G8 Backs 'make-or-break' Global Trade Deal to Ease Flagging Economies

Gordon Brown warned today that knife-edge talks to end seven years of tortuous global trade negotiations were "at a minute to midnight" as the G8 gave strong political backing to force a deal.

Ahead of what he called a "make-or-break" meeting of trade ministers in Geneva on July 21, the prime minister said he was optimistic of a breakthrough after talks at the G8 summit with the US president, George Bush, the president of Brazil, Luiz In?cio Lula da Silva, and the French president, Nicolas Sarkozy.

Brown and Lula issued a joint statement stressing the need to boost the flagging global economy by opening markets and resisting growing protectionism.

"Following months of hard work and detailed negotiations we are now closer than ever to a deal. But the window of opportunity for achieving such a deal is small and it is closing," it said.

Brazil is seen as one of the key players in the 2001 Doha round of trade talks because, with India, it has demanded big cuts in support for farmers in Europe and the US in return for opening its domestic market to European and American goods.

The prime minister said he was confident the year-long deadlock could be broken at the talks convened by the World Trade Organization later this month. "President Sarkozy was clear that he wanted to see a breakthrough in the talks", Brown said.

French sources were more cautious about the prospects of a deal. Sarkozy has adopted a tough stance in recent exchanges with Europe's trade commissioner over further cuts in the Common Agricultural Policy that might be needed to clinch a deal.

The G8 summit in St Petersburg two years ago ended with world leaders expressing strong support for an end to the Doha round, only for the talks to break down in Geneva within 24 hours.

Brown said the level of commitment showed by world leaders made him optimistic of a more successful outcome this time, adding that freer trade could boost family incomes in Britain by ?200 a year. Benefits to developing countries, he said, would be even greater.

At the heart of the problematic talks has been the demands of developing countries to secure a better deal than in the last bout of liberalization, the Uruguay Round, which ended in 1993. Brazil and India have been looking for much easier access to the heavily protected agricultural markets of Europe and North America and have been resisting demands from Brussels and Washington for deep cuts in the protection offered to their manufacturing sectors.

In the statement released today, Brown and Lula said: "The time for technical negotiations is drawing to an end. The key decisions now are political ones. We must act decisively now. If we don't we will be failing the world's poor and destroying the best basis for continued economic growth in the future. The cost of failure is simply too great."

The WTO's director-general, Pascal Lamy, believes chances of the talks succeeding are greater than 50%, but has warned a fresh failure might spell the end of the Doha round. Brown said it would not be a matter of weeks or months but at least a year to resume negotiations.

One UK source said the key issue at the start of the summit was whether Bush would signal US backing for a trade deal. "They got it", he added.