FACTBOX-Gaps in the WTO talks, and areas of convergence

(Reuters) - Ministers from 35 countries entered a second week of talks on Monday to rescue the World Trade Organisation's (WTO) Doha round on a new global trade pact.

The talks aim to reach the outlines of a deal in the core areas of agriculture and industrial goods.

Here are the main issues where the WTO's 153 members are still far apart -- and those where they are getting closer:

WIDE APART

1. Cotton subsidies. Everyone agrees these must come down faster than support for other agricultural products. Four West African producers have made a proposal which would cut U.S. cotton subsidies by 82 percent against 60 percent on other goods. The United States has not yet made a counter-proposal and says it's waiting to see whether China cuts its cotton tariffs. But there is agreement this cannot be left until the last moment.

2. Special safeguard mechanism (SSM). This would allow developing countries to raise tariffs on farm produce to counter a surge in imports or collapse in prices. In some cases tariffs could rise even above current levels, let alone above any lower levels agreed in the Doha round. Some countries like India and China say they need this to protect their subsistence farmers. But developing country exporters like Uruguay say this could affect the bulk of their export opportunities and even cost them market access they have now.

3. Sectorals. The United States and European Union want big developing countries to take part in voluntary agreements to slash or eliminate duties in some industrial sectors. They suggest participating developing countries should be rewarded with smaller general cuts in industrial tariffs. India and China object to this pressure saying it undermines the voluntary nature of the deals. Some developing countries also want sectoral deals.

4. Tariff rate quota creation. All countries, rich and poor, can shield sensitive farm products from the full impact of tariff cuts. They pay for this by letting in a quota of the product at a lower tariff -- a tariff rate quota. Some countries argue that countries should not add any more products to those they have already declared sensitive, i.e. they should not create any new tariff quotas.

5. Recently acceded members. Discussions continue as to whether new WTO members such as China should get 3 or 4 extra years to implement industrial tariff cuts. Some countries want to link this to participation in sectorals (see above).

6. Special arrangements for individual countries:

- South Africa: still no agreement on special treatment for South Africa and its partners in the Southern African Customs Union (SACU), but there is widespread support for the idea that they should get something.

- Venezuela: still no agreement on Venezuela, which wants to be treated as a small vulnerable economy (see below) because its exports are dominated by one product -- oil.

GETTING CLOSER

1. Tropical products. Broad agreement to cut tariffs faster and deeper than otherwise on certain tropical products, mainly exported by Latin American countries.

2. Approach on preference erosion in agriculture. These are arrangements to ensure that poorer developing countries who enjoy special access to rich-country markets do not lose their relative advantage all at once when tariffs come down. The answer is to cut tariffs on those products more slowly over a longer period. In industrial goods new products will be included for U.S. and EU markets. Can conflict with tropical products.

3. Least developed countries (LDCs). The poorest 32 developing countries will get the same treatment in agriculture as is on the table for industrial goods -- they don't have to cut tariffs themselves and will have duty-free quota-free access to other markets on 97 percent of products. In industrial goods duty-free quota-free access will be clarified to ensure LDCs get real commercial value.

4. Sensitive products. New options for developing countries who do not wish to expand tariff rate quotas (see above).

5. Longer and greater access for developing countries to the "special safeguard" (SSG), a facility that is being phased out which allows all countries to counter import surges or price drops on farm products with temporary increases in tariffs. Not to be confused with the special safeguard mechanism (SSM) (see above).

6. In-quota tariffs. These are the tariffs charged on quotas of agricultural products allowed in at a low tariff in exchange for declaring those products sensitive. Broad understanding to eliminate tariffs below 5 percent and cut others, with special arrangements for different groups of developing countries.

7. Farm subsidies by developing countries. Improved terms for reduction, and LDCs and net food importers do not need to notify them at all if they do not distort trade.

8. Export prohibitions and restrictions. Agreement to improve the rules for notifying such measures.

9. Tariff quota underfill. Improved proposal for developing countries on highly technical arrangement for dealing with what happens when a tariff quota is not used up.

10. Export competition. Everything settled (i.e. rules for export subsidies, export credits and food aid) except "monetisation" covering restrictions on rich countries donating food to poor countries to be sold there as aid. Such donations can compete unfairly with farmers in the local market.

11. And also under export competition, rules on state-trading enterprises -- single agencies handling commodity exports -- need to be tightened.

12. Small vulnerable economies. Developing countries with less than 0.1 percent of trade in industrial goods can make smaller cuts in industrial tariffs than other developing countries.

13. Special arrangements for individual countries:

- Bolivia: improved conditions

- Mongolia: to be treated as a transition economy