Trade and agriculture ministers said they made progress as they concluded three days of free trade talks, but acknowledged that they have several mountains still to climb.

"We had focused and frank political discussions,'' Canadian Trade Minister Pierre Pettigrew, who chaired the meeting of representatives from 25 World Trade Organization (WTO) members, said on Wednesday.

"My sense is that some defrosting is happening, but we are not yet at the sort of global-warming drive that will be needed,'' said European Union (EU) Trade Commissioner Pascal Lamy.

Other ministers were less optimistic.

"We have got a major problem. It's going to be tough,'' South African Trade Minister Alec Erwin said.

The Montreal gathering was called to try to smooth out differences between the WTO's 146 members before a major meeting in Cancun, Mexico, in six weeks. That meeting is a crucial staging point in negotiations on a global trade treaty that is supposed to be completed by the end of next year.

The biggest differences are over how to reduce barriers to international trade in agricultural goods. Exporting countries like the United States and Australia want to see big cuts in farm subsidies and import tariffs, but importers like the EU and Japan are offering much smaller cuts, insisting they still need to give some protection to their domestic producers.

The EU, which has just completed a major internal reform of its farm subsidy programmes, told the meeting it would be prepared to cut its domestic support levels by 60 per cent.

US Trade Representative Robert Zoellick called that "a very important step... but not an acceptable result.''

However, he said, the EU was moving more than other countries. On Japan's position he noted: "If there were flexibility, it escaped me.''

The United States and the EU have started private talks to try to solve some of the biggest issues in agriculture, but accept that anything they agree still has to be approved by all the other countries.

"The two main trading blocs have to lead by example... but it takes 146 to tango,'' said EU Agriculture Commissioner Franz Fischler.

But, he added, the EU is not prepared to make all the concessions and there must be moves from other countries as well.

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