Talks on the $70 billion a year global arms trade talks hit deadlock before starting Monday amid a diplomatic battle over Palestinian representation.

Arab demands that Palestinians be allowed to take part led to a threat of an Israeli walkout and a block on European Union presence at the conference, diplomats said. Even the Vatican has been drawn into the dispute.

"This chaotic start is a tragedy for this event, which is so important," said a minister from a western nation who went to the UN headquarters for the start of the negotiations.

Talks among the 193 United Nations members were meant to have started on Monday morning and gone on until until July 27 to come up with a draft arms trade treaty.

However, tense negotiations over the Palestinian representation came to a head in the hours before the start. UN Secretary-General Ban Ki-moon called off his opening speech and it was not clear when the talks would begin.

Arab nations have demanded that the Palestinians, who have been seeking to bolster their international presence, get a place at the conference.

The Arab group said the European Union should not be allowed at the talks if the Palestinians do not get a place, diplomats said. "The Egyptians, acting for the Arab group, have held up the conference. They insisted that the Palestinians take part," said one Arab diplomat.

The Palestinians are observers at the UN and the European Union has super-observer status. The Vatican, which is also a UN observer, has said it should also take part if the Palestinians get their way, diplomats said.

Israel, a key arms manufacturer in the Middle East, said it would not take part in the talks if the Palestinians did get conference recognition, Arab and Israeli sources said.

While the Palestinians have sought to bolster their international presence by asking for full UN membership, some diplomats indicated the move could be a tactic by Egypt and others to weaken the treaty.

"Certain states, fearing an arms trade treaty with strong human rights provisions, are exploiting the legitimate Palestinian cause," said a Western diplomat condemning Egypt's action.

Egypt is an important arms importer. Much of the $1.5 billion it receives from the United States each year goes toward military purchases.

UN states have spent seven years preparing for the talks on how to regulate the arms trade.

The United States is by far the world's biggest arms trader, accounting for more than 40 percent of conventional weapons sales. Britain, China, France, Germany and Russia follow them.

All of the major producers have reasons to limit any treaty.

The United States -- which produces six billion bullets a year -- wants to exclude munitions, according to diplomats. China does not want the treaty to cover small arms, which it exports en masse to developing countries.

China, Russia and Arab countries say the accord's criteria are politically motivated.

European nations, meanwhile, say they want a treaty that at least makes the arms trade more transparent.

Ahead of the negotiations at UN headquarters, the foreign ministers of France, Britain and Germany and Sweden's trade minister called for a comprehensive treaty.

While acknowledging that their countries bear "a special responsibility" as leading exporters, they said a solid treaty was need to counter "a growing threat to humanity" because of the numbers killed in conflict each day.

They said any treaty should be legally binding, but nationally enforced.

The ministers also pushed for an arms trade treaty that would cover all types of conventional weapons, including small and light weapons, all munitions and related technologies.

Australia's Foreign Minister Bob Carr said that 2,000 people die each day because of illegally traded small weapons. "We want a strong and precise treaty that enables countries to track and report major arms transfers and sales," he told reporters.

If the negotiations produce an accord, the treaty could come into force in late 2013. If the talks fail, a draft accord could still be taken to the 193-member UN General Assembly.