Farm issues key to success

By GREG ANSLEY in SYDNEY

There was a comforting humanity about the final - and only public - assembly of the ministers who between them control about 80 per cent of world trade and who were in Sydney to shape the way trade should be carried out.

Malaysian International Trade Minister Dato Seri Rafidah Aziz was reportedly upset because there were no chairs for the dignitaries on stage for the closing press conference.

South Africa's Alec Erwin was running late, America's Robert Zoellick was squished in among the Third World, and Australian host Mark Vail was calling them all by their first names.

Were it not for the fact they held so much power in their hands, and that police and demonstrators were cracking one another's heads outside, it could have been rather jolly.

However, while not even the wildest optimist could claim that the 25 trade ministers who gathered on Thursday and Friday for the informal World Trade Organisation mini-ministerial had broken through the morass of issues entangling the Doha Round, there were encouraging roads signs for New Zealand.

The first was the inclusion of New Zealand in Zoellick's announcement on Thursday of negotiations for a free trade agreement with Australia.

The key to a US-Australia deal will be agriculture, as it will largely be for the Doha Round, and if the Bush Administration on the one hand and Prime Minister John Howard on the other can win their trenchant farm lobbies over to a compromise, there might be some hope for broader ambitions.

This holds obvious implications for New Zealand, whose monumental efforts to get the country blipping on Washington's radar screen were rewarded with the brief promise of congressional action by Zoellick.

In diplomacy such language is everything.

"We're delighted by [Zoellick's reference]," Trade Negotiations Minister Jim Sutton told the Business Herald. "That was at the upper end of our reasonable expectations."

Wellington's diplomatic task remains daunting, not the least because whatever the Government may say to the contrary, New Zealand continues to carry its non-nuclear baggage - and we will be arguing our own difficult case without the Australians.

Canberra had its own reasons for working alone: its huge congressional goodwill from a close military and diplomatic alliance, a range of very tough issues of its own and, as Sutton accepts, a bottom line that could be substantially different from New Zealand's.

"We wouldn't necessarily negotiate identical terms and conditions," he said.

It is also important for Howard to be seen to have brought home one of the Holy Grails of Australian trade policy on his own.

On the other hand, and also contrary to much speculation in New Zealand, Australia will not hamper separate US-New Zealand negotiations and, at important levels, has said it will cheer from the sidelines.

"We are pleased to have an endorsement from John Howard that he's prepared to be helpful towards any parallel or similar enterprise that we undertake in the US," Sutton said.

Although this sentiment may not reach some dark corners of the Australian trade bureaucracy, sources have pointed out that Canberra's interests would not be served by a US agreement that undermined the New Zealand economy.

The NZ-Australia Free Trade Agreement, precursor to CER, was promoted by Canberra partly because Australia did not want a dependent basket case across the Tasman and partly because it saw New Zealand as a nursery and key market for its nascent manufacturing export industry. Both considerations still apply.

The transtasman economies are now infinitely more entwined, Australia has huge investment and trade at stake In New Zealand, and Canberra needs a healthy partner to help shoulder the burden in an increasingly unstable region.

Wellington's task will be to attach itself to Australian momentum.

"It think it would be more realistic to describe [New Zealand's aims] as trying to catch the slipstream," Sutton said.

But the Sydney mini-ministerial showed clearly that there was a much bigger game afoot than the US, one that will continue to extract an exhausting toll from Wellington.

The old, antagonistic duopoly of the US and Europe has been joined by a developing world determined that no more cosy deals will be carved out by the rich at the expense of the poor.

There is no simple, single lobby for the Third World.

The demands of the least developed countries of Africa, for example, may differ from the more advanced nations of Asia.

Geneva-based observers in Sydney noted that although Egypt and South Africa were among the most strident, unified and cohesive voices for the poor, they were regarded with suspicion by much of southern Africa and had previously clashed with Malaysia.

But the power of the developing world was demonstrated by the compromise reached in Sydney that would allow cheap, generic drugs to be made available to the poor.

It has yet to survive the roughhouse of Geneva and the muscle of European and American pharmaceutical giants, but ministers said they believed it was a workable compromise. "We need to pay attention to the needs of the developing world," Vail said.

The Sydney agenda included more than 100 references to developing countries. About 60 proposals are under review and progress was reported in the thorny area of special treatment for developing countries.

WTO director-general Supachai Panitchpakdi proposed a package of issues to help deal with the developing world's demands.

Zoellick said that, "in that part of the discussion, I think there was a good sense of how to approach that."

Agriculture remains probably the toughest bottom line. Europe, the US and countries represented by the Cairns Group are still poles apart.

"Clearly agriculture is an area where there is a very significant divergence of views," Sutton said.

"There was some pretty vigorous discussion at times.

"But what I think I can say is we did see some convergence, because what happens in that situation is people get a sense of how far they can go, and gradually over a series of meetings you'll bring positions closer together, until at the end of the day people will agree because there are things they want to obtain in other areas.

"Of course, in this process nothing is agreed until everything is agreed."