U.S. sees a plus for Doha in weaker world economy

By Adriana Garcia and Missy Ryan

WASHINGTON (Reuters) - The deepening gloom over the global economy may augur well for trade talks, a top U.S. official said, as negotiators suggested the Doha round is on the cusp of a breakthrough after years of acrimony and delay.

"There is a growing sense that, given the concerns about ... slowing growth in the global economy, that ministers are even more focused on opportunities that would provide a shot in the arm," Deputy U.S. Trade Representative John Veroneau told the Reuters Latin America Investment summit on Thursday.

Veroneau, the Bush administration's lead trade negotiator for Latin America, said it is too early to tell when ministers from the World Trade Organization's 151 member countries would be ready to gather in Geneva for a meeting widely expected to seal a long-awaited breakthrough in the talks.

On Thursday, WTO Director-General Pascal Lamy said a ministerial meeting, which had been proposed for March or April, could take place before the end of May.

Peter Mandelson, the European trade commissioner, said separately he was more confident than ever that a breakthrough was in reach.

In recent weeks, negotiators in Geneva have been chipping away at technical issues that, while seemingly trivial to the outsider, threaten to derail the talks entirely.

One of those is how countries will calculate increased market access for sensitive farm products each nation would like to protect from increased competition from abroad.

The stakes are high for the United States, Veroneau said, which is seeking to contain a deepening housing and credit crisis and reinvigorate its slowing economy.

Governments the world over are under pressure, too, as they try to shield themselves from U.S. economic woes and seek to manage the destabilizing effects of record-high prices for fuel and basic foodstuffs such as bread and milk.

The International Monetary Fund, whose chief economist concluded on Thursday that the U.S. economy is at a "virtual standstill," now expects the global economy to grow 3.7 percent in 2008, below an earlier forecast of 4.1 percent.

At such a time, Veroneau said, the Doha round "offers an important opportunity to add confidence."

"Where there's been important and necessary progress has been whittling the number of outstanding issues down to a manageable number for ministers to deal with," as they angle to strike a deal, he said.

The obstacles that remain, however, are significant. One central issue is how countries will balance concessions and gains across agricultural and industrial sectors.

Agriculture has long been the round's most charged issue, as the developing world pushes for lower farm subsidies from rich nations. But more recently, trade-offs with the manufacturing sector -- a U.S. priority -- has gained attention as another potential minefield.

For Latin America, the round has marked a new role for major exporters such as Brazil and Argentina in wielding their growing clout on the world stage.  Continued...