Fran O'Sullivan: Poor nations need to lift their game

The World Trade Organisation boss, Pascal Lamy, will need to wave more than his magic wand to get an outcome from the talks going on in Hong Kong that means more than PR fluff.

What Lamy needs to wave is a big stick - not just at the rich nasties like the European Union, US and Japan which still cosset their farmers with absurd subsidies but at the poorer developing nations.

Lamy's magic wand - used theatrically at the opening ceremony for the six days of talks - was given to him by one of his secretaries in Geneva. "It's a plastic toy and certainly doesn't work," he later admitted on his daily blog.

The blog gives an insight into the pressures he feels trying to get 149 nations to converge their competing interests.

"Sometime I feel like a shepherd, sometimes like a nurse, or a mid-wife, trying to help members in a difficult delivery."

Lamy should abort the show in the hope that the embarrassment of failure might bring some much needed rigour to an organisation which has diverted so far away from its raison d'etre - trade liberation - that it risks being another "development" version of the United Nations, and just as ineffectual.

Take the incessant propaganda mounted outside the talks by a raft of South Korean farmers (called a "mob" by Hong Kong's excitable television journalists) who are pulling every stunt to try to ensure their "Down, down WTO" chants help push the talks over the brink into outright failure.

What those farmers would be better off doing is copying their Hong Kong cousins who decades ago jettisoned their ploughs for manufacturing tools in the first steps up a ladder of success that has seen this city state transform into East Asia's most significant financial capital.

It is not as if these farmers do not get globalisation. Their demonstrations are co-ordinated by text-messaging leaders who turn off the loud-hailers once the television cameras disappear.

Instead of confronting the fact that new technologies and more efficient practices by their international farming peers means their rice-growing industry has become frankly uncompetitive - and doing something about it - the rice-farmers want to be preserved on their farms like cultural icons. Who can really blame them?

French farmers did just that by persuading Paris to swap the domestic farming subsidies that propped up their small holdings for environmental and cultural preservation top-ups.

But it still does not get to the crux of the matter.

The problem is no one really wants to stand up to the righteous arguments mounted by the lesser developed nations - or their NGO allies like Oxfam - and probe the real reasons behind national failure.

They would rather beat the drums in favour of the "deserving poor", instead of examining how such countries can manage a transition to a more competitive global trading environment.

But if the WTO does not want to simply be labelled the "World's Protectionist Organisation" it needs to take a much more rigorous approach to understanding why some of these poorer nations are economic basket-cases.

Try corruption for a start.

The WTO should require an independent investigation into what happens to the tariff income that some of these smaller nations say is necessary to prop up social conditions.

Does it really find its way to the pockets of those farmers and small business people who will face significant costs as they either try to upgrade their businesses to compete globally or shift (as the Hong Kong Chinese did) into other industries?

Or does it just go into the pockets of high-ranking Ministers and Government officials - like Tonga - which this week became the 150th nation to join the WTO club.

Try economic liberalisation.

New Zealand, like Australia, is one of the few countries which removed subsidies and cut tariffs without waiting to make a trade off with other nations. We were verging on bankruptcy drowning under the weight of propping up a farming sector that invested its subsidies in sending their kids to private schools and taking overseas trips, instead of making farms efficient.

Two decades on we have one of the world's most efficient farming sectors - those who couldn't cut the mustard sold up and moved to town - or went bankrupt. But cutting tariffs enabled the rest of us to enjoy much cheaper imports putting cars (second-hand imports aside), stereos, clothes and many consumer goods within the range of ordinary people.

Kiwi farmers will say - and they are right - that they paid a huge personal price in bankruptcies and suicides as they went through the "adjustment process". But the World Bank is the place to help these smaller nations with handups - not US aid (which is basically dumping) or giving these smaller nations preferential access to rich countries' markets without requiring them to lift their game.

The problem is that the trade game is now being fought on moral lines (WTO: More Dangerous than bird flu reads one poster). The poor nations carry one big card - they can jettison the talks by walking out.

But the "rich" nations have no excuse either for maintaining tariffs into the 21st century. If they believe their free trade mantras they should "tear down their walls now" - anything less will not work.