Concessions on agriculture are key to breaking the impasse

It was speaking at a two-day meeting in Buenos Aires that also includes the World Trade Organization (WTO) and Inter-American Development Bank.

The OECD said the case for farm and trade policy reform was "compelling".

Developing nations believe that the EU and US must cut agricultural subsidies if progress is to be made.

'Benefits lost'

Trade talks broke down in July amid ongoing disagreements over agriculture.

The EU protects its farmers from competition through steep import tariffs, while the US government pays around $20bn a year in farm subsidies.

Unblocking the agriculture negotiations is crucial Ken Ash, OECD

Members of the G20 group of emerging nations have demanded that wealthier countries take the lead in trying to re-energise discussions.

The two-day meeting in Argentina is discussing agriculture and trade in Latin America.

The OECD tried to take an optimistic lead by saying that any agriculture breakthrough would mean most countries stood to gain - "and many significantly".

"Failure to reach a multilateral agreement would mean that these benefits will be lost," said Ken Ash, deputy director of Food, Agriculture and Fisheries at the OECD.

"The costs of failure could also do damage to the basis of a multilateral, rules-based trading system. Unblocking the agriculture negotiations is crucial."

'Directly target'

The OECD said its analysis showed agricultural tariffs and price support mechanisms "do a poor job" of providing income support for farm families, encouraging sustainable economic development, maintaining healthy rural communities, or protecting the environment.

It said governments should move from price and production-related support - to policies that "directly target what they want to achieve".

And it believes that if a breakthrough can be achieved in agriculture then open trade arrangements may be achieved in other economic sectors.

The Doha round of talks at the WTO was intended to favour poorer nations but the likelihood of securing a hoped-for agreement by the end of the year look very slim.

Negotiators have agreed to meet in Geneva later this year but no major breakthrough is expected before November's US congressional elections.

If the Doha round is to succeed, talk must resume very soon after that since President Bush will lose his current authority from Congress to negotiate trade deals next July.