MercoPress. South Atlantic News Agency

Talks on farm subsidies enter final phase.

Agricultural trade negotiators enter the home straight on Wednesday in their race to reach an outline deal by the end of July that will commit World Trade Organisation members to cutting farm subsidies and opening their markets further to imported produce.

By the end of this week, diplomats say they need to have resolved their differences sufficiently to allow Tim Groser, the experienced New Zealander chairing the farm trade talks, to start drafting what he has called a "template" to guide future negotiations in the Doha global trade round.

"We don't have much time left," says one Latin American WTO ambassador, noting that negotiators are also committed to forging preliminary accords by the end of July on industrial tariffs, services and easing customs procedures.

Negotiators say they have been given more flexibility by informal discussions among trade ministers last week in São Paulo, Brazil, on the sidelines of the United Nations Conference on Trade and Development meeting.

Confirmation last Friday of a WTO panel ruling declaring US cotton subsidies illegal in a case brought by Brazil - and an expected win for Brazil later this year in its challenge to European Union sugar subsidies - have also given the talks a nudge.

Still, WTO members look some way from accord on the crucial details needed for all countries to be satisfied that the future negotiations are set to go in the right direction.

Five of the key players - the US, the EU, Brazil, India and Australia - were meeting on Tuesday ahead of the three-day Geneva talks in a bid to narrow divergences on each of the three "pillars" of the negotiations, which cover export competition, domestic farm subsidies and market access for imports.

Brazil and India represent the Group of 20 developing countries formed last year ahead of the ill-fated WTO ministerial meeting in Cancún, Mexico, to press for big reductions in rich-country farm subsidies.

Australia heads the Cairns Group of agricultural exporting countries. Though agreement among the five is no guarantee of acceptance by all 148 WTO members - there is no representation of small poor countries and protectionist rich nations such as Japan and Switzerland, for instance - without such agreement no deal is possible, trade officials note.

The broad thrust of a deal on two of the three pillars, relating to export competition and domestic subsidies, is already clear, though the details remain to be worked out. Discussions last week in São Paulo also appear to have made progress on market access, which has emerged as the most difficult and technically complex area of the talks. On export competition, the EU now says it is prepared to negotiate an end date (or dates) for the elimination of the $3bn (?2.5bn, £1.65bn) a year it pays out in export subsidies.

However, this depends on what it calls "parallelism" in eliminating export aids channelled in other ways.

On domestic subsidies, the July framework deal is likely to envisage further cuts in the most trade-distorting subsidies but will allow some farm-support programmes to continue provided they take a less harmful form. As for market access, negotiators appear to be converging on a broad formulation that would cut high tariffs more than low ones but allow the EU, Japan and others granting high protection to their farmers to shield certain sensitive products.

There would also be more lenient rules for developing countries, though the extent to which these should apply to competitive agricultural exporters such as Brazil remains one of the most difficult issues to resolve.