Time is running out for the United States and other developed countries to agree to phase out their trade-distorting, taxpayer-gouging, Third World-punishing farm subsidies.

The latest round of world trade talks is scheduled to resume later this month in Hong Kong. The World Bank has estimated that a successful completion of the talks could boost the world economy by $500 billion a year and lift at least 144 million people out of poverty.

But the talks have little hope for success unless the United States, the 25-member European Union and other developed countries agree to reduce the billions of dollars a year they spend on agricultural subsidies.

While poor countries are much more economically dependent on agriculture, they can't afford to subsidize their farmers. As a group, their economies lose billions of dollars a year because they can't compete in agriculture. So it's understandable that they have balked at opening their markets to goods and services from developed countries as long as those countries keep paying farm subsidies.

In the absence of action from the United States and European Union, poor countries are turning to the World Trade Organization to chip away at farm subsidies. This year the WTO ruled, in response to challenges from Brazil, that U.S. cotton subsidies and EU sugar subsidies violate world trade rules. The United States and the European Union can be slapped with WTO-sanctioned punitive tariffs on their exports if they fail to comply with those rulings. And Oxfam International said in a report last week that U.S. or EU subsidies worth a total of $13 billion annually for 11 other crops are vulnerable to challenge under WTO rules.

Piecemeal challenges might gradually force the United States and the European Union to eliminate their subsidies. But in the process, exporters will be hurt and trade relations further poisoned. A negotiated, systematic phaseout of farm subsidies is far preferable.

Phasing out farm subsidies would not just be a demonstration of international good will by the United States. It would save U.S. taxpayers big bucks — farm subsidies have reached nearly $20 billion a year. The bulk of those subsidies go to large agricultural operations, not small family farms.

By paving the way for more trade deals, a farm-subsidy phaseout also would expand opportunities for U.S. exporters and secure better protection for U.S. intellectual property abroad.

In October, U.S. Trade Representative Rob Portman proposed that the United States and European Union phase out their farm subsidies over several years. So far, Europe has failed to match the U.S. proposal, and there has been little enthusiasm for it in Congress.

Even so, this is one area where the United States needs to take the lead. The benefits of phasing out farm subsidies are too great to excuse continued inaction.