India warms to U.S. offer to help save WTO talks

Kamal Nath, Minister for Commerce and Industry, speaks in New York in this May 8, 2008 file photo. India welcomed on Wednesday an offer by the United States to limit its disputed farm subsidies as part of efforts to save a global trade deal but immediately came under pressure from Washington to make concessions itself.

GENEVA (Reuters) - India welcomed on Wednesday an offer by the United States to limit its disputed farm subsidies as part of efforts to save a global trade deal but immediately came under pressure from Washington to make concessions itself.

Talks were taking place late into the night on Wednesday as more than 30 trade ministers press for a breakthrough in the World Trade Organisation's seven-year Doha negotiation.

"The first thing which we must take note of and must appreciate is that the United States is moving," India’s Commerce Minister Kamal Nath told reporters.

Washington had to cut subsidies more deeply but its move on Tuesday showed the deadlock was easing, Nath said, sounding more upbeat than hours earlier when he said the U.S. offer was "wholly inadequate."

"Up to now there was no movement. The fact that movement has started is a good thing," Nath told reporters.

U.S officials said they were disappointed that Nath did not respond to their subsidy offer by indicating new willingness to cut tariffs on manufactured goods which they argue would also help other developing countries access India's vast market.

"We hope Nath is just reading from old talking points. If the emerging markets don't contribute it will not truly be a development round," said U.S. spokeswoman Gretchen Hamel.

Under Doha, developing countries are supposed to benefit from a scaling back of subsidies and import tariffs that protect farmers in the United States and Europe.

But the biggest emerging economies like India and China are being asked to open their markets too, from farm products to industrial goods such as cars and chemicals.

SMALLER HUDDLES

Seven key WTO players -- the United States, the EU, Japan, China, India, Brazil and Australia -- were meeting late into the night on Wednesday in a new format of small groups of negotiators focusing on specific deadlock issues.

Australian Trade Minister Simon Crean, taking a break from the talks shortly before 10:30 pm (2030 GMT), said he was hoping progress could be made in a potentially all-night session of negotiations.

"I am coming back so I can work through the night," he told reporters. "It's a very good sign."

Nath said the meeting would resume at 1.00 am (2300 GMT).

Rich countries were hoping for signs that the big developing economies were ready to be flexible on industrial goods.

Unless the talks collapse, they could extend beyond the original end date of Saturday and well into next week as WTO boss Pascal Lamy pressed for a breakthrough, officials said.

"He is using marathon running tactics," said Adolfo Urso, Italy's top trade official, referring to Lamy's passion for long-distance running.

"But we won't tire. We will be right there behind him. What is important is that for the first time we are negotiating on industrial goods," Urso told reporters.

Without a breakthrough on farm and industrial goods by the August summer break, the round risks being put on hold possibly for a couple of years due to November's U.S. presidential election, the 2009 White House changeover and other factors.

The United States on Tuesday offered to cap trade-distorting farm subsidies at $15 billion, lower than the level in seven of the last 10 years and the existing $48.2 billion ceiling.

But the proposed limit is above the approximately $7 billion paid to U.S. farmers last year, an amount that was relatively small due to high commodity prices.

Developing countries complain that rich country subsidies squeeze their farmers out of the market, reducing local food production and leaving them vulnerable to food price spikes.

(Additional reporting by Jonathan Lynn, Laura MacInnis and William Schomberg)