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WTO talks achieve some progress, but

Trade negotiators failed to tackle the toughest issues in a draft agreement circulated at WTO talks yesterday, showing that only modest progress was being made as the meeting entered its final hours.

The text, which will likely be revised further before the six-day conference ends today, touches on a broad array of topics ranging from cutting agricultural subsidies to opening markets to services like insurance and banking. But it was riddled with loopholes and gaps that might be hard to close with little time left.

One of the most contentious issues was setting a deadline for ending government payments to domestic producers to promote exports. The draft suggested that such subsidies be eliminated by 2010 -- a date that will likely meet with opposition from the EU.

In a victory for West African cotton growers, the draft calls for rich nations to end export subsidies for cotton next year. This represents a US concession to demands by African and other developing countries that say government support for farmers in rich countries is driving many poor farmers out of work.

The text also showed progress on the issue of granting duty-free and quota-free access for goods from the world's poorest countries, suggesting that all developed nations would agree to the proposal, although the small print still leaves rich countries with some possible opt outs.

But in other vital areas, major gaps remained. In particular, there was no date by which members would agree to a precise method for reducing agricultural trade barriers, a key demand of poorer nations.

A dispute over how much wealthy nations should cut their tariffs and farm subsidies has been a major obstacle during the meeting, with many delegates pinning the blame on the EU's refusal to further open up its farming market to imports. The EU, however, says it has made ambitious offers to cut its trade barriers and wants developing nations to agree to lowering their tariffs on manufactured goods and services.

US Trade Representative Rob Portman said he didn't expect any big breakthroughs but said he was hopeful for some modest progress, including an agreement on an end date for export subsidies.

"The US had hoped for more in Hong Kong, but we came here with relatively low expectations because of the inability to resolve the agriculture subsidy issues," he said.

The Hong Kong meeting was originally meant to produce a detailed outline for a global free trade agreement by the end of next year. But the six-day meeting appeared doomed even before it began due to the impasse over agricultural trade.

A failure in Hong Kong could seriously undermine the WTO's credibility. Previous trade-liberalization talks in Cancun, Mexico, in 2003 and Seattle in 1999 collapsed in disarray. And the current Doha round of talks, started in 2001 in Qatar's capital, is already two years behind schedule.

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