World trade talks are in danger of falling off course unless agreement can be reached on how to provide poor countries with cheap medicines, a top World Trade Organization official said on Tuesday.

"We ended last year on a rather sour note," Sergio Marchi, chairman of the WTO's General Council and Canada's ambassador to the WTO, said at a meeting of trade policy specialists.

"Obviously, the WTO didn't do itself any favors" by missing a December deadline for resolving the controversial issue of pharmaceutical patents, he said.

The next WTO ministerial meeting in Cancun, Mexico in September must be a success if the negotiations are to stay on course toward reaching a new world trade agreement by December 2004, he said.

Marchi said he feared the Cancun meeting could become overloaded with difficult issues if countries are unable to resolve the medicine dispute and fail to meet other deadlines this spring for services and agricultural trade talks.

"Cancun must be a successful pit stop," Marchi said. The WTO risks becoming irrelevant if negotiations stretch on and on as happened in the Uruguay Round, which lasted from 1986 to 1994, he said. The current round started in Doha, Qatar in November 2001.

WTO members failed to reach agreement in December on rules for allowing poor countries to import generic versions of patented drugs after the United States objected to the number of diseases that would be covered.

It said the proposed compromise would go far beyond providing poor countries with cheap medicines for epidemics such as HIV/AIDS, malaria and tuberculosis and would allow generic manufacturers in countries such as India and Brazil to produce and export more profitable patented drugs like Viagra.

After the negotiations failed, the United States offered what it said was an interim solution in which it pledged not to act against poor countries that suspend drug patent rules to import generic versions of drugs for certain diseases.

Those included Ebola, African trypanosomiasis, cholera and dengue, typhoid and typhus fevers.

Last week, European Union Trade Commissioner Pascal Lamy proposed a compromise which calls on the World Health Organization to decide when a public health crisis existed in a country, allowing it to override patent laws and import cheap generic drugs.

Deadlines on other issues

WTO members will try again in February to reach a deal on the issue, but Marchi said it would be difficult for countries to gear up again for negotiations after the intense set of meetings in December ended in failure.

He also expressed some sympathy for the US position, saying the focus at the start of the talks had been on helping was on helping countries deal with epidemics like HIV/AIDS.

Since Doha, Marchi said, "different diseases ... have been put on the table, which has caused I think some fear and consternation about diluting" protections for drug patents.

The WTO missed another December deadline for agreeing on a new package of "special and differential" measures, which would give developing countries more leeway in implementing some of their Uruguay Round trade pact commitments.

"Obviously, (the failure to meet) these two deadlines will impact on the rest of the negotiations," Marchi said. "I think it would be unrealistic to say that they won't."

But it may still be possible for countries to meet an equally important deadline in March for agreeing on the basic framework for next stage of agricultural negotiations, he said.