The World Trade Organisation (WTO) yesterday dropped plans to seek a breakthrough for a new trade deal this year, risking an increase in protectionism as the world economy suffers its worst crisis in a generation.

WTO director-general Pascal Lamy told members he had decided against calling trade ministers to Geneva this month to push for a deal in the WTO's seven-year-old Doha round, because they were not showing enough political will to narrow differences.

The decision means ministers were unable to meet a call by leaders of the G20 rich and emerging nations last month to reach an outline Doha deal by the end of this year to help counter the financial crisis by warding off protectionism.

It also promises an uncertain period for international trade, the lifeblood of the global economy, as the world navigates the worst economic crisis since the 1930s.

Lamy decided that the prospects of a successful meeting were not high enough to invite ministers now. Economists say it will be much harder to reach a deal next year when the world economy will already be in a much worse state than today.

But Lamy left political leaders the opportunity to save the talks over the weekend. The next steps for negotiations will be discussed at a meeting of the WTO's general council on December 18-19.

The US ambassador to the WTO, Peter Allgeier, said a ministerial meeting was unlikely now to take place while George Bush is president, and the next moves were likely after President-elect Barack Obama takes office on January 20.

'We're very disappointed but we also agree that that is a prudent conclusion to draw given the gaps that still exist in some crucial issues,' Allgeier said.

Lamy had previously indicated a meeting could be held this weekend. But on Monday, after meeting the ambassadors to discuss revised negotiating texts on agriculture and industrial goods, he decided that further consultations were needed on three sensitive issues.

These were proposals to create duty-free zones in some industrial sectors such as chemicals, a proposal to safeguard farmers in poor countries from surges in imports, and cotton subsidies - all of which touch on key US interests.

Brazil's Foreign Minister Celso Amorim said the US was making excessive demands, when, as the source of the financial crisis that Doha deal would help solve, it should be showing the most flexibility.-Reuters