Fran O'Sullivan: WTO foreplay over, now down to work

"Today multilateralism has made a minor triumph," said World Trade Organisation Director General Supachai Panitchpakdi in the early hours of Sunday.

"The major triumph will be the day we achieve the Doha Development Agenda," he added, giving the round its full title.

It was typical Supachai.

After two years of lacklustre leadership of the WTO the former Thai deputy prime minister was not about to let pass the opportunity to finally claim a victory.

The decision by WTO members at their Geneva meeting to agree on a framework for negotiations for the vaunted "development" round is a significant achievement after a rift between poor and rich nations scuttled a previous attempt last September.

Rich nations - such as the EU and US - have agreed they will end export subsidies for agricultural products and free up access to their well-off consumer markets to boost global economic growth.

But while the agreement has huge ramifications - particularly for agriculture exporting nations such as New Zealand as well as poorer nations - there is still considerable ambiguity and many tough decisions have been deferred.

THE DEAL

"Think of it as foreplay," said one private sector trade specialist yesterday. "An indication of good intentions - but performance anxiety will come later when they have to actually finalise a deal and implement it."

The decision to axe agricultural export subsidies as part of the round dominated early publicity.

World Bank estimates are trotted out. They say a good agriculture deal could lift incomes by as much as US$520 billion by 2015, lifting 144 million people out of poverty.

The framework also includes tighter use of export credits, the preservation of food aid programmes, moves to cut back domestic support for agriculture and increase market access.

The text is deliberately loose.

The crucial questions of how much, by when and for whom will come later.

The US estimates 8 per cent of the gains in global trade liberalisation will come from south-south liberalisation.

It is not just "rich" nations who have given way.

A spokesman warned last year: "We should not create a situation where developed countries pay everything and others cash in."

A clause which allows significant new market access to manufactured goods for industrialising countries ensures the framework is not a one-way street.

THE PAYOFF

Trade Negotiations Minister Jim Sutton predicts a major spinoff to New Zealand to the tune of some $1 billion annually for dairy trade alone if the deal is finalised (a "75 per cent to 25 per cent" rating in Sutton's books).

That far exceeds the boost in cash terms alone from what the previous Uruguay Round netted New Zealand annually across all product categories.

The Uruguay Round is estimated to have added 1 per cent of GDP annually to the New Zealand economy. So a successful conclusion to the Doha Round could theoretically help New Zealand get back into the top half of the OECD far faster than other policy mixes.

NEGOTIATION BY SLEEP DEPRIVATION

Prime Minister Helen Clark once said success at the WTO always seems to come at the 11th hour. "They work through crisis ... and they'll sit up for hours until Mike Moore's eyes are hanging out like bean bags and something happens."

Moore went from the top WTO job two years back.

This time it was fellow New Zealander, Ambassador Tim Groser, who had his eyeballs out on the line. Groser, who chaired the WTO's agricultural committee and brokered the deal, said agreement had not been reached until the early hours of the morning in Geneva.

"Between roughly three o'clock in the morning and seven in the morning I put together a package of additional concessions on my text and put it up and said to the ministers, 'You can't pick and choose you know. This is a total deal, it's accept or reject.' And at that stage maybe they were just so tired they agreed," he told NZPA.

"I mean, it sounds crazy but, given the sensitivity of the issues, it's probably the only way you can ever get this thing done."

Sutton - similarly confessing to just a few hours sleep during the Geneva marathon - took part in the final "green room" where some 30 countries worked to reach an agreement that all 147 WTO members could swallow.

Getting 147 WTO members to negotiate together at one time would be an impossible task. That is why WTO talks inevitably come down to the relationship between the major power players - and the rest.

THE POWER PLAYERS

Think WTO power plays and two names inevitably spring to mind - US Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy.

Both men had huge reputational capital riding on a successful outcome in Geneva.

In Cancun last September, developing nations were affronted at a joint EU-US position that was tabled just before the WTO ministerial meeting.

Zoellick and Lamy took knocks when the talks ultimately failed.

After publicly signalling in January and February that they were prepared to end export subsidies, the pair went on to work a subtler, more private, and more inclusive game to get smaller, less powerful nations on side in the run up to Geneva.

Whatever happens from here the pair will be able to depart their respective trade jobs this year with some of their reputational capital intact.

The EU and US have always been major players in world trade talks - sheer economic power guarantees that.

But the cosy group of four, US, EU, Canada and Japan, known as the "Quad", which used to run WTO negotiations has given way to different power players.

Instead of Canada, Australia - which leads the Cairns Group of agricultural exporting nations - is now in the frame. However, some major players, notably the US, quietly admit that New Zealand plays a more useful role within Cairns than Australia through "leading from behind".

In Geneva, the EU (Lamy) US (Zoellick) and Australia (Trade Minister Mark Vaile) were joined by Brazilian Foreign Minister Celso Amorin, leader of the G20 group of developing nations. Together with fellow G20 member, India, he has formed "Five Interested Parties" or FIPS which laid much of the groundwork for Groser's finishing touches in the three days of discussions.

Brazil and India may not have the money, but they've got numbers. More than half of humanity and 63 per cent of the world's farmers belong to the G20 which has fronted the case of the poor against the rich.

The power balance within the WTO has been permanently altered.

THE PITFALLS

From here on there will be many major hurdles to overcome as the round gets down to the wire.

Nothing much will happen until the US presidential elections are out of the way. If Democrat John Kerry is elected expect labour and environmental issues to get renewed prominence.

But despite Democrat concerns over the impact of free trade on US domestic producers, Kerry is not expected to pull the plug.

If Bush gets back in, Zoellick will not rejoin the Cabinet in the trade post.

So another player will have to be blooded.

The composition of the next Congress is also important as it must renew the US membership of the WTO and the president's negotiating mandate (Trade Promotion Authority) by 2007.

Lamy has been an extraordinarily adept navigator of the shallow shoals of EU politics. There are questions over whether his successor, tipped by British news media to be Labour MP Peter Mandelson, will display the same tough skills as the French socialist.

Inevitably, technical barriers to trade will resurface as the round gets closer to finalisation.

Expect the French to bang on about animal welfare and geographical indicators as they endeavour to institute backdoor protectionist measures.

The players will continue to negotiate bilateral trade deals on their own behalf as insurance against ultimate failure of the round.

THE POSTURING

There has been less posturing at Geneva than at other WTO talks.

But realpolitik dictates that as the fine print is negotiated into a deal over the next 18-30 months the posturing will begin in earnest.

This week's agreement was important to signal that globalisation is not dead.

But while the framework for a binding treaty is now on the table it will take a concerted effort to ensure it is not scuttled.