GENEVA (Thomson Financial) - Optimism over WTO negotiations waned on Sunday as clashes between emerging economies threatened to shatter fragile progress towards a long-sought global trade pact.
Europe's trade chief Peter Mandelson underlined the precarious situation, saying the road to a deal was strewn with 'potholes' that threaten to derail the delicate process as it looked set to drag on into a second week.
'There is no guarantee that the fragile package that began to emerge on Friday night will survive,' he wrote in his daily blog on the trade talks, as ministers prepared to reconvene in a bid to fine-tune the World Trade Organization's latest proposals.
Ministers from 35 key trading economies have been meeting at the WTO since Monday to discuss cuts in subsidies and import tariffs with the aim of forging a new deal under the so-called Doha Round of talks.
Optimism had grown after a perceived breakthrough Friday in deadlocked talks on farming and industrial products, followed by further encouraging signs from key players after discussions on the services sector.
But even as negotiators began picking through the finer details on Sunday, a split became apparent among emerging nations, underlining the vast differences in their interests.
Disputes over agricultural products have pit emerging giant India against Latin America exporters, while China's stance on industrial goods has irritated fellow Asian economic powers such as Thailand and Taiwan.
'There are any number of potential potholes in the road,' Mandelson wrote ahead of a meeting Sunday evening at which ministers were set to revisit the tentative deal on farming and industry.
'I have a feeling that this issue will go to the wire.'
Sources said the talks -- which had been scheduled to wrap up by Saturday -- were likely to carry on until at least Monday or Tuesday. Anything approved by the 35 key countries meeting here would still have to be cleared by all 153 WTO member states.
The Doha Round was launched in the Qatari capital seven years ago but has been deadlocked because of disputes between the rich developed world and poorer developing nations on trade in farm and industrial products.
Mandelson cited the determination of India, and other countries where millions depend on subsistence agriculture, to hold out for stronger safeguards against farm imports.
Under proposals tabled by WTO Director-General Pascal Lamy, developing countries such as India would have recourse to a so-called 'special safeguard mechanism' (SSM) to protect their farming sector.
The mechanism allows tariffs to increase if imports surge over 40 percent.
But an Indian diplomat told AFP on Saturday this threshold was too high, saying: 'By the time it reaches 40 percent, our people would have died.'
However, such a mechanism could harm the exports of countries such as Paraguay and Uruguay, whose farm exports are concentrated on specific products.
Paraguay's foreign minister told the opening session on Monday that SSMs 'could turn into an insurmountable obstacle' for the Doha Round.
They could 'cause countries such as Paraguay to lose everything they might have gained in terms of access to markets' in developing countries where they send much of their produce, he said.
On Sunday, another diplomat told AFP that developing nations were also unhappy with China over its insistence on protecting its rice, cotton and sugar producers.
'China is becoming a major problem. It is going back on a lot of its promises,' said the diplomat on condition of anonymity, adding that the Asian exporter said it would not lower its tariffs on these three products.
China has also objected to any discussion on certain sector-specific import tariffs on industrial products, irritating Thailand, Taiwan, Uruguay and Paraguay, the diplomat said. tf.TFN-Europe_newsdesk@thomson.com afp/ak COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.