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* Faster pace, more substance needed
* Mexico proposes trade-offs solution
By Jonathan Lynn
GENEVA, Feb 2 (Reuters) - Trading powers who have embarked on an intensified push for a new trade deal sought by political leaders must go faster if they are to have any hope of finishing the Doha round this year, the head of the WTO said on Wednesday.
Trade ministers meeting in the Swiss resort of Davos last week agreed to push for an outline agreement by July and to tell their negotiators at the World Trade Organization to show enough flexibility to clinch a deal in the long-running talks.
But WTO Director-General Pascal Lamy told a meeting of the trade body's 153 members to review progress on the nine-year-old talks that movement on substance in real negotiations was needed as well as a change in mood.
"Atmospheric improvement is good and important, but we will not advance on air alone," he said.
Lamy said it was clear the broad negotiating groups working on tearing down trade barriers in areas such as agriculture, industrial goods and services were now working hard.
But much more must be done in the bilateral talks and discussions among small groups of key players that are critical for a deal, and this would require give and take, he said.
The Doha talks were launched in late 2001 to boost the world economy and help poor countries prosper through trade.
Since then they have stalled repeatedly, the last time in July 2008, and trade diplomats at Wednesday's meeting said 2011 was probably the last chance to reach a deal.
Countries including Mexico and Indonesia said failure would damage the multilateral rules-based trading system that is umpired by the WTO and is credited with having prevented 1930s-style tit-for-tat protectionism in the financial crisis.
The uncertainties in the global economy made concluding the round now more important than ever, China's WTO ambassador, Yi Xiaozhun, told the meeting.
One issue in the talks now is whether it is enough to tweak the negotiating drafts that were drawn up in 2008, or whether major changes are needed for a deal.
The United States and European Union say the 2008 texts have too many gaps, but many developing countries are wary of reopening them for fear of losing what they have gained so far.
Big emerging economies like China, Brazil and India -- the main targets of U.S. ambition -- say what is already on the table represents a fine balance, and if rich countries want more they must pay with concessions of their own.
If rich countries wanted better access to markets for industrial goods or more liberalisation of services in emerging economies, Brazil's ambassador Roberto Azevedo told the meeting, they should offer something in agriculture -- a reference to high U.S. and EU farm subsidies that developing countries say distort trade.
"If we all understand and accept this, we are in good shape for this final push," he said.
Mexico's WTO ambassador, Fernando de Mateo, proposed a way that key players could make trade-offs across agriculture, industrial goods, environmental goods and services, and other services, giving the broader deal sought by rich countries but requiring developed nations to do more.
WTO members hope to produce new draft texts as the basis for an agreement by late April and reach an outline deal by July. (For TIMELINE on future Doha talks click on [ID:nLDE71111VF] ) (Editing by Jon Hemming)