U.S. accuses China and India of threatening WTO round

GENEVA (Reuters) - A clash between the United States andtwo big emerging markets, China and India, over cutting farmand industrial tariffs threatened to derail more than a week ofwork to salvage a world trade deal on Monday.

"We are very much concerned about the direction that acouple of countries are taking," U.S. Trade RepresentativeSusan Schwab said during a break on the eighth day of WorldTrade Organisation talks.

"I am very concerned it will jeopardise the outcome of thisround," she told reporters.

A U.S. trade official earlier said resistance by India andChina to opening up to more imports had thrown the global tradetalks into their "gravest jeopardy" since their launch in 2001.

David Shark, deputy U.S. ambassador to WTO, said theyneeded to "immediately reverse course" and accept a delicatepackage of compromises put together by WTO chief Pascal Lamylast week.

China responded quickly. "We have tried very hard tocontribute to the success of the round," its WTO ambassador SunZhenyu told delegates. "It is a little bit surprising that atthis time the U.S. started this finger-pointing.

Earlier, WTO officials said what had already been agreed inthe talks far outweighed remaining differences. Lamy said thetalks were "close to closure" and he urged delegates: "Let's gothat short distance to the summit," according to his spokesman.

Top trade officials from around 30 key WTO members havebeen in Geneva since last Monday to try to agree on terms forcutting farm subsidies and tariffs on agricultural andmanufactured goods that were originally supposed to decided in2003.

The United States, under pressure to cut its farm subsidiesand tariffs in core markets such as autos and clothing, insistsdeveloping countries make significant market openings inreturn.

In manufacturing, it wants China, India and others to agreeto "sectoral" negotiations, in which a critical mass ofcountries would agree to cut tariffs to as close to zero aspossible for industries ranging from jewellery to chemicals.

Separately, France kept up pressure on EU trade chief PeterMandelson not to agree to a deal that meant farm concessions inreturn for little gains elsewhere. Paris was trying to rallyother EU capitals against the negotiations, a French governmentofficial said.

French President Nicolas Sarkozy called Mandelson on Sundayseeking an urgent meeting with him and European CommissionPresident Jose Manuel Barroso but the British commissioner toldSarkozy he was unable to leave the Geneva talks, a diplomatsaid.

STRONG RESERVATIONS

WTO members endorsed the idea of "voluntary" sectoralagreements at ministerial meetings in Hong Kong in 2005.

China and India object to a new compromise provision whichencourages countries to take part in at least two sectoraltalks by allowing them to make less cuts in other industrialtariffs.

"Priority sectors highlighted by them include machinery,chemicals and automobiles, in which they enjoy substantialexport advantage. Naturally, such attempts led to strong andfirm reservation by developing members," said Lu Xiankun, aChinese press counsellor.

In agriculture negotiations, "China has indicated that itintends to shield cotton, sugar, rice and other commoditiesfrom any tariff cuts whatsoever," U.S. envoy Shark said.

That makes it much harder for the White House to sell farmsubsidy cuts to Congress, particularly for cotton, which WTOmembers have agreed will face faster and deeper reductions.

Lu noted the United States would be able to spend up to$14.5 billion (7.3 billion pounds) on trade-distortingsubsidies under the proposed deal, or about twice what itcurrently does.

Efforts were also being made on Monday to try to solveanother potential pitfall for the talks.

African and Caribbean banana exporters are angry at plansby the EU to cut its import tariff for bananas from morecompetitive exporters in Latin America. ACP representativeswalked out of a briefing on Monday for WTO members on the stateof the broader talks but were meeting at the WTO on Monday.

(Additional reporting by William Schomberg, Laura MacInnisand Robin Pomeroy; editing by Richard Balmforth)