Ministers agree to resume WTO talks; Blair upbeat

DAVOS, Switzerland, Jan 27 (Reuters) Major powers today agreed to resume global free trade talks, suspended six months ago because of deep divisions, and British Prime Minister Tony Blair said a deal was now ''more likely than not.'' Trade ministers from around 30 countries expressed optimism too but said big hurdles remain in the way of a deal to settle the long-troubled World Trade Organisation (WTO) negotiations.

WTO chief Pascal Lamy said ministers concluded the moment was ripe to get back to ''full-negotiating mode'' after the United States, the European Union and other key members reported some progress in recent bilateral talks.

''I believe we are back in business,'' EU Trade Commissioner Peter Mandelson said on the fringes of the annual World Economic Forum gathering in the Alpine resort of Davos, where the trade ministers wrapped up four days of talks with a broad meeting.

Launched in 2001 to calm the world economy after the September.

11 attacks and to ease poverty, the so-called Doha round all but collapsed last July over politically sensitive farm trade.

Now the EU, the United States and other trade powers such as Japan and Brazil, have indicated they may be ready to make some of the concessions that Lamy has said are key to a breakthrough.

Business groups around the world have also stepped up calls on governments to reach an accord.

A deal requires Washington to make deeper cuts to farm subsidies, the EU and some leading developing country importers, such as India, to accept lower farm tariffs and for developing countries as a whole to slash industrial duties.

The top negotiators of the United States, the EU, Brazil and possibly other countries were due to meet in Geneva, where the WTO is based, on Monday to discuss the talks, officials said.

SENSE OF OPTIMISM ''I emerge from these meetings with a real sense of optimism but also sense of realism about all the work ahead of us,'' U S Trade Representative Susan Schwab told reporters in Davos.

She said the focus now on how specific farm products would be treated, as opposed to top-line numbers on which countries have disagreed, could help build a deal by giving the United States a clearer idea of what it had to gain.

But it is not clear just how far the U S administration can go in offering further cuts to a farm subsidy system that was created in the Depression and costs some 20 billion dollars a year.

Brussels is also under pressure from France, where presidential elections are looming, and other big EU agricultural states not to give more ground over tariff cuts.

The EU's Mandelson, who says the U S demands for tariff cuts in agriculture are too high, warned that striving for the perfect deal, rather than a good one, could kill the talks.

''I think it is now more likely than not, though by no means certain, that we will reach a deal within the next few months,'' Blair said in Davos. ''Countries are moving closer together; there is a reignition of political energy and drive and an increased recognition of the dire consequences of failure.'' The WTO chief says what has already been agreed in five years of negotiations amounts to more liberalisation and opening of trade than anything achieved in multilateral talks before.

Not only would this be lost, but the global trading system could suffer a crisis of confidence if Doha became the first trade round to fail, he and other leading officials have warned.

Brazil would be flexible if the United States and Europe confirmed ''big signals'' on reforming farm trade, its Foreign Minister Celso Amorim said.

''My impression is that they have leeway to move,'' he told journalists, referring to U S farm subsidies. ''I see a positive disposition, but if they will come as far as we need that still has to be seen.'' He said there could be a breakthrough by early April, followed possibly by definitive numbers by the end of June.

The round risks years of further delay or collapse due to the June 30 expiry of U S President George W Bush's fast-track powers to approve trade deals.

Negotiators hope that if there is an outline of a deal soon, the Democrat-controlled U S Congress might put party politics aside and grant an extension of those powers. Without them, negotiating becomes impossible.

REUTERS SY RN0009