

BRUSSELS, Oct 11 (Reuters) Developing countries risk inflicting terrible injury on long-delayed global free trade talks now nearing a moment of truth, the European Union's trade chief Peter Mandelson said on Thursday.

Brazil, South Africa, India and other developing countries called this week for more opt-outs from proposed cuts to tariffs on industrial goods as part of the World Trade Organisation's Doha round of trade negotiations.

Such a move would limit new export opportunities should a deal -- once billed as a chance to boost the global economy and help fight poverty but now struggling to stay on course -- finally be reached.

The EU and the United States have already seen their demands diluted by a compromise proposal floated in July by the chairman of the industrial goods talks at the WTO.

Mandelson told Reuters the move by big developing countries to protect more of their industries from tariffs cuts ''flies in the face'' of the round's development aims, given that most import duties were levied by poor states on one another.

''For such developing country leaders as Brazil, India and South Africa now to reject the chair's industrial tariffs text would do terrible injury to the current negotiating process and drain the negotiations of what confidence and momentum remains in them,'' Mandelson said in an interview.

''Now is not the time to take such risks and I appeal to the leaders of Brazil, India and South Africa at their summit next week to bolster confidence in the round,'' he said.

The three leaders are due to meet in Pretoria on Wednesday.

Industrial goods have emerged as a new battleground in the WTO negotiations after the United States signalled it could go further with cuts to its farm subsidies, suggesting a narrowing of differences in the highly sensitive farm talks.

But Mandelson said the United States still had to ''significantly improve its farm subsidy offer''.

Top trade diplomats say that, without a breakthrough in the next few weeks or months, the round, launched in 2001, risks several more years of delay or possible collapse.

''MODEST'' MOVES Mandelson said the most vulnerable countries should be protected but bigger developing economies faced only modest opening of their economies under the compromise proposals.

Most big developing countries would have to bind existing industrial tariffs into a WTO deal, not cut them from the lower levels they actually apply, and some others would make ''limited adjustments'' of 1 or 2 percent over 10 years, he said.

''If that isn't modest, I don't know what is,'' he said.

While opening up new markets was important, the round's big result would be to boost trade between poor countries, vital for efforts to ease global poverty, he added.

''I don't think anyone could have brought a stronger development-minded conviction to this negotiation than I have,'' the former minister from Britain's Labour Party said.

''I actually believe in it. But I feel that my commitment is being taken for granted and I am being left with empty hands.'' The United States slammed this week's move by the developing countries as possibly signalling the end of the WTO round.

Mandelson said the talks were nearing a moment of truth but were not degenerating into a blame game.

''I am genuinely, genuinely not doing that. I will still be proclaiming the importance and 'doability' of this round if I am the last person standing,'' he said.

REUTERS SR HT1927