KEY POINTS:
Trade Minister Tim Groser will soon be back in his element lobbying the luminaries of the international trade world at Davos and in Brussels against the European Union's decision to reintroduce export subsidies for its dairy farmers - a move which could spark "tit-for-tat" reprisals, and, if carried
to extremes, a reversion to 1930s-style protectionism.
The long-stalled world trade talks will also be in the spotlight.
But the reality is that few governments are really focused on multilateral trade liberalisation when financial systems are stretched to breaking point and the international recession is deepening.
Despite the head of steam at the G20 meeting late last year, trade ministers did not muster in Geneva to get the round completed.
The World Trade Organisation's credibility - along with the G20 itself - has become debased.
There is an argument which says it would make more sense to suspend the WTO talks for say 12-18 months while big players like the US, Germany, China, and the UK deal with the economic crisis.
Particularly as United States President Barack Obama gets down to reality rather than rhetoric.
But in the meantime incipient protectionism has to be arrested.
Back to Groser.
He was clearly apoplectic when the EU fingered the online auction system used by NZ dairy co-operative Fonterra as a factor in driving down world prices to the point where it had to intervene in the market.
In the Groser lexicon it's simply a reversion to the "we are all sinners" arguments used as moral justification by big players for "tramping over small countries".
Australian Trade Minister Simon Crean has been enlisted to kick the Cairns group of agricultural exporters into action so that New Zealand does not become isolated. The clear objective is to get the EU to impose a time limit on the subsidies so that they don't become a permanent fixture.
But the inevitable upshot is that the US will come under pressure from its dairy sector to "help it out", and, international prices will get another downward kick.
Trouble is that while Groser in his previous life (he chaired the World Trade Organisation's agriculture committee while he was New Zealand's WTO ambassador) had forged an international agreement banning agricultural export subsidies as part of the long-winded Doha Development Round negotiations, that round has yet to be completed.
And the EU is now thumbing its nose at the "users agreement" not to apply export subsidies meantime.
During the nine years of the Clark Government, New Zealand's agricultural players took an NZ Inc approach when it came to driving a hard bargain in their combined interest.
This resulted in legions of lobbyists from various sectors and some directors of key agricultural companies being on hand to advise the NZ Trade Minister (Jim Sutton and then Phil Goff) as he prepared to talk turkey offshore with the 20 or so key trade ministers that tend to drive much of the action at the WTO.
But Groser has not decided whether to continue with the Ministerial Advisory Group. ("I've had 30 years of background in this - I don't see the need for advice on this - I just want the analysis.") As a skilled negotiator who drove New Zealand's case during the similarly long-running Gatt negotiation, he has a point.
But the problem is unless he uses his cachet as New Zealand's Trade Minister to butt Kiwi heads together - by impressing on them the need for an NZ Inc approach - the EU will simply use the auction system as a wedge between this country's agricultural interests. It may not matter too much at the informal "green room" meeting of select trade ministers that will take place on the outskirts of this week's World Economic Forum in Davos. But it does need to be addressed.
The mere fact that ex-Fonterra chief Craig Norgate - who now chairs the PGG Wrightson combine - has broken cover and publicly attacked the online auction system could strengthen the Europeans' hands. Norgate - who has held these concerns privately for sometime - now openly claims the EU move has been prompted by Fonterra "behaving irresponsibly" in the market and via its auction system leading prices down.
Norgate's not alone in his consternation. Even before the EU moved, Federated Farmers dairy chairman Lachlan McKenzie had asked Fonterra to allow a review of the auction system - to no avail.
Groser notes the competition will always think the selling price used by an unsubsidised exporter shouldn't be used when prices are going south. But he maintains the real reason why the EU has moved is the international downturn which has affected all commodity prices. ("To pretend somehow the particular selling method used by Fonterra is the cause of this is simply ludicrous.") Unless Fonterra puts this issue to bed quickly by holding a review, Norgate with his superb media skills is quite capable of creating a bandwagon on the matter.
Of course, if an independent review finds Norgate is right - then Fonterra would find itself under increased pressure to abandon its auction system.
Given this factor, the blame shifting game that Groser castigates will inevitably continue if he does not ensure a cohesive NZ Inc support base.
Groser will have a useful meeting with EU Agriculture Commissioner Mariann Fischer Boel after the Davos meeting and will impress upon European Trade Commissioner Baroness Catherine Ashton that the EU decision has sent a negative signal at a critical time for the global economy. The key question now is whether the US will follow suit. The US now has 10 per cent of the global dairy export trade and pressure is growing to "assist" its farmers through the downturn. Trouble is the US has no topline representation at Davos.
New US trade representative Ron Kirk hasn't even been sworn in yet. The US Senate finance committee has been too busy with the finer details of the financial stimulus package to get down to hearings.
Obama has also ordered his top economic adviser Larry Summers to revoke his trip.
Obama is sending personal adviser Valerie Jarrett in Summer's place and acting US trade representative Peter Allegier - a holdover from the Bush Administration - will also be present.
But the absence of the key water carrier for US trade - even in an observer's role - is telling.
Kirk has said he shares Obama's commitment to a "values-driven trade agenda". But as protectionist pressures grow the international trade world needs a clearer signal than mere rhetoric.
Groser might get a chance to meet Jarrett personally (she is known as the "other side of Obama's brain") and impress on her the need to resist protectionism at this time. There will inevitably be more verbiage from Davos about the need to get the WTO round moving again. But given the ranking Obama places on trade (it is well down his list of concerns), Groser might be better placed arguing for a "standstill pact" - an agreement where WTO member states do not introduce new protectionist measures.
WTO director-general Pascal Lamy has already introduced a "name and shame" report which checks off the new protectionist measures nations are introducing. But unless a standstill can be agreed, the EU will not be the only player reverting to the types of policies that threaten to turn the current recession to outright depression.
