The US has delivered a blistering critique of the status of multilateral trade talks, saying a “serious course correction” was needed to salvage even small elements of the Doha round agenda.

In January, trade ministers from World Trade Organisation countries agreed to pursue a narrow package of measures from the Doha round that seemed most ripe for compromise while the rest of global trade talks remained stalled.

But Michael Punke, deputy US trade representative, told the WTO on Thursday that those efforts were also faltering. “There was genuine hope that intensive work could deliver such a result. Yet only three months later, the picture is grim,” he told the trade negotiations committee.

Mr Punke went on to say the WTO was hurtling towards “irrelevance” as a negotiation forum. “The glint of hope today is that we still have time – though only just barely – to adjust our course. The institution we care about is in crisis, and we need to act accordingly,” he said.

Angelos Pangratis, the EU ambassador to the WTO, also expressed frustration at the slow pace of negotiations. “It seems we are once again caught in a self-defeating manner, in the trap of hostage taking: if my issues do not move, yours won’t move either,” Mr Pangratis said.

Mr Punke’s warning came a day after the WTO said world trade growth fell to 2 per cent in 2012 from 5.2 per cent in 2011 and was expected to rebound only slightly to 3.3 per cent this year – all well below the average 6 per cent growth before the 2008 financial crisis.

The slow growth in world trade was mainly attributed to lacklustre demand in Europe related to its sovereign debt crisis.

“The events of 2012 should serve as a reminder that the structural flaws in economies that were revealed by the economic crisis have not been fully addressed, despite important progress in some areas,” said Pascal Lamy, whose term as WTO director-general ends this year.

Mr Lamy, whose replacement will be chosen among several contenders over the coming weeks, also warned that protectionism might intensify around the world.

“As long as global economic weakness persists, protectionist pressure will build and could eventually become overwhelming. The threat of protectionism may be greater now than at any time since the start of the crisis, since other policies to restore growth have been tried and found wanting,” Mr Lamy said.

A cornerstone of the more limited Doha package is trade “facilitation” – designed to limit the logistical and bureaucratic barriers to shipping goods around the world, but Mr Punke said progress there had been sluggish.

“What has not occurred is a narrowing of the gaps. Most concerning for the process, we watched key players support converging positions one week, then step away from the same position the next – a waste of precious time that calls into question the utility of weeks’ worth of labour,” he added.

On farm products, Mr Punke suggested that a proposal backed by India on food stockholding, allowing countries to subsidise agriculture for food security purposes, had thrown a wrench into the discussions.

Mr Punke called it “a step backwards from existing disciplines [that would] cause more harm to international trade and to those who most need its benefits. We cannot support such an outcome.”

Trade ministers had aimed to reach a deal on the smaller multilateral trade package by the December ministerial in Bali, but that now appears in jeopardy.

“The message [from Mr Punke] is a wake-up call for countries who say they want something, it’s a little bit distressing that they can’t even seem to agree on basic things,” said Jake Colvin, of the National Foreign Trade Council, a Washington-based lobby group. “If Bali tanks it sends a devastating signal for the health of the WTO.”

Mr Pangratis, the EU ambassador, singled out trade facilitation, in particular, as the subject that still required the most preparatory work, and warned fellow delegates about the consequences of failure in Bali, saying: “If we are unable to reach agreement on such basic issues as improving customs procedures and addressing aspects of food security, then we will really convince the outside world that multilateral negotiations are doomed to failure for a long time.”

The difficulties at the WTO come as countries are moving forward with bilateral and plurilateral trade deals, such as that between the EU and the US, and the Trans-Pacific Partnership. More than 20 countries, and the EU, are also discussing an International Services Agreement.

With reporting by Joshua Chaffin in Brussels

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