Talks aimed at further liberalising world trade face a serious risk of collapse unless rich nations take action to heal a rift over agricultural subsidies, the World Bank's chief economist said on Thursday.

The mid-term meeting of the World Trade Organisation's current round of trade talks is due to be held in Cancun, Mexico in September. The round, which was started in Doha, Qatar in 2001, is due to be completed by the end of 2004.

But a deadline for a farm agreement on March 31 this year has already been missed and fresh tensions between the United States and the European Union over subsidies have also raised concerns over an agreement on agricultural trade.

Nicholas Stern told the bank's annual conference of development economists in Bangalore that developed nations needed to yield urgently "on the trade front, but also on the aid front".

Stern, speaking on the second day of the three-day meeting, said developing countries were testing the commitment of rich nations to free trade in agriculture and also sectors like pharmaceuticals.

Action was needed in the next few weeks, he said.

"Movement on sufficient scale and speed has yet to materialise and success at Cancun is at serious risk," he said.

US Trade Representative Robert Zoellick said in Washington on Wednesday that a deal on agriculture was still possible before the September meeting.

While the United States was hopeful, the fate of the farm trade talks depends on whether the European Union can agree next month on reform of its Common Agricultural Policy, Zoellick said.

Developing nations are looking for access to sell farm goods to rich nations in the round that also covers services, industrial goods and issues related to intellectual property.

Stern said the developed nations of the Organisation of Economic Cooperation and Development subsidised their farmers by more than $300 billion a year, six times the level of foreign aid flows that needed to be raised.

US and other farm produce exporters like Australia are pushing hard for cuts to agricultural tariffs and subsidies, which they say artificially protects agriculture.

Europe and Japan want slower change.