Billion-dollar blow to NZ trade

By FRAN O'SULLIVAN

CANCUN - Amid the wreckage of world trade talks last night New Zealand's negotiating minister, Jim Sutton, refused to play the blame game.

The failure was a "collective disgrace", he said. But there was still sufficient meat on the bones of a draft negotiating framework to give him comfort New Zealand's interests would not be harmed immediately.

The European Union and the United States had each made huge concessions during the negotiations at this Mexican beach resort.

"Pascal Lamy [European Trade Commissioner] has said those concessions will remain on the table," said Mr Sutton late last night.

"If we can get things back on track again we might ultimately get to an outcome which reduces export subsidies."

That could be worth as much as $1 billion a year to the New Zealand economy.

But after five days of talks at Cancun, no one believes the negotiations will be easy to revive.

Mr Sutton had been one of those admitted to the WTO "green room" with 33 other hand-picked trade ministers to try to thrash out a series of trade-offs for officials to take to a December 15 meeting in Geneva.

But outside the green room there were a large number of national representatives worrying whether they had been sold down the river.

Yesterday, Mr Lamy damned the WTO as medieval. "The procedures, the rules of this organisation cannot support the weight of its task," he said.

Like the previous Seattle talks, the Cancun ministerial meeting collapsed through a lack of preparation and poor communications.

Mr Sutton, a veteran of numerous mini-ministerial meetings in recent months, believes it will be difficult for the WTO to complete negotiations by the January 2005 deadline for the Doha round.

He also admits the Cairns Group of agricultural exporters to which New Zealand belongs was overshadowed by the G22 grouping of developing nations on agricultural issues.

"But I'm not sure whether the bright light that is the Group of 22 will be a new star or a shortlived meteorite."

US Trade Representative Bob Zoellick has indicated the United States will press ahead with bilateral trade agreements with a queue of countries to which New Zealand has yet to be admitted.

"If it was done on the basis of qualifications, we'd be there," Mr Sutton said. "But the US has all sorts of strategic interests to pursue.

"New Zealand has been mentioned by some Americans as a potential partner. But a number of issues such as export subsidies would not be addressed bilaterally. In the WTO they will be." Mr Sutton said some trade ministers were clearly unprepared.

"They lacked the mandate to make the trade-offs that were essential to finalise a negotiating framework for officials to take back to Geneva."

Like other trade ministers he would not single out particular players for blame. But the implication was clear.

The WTO talks had foundered at the point when rich nations had already given way to much of the demands by poor nations - led by the powerful new G22 group - to cut farming subsidies.

But they came unstuck when African and Asian nations refused to consider new rules governing investment, competition policy and other issues that rich nations, in particular the European Community, wanted in return.

These "Singapore issues" were whittled down to rules to facilitate trade and stamp out corrupt Government backhanders after the EU agreed to drop investment and competition issues.

The G22 group had laid down a gauntlet from the outset, repeatedly charging the EU and the US with trampling over the rights of developing nations.

Mr Zoellick was acerbic: "We tried to caution that too many were spending too much time pontificating, not negotiating.

"Whether developed, or developing, there were can-do countries here and there were won't-do countries."

Prime Minister Helen Clark said the Cancun outcome could give more impetus to the Apec talks in Thailand next month.

"It's obvious that the pace has fallen off a bit at Apec as well," she told the usual post-Cabinet press conference.

"And perhaps that will focus minds a bit at the meeting in Bangkok this year - that if we want the WTO round to be a success then Apec may need to put a little more pressure on itself as well."

* MFAT, Fonterra and the NZ Trade Liberalisation Network are contributing to Fran O'Sullivan's trip to Cancun.