Fran O'Sullivan: Time for a rethink on two-tier WTO

Former NZ Prime Minister Mike Moore. Photo / NZME.

New Zealand should have a critical rethink about whether it's time to join those that want to get the World Trade Organisation on to a two-tier system and reinvigorate global trade.

The reality is that globalisation has hit a sticky patch. The OECD recently reported that the growth in global trade volumes has slowed - down from an average 7 per cent of global GDP the year before the global financial crisis to 2 per cent this year.

As the Nairobi talks move into a steady gavotte there will be plenty of claims that progress is being made.

There are some suggestions that a new package including export subsidies for less developed nations could be announced, along with the passage of the deal ending tariffs on US$1.3 trillion ($1.9 trillion) in information technology products.

But this goes nowhere near the end goal for the round.

The WTO has moved at glacial speed since former director-general Mike Moore forged an agreement to pursue a new negotiating round at a ministerial meeting in Doha, Qatar in November 2001 which made improving the lot of development countries its goal.

New Zealand still places extraordinary emphasis on the WTO.

It has become a truism to say that NZ's trading partners will not concede any major reductions in agricultural tariffs outside of a global deal.

Hence the strong commitment to the notion that major progress can only be achieved through a successful global negotiation. But what if those gains stay illusory?

The real breakthroughs in international trade have been made through bilateral free trade agreements and major regional deals like the Trans-Pacific Partnership.

When I spoke with Todd McClay last week he was pumped at picking up the prized trade portfolio in John Key's Cabinet reshuffle.

The press statement he issued before heading off to Africa for what is the sixth ministerial meeting since the Doha Development agenda was launched was inevitably optimistic. But persuading ministers from 162 nations to move in concert is a difficult task as he concedes.

A 2010 issues paper pointed to four factors that should drive a rethink.

First, there has been a shift in emphasis with the progressive reduction of tariffs and the ban on restrictions on agriculture to focusing on domestic regulation and securing fair conditions for investment in many fields.

Secondly, the advent of binding dispute settlement has changed the relationship of rule-making and adjudication.

Importantly the leadership of global trade has changed. Instead of the WTO being effectively ruled by the quad - the United States, European Union, Japan and Canada - major decisions now require the consent of a number of countries, including Brazil and India and China.

Fourth, the WTO is now more transparent.

By forming a coalition of the willing - countries which are prepared to focus on today's issues like the framework for trade within global supply chains - it may be possible to ensure the growth in overall trade continues. Other nations could step up when they are ready.

Finally, let's note former NZ Prime Minister Mike Moore returns from Washington DC from a stellar period as NZ Ambassador. Moore is a fervent globalist and will now be free to re-enter the local debate.