Trade ministers face uphill battle

By GREG ANSLEY

CANBERRA - Trade ministers from the Cairns Group of fair-trading nations are meeting in Canada today amid growing concern that further global trade reform has been thrown off the rails.

Opposition by developing countries to a new lowering of trade barriers was demonstrated dramatically in Thailand last week when Southeast Asian nations rejected efforts to launch negotiations on a trade agreement with New Zealand and Australia.

The talks failed despite acceptance of a taskforce report predicting region-wide growth of $US90 billion over the next 20 years from a pact linking the transtasman closer economic relations agreement with the Asian Free Trade Area.

Sources in Canberra yesterday said similar opposition would almost certainly block an early comprehensive World Trade Organisation round of talks. It would also plant hurdles in the path of a new agreement on agricultural trade.

Developing countries such as India, Pakistan, Malaysia and Indonesia say they have largely missed the promised gains from the 1994 Uruguay Round agreement.

They have little faith in predictions of gains for developing countries of almost $US14 billion in 2010 from further liberalisation of agricultural trade.

The developing countries have also been enraged by European Union attempts to impose conditions relating to animal welfare, the environment and social issues on a new agricultural trade deal.

Trade sources in Canberra said there were some signs the EU could soften its position, but the prospects remained bleak.

They also said there was little confidence in a strong US approach, despite a comprehensive proposal for new WTO farm talks embracing domestic support, market access, export measures and differential treatment for developing countries.

Aggressive proposals and assurances put forward by US Special Trade Representative Charlene Barshefsky have been undermined by a Congress with powerful protectionist sympathies, and the US is about to elect a new Administration.

Developing country concerns have been confirmed in two fresh studies from the Australian Bureau of Agricultural and Resource Economics, released yesterday to coincide with the Cairns Group ministerial meeting in Banff, Alberta.

Bureau executive director Dr Brian Fisher said agricultural support policies around the world remained grossly inequitable and damaging, both to the countries applying them and to efficient farmers.

Agricultural trade barriers and subsidies had been choking potential gains from more open, less distorted markets, with farm support remaining as high now as at any time since the mid-1960s.

Bureau studies said the EU had obtained exemptions from agreed Uruguay Round cuts by changing the form of support for a few major commodities, ensuring real levels of support were maintained.

US domestic support, meanwhile, had risen sharply since 1998 to record levels because of generous base levels in the WTO agreement and subsequent exemptions through changes in the form of support for a few major commodities.

Japan's price support had risen steeply in the past few years.