ROUND AND ROUND WE GO !

The present stand-off in trade talks at the World Trade Organisation is the crisis that we have to endure, it happens in every trade round. Timed to coincide with the Northern Hemisphere summer break, the so-called ‘suspension’ of negotiations admits the grim truth of the state of play. Short of ideas, Ministers frequently say, "Lock the Ambassadors in a room and throw away the key!" That never works unless negotiating instructions are changed in capitals. The long northern summer break allows Ministers to work the phones and to privately travel. Like the proud swans on the lake in Geneva, heads high, there is feverish activity paddling underwater unseen, by key players. What’s unfortunate, but again not new, is the public round of insults and name-calling by some Ministers passing the blame to others. Not helpful, relationships count. Before the collapse of talks at the Seattle Ministerial, things were so bitter that the U.S. Trade Representative and the European Union Commissioner wouldn’t take each other’s phone calls for a while. There’s enough blame for everyone to share. Australia will, next month, host a meeting of the Cairns Group of agricultural exporting nations, they will also celebrate 20 years since that grouping was established. The Cairns Group has been quiet over the past few years with the momentum passing to the Group of 20, that’s a group lead by Brazil and India. They will also meet next month. All of these meetings will be successful, in the public mind anyway, like-minded groups don’t disagree. That’s why it’s disappointing that the European Commissioner, Peter Mandelson’s refusal to be a guest and his gratuitous Australian insults were unnecessary and self-serving, and if replied to further cement in differences. For meetings of like-minded groups to be useful, they need to see where they can work out a deal the other side can respond to. This is delicate because shrewd negotiators accept, bank any offer, and lower their response. Turning cards over is a matter of timing. Timing is difficult when you have 149 players sitting on their cards. Solidarity, confidence-building and personal trust are important functions of meetings of like-minded groups because at a certain time there must be compromise, and there needs to be confidence among members that in accepting a compromise, they have not been sold out.

Economic nationalism is on the rise. Blinding in its stupidity, dangerous in principle, it’s where the votes are. The protectionists, who fear competition and seek government hand-outs, know which buttons to push and which politicians to fund, somehow are seen to be patriotic. It’s economic welfare-ism when the poor practice it, but patriotic when the rich in business practice it. Governments need to get out front and warn of the danger the world faces if economic nationalism takes further hold. This case must be again made fearlessly and without compromise. Hundreds of millions of people have been lifted from desperate poverty and are now the consumers who are lifting the world economy. It’s a healthy development that living standards in Lyon, Detroit and Tokyo are more and more reliant on the consumers of Shanghai and Mumbai. That’s great, and in that equation of ‘customers of the future’ lies the Doha deal.

China has been alarmingly quiet, their negotiators modest about being seen to throw their weight around. They have gained much and have much to lose if the multinational system withers. What a delicious thought, rich with irony, if it were to be China that leads the way for the Round to be concluded. There are positive signs of movement. However there are dangers, foremost among them that we will see more leadership initiatives by politicians immorally seeking immortality through fresh initiatives. Please, free us from initiatives - we have a table-full now. It’s laughable to read of endeavours to pull an Asian Pacific (APEC) deal. We have already many, many times announced that deal, years ago it was to be APEC free trade among developed countries by 2010, and developing countries by 2020. Yet, if I were New Zealand’s Minister, I would be looking at the cost of not being part of the many bilateral and regional deals, OK, I’d do them too. But that’s like dancing with your sister, not much will come of it but it’s good practice. Here’s the deal – more time for developing countries to adjust to market openings, a few more years for rich countries to adjust, but they need to move on the substance of agriculture, which for the U.S. means domestic support, and for the EU and Japan it means market access and to nail down to a tiny safeguard, the definition of sensitive products. How to massage the message so all Ministers walk away claiming victory is the political challenge.