Fran O'Sullivan: Key leads way at G20 meeting

Photo / Getty Images

Prime Minister's calls to move the trade agenda forward at the WTO finds support.

John Key played an effective role in the trade debate at the G20 meeting questioning the efficacy of the World Trade Organisation's "consensus model" and challenging leaders to take action.

Key's contention is that progress has been stymied at the WTO through the lowest common denominator approach adopted by trying to find consensus among the 160 members.

He put the case to the G20 leaders that forging all round consensus should not be necessary to break the gridlock and move the multilateral trade agenda forward at the WTO: "Ultimately that doesn't mean you force people who don't want to be participants," Key said. "But there is nothing wrong with getting to a point where if some countries cannot agree, then a subset of other countries could progress forward and others could join in if they want to."

Key's view - which a number of G20 leaders share - is that if member nations sit around and wait for the last country to sign up it could take another 10 years or more to get movement in the WTO. Key wouldn't disclose just which leaders shared his view - simply noting that while New Zealand "might be the smallest, some of the largest at the table were making the same case".

But it's reliably understood one of those G20 leaders was Barack Obama. Obama is said to have made the distinction that WTO members could not bind others to liberalisation moves that they did not agree with. But also they should not be able to stop other members from going ahead and doing more liberalisation.

It was a critical debate that resulted in the G20 leaders adding another sentence to their communique that said they would talk about how to make the multilateral trading system work better at their next meeting.

The debate poses challenges for WTO director-general Roberto Azevedo who is a fan of the consensus model. Azevedo is understood to take the view the WTO has always operated that way.

But the G20 debate would have left Azevedo in no doubt that the leaders believe the WTO is still the ultimate game in town. Not just the swag of bilateral and regional deals done in recent years. And that they expect to see more momentum achieved.

On that score, a pre-meeting move by India and the US to endorse the Trade Facilitation Agreement (TFA) in the Bali Package has provided the opportunity for new momentum.

A prior announcement at Apec of a US-China pact to cut tariffs on IT products (which Azevedo reckons could result in a US$1.4 trillion boost to global trade) is also notable.

The upshot of the India-US agreement is that Azevedo cut short a planned international swing to go back to Geneva to try and get the TFA finalised within the next fortnight.

It's a mark of New Zealand's standing that Azevedo did keep one stop on his itinerary - Auckland -- in place; spending a day here to brainstorm with trade negotiators and dine with Trade Minister Tim Groser. "We are at the time when we need insights; when we need support, when we need active participation and New Zealand can provide all of those," Azevedo told this columnist.

"My hope is that we can begin here a dialogue that will continue in Geneva in this very special moment for the organisation."

He makes the point that a lot of the barriers New Zealand faces - like subsidies on agriculture - can only be dealt with in the WTO.

Key's G20 spiel was well-received, according to Azevedo. Essentially, the Prime Minister made the case that New Zealand was such a strong advocate for free trade because of its benefits to the economy.

Key's next big international engagement is likely to be at the prestigious Davos meeting. The World Economic Forum has invited him to be a participant at the January meeting in Switzerland where global economic heavyweights ranging from political leaders, finance ministers, treasury heads, and thought-leaders will discuss major issues facing the global economy.

The invitation is clearly an indication of Key's growing international stature in the economic arena where he is starting to draw down on the skill-set from his previous career to offer sharp insights on major issues like trade and the financial system.

Key made three significant contributions at last weekend's Brisbane meeting. Tony Abbott had pre-arranged with Key to participate in the trade discussion which is where Australia had asked New Zealand to focus for its year as a G20 'ring in' alongside Singapore.

But Key also contributed to the debate on the international financial system. The former Merrill Lynch banker cautioned the G20 leaders on the risks around how they manage the wind-out of quantitative easing and the liquidity issues which could threaten to overwhelm the system if not addressed adroitly.

Thirdly, he was invited to give an "up sum" by reflecting on the meeting. Key is understood to have challenged the G20 leaders to become more directly engaged with major trade issues themselves - such as on the need to move the WTO agenda forward - instead of leaving it to their trade ministers.

It's obvious that despite being a 'baby leader' in comparison with the G20 heavyweights, Key was a substantial contributor in his own right.