Currently holding the EU's presidency, the UK on Tuesday tried to placate EU producer states by suggesting the phasing in a proposed 39% cut in the EU's guaranteed sugar price over four years rather than two, as had been proposed by Mariann Fischer Boel, the EU's agriculture commissioner, in June.

Ms Fischer Boel said: "I think I can say with some confidence that we have a compromise which, while responsive to needs, retains the balance and robust architecture of the Commission's first proposal."

Two weeks ago, the African, Caribbean and Pacific Group of States (ACP), who would lose revenue from any reduction in the price, had circulated their own proposals, complaining that the EU's own proposals are far too harsh, and that it continues to subsidize its own refiners. The ACP wants a net price cut of 19% spread over 8 years starting in 2008 with the retention of refining aid of 5.1%.

“We have not plucked this figure out of thin air. A net reduction of 19% over 8 years with the retention of refining aid would be fully in line with the EU’s WTO commitments, despite what the Commission may claim to the contrary. From our perspective, while far from ideal, it would allow more ACP producers to remain competitive and offset the economic and human suffering that will inevitably be caused by the drastic reform,” said George Bullen, Chairman of the ACP Consultative Group on Sugar.

“We are aware of the pressures for some degree of price cut. However, we cannot accept a reduction that is unjustifiably excessive and hits the most vulnerable stakeholders the hardest.” he added.

Oxfam says that the €40 million compensation offered to ACP countries is minimal compared to the five billion euros it calculated EU farmers would get to help them adjust to the reforms in 2006 alone. "Sugar reform is a litmus test for the EU's commitment to trade rules that genuinely support development and poverty reduction ahead of the WTO ministerial," said Oxfam's head in Brussels, Luis Morago.

The Brussels agriculture council was due to close on Wednesday, but the chances of a breakthrough receded when officials from 11 sugar-producing member states refused to accept the presidency's proposal.

The EU's sugar regime and an earlier, weaker, set of reform proposals, have been condemned by World Trade Organisation arbitrators following a complaint from Australia, Brazil and Thailand. At the moment, the EU offers a guaranteed price for sugar that is about three times the average world market price.

Former chairman of the General Agreement on Tariffs and Trade, or GATT, a predecessor to the WTO, Australian Alan Oxley says in a report released in Hong Kong yesterday that negotiators need to push hard for wide-ranging liberalization policies when global-trade talks resume in Hong Kong in three weeks. He argues that the worst result from the continuing trade talks would be an agreement on agriculture that cuts subsidies and tariffs by developed countries on the surface, but allows them to continue to protect special products such as sugar in the EU.