Fran O'Sullivan: EU obstinacy beats Apec wizardry

Technical wizardry was on show at this year's Asia-Pacific Economic Co-operation (Apec) forum.

Political leaders held virtual meetings, shook hands with a robot mocked up as Albert Einstein and gushed over the Wibro gear and other electronic gadgets that their Korean hosts gave them.

But when it came to show-time - mustering sufficient collective pressure to shame the Europeans into being more flexible on agricultural trade and ensure significant movement at upcoming world trade talks - wizardry was absent.

The leaders' declaration lacked one vital factor. Right through Apec week, agricultural-exporting nations such as Australia and Canada lobbied hard for a stronger statement than that ultimately adopted by the leaders of the 21 Apec nations. They wanted the European Union named and shamed as the key obstacle to getting a big wave of agricultural liberalisation in the World Trade Organisation's Doha Development Round.

The big trade gun, WTO director-general Pascal Lamy, was wheeled in from Geneva for confidential discussions with trade ministers.

US Trade Representative Rob Portman lobbied behind the scenes (unsuccessfully) for an Apec agriculture offer to be made to the WTO. Portman's binding offer - which would have covered agriculture protectionists from within Apec's own ranks, such as Korea and Japan, and the US, which has already made a significant offer - would have been too difficult to stitch up in time for the mid-December meeting in Hong Kong, or so the story goes. It might yet eventuate if the upcoming Hong Kong WTO meeting fails altogether.

Former US Trade Representative Robert Zoellick, now Deputy Secretary of State, left big shoes when he vacated the trade czar's role. But Portman - like US Agriculture Secretary Mike Johanns, who uses the prowess of New Zealand farmers he has met as an exemplar for how US farmers could flourish without subsidies - has proved to be a quick study.

Cabinet Minister Phil Goff, who takes over the trade negotiations portfolio from Jim Sutton in the New Year, found Portman personable and easy to deal with (if not getting anywhere yet on bilateral free trade talks).

Goff defends the initial statement which was forwarded by trade and foreign ministers to their leaders, saying that when Apec talks, the world listens.

He notes all countries will benefit from a successful WTO round. This is the most important thing that might happen for the developing world; if we lose this opportunity, the next might be years away. Those facts are relatively sobering.

Goff says it's important not to lump all 25 EU nations in together.

While France is still the clear sticking point, several EU members do not support the common agricultural policy.

Finding a path around the impasse in agricultural negotiations, and getting greater market access, is where the action has to be.

Sutton, who was in Busan on his Apec swansong, says nations who are playing hardball and refusing to budge are playing a high-stakes game that puts the whole Doha Round at risk.

But Sutton's plain-speaking did not make it through the wall of officialese.

The brute reality is that if 21 Apec nations, which between them account for 70 per cent of world trade and drive the global economy, cannot bring a grunty offer together in speedy fashion, Lamy, with some 149 WTO members to cajole, faces a much bigger challenge.

The political leaders' mutual backslapping over their Busan Declaration might seem preposterous but for one thing - the public relations value of a show of solidarity which trade ministers can draw on when they return to WTO talks.

The clear consensus from Busan was to prepare to lower expectations on this round.

The Hong Kong ministerial meeting will still take place, short of the EU throwing its toys out of the cot. Lamy is using the looming deadline for the expiration of presidential trade promotion authority in the US as a cudgel to get recalcitrant WTO members to give way.

But a consensus is developing that this Doha Round will not deliver the big rewards to developing nations that were initially pledged when Mike Moore, WTO director-general at the time, kicked it off about six years ago.

The proliferation of free-trade deals criss-crossing the Asia-Pacific region (known as the spaghetti bowl) is beginning to trouble more free-market-minded Apec members.

Many deals are not WTO-plus - in other words, do not make substantial inroads into liberalisation across goods and services, let alone investment.

For instance, the China-Chile deal unveiled at Busan does not cover services.

New Zealand could have got to the signing stage just as quickly if it had been prepared to make significant carve-outs.

But from Prime Minister Helen Clark down, the word is that New Zealand will hang tough for an ambitious result rather than a down-and-dirty quick deal.

Despite the forced optimism, there was also talk of the dreaded "F" word - failure.

After two previous disasters - Seattle and Cancun - the WTO will not want to chalk up yet another failure when this round is supposed to deliver greater access for poorer exporting nations to the world's richest markets.

A fallback option - reviving the Free Trade Agreement of the Asia-Pacific which was proposed by Apec's official business lobby last year - is also being plugged.

Sir Dryden Spring, who is one of New Zealand's three representatives on the Abac (Apec Business Advisory Group), said the official statement was not grunty enough but was probably as much as could be expected.

Spring's own "letter of committal", a robust document that accompanied Abac's executive summary to Apec this year, needed to be toughened up again after it got lost in the morass of officialdom. He believes that if the Doha Round results in a less-than-optimal deal, Apec should go ahead and overlay the WTO agreement with a much more ambitious Asia-Pacific deal which would exclude the EU.

This is not a bad pathway forward if Doha fails; and if Doha is a success it is still a way of making sure we achieve liberalisation in the Apec countries more rapidly than can be achieved under multilateral negotiations.

The big issue is how to consolidate the proliferation of free-trade bilateral deals and regional deals into an over-arching, binding agreement, with a big A for agriculture.

Auckland University's Rob Scollay did the initial proposal. But Spring believes it may be timely for the full feasibility study that Apec leaders deferred last year.

He acknowledges that little is likely to happen on the Government side while officials are fixated on Doha.

Sutton says it's not timely to push for the FTAAP (Free Trade Area of the Asia Pacific) while the Doha discussions continue.

But Goff believes the Pacific Four deal linking New Zealand, Chile, Brunei and Singapore could be held up as a model which people can join if they wished. There has been some interest from other countries.