BRUSSELS Australian Prime Minister John Howard warned on Thursday that confidence in the world's trading mechanisms will collapse if the Doha Round of trade liberalization talks fail.

"We must ensure that the current WTO (World Trade Organization) trade round, the Doha Round, is successful. If it is not successful, there will be a major collapse of confidence around the world in the multilateral trading mechanisms of the world," he said.

Speaking at a business breakfast on the last day of a 12-day European tour, he suggested Australia was an example to other developed countries. "We are not frightened to have any of our trading practices thrown open for examination...we believe that we run, in relative terms, an extremely open economy and our trade barriers now are miniscule compared with those of most other countries."

Howard said he remained profoundly unhappy with the agricultural policies of the European Union, but repeated a cautious welcome for a proposed reform of agricultural subsidies announced on Wednesday by the bloc's farm commissioner, Reuters reported.

"There are a lot of ifs, buts and maybes along that path.

But it does represent to us and I believe to Europe, a positive step," he said.

For its part, Australia had slashed tariffs in all but two areas and had reformed its economy steadily and comprehensively over 15 years, bringing economic growth of around four percent on average for the last four or five years.

"It is possible that in the current year the Australian economy will grow faster than any developed country," he said.

Tax reform, a balanced budget and debt repayment had also promoted growth, but unemployment remained too high at about 6.5 percent, he added.

Industrial relations reform being blocked by opposition parties in Parliament, in particular the abolition of unfair dismissal laws which discouraged recruitment by small businesses, would bring unemployment down much further, he said.