Trillion dollar IT trade deal on a knife-edge at the WTO

Deal unlikely because of a stand-off between South Korea and China

A trillion dollar deal at the World Trade Organisation to reduce tariffs in the vast information technology sector will stand or fall in the next 24 hours, trade diplomats said on Thursday.

But late on Thursday one trade official involved with the talks said a deal would be very unlikely because of a stand-off between South Korea and China, which was refusing all attempts to broker a compromise.

Countries representing 97% of global IT commerce are trying to agree on expanding the WTO's Information Technology Agreement, which would be the first global agreement on tariff cuts in more than a decade.

The accord would reduce tariffs on such products as medical equipment, GPS devices, video games consoles and next-generation semiconductors, cutting more than 200 tariff lines to zero.

"We have in front of us the most far reaching market access package made in the WTO since 1996, worth more than 1 trillion euros of world trade," European Union Ambassador Angelos Pangratis, chair of the talks, said on Thursday.

"However, while the finalisation of the negotiations appears certainly within reach, there is still some distance, small compared with the long way we have already gone, which needs to be bridged," he told envoys in the WTO's General Council.

Some delegations needed to consult their ministries, but the deal needed to be done on Friday or not at all, Pangratis said. "Later it will not be easier, rather the contrary. Now is the moment."

Countries negotiating the package have set themselves a goal of reaching an accord by a meeting of the WTO's General Council this week. Although the deadline is an artificial one, the vast majority of states are happy with the deal on the table, and further delay raises the risk that it might unravel.

The talks got a boost last month after a US-Chinese compromise removed a long-standing block to progress - a Chinese demand for a large number of exemptions.

China was now sticking rigidly to the letter of that bilateral deal with the United States and refusing to adapt it in ways that would assuage the concerns of other WTO members, said the trade official involved in the talks, who requested anonymity.

China had refused compromise options put forward by the South Korean delegation and WTO Director General Roberto Azevedo and had not made any suggestions of its own, the same official said.

Chinese officials in Geneva were not immediately available to comment.