Apec leaders call for urgency on trade talks

By BRIAN FALLOW

The Apec summit in Shanghai has strengthened confidence that trade ministers will succeed next month in what they failed to do at Seattle two years ago - launch an new round of world trade negotiations.

The leaders' declaration voiced strong support for the launch of a new WTO round, "recognising that the current slowdown in the world economy has added to its urgency".

The director of the Apec Study Centre at Auckland University, Robert Scollay, said the Europeans had also been making encouraging noises.

The draft text thrashed out for the world trade ministers' meeting includes what is, on the face of it, positive language on the topic central to New Zealand's agenda, agricultural-trade liberalisation.

"We commit ourselves to comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support," the draft declaration says.

The chief executive of the newly formed Trade Liberalisation Network, Stephen Jacobi, said the draft declaration picked up on agriculture where the Seattle talks had left off. "But it is a bit of a worry that the draft text goes on to say that non-trade concerns will be 'taken into account' in the negotiations."

The worry is that these non-trade concerns, about food safety or animal welfare for example, could give rise to non-tariff barriers and prove a protectionist Trojan horse.

The trade ministers are scheduled to meet in Qatar from November 9 to 13, but security concerns could force a change of venue.

In Shanghai, Prime Minister Helen Clark took the opportunity to bend President George W. Bush's ear on New Zealand's keenness to negotiate a bilateral free-trade agreement.

There are two main obstacles: President Bush does not have fast-track negotiating authority from Congress; and there is little value for New Zealand in an agreement with the US which does not include agriculture.

With fast-track, or Trade Promotion Authority as it is now called, Congress can approve or reject a trade agreement but not take it apart. Without it, a country negotiating with a US official runs the risk that the deal might be relitigated on Capitol Hill by legislators beholden to special interest groups.

Opinion in Washington is divided between those, like President Bush, who argue that at a time of global economic weakness what is required is more trade liberalisation, and those who believe that when the US is in recession it should be reluctant to expose its domestic industries to more international competition.

Since the attacks on September 11 there has been a rise in bipartisanship on Capitol Hill.

"But it cuts two ways," Mr Scollay said.

"The President may be able to convince Congress that bipartisanship means backing him on trade. But the other view is that it means the President limiting his trade ambitions and aligning with Congress. I would see it as a bit of a cliff-hanger."

WTO rules require bilateral agreements to cover "substantially all" trade between the parties.

There have been signs that the US would seek to exclude agriculture from these deals, Mr Scollay said, but that would be awkward for them, having criticised the European Union for excluding it from theirs.

"For New Zealand, dairy is the big prize and without that the value of a [bilateral free-trade agreement] is certainly diminished.

"There are strong defensive arguments. If Australia is going to get a free-trade agreement we can't afford to have one of our major competitors get preference in the US market. If the US concludes a Free Trade Agreement of the Americas [scheduled for 2005] that will include some of our more formidable competitors from the Western Hemisphere."

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