Industry text reaction key to Doha trade talks

By Jonathan Lynn

GENEVA (Reuters) - The way rich and poor countries react to a new proposal at the WTO for the scale of tariff cuts on industrial goods could be decisive for the long-running Doha round of trade talks.

A revised negotiating text for industrial goods seeks to break deadlock on the cuts within the World Trade Organisation (WTO) by setting no fixed limits for the exceptions that developing countries would enjoy.

Canada's WTO ambassador Don Stephenson, who chairs the industry talks and made the proposal, is gambling that will satisfy poor countries who say their cuts in industrial tariffs must be in line with what rich nations will do in industry and agriculture.

But if rich countries feel the move gives developing countries too much leeway to avoid opening up their markets, the whole Doha round will suffer.

"It's moved things backwards," said one rich country diplomat. "The chairman has washed his hands of it. It's taken us back several months."

John Engler, president of the U.S. National Association of Manufacturers, which would play a big role in getting any deal through Congress, cited the flexibility on developing country tariffs as an aspect of "regrettable retrenchment".

But he said the new revision "continues to provide a basis for negotiation."

THREATENED SLOWDOWN