Free-trade deals now crucial

Pascal Lamy has an unenviable task. Picture / Reuters

The collapse of global free-trade talks will see New Zealand pressing ahead with bilateral talks, says Trade Minister Phil Goff.

He said yesterday such talks would include China, the Association of South-East Asian Nations (Asean) and potentially the Gulf states.

"And we will explore what exactly Japan means with its call for a free-trade area for the countries of the east Asian summit, though that is drawing a fairly long bow."

The successful Uruguay Round of the World Trade Organisation talks had been worth about $1 billion a year to the economy, he said. An ambitious outcome to the Doha Round would have been similarly beneficial.

But Goff said the bigger cost was the lost opportunity for a fairer, more prosperous and stable world.

The Doha Round, launched nearly five years ago, had been looking sickly for months, as the key concessions needed to break the deadlock did not materialise. These included European movement on agricultural market access, deeper cuts in United States support for its farmers and improved access for industrial goods to major developing countries.

WTO director-general Pascal Lamy, faced with a persistent impasse, recommended on Monday that the talks be suspended indefinitely. Existing concessions, such as the end to agricultural export subsidies, will remain on the table, even if the table is now deserted.

The US Government's negotiating mandate expires in the middle of next year and there is now no prospect of a deal being completed and passed by Congress before then.

Trade experts fear it will be at least two years before the talks resume.

National MP Tim Groser, who chaired the WTO's key agriculture committee while New Zealand's ambassador there, said nothing of any real import would happen until the US Government got a new mandate from Congress. "When that might be is anyone's guess," Groser said.

"But I think it will be two years before we start again. The cynicism and bitterness that will set in now will be enormous and will take some time to dissipate. So it is absolutely pointless to continue."

In the meantime, New Zealand should expect more trade disputes and attempts to roll back existing gains.

It would have to try to negotiate bilateral free trade agreements to mitigate the impact. "This raises the stakes of not being on the US list [for a free-trade agreement]," Groser said.

Phil Lewin, who chairs the Trade Liberalisation Network and who was New Zealand's senior trade official in Washington, said governments across the Northern Hemisphere had failed to muster the political will to face down their domestic farm lobbies.

"However, no previous WTO negotiation has ever been successfully concluded on time or without a crisis," he said. "The likelihood remains there will be a Doha Round outcome, but not for another two or three years."

The US is due to enact a new Farm Bill, enshrining its domestic support measures, next year. The last one, in 2002, was a step backwards in trade liberalisation.

This one will be enacted without a live prospect of better market access for US exports in exchange for rolling back domestic support.

"If there is a further bill not infused with liberalising zeal, that can only complicate this further," Lewin said. But he believed there was an increasing realisation in the US that subsidies were not the way forward.

"I would hope that the next Farm Bill is at least no more of a pork barrel exercise than the previous one."

The reaction

* "Today there are only losers" - Fonterra chairman Henry van der Heyden.

* "The silver lining is ... negotiation resources will become available for accelerating progress on our bilateral agreements" - Bruce Goldsworthy, Employers and Manufacturers Association.

* "This may stall negotiations for a year or two. Meanwhile, our competitors will continue to have carte blanche, distorting trade and subsidising global fisheries into collapse" - Seafood Industry Council chief executive Owen Symmans.