Editorial: Apec fails in global trade crisis

Just over a decade ago, when Apec was in its infancy and still needed to be written at first reference as Asia Pacific Economic Co-operation, it played an important part in bringing a world trade round to a successful conclusion. Then, as now, the global talks were deadlocked, mainly over issues of agricultural protection, and needed a concession from Europe to release the log-jam.

At that time East Asia and the Pacific rim were the world's most promising zones of economic growth and the new Apec forum was gung-ho for free trade. There was much talk that if the Uruguay round failed the world would divide into trading blocs. The prospect of a bloc spanning the Pacific seemed to concentrate European minds fruitfully.

Sadly, the comparison with the present stops at the deadlock. The sticking point is still agricultural protection and a concession from Europe is needed. The Pacific, having the United States on one side of the ocean and China and Japan on the other, is still a powerful economic axis. But, sadly, Apec has missed an opportunity to do for the Doha round what it did a decade ago.

At the Apec summit in South Korea last week, leaders of the 21 member countries failed to agree on a declaration that might have added to the pressure on the European Union to produce something meaningful for an all-important meeting of the World Trade Organisation in Hong Kong next month. Herald correspondent Fran O'Sullivan reported that the consensus of Apec leaders at Busan was to prepare for lower expectations from the Doha round. A consensus was developing, she found, that the round would not deliver the rewards to developing countries that were pledged when Mike Moore, WTO director-general at the time, got it under way six years ago.

The present director-general, Pascal Lamy, previously the EU trade commissioner, was at Busan but his meetings with Apec trade ministers did not produce anything that moved the summit. The prospect of regional alternative trade deals no longer haunts the WTO talks; the risk now is rather that a global failure will see trade liberalisation pursued instead through bilateral free trade agreements. It is not so much a threat as a trend already under way, led by the most powerful Apec members, the United States and China.

Free trade can be advanced on three fronts, global, regional and bilateral, but only the global negotiations offer a reasonable assurance that all countries can trade under rules of non-discrimination and enjoy the same access to lucrative markets. Regional and bilateral agreements are supposed to be compatible with WTO principles and open to outsiders to join on the same basis. But inevitably they favour those inside the deal and distort trade patterns.

A further risk in bilateral agreements, particularly the way the Bush Government is doing them, is that they are made primarily for strategic rather than economic purposes and are unlikely to help to make the world economy function as efficiently as it can. The actual trade openings, as the Australian deal showed, can be very one-sided. At best, regional and bilateral agreements are a poor substitute for progress on the global front.

Apec's reduced expectations for the Doha round are particularly disappointing because two of the countries present, China and India, have, with Brazil, led the drive to put the interests of developing nations at the top of the Doha agenda. Dissatisfied, they collapsed the talks at Seattle and at Cancun, Mexico. A third failure at Hong Kong could be terminal. But a deal that does little to help poorer countries would be not much better. Trade, not aid, after all, is the lasting answer to poverty.