U.S. trade chief cautiously optimistic on WTO talks

WASHINGTON (Reuters) - The top trade negotiator of the United States said on Thursday she was "cautiously optimistic" about the chances of a breakthrough next week in key talks on the World Trade Organization's Doha round.

U.S. Trade Representative Susan Schwab said there was a sense of momentum before the meeting in Geneva but cautioned the United States would only agree to a deal that generates increased trade.

That means major developing countries like India, Brazil, China, South Africa, Argentina and the Association of Southeast Asian Nations must further up open their agriculture, manufactured and services markets, she said.

"The good time to close a trade deal is when there is enough on the table," Schwab said, brushing aside concerns that the long-running Doha talks are cobbled by the fast-approaching U.S. presidential election.

Trade ministers from dozens of countries will meet at the WTO beginning Monday for a potentially decisive bid to break the deadlock in the long-delayed Doha round of negotiations for a global trade deal.

Many in the U.S. agriculture and business community are skeptical that longstanding differences in the talks can be bridged in the coming week. Another failure would likely push off a final agreement for years.

Schwab, who was leaving for Geneva on Thursday for weekend meetings, stopped short of saying an agreement was likely: "I do believe it's doable and I believe it's doable next week."

The number of outstanding issues in the agriculture and manufactured goods talks has been whittled down to about 30 from 200 in May and many times that last year, Schwab said.

But the remaining amount is still a large amount to be settled by ministers next week, she said.

Countries also must signal their willingness to open their services sectors to more foreign companies for the meeting to be a success, Schwab said.

FARM SUBSIDIES, MARKET ACCESS

Current proposals call for the United States to reduce its overall cap on trade distorting farm subsidies to $13.0 billion to $16.4 billion from a current cap of $48 billion.

Some developing countries like India say Washington should go even further in light of current high farm prices which has already cut U.S. farm spending significantly.

The final level the United States can accept depends on what other countries are willing to offer in terms of new market access for U.S. farm exports, Schwab said.

"If we came out within that ($13.0 billion to $16.4 billion) range, it would be an extremely important contribution" to a successful deal, she said.

The United States agreed at December 2005 meeting in Hong Kong to make faster and deeper cuts in its cotton program to address concerns raised by West African countries.

Washington stands by that commitment, but specific details can only be resolved after other elements of the agriculture package are place, Schwab said.

The United States faces pressure in the services negotiations to provide more temporary entry work visas for software engineers and other professionals from developing countries like India.

The issue is controversial because many U.S. lawmakers consider it an immigration issue that should not be part of trade agreements.

However, the United States is prepared to respond to developing country demands on that issue if there is a robust overall deal to be had, Schwab said.

For a deal to be politically salable in Congress, "we need to bring home a package that has some degree of balance in terms of gives and gets," she said.

(Additional reporting by William Schomberg in Brussels; Editing by Doina Chiacu)