Fischer preaches free trade to unconverted

By Greg Ansley

CANBERRA - Australian Trade Minister Tim Fischer was evangelising in Europe this week, handing out copies of a new tract on free trade in a bid to convert the unconvinced to the cause of open markets.

Promising global benefits of $US400 billion a year, Mr Fischer's book, Global Trade Reform: Maintaining Momentum, is a study by his Foreign Affairs and Trade Department prepared as a taster for the meeting of World Trade Organisation trade ministers in Seattle in November.

Ideally, it will harden the resolve of the United States to leap in boots and all, stiffen the already considerable support for further market-opening in the developing world, and weaken the resistance of such influential doubters as India, Pakistan and Malaysia.

But ideals are likely to be difficult to realise. While Mr Fischer was promoting the study at an OECD meeting in Paris, he was also planning tactics with New Zealand counterpart Lockwood Smith against US lamb import bans, the US confirmed New Zealand and Australia on its "watch list" for possible trade action, hopes of Chinese entry to the WTO faded as Sino-American relations nosedived, and fears grew of a new North-South divide over the wrangle for the WTO's top job between New Zealand's Mike Moore and Thailand's Supachai Panitchpakdi.

The crucial position of the US in the coming negotiations is also uncertain. The administration officially is committed to a new, barrier-breaking round embracing agriculture, industrial goods, electronic commerce and bureaucratic red tape, a position reaffirmed earlier this month at a meeting of the trade ministers of the US, Japan, the European Union and Canada.

But with protectionist pressure mounting in Washington from such key sectors as the steel industry, and doubts over the level of support for a prolonged round - the Tokyo and Uruguay negotiations totalled 13 years - the US is feeling the heat. Against this are hopes that the weight of the US, Europe and Japan will be increased by a sufficient number of other players to give the negotiations the critical mass they need to roll over any opposition.

All but three of the 15 members of the Cairns Group of fair trading nations - which includes New Zealand and Australia - are developing countries. About half of the loose pro-reform group called Friends of a New Round, which met in Budapest, Hungary, this week, are also from the developing world.

It will be a battle, but not necessarily an uphill battle," a senior Australian trade official said of the coming negotiations. Australia wants to use Global Trade Reform: Maintaining Momentum to weaken resistance, designing the 50-page argument as an easy-to-read primer of the benefits of tearing down global trade barriers.

It argues that there are "compelling reasons" for trade ministers to agree to a comprehensive new negotiating round in Seattle, key among them the massive benefits that would flow to both global and national economies.

Even with the areas of heavy protection it left in place the Uruguay Round promises global welfare gains of more than $US200 billion a year, according to OECD studies. Australia says the gains from a further halving of trade barriers would conservatively double to about $US400 billion a year, or soar to $US750 billion if barriers were eliminated entirely. In relative terms, Canberra claims, the developing world would benefit most. Early trade liberalisation would boost investment in crisis-ridden Asia - rising by an estimated 5 per cent a year in Indonesia and Thailand, and 4 per cent in Malaysia - and accelerate recovery in east Asia.

Exports would rise by an annual 14 per cent for India and by more than 7 per cent for China, while developing countries across Asia, Africa, Central and Latin America and the Middle East would gain most from reform in proportion to their GDP.