(GENEVA) - The United States and European Union turned up the heat on emerging economies at crucial WTO trade talks here Monday, warning that a global deal could only be done if they opened up their markets.

EU Trade Commissioner Peter Mandelson even implied an ultimatum, saying he had gone out on a limb on agricultural trade and stressing that agreement was now conditional on developing countries making "real" cuts in their industrial tariffs.

But Indonesian Trade Minister Mari Elka Pangestu, speaking on behalf of the G33 group of developing countries, insisted it was up to industrialised nations to make an effort to reach a deal.

Ministers from 35 key countries are meeting in Geneva this week to hammer out a global deal, which has so far proved elusive. The nearly seven-year-old Doha round of trade liberalisation talks, held under the auspices of the World Trade Organization, is deadlocked.

Mandelson, under strong political pressure -- notably from France -- to harden his stance on industrial trade, said emerging economies must make "real" cuts in industrial tariffs.

"These cuts must provide some new market access in practice. That is the political bottom line. Nothing else will work for us. Nothing else will close the deal," he said.

Mandelson had said Europe was prepared to make "painful" cuts in its payments to farmers but only if it received guarantees of progress on industrial tariffs and services.

The EU commissioner earlier Monday revealed that the European Union was now ready to extend proposed cuts in its tariffs on farm produce to 60 percent from 54 percent.

But the offer was dismissed as "propaganda" by Brazil, a key emerging market player at the Doha talks.

US Trade Representative Susan Schwab also turned the spotlight on emerging market countries, which she said had a "fundamentally critical role."

She noted that much of the developing world itself did not have sufficient access to the rapidly emerging markets.

"Seventy percent of the tariffs paid by developing countries are paid by other developing countries, they aren't paid by developed countries," she said.

The United States was prepared to make concessions in return for the same from emerging countries, she said, maintaining that "vast overwhelming contribution" had to come through market liberalisation rather than subsidy cuts.

But Indonesian Trade Minister Pangestu contended that industrialised countries, and not emerging economies, were the ones that should make concessions.

"We continue to believe that huge subsidies in agriculture (by) developed countries are accountable for the distortion to the world market.

"So it is now or never that developed countries have to demonstrate their leadership in this crucial juncture by showing flexibilities and providing movements from their current and entrenched positions," she said.

The Doha round of negotiations was launched amid high hopes in the Qatari capital in November 2001.

But it has foundered ever since as developed and developing countries have bickered over concessions on issues such as agricultural subsidies and tariffs on industrial goods.

Any draft agreement thrashed out here would then have to go before all 152 members of the World Trade Organization.

But despite positions that appeared to be far from converging, ministers expressed cautious optimism on the sessions this week.

Schwab said there was a "sense of anticipation, a sense of momentum and a great desire to see a successful conclusion" to the round.

Egyptian Trade and Industry Minister Rachid Mohamed Rachid said he was optimistic "because people expect nothing out of this week -- because when expectation is so low, people are becoming more relaxed to negotiate."

WTO Director General Pascal Lamy of France has argued that a Doha deal could inject at least between 50 billion and 100 billion dollars each year into the world economy and be of enormous benefit to poor countries.

At the session today, Lamy also said a global trade accord could provide much-needed stimulus to economic growth at a time of financial turmoil.

With elevated food and energy prices coupled by uncertainty in financial markets, there is no better time than now to conclude the Doha Round, he said.

However, for the meeting to be a success, the WTO's 152 members will have to agree on "modalities" -- the key percentages for tariff cuts that would form the basis for any comprehensive deal.

The Geneva talks have added urgency because all sides know that the United States will have a new administration and a new Congress next year, with the impact of the transition on the trade talks uncertain at this point.

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