Cancun Was Meant to Kick-Start the World Economy. Now Pessimism Reigns ; BUSINESS ANALYSIS Global Rifts Remain Deep Ahead of the WTO's Gathering in Mexico Next Month

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THE WEATHER may be good but the outlook is gloomy. In just 20 days' time 146 trade ministers gather in the Mexican resort of Cancun.

Hope is fading fast that this latest World Trade Organisation jamboree will lead to a deal to unlock billions of pounds for both the rich and poor nations.

It is a staggering 21 months since the talks were launched in Doha, Qatar, amid scenes of jubilation. That optimism has all but evaporated and there is scant sign of progress.

Not only are many of the negotiations stuck in the mud but some countries, notably the US, have adopted policies that appear to flout the spirit of the Doha agreement. Steel tariffs, farm subsidies, genetically modified foods and the war in Iraq have all driven deep rifts within the global community.

If breakthroughs are not achieved it is almost certain a final deadline of 1 January 2005 will be missed, which could push any deal as far out as 2007.

Professor Alan Winters at Sussex University, said: "If you can't settle trade then the multinational situation looks very sick. Utter failure would further weaken groups within countries that have been advocating open trade. People will be less willing to invest in trading systems."

The World Bank estimates an additional 300 million people will be lifted out of poverty by 2015 if the WTO secures a comprehensive trade deal. A 40 per cent cut in industrial good tariffs worldwide would generate an increase in global trade volume of $380bn (pounds 239bn), with three-quarters of the gains accruing to developing countries.

According to Oxfam, a 1 percentage point increase in Africa's share of world exports would generate $70bn, or five times what the continent receives in aid.

But most NGOs believe there is a real danger the talks will simply rubber stamp a deal under which rich countries exploit the wealth of the developing world but give little in return. Adriano Campolina Soares, head of the rights campaign at ActionAid, said globalisation has "completely failed" poor people and the WTO's trade rules have made things yet worse.

He said: "If Cancun fails to deliver genuine changes on key issues such as agriculture and access to essential drugs, developing countries may well start questioning the existence of an organisation that seems constantly to work against us. …