BRUSSELS, Sept 4: European Union officials on Thursday warned of tough negotiations on a new trade liberalization package in Cancun, Mexico, next week but said a fresh deal was crucial to bolster faltering economic growth.

“A bad result in Cancun will be bad news for the world economy,” EU trade chief Pascal Lamy cautioned ahead of the World Trade Organization (WTO) ministerial meeting opening in the Mexican resort on September 10.

The Cancun meeting must “move the negotiating process into a decisive phase if we are to meet the end 2004 deadline” for completing work on the Doha Development Agenda, launched in the Qatari capital in November 2001, he said.

Mr Lamy’s comments were backed up by World Bank officials who said further worldwide moves to slash tariffs could produce up to $520 billion in income gains to both rich and poor countries and lift an additional 144 million people out of poverty by 2015.

But Mr Lamy and EU farm commissioner Franz Fischler warned that the bloc was determined to defend its farming interests, fight for tougher rules to protect Europe’s regional food and drink brands and press for negotiations on investment rules.

Reform of the EU farm policy agreed in July meant that the bloc was already working to slash trade distorting farm support, cut export subsidies and open up markets to foreign goods, Fischler insisted.

“But if we want to move the talks forward all WTO members have to make an effort, not just Europe,” he said.

The EU farm chief had especially tough words for an “extreme proposal” by Brazil, China and India calling on developed countries to do more to liberalize farm trade.

“Their proposal is a record breaker: all reform and efforts are to be made by developed countries, hardly any by developing,” Mr Fischler said, adding that the three countries needed to stop “circling in a different orbit” and “come back to mother earth.”

Rejecting “cheap propaganda” against EU farm expenditure, Fischler said Europeans could afford to spend more on their farm sector because of a higher standard of living.

“What’s next? Criticising governments for spending public money on hospital beds, costly noise protection walls or fancy trees in parks instead of sending them to Africa?” he raged, adding: “We will vigorously defend our right to support our farmers.”

EU officials have already warned of “flaws” in a draft text to be discussed by ministers in Cancun.

But Mr Lamy and Mr Fischler promised to “work constructively” to get a deal in Cancun.