Developing countries say Doha talks make progress

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GENEVA, Oct 23 (Reuters) Talks on a deal to free up world trade are making progress, developing country leaders said, but the chairman of key industry negotiations said more needed to be done to reach an agreement by the year's end.

Brazilian President Luiz Inacio Lula da Silva yesterday said the Doha round of trade talks, launched six years ago to boost the global economy and help poor countries export more, could end in a deal by the end of the year despite remaining obstacles.

''Nothing is decided but I think we are close to that,'' Lula, who met the leaders of India and South Africa in Pretoria last week and spoke with US President George W Bush by telephone, said on his weekly radio program.

India's Trade Minister Kamal Nath also sounded a positive note, saying the World Trade Organization (WTO) talks had progressed over the past two months.

WTO Director General Pascal Lamy, in Washington for talks with US Trade Representative Susan Schwab and the annual fall meeting of the World Bank and the International Monetary Fund, agreed a deal was within reach if countries can grab it.

Negotiators have made significant progress on technical issues since September, and world leaders from Bush to Lula to the European Commission to Indian Prime Minister Manmohan Singh seem sincerely interested in reaching a deal, Lamy said.

''In one word, it is now doable, which of course is different from saying it will be done,'' Lamy said in a speech at Georgetown University's law school. ''Both in scope and in depth, there is a substantial package on the table.'' MANUFACTURED GOODS VS. AGRICULTURE The United States and European Union are calling on developing countries to open up their markets for manufacturers by cutting import tariffs in return for cuts by rich countries to trade-distorting subsidies and tariffs on farm goods.

Developing countries say proposals currently on the table are not in the spirit of the Doha round's development mandate because they require poor countries to cut their industrial tariffs by more than rich countries would do.

Some are also concerned that opening up food markets could hurt the livelihoods of millions of subsistence farmers.

''Brazil is absolutely right to take a tougher stance on industry tariffs. We can't open our economy in exchange for uncertain gains in agriculture,'' said Fernando Pimentel, director with the textile association Abit.

Under proposals made in July by Canada's WTO ambassador Don Stephenson, who chairs the industry talks, developed countries would cut tariffs in line with a formula where the lower the coefficient, the deeper the cuts in tariffs.

Stephenson has proposed a coefficient range of 19-23 for developing countries, whose tariffs are much higher than those of rich countries, and 8-9 for developed nations.

Canada is now willing to take a coefficient of 5, Stephenson told WTO negotiators in the industry talks known as ''NAMA'' for Non-Agricultural Market Access.

One senior developing country diplomat said a cut to 5 for rich countries would not help developing countries, who needed either higher coefficients themselves or more flexibility to shield sensitive products from tariff cuts.

''As long as they insist on what seems to be a pretty ambitious result in NAMA, and on being so 'realistic' in agriculture, then we're stuck,'' he said.

Stephenson said he would continue talks for the next two weeks and aim to produce a revision of his July negotiating text by mid-November, although talks in the past six weeks had left him little material to work on for a new compromise draft.

Failure to agree the outlines of a deal by the end of the year risked the failure of the entire Doha round, he said.

REUTERS ARB KN1114

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