Sutton acts to enliven trade talks

By COLIN JAMES

Trade Minister Jim Sutton hopes his proposal for a zero tariff for all industrial goods, tabled at the World Trade Organisation (WTO) last night, will improve the chances of real progress on freeing agricultural trade.

Sutton yesterday called the move an attempt to "galvanise" the Doha round of trade negotiations.

He said he believed it was the first substantive proposal by any country in the round in the non-agricultural section of the negotiations (the other two sections are agriculture and services).

The proposal will be discussed at a meeting of WTO ministers in Sydney on November 14-15.

New Zealand stands to gain directly from a zero tariff on non-agricultural goods through better access for processed food, fish and forest products and manufactured goods generally.

Around half of goods exports are in this category (the other half are agricultural) and Sutton estimates the savings in tariffs at $185 million.

He wants the 144 WTO countries to commit to an objective of zero tariff for all non-agricultural goods and envisages developing countries would have a longer phase-in period, but he has not proposed a timeframe.

In WTO negotiations no agreement comes into force unless all countries agree, so New Zealand will not move unilaterally.

"New Zealand is taking the lead but is not going to do it alone.

"I have consulted a variety of companies. Pretty much all of them have concluded they have more to gain than to lose."

That includes the sensitive textiles-clothing-footwear sector, which has the highest remaining tariffs, up to 19 per cent.

Sutton said this sector had moved into higher-priced goods and was showing "outstanding" growth.

The Seafood Industry Council said it fully supported the initiative, but the Council of Trade Unions warned it "risks the loss of popular support for the Government's trade policy" and complained that there was no cost-benefit analysis.

Greens co-leader Rod Donald called it a "flight of fancy" and demanded the Government "stop chasing rainbows".

Rainbow or not, Sutton and diplomats have discussed the proposal with several foreign countries and claim "general expressions of support".

Sutton said he expected most support to come from Australia, Canada, the United States - "I have spoken to [US trade negotiator] Bob Zoellick and he was very encouraging" - Mexico, "the more progressive countries of western Europe, like Britain" and, in Asia, Singapore and Hong Kong.

But Sutton and his chief negotiator in Geneva, Tim Groser, are also playing a longer game.

The reason for that is if they can get substantive agreement on a zero-tariff objective for non-agricultural goods, that will put pressure on countries which protect agriculture to agree to freer agricultural trade.

Developing countries and the Cairns group of agriculture exporting nations would probably veto a WTO round which did not make major concessions on agriculture, Sutton said.

By proposing dramatic reductions in industrial tariffs, agricultural protectors would have something to gain in return for opening-up on agriculture.

Moreover, the minister said, without an across-the-board move on non-agricultural tariffs, the round was likely to turn into a haggle in which countries tried to continue to protect their most sensitive sectors.

* Email Colin James