Fran O'Sullivan: Trade pygmies' day is here

COMMENT

At this year's Apec meeting there has been a switch - pygmies like New Zealand no longer get quashed by the elephants of global trade.

Major players like the US, China and now even Russia have embarked on a mad rush to stitch up alliances with other trading nations .

The proliferation of free-trade deals being talked about in the myriad hotels where political leaders, their trade ministers and officials are clamouring to ensure their countries do not get left out is quite extraordinary.

There is a real buzz in town.

Free trade is finally fashionable - although, of course, it comes with caveats.

Many of the bilateral deals that have been banged out in recent times are sub-standard, nothing more than a return to preferential agreements that boost the participants' prospects to the detriment of those left out. Hardly free trade and hardly fair.

But, after years of talking, Apec is getting down to action. What is being stitched up is not the Bogor goals of free and open trade (and, ideally, zero tariffs by 2010 for developed countries and 2020 for developing nations). But a consensus is emerging that the bilateral and regional deals can play into Apec's goals if skilfully handled.

New Zealand has launched free-trade negotiations with China at this year's Apec and is now on the dating card for other players such as Russia and maybe even the US if it really decides to do battle with the dragon in a big way.

The China negotiations, which were launched at a meeting between Chinese President Hu Jintao and Prime Minister Helen Clark on Friday (local time) are impressive for their scope. As Clark later said: this is without question the most significant deal.

Australia, of course, is our top trade partner and export market, so anything we do with them is important. But with China rising so fast up the ladder of New Zealand's chief trading partners, this is very, very big.

The powerful US Chamber of Commerce is also now publicly backing Zealand's case for a free-trade deal with the second Bush Administration.

Russia is also understood to have confidentially sounded out the Clark Government about going all the way.

Clark's criticisms of the Iraq invasion have been put to one side as the game of influence gets played.

The US chamber's president, Tom Donohue, is an engaging man.

Donohue has met Clark before and initially proposed the two countries going down the free-trade path together at a private meeting during the Shanghai Apec Leaders summit in 2001. He also introduced her speech to that year's Apec business and directed an acerbic question-and-answer session with her which was quite sparky.

The chamber has pushed New Zealand's case before in Washington, notably prior to free-trade negotiations between Australia and the US being announced.

But the arrival of China on the scene as a competitor for New Zealand's affections has clearly revived interest.

Clark said she had an excellent meeting with Donohue and a team of US business leaders and was stoked that he had given his support at this year's meeting - probably the most important forum that the chamber has used to back New Zealand's case.

His rallying call is a sharp signal to the Bush Administration: that it cannot afford to ignore its friends. It is a source of deep delight to Clark, who has been pushing a New Zealand US FTA since 2002.

American business interests at the CEOs summit have privately expressed deep concerns about the huge footprint China is beginning to exert over areas of the Asia-Pacific region that the US traditionally regards as in its camp.

China's decision to explore free trade negotiations with countries ranging from New Zealand and Australia through to the Asean group of 10 Southeast Asian nations has put the wind up US big business. The influential US business lobby is now urging the Bush Administration to strengthen ties with the Asian region, fearing America could dip out as China increases its influence.

Bush yesterday told the CEOs summit his administration would launch some new bilateral deals, but New Zealand's name was not among those singled out by the President.

Donohue, whose front-row seat was immediately opposite the President's lectern and one down from outgoing Secretary of State Colin Powell, nodded vigorously as Bush pledged to renew the US's free-trade agenda.

"We're going to be aggressive about our bilateral trade agreements and our regional trade agreements," said Bush.

"We've completed trade agreements with nations throughout Asia and the Americas, including Australia, Singapore, Chile, the five nations of Central America and the Dominican Republic. We are working on new agreements with Thailand, Panama, the Andean nations of South America."

Although New Zealand's name did not figure in Bush's list, neither does the list include any names other than those with which the administration had already announced talks before the presidential election.

New Zealand's ban on nuclear ship visits has been repeatedly raised by influential US politicians as a barrier to negotiations in visits by senior Republican senators and US Commerce Department figures such as Grant Aldonas. But Donohue's statement that that was 20 years ago is a signal that Washington may finally decide it is time to move on.

Ironically, US trade negotiator Robert Zoellick, who coined the term "competitive liberalisation" to describe the explosion of FTAs at bilateral and regional level, probably did not figure that it would make smaller players more valuable.

New Zealand began the stampede to bilateral deals when it began talks with Singapore after World Trade Organisation talks on a new multilateral round in Seattle failed. The deals exploded in earnest after the subsequent collapse of WTO talks in Cancun forming a mesh of criss-crossed arrangements, particularly in the Asia-Pacific region.

Clearly this country is, along with other free-traders, concerned that sub-standard deals will undercut the push for a significant round of trade liberalisation at Doha.

But right now, with the larger players seeking to increase their own influence, it's a great time to be a pygmy.

Herald Feature: Apec

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