A draft statement being discussed by senior officials from APEC members warned on Sunday that global trade talks could collapse if the current impasse over agricultural subsidies and other issues were not resolved.

The statement said the 21-member Asia Pacific Economic Cooperation Forum was concerned that "the current impasse in the negotiations may lead to a potential failure" of the Hong Kong ministerial meeting scheduled for next month.

"We all agree that the Hong Kong ministerial (meeting) will be a critical step in achieving this goal" of reducing subsidies and other barriers to free trade, said the statement, whose final wording may be changed.

The APEC summit on Friday and Saturday will bring together APEC leaders, including Chinese President Hu Jintao, US President George W. Bush, Japanese Prime Minister Junichiro Koizumi, South Korean President Roh Moo-hyun and Russion President Vladimir Putin.

The statement said that while the initial expectations of the Hong Kong meeting may not be achieved, "we should nonetheless not compromise the level of ambition for the whole round" launched in Doha, Qatar, in 2001.

The trade dispute centers on agricultural subsidies which protect European farmers from outside competition. The European Union has rejected demands by the United States, Australia and some other APEC members to impose greater cuts in the subsidies.

The APEC statement urged all WTO members to "make further, meaningful contributions to move the negotiations forward." It said, "Doing this will require economically and politically difficult decisions by all WTO members."

Many pin hopes on the APEC summit to pave the way for the Hong Kong ministerial round. "The summit would add momentum to finalizea trade deal in Hong Kong by giving leaders around the world a chance to reaffirm the pledge to make substantial progress in global trade talks," South Korean Foreign Minister Ban Ki-moon said earlier.

Expectations were shrinking and hopes plummeting after negotiations last week in Geneva and London failed to end the stand-off.

Participants at the APEC senior official meeting were working hard to come up with a statement for their leaders to sign off. The statement was expected to support the WTO, thus breathing new life into the staggering trade talks.

"What is needed at this moment is a strong message from leadersto keep spirits up," said one participant, who refused identification.

Some participants, however, were worried about the Hong Kong meeting becoming a repeat of the previous ministerial gathering in Cancun, Mexico, in 2003, which broke down in acrimony and paralyzed the WTO for months.

"APEC would like to change this message of crisis into a message of hope," said Kim Jong-hoon, South Korea's senior APEC official.

APEC, with seven of the world's 13 largest economies, constitutes 60 percent of the global economy and almost half of world trade.

Source: Xinhua