UNITED NATIONS (Reuters) -- UN arms controls talks resumed late Tuesday after Palestine and the Vatican accepted a compromise to their demand to participate as state parties in the summit.

UN Secretary-General Ban Ki-moon pleaded the summit for a binding pact to regulate the more than $60 billion global weapons market.

"We do not have a multilateral treaty of global scope dealing with conventional arms," Ban told delegates to the conference, which runs through July 27. "This is a disgrace."

A dispute over whether the Palestinians should participate in the conference as an observer without voting rights -- the status they have in the UN General Assembly -- or as a state party with voting rights delayed the start of the conference by more than a day before it was resolved, delegates said.

The Palestinian Authority's permanent observer to the United Nations, Riyad Mansour, told reporters that since the arms trade treaty negotiations are what he called "an international conference of states," the Palestinians should be a full participant.

Last year the Palestinian Authority successfully obtained membership as a state party to the UN scientific and cultural agency UNESCO, which infuriated the United States and Israel. Because of Palestine's recognition as a state by UNESCO, Mansour said, it should have the same status at the arms treaty talks.

The UN Arab Group's insistence that the Palestinians have full participation as a state caused the United States and Israel to threaten to leave the conference, delegates said.

"Without the United States, the world's biggest arms supplier, it would be hard to get a meaningful treaty out of this conference," a Latin American diplomat told Reuters on condition of anonymity. Israel is also a major arms supplier.

In the end, the Palestinians and the Vatican delegation, which also wanted full participation rights, reluctantly accepted the right to sit at the front of the negotiating hall next to Argentina, but without the right to participate as states with voting rights in the consensus-based talks.

The US delegation was "pleased that a solution agreeable to all parties was reached that would allow the negotiations on the Arms Trade Treaty to begin," said Kurtis Cooper, a spokesman for the US mission.

"It is regrettable, however, that the limited time available to negotiate this treaty was reduced pending resolution of this unrelated issue."

One of the reasons this month's negotiations are taking place is that the United States, the world's biggest arms trader accounting for over 40 percent of global conventional arms transfers, reversed US policy on the issue after Barack Obama became president and decided in 2009 to support a treaty.

However, US officials say Washington insisted in February on having the ability to "veto a weak treaty" during this month's talks, if necessary. It also seeks to protect US domestic rights to bear arms -- a sensitive issue in the United States.

The other five top arms suppliers are Britain, China, France, Germany and Russia.