Doha failure damaging to world economy -IMF's Rato

WASHINGTON, June 16 (Reuters) International Monetary Fund chief Rodrigo Rato said today failure to reach agreement on the so-called Doha round of world trade talks would be very damaging globally and more complex webs of bilateral trade deals would be no substitute.

In a speech delivered earlier in Wellington, New Zealand, the IMF managing director said increased trade, bolstered by multilateral agreements, has been a cornerstone of growth in the global economy for many years.

''But time is running out on the next stage of multilateral trade reform, the Doha Round. Failure would be very damaging,'' Rato said in a statement. ''I would urge all parties to look beyond narrow defensive interests and demonstrate their willingness to negotiate a substantive agreement in the time that remains.'' The so-called Doha Development Round of World Trade Organization talks was launched in 2001 to boost the world economy and lift millions out of poverty by lowering trade barriers.

But talks have repeatedly run aground as rich and poor countries quarrel over who should cut trade barriers first and to what extent.

Agriculture has been a key sticking point.

Teams of officials from the 149 WTO member countries are struggling to reach a deal by the end of this month on how to cut tariffs and subsidies in both agriculture and manufacturing in the hope of keeping a broader pact on track.

Rato bemoaned a growing disillusionment with the multilateral process and said he was concerned about the extent to which countries were now turning to bilateral and regional trade deals instead.

''These agreements can certainly be useful, especially if they are combined with significant non-discriminatory liberalization and if they contain transparent, simple, and liberal rules of origin,'' Rato said.

''But they can also be a distraction, result in trade diversion, and can be confusing to exporters.'' Rato cited what has been called the ''Asian noodle bowl'' -- which contains many competing and overlapping agreements -- as an example of such a web of agreements whose net effects on global and even regional trade are ''uncertain''.

''The answer is not necessarily to forego all bilateral agreements, but to ensure that these are well-designed and that they are complemented by the further liberalization of trade with all partners,'' he said.

REUTERS MP PM2303