EXCLUSIVE - Mexico seeks to break Doha trade deadlock

A worker rides his bicycle past shipping containers at the Longtan port in Nanjing, Jiangsu province January 16, 2011.

GENEVA (Reuters) - As trading powers embark on a renewed push for a Doha round trade deal, Mexico has come up with a wide-ranging proposal to break the deadlock in the long-stalled talks.

Trade ministers agreed last week to push for an outline deal in the decade-old talks by July, and instruct their negotiators at World Trade Organization headquarters in Geneva to make the necessary compromises to reach an agreement.

Mexico's proposal attempts to tackle the fundamental divide in the talks -- the call by rich countries for a more far-reaching deal than is now on the table versus the demand by poorer countries that a deal primarily promotes development.

The United States and European Union want emerging economies to open up their markets more than so far proposed, while developing countries want advanced economies to make a bigger contribution to the deal than they do.

Since it is already agreed in principle that the world's poorest countries would not have to make concessions, the difference is between rich and fast-emerging economies like Brazil, China, India, South Africa and Thailand.

Some economists say a Doha deal could inject hundreds of billions of dollars into the world economy. It would also boost business sentiment and bolster defences against protectionism.

While the nine-year-long negotiations have prompted yawns and scepticism in the past, businesses are paying increasing attention. The law firm King & Spalding issued a note to clients on Thursday urging them to review how a deal could affect them.

TRADE-OFFS

Mexico's proposal, a copy of which was obtained by Reuters, would require rich countries to do more to open their markets than developing countries.

It looks to open up a whole range of markets, from farming and industrial goods to services, allowing negotiators to make trade-offs across the board.

For instance one country may be willing to make deeper cuts in industrial tariffs if it sees its partner going the extra mile on farm import duties.

"In the market access areas progress has been quite limited," Mexican Economy Minister Bruno Ferrari told trade ministers in the Swiss resort of Davos on Jan. 29, according to a participant in the meeting.

"So the question is if we are going to be able to create a shortcut towards a simultaneous solution for all market access issues," he was quoted as saying.

A Doha agreement may be quite different to Mexico's proposal in the end, but it is certain to involve this kind of trade-off across different sectors, known in the jargon as horizontal negotiations.

And once questions of market access are dealt with, other problems such as cutting subsidies or improving rules for unfairly priced imports will fall into place, Ferrari said.

(Editing by Laura MacInnis)