The world's most powerful leaders vowed Wednesday to resolve bitter differences blocking a free-trade deal by the end of July but were divided over Iraqi debt and traded charges over economic performance.
Group of Eight leaders, appearing laid-back in short sleeves at a heavily-guarded luxury retreat on Sea Island off the coast of Georgia, touted the souped-up trade agenda as a boon to world growth.
A split between rich and poor countries, aggravated by disagreements over farm trade, had contributed to the spectacular collapse of World Trade Organization talks in the Mexican city of Cancun in September.
Leaders of the G8 -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- endorsed an end-of-July target for an outline deal on the most divisive issues to put trade talks back on track.
"We face a moment of strategic economic opportunity: by combining an upturn in growth in various regions with a global reduction in barriers to trade, we can deepen, broaden, and extend this economic expansion," the G8 leaders said.
Core issues were lowering farm subsidies and market barriers; opening markets to trade in goods; expanding trade in services; improving customs rules; and helping all countries, especially the poorest, develop through trade.
"A consensus appears to be emerging on a way forward for these issues," the G8 leaders said.
But as they surveyed the fastest two-year global economic growth pace since the late 1970s -- 4.6 percent in 2003 and an expected 4.4 percent in 2004, according to the International Monetary Fund -- France and the United States slipped into tired performances about the biggest risks to the outlook.
The United States pointed to eurozone countries as a drag on the world, nudging them to remove constraints on growth, such as worker protection laws it blames for clogging up the labor market.
"The exception to the strong outlook for global growth is the euro area," a senior US administration official said.
"It is important for Europe to undertake some difficult structural reforms in order to raise growth so it can contribute its share to growth in the global economic going forward."
France jabbed a finger at the US trade deficit as the severe threat.
French President Jacques Chirac said he and some other leaders worried about the "possible consequences of the large US budget and trade deficit for the future and notably on interest rate developments."
US President George W. Bush was aware of the problem, Chirac said.
The US trade deficit grew 3.9 billion dollars (3.3 billion euros) in March to a record 46.0 billion dollars.
The Bush administration has predicted an unprecedented 521-billion-dollar budget deficit for fiscal 2004 ending September 30.
And while US officials expressed confidence the world economy could withstand high oil prices, Chirac said he was concerned.
"We also raised the problems of oil, noting that there are economic, political and technical uncertainties," he said.
The G8 powers also wrangled over how far to go in erasing Iraq's debt of 120 billion dollars, spoiling a show of unity after a unanimous UN Security Council resolution endorsed the US plans for a return of sovereignty to Baghdad.
The United States is pushing for up to 90 percent to be canceled.
A French official, who asked not to be named, said the G8 leaders had agreed to forgive a "substantial" part of Iraq's debt but had not set a precise figure.
For France and Germany, substantial is around 50 percent while Canada considers it around two-thirds, and is willing to forego all of its own 750 million dollar portion. Japan has given no sign.
Moscow, which is owed 8.5 billion dollars, prefers "a more open formula" for dealing with the 120 billion dollars in debt, said a Russian official, who spoke on condition of anonymity.Agence France Presse:
