Trade negotiators from the US and European Union have reached the brink of an agreement that could restart stalled world trade talks, according to people familiar with the discussions.

Officials said the progress followed a meeting of high-level officials that finished at the weekend and constant cabinet-level contact between Washington and Brussels in the run up to the World Economic Forum meeting this week in Davos, Switzerland.

The proposed outline of an agreement between the world's two largest trading blocs includes politically-explosive concessions that are already causing rifts in Europe and alarm in the US farm lobby. The fragile deal that is starting to emerge has yet to be finalised and comes amid tremendous uncertainty about whether negotiators can get the political backing to achieve a breakthrough in the Doha round of trade talks.

The deal now taking shape behind closed doors includes a proposal by Brussels to cut barriers to foreign agricultural products by an average of at least 54 per cent and a conditional offer by the US to lower the ceiling on its domestic farm subsidies to close to $17 billion (€13.1 billion).

This tentative pact represents a significant advance beyond entrenched battle lines over farm policy that have impeded widertrade talks for years. Both sides have also explored yet deeper cuts to tariffs and subsidies, according to people familiar with the dialogue.

An official said: "We are trying to get to the absolute limit of what is politically feasible without falling off a cliff."

The latest round of trans-atlantic talks began four days ago and included detailed technical discussions about ways to narrow differences over exemptions for so-called sensitive products such as beef and dairy.

A senior EU trade official said the talks were "constructive but not definitive".