Free trade enters by back door

By JOHN ARMSTRONG political editor

The end-of-summit communique is already written, its language crafted to offend no one.

Noble-sounding sentiments will insist that global trade talks stalled at the World Trade Organisation must begin as soon as possible - but without any helpful incentives offered by way of tariff cutting from Apec's own protectionist laggards such as Japan.

Don't hold your breath, either, for a strong statement on Apec's other headache - soaring oil prices threatening to plunge member economies into 1970s-style recession.

Apec is split between big oil consumers, such as the United States and Japan, and oil exporting nations, such as Malaysia, Mexico and, of course, host Brunei.

On that delicate subject, the communique's tone will be what diplomats describe as "finely balanced."

So much for this week's Apec, an organisation once again dogged by questions about its relevance a year on from Auckland, although Bill Clinton may want to make some impact at his last meeting before signing off as President.

The more relevant piece of paper may be the one flourished in Singapore tomorrow, the day before the leaders meet in neighbouring Brunei.

In an ornate hotel ballroom just off the shopping mecca of Orchard Rd, New Zealand Prime Minister Helen Clark and her Singapore counterpart, Goh Chok Tong, will sign the landmark free-trade agreement between the two countries at precisely 7.32 am. Helen Clark then leaves immediately to catch a flight to Brunei.

The timing is deliberate. Having provocatively, but frankly, declared that Apec has run out of steam on trade liberalisation, Helen Clark intends the deal with Singapore to send a pre-summit message to other Apec leaders and act as a catalyst on those who are making precious little effort to reach the organisation's ambitious target of free trade by 2010 for developed economies.

But the general lack of will to revitalise the tariffs issue via Apec and the Mike Moore-led WTO is also forcing free-traders such as New Zealand to take the precaution of stitching together such bilateral and trilateral agreements among themselves.

A patchwork of such deals criss-crossing the Pacific may yet go a long way towards helping Apec reach the 2010 target by de facto means - and not thanks to Apec itself.

New Zealand, which has already cut tariffs unilaterally, is now looking at striking a Singapore-like deal with Hong Kong. Likewise with Chile, whose President, Ricardo Lagos, stopped over in Auckland yesterday for talks with Helen Clark on his way to Brunei.

All this should single Helen Clark out for attention in Brunei. It is understood that Taiwan is also interested in a deal.

And lurking in the background is the P5 (Pacific Five) - a free-trade area that would link New Zealand, Australia, Singapore, the United States and Chile.

Progress on that initiative is slow, having been halted by the American presidential election, with the candidates afraid of offending domestic lobbies.

But P5 is a scary prospect for the more protectionist economies, which risk shutting themselves out of the burgeoning number of free-trade areas.

The question is where this leaves Helen Clark, who, in Opposition, sounded like a critic of such speedy trade liberalisation.

She argues that Labour has always favoured free trade, but considered Apec too focused on a rigid liberalisation agenda and not enough on ensuring that the benefits of globalisation are shared around more fairly.

Apec is now shifting the emphasis. Such broader thinking is understood to be reflected in the communique, which stresses the need to address widening disparities between nations in wealth and knowledge, and develop sound social "safety nets" - language that will satisfy social democrats such as Helen Clark and Mr Clinton.

In this regard, at the leaders' retreat at the Rudyard Kipling-sounding Jerudong Polo Club, Helen Clark intends playing a "bridging" role, speaking as a developed economy but one that is based on primary production and thus shares the trade access worries of lesser-developed economies.

* John Armstrong will be in Singapore and Brunei with the Prime Minister to cover the Apec summit.

Herald Online feature: Apec