Sunday's collapse of World Trade Organisation (WTO) talks in Cancún took everyone by surprise, not least the participating ministers themselves.

For more than an hour after Mexico's foreign minister, Mr Luis Ernesto Derbez, declared that he was closing the meeting, delegates scurried around the convention centre trying to establish if it was really true.

When it became clear that the meeting was over, many ministers, including Britain's Ms Patricia Hewitt, felt Mr Derbez had made a serious mistake.

"Failure was not inevitable. There was a deal to be done and all participants, including the EU, had signalled a willingness to compromise. Because the talks were ended prematurely, the WTO has wasted a great deal of time and money. The setback seriously weakens the credibility of the WTO at a time when we need to strengthen multilateral organisations," she said.

It had been clear since Saturday morning, when Mr Derbez circulated a draft declaration, that finding agreement among the WTO's 148 members would be difficult. The WTO does not vote but makes decisions by consensus, a procedure that makes agreement all the more elusive.

The draft demanded some concessions from the EU and the US on agriculture, including the elimination of export subsidies on products of special interest to developing countries. For the newly-formed G21, a group of more than 20 large developing countries led by Brazil, India and China, the concessions did not go far enough.

Negotiators from the EU, the US and the G21 believed, however, they had the basis of a deal on agriculture. The draft also contained some benefits for the poorest countries, including special treatment on some issues and an initiative that would make it easier for them to export cotton to the developed world.

Developing countries were outraged by the draft, however, because it called for the start of negotiations on the four "Singapore issues", measures that would give the WTO a role in setting rules for investment, competition, transparency in government procurement and trade facilitation.

The EU and Japan were the strongest advocates for including these issues, arguing that it was important to establish international rules to protect foreign investors. They claimed that rules on government procurement would discourage corruption and that better trade facilitation would help developing and developed countries alike to trade more efficiently.

The US was relaxed about the Singapore issues, although many of its corporations stood to benefit if the EU and Japan prevailed. Developing countries rejected the proposals out of hand, however, partly because they feared that adding four new issues to the WTO agenda would place an intolerable burden on their own ability to negotiate within the organisation.

They also believed the proposals represented an unacceptable interference in their internal affairs that would limit scope for protecting fragile domestic industries against powerful competition from the rich world.

Mr Derbez decided to start negotiations on the draft with a discussion on the Singapore issues, which continued until 4 a.m. on Sunday and resumed a few hours later.

The talks took place in a so- called "green room", with 34 representatives of regional and economic blocs. At lunchtime on Sunday, the EU's chief negotiator, Mr Pascal Lamy, offered to compromise by dropping two of the issues - investment and competition - leaving the two least controversial on the table.

Mr Derbez suggested that the representatives should consult their regional partners before proceeding with the negotiations. When they returned two hours later, Korea said all four issues must remain on the agenda and Kenya's delegate said his partners could not accept negotiation on any of the issues.

Mr Derbez said it was clear that no consensus was possible on the issue and suggested that the meeting in Cancún should be ended. Singapore's trade minister, Mr George Yeo, suggested that they should suspend talks on the Singapore issues and start negotiating about agriculture but Mr Derbez rejected the proposal and declared the meeting over.