Failure to reach agreement on an overhaul of the Common Agricultural Policy could lead to a collapse of the world trade talks, a committee of peers has warned.

The EU sub-committee on economic affairs and trade said the Doha round of talks could be scuppered by a failure to make progress in removing barriers and subsidies within the European Union's farming sector.

The committee said the EU "should make a firm commitment" to reform its system of farm subsidies to save the Doha round from collapse.

"If WTO members get the Doha round back on track there is a great deal to gain. The expansion of freer and fairer trade stands to benefit the whole global community, including developing countries," said committee chairman Lord Radice.

"If governments allow it to fail, economies the world over have a great deal to lose, not least the poorest ones."

The peers said that a framework for the Doha round negotiations should be agreed by the end of July at the latest and pressed for the completion of negotiations by early 2006.

The committee warned that the EU must remove all agricultural export subsidies by a specified date and insisted that ministers must improve market access for agricultural imports from outside the union.

While it has harsh words for European leaders, the report also warns that the US and Japan must all play their part.

In exchange for removing subsidies, the peers said other nations must yield in key areas.

Ministers must press for the greatest possible liberalisation of trade in services and goods and make the case for cutting red tape at borders, the committee concluded.