Hopes that a breakthrough could be achieved at the world trade talks in Geneva galvanised the top negotiators yesterday evening to continue talks into the night on the expectation that a deal could be sealed on the Doha trade round within four days.

The sudden change in mood emerged as a new set of figures was discussed in a closed meeting among the seven top trading nations: the European Union states, the US, China, Japan, India, Brazil and Australia.

The draft text, which includes new reductions in tariffs and subsidies for agriculture and tariff cuts on industrial goods was put forward by Pascal Lamy, the director-general of the World Trade Organisation, in a last-ditch effort to rescue the seven-year-old Doha trade round.

Mr Lamy spoke of encouraging signs and Peter Mandelson, the European Trade Commissioner, spoke of an “emerging deal”. The meeting, which began at noon yesterday, was adjourned for five hours in order to widen the discussion of the new figures among a larger group of WTO members. Mr Mandelson said last night: “I think the situation looks strong. I think we can be very hopeful now. What is emerging is a deal that is not perfect, not beautiful, but is good for the global economy and good for development.”

The Doha trade round, which began in Qatar in 2001, has suffered repeated setbacks as powerful emerging market nations have insisted on swingeing cuts in farm subsidies and tariffs by rich nations, notably the US, the EU states and Japan. These latter nations have insisted that big trading nations in the developing world, such as Brazil, China and India must open their markets to Western manufactured goods as a quid pro quo for a deal on agriculture.

Diplomatic sources in Geneva said that the breakthrough was extremely tentative. One diplomat said: “Yesterday people were bringing their flights forward to leave Geneva. We are now looking to remain until next week.”

A key obstacle may be India, one diplomat suggested. Kamal Nath, the Indian trade negotiator, is believed to have serious reservations about the new figures. India has proved to be one of the toughest negotiators in the Doha round, refusing to give up the country’s high trade barriers. India maintains some of the world’s highest tariffs, arguing that its peasant farmers and emerging industries need protection from world markets.

Mr Mandelson denied that India was unwilling to move forward. He said: “I don’t think India will be the one to break a world trade round. I really don’t.” He added that India had “real concerns”, which he understood.

Argentina could also throw a spanner into the works. Last night, Jorge Taiana, the Foreign Minister said the document was “not acceptable in its current form”.

Mr Mandelson will brief the EU member states today on the new figures – a single WTO member state can veto an agreement and France gave hints earlier this week that it was prepared to block an agreement that gave too much away in Common Agricultural Policy support. An EU spokesman said the negotations within the EU would be “a challenging task”. The figures proposed by Mr Lamy are believed to include a lower ceiling for US farm support. The US delegation had offered a ceiling of $15 billion (£7.53 billion), which Mr Lamy has suggested could be cut to $14.5 billion.

Another area of compromise includes special products that would be exempt from tariff cuts. The Lamy text offers developing countries a right to categorise 12 per cent as special while developed economies would be able to shield 4 per cent as sensitive products.

Susan Schwab, the US trade official, believes that some developing countries are threatening progress. “We have a tentative agreement on a path forward. I think the biggest concern is that a handful of large emerging markets really threaten this round for the rest of us,” she said last night.

The Irish Farmers Association criticised the farm reform proposals being discussed as a “sell-out” by the EU and urged Ireland’s Prime Minister to veto any final agreement. Padraig Walshe, the association’s president, said that the proposals being discussed were “obviously a last-ditch attempt to buy a WTO deal at any price”.

The deal's potential

— Maximum tariff for farm products could fall to 30 per cent or less, and 5per cent on non-agricultural goods

— Existing tariffs applied on imported goods could also fall but to a lesser extent than maximum tariff ceilings, according to the World Bank economists

— The talks could include a sharp reduction in the amount of money and other assistance that governments can give to their agricultural exporters. The European Union's permitted level of farm subsidies could fall by 70 per cent and Washington's by 60per cent, the World Bank said

Explore Economics

• Pre-Budget Report 2009

• Budget 2009

• World Economic Forum in Davos

• The Times MPC

Times Recommends

• Toyota recalls 437,000 cars including Lexus
• Myners says bonuses are bleeding pension funds
• Japanese company faked safety reports on seats