Fran O' Sullivan: Not quite so fast, Pascal

Seattle was about shrinking the WTO, Cancun was about sinking the WTO, Hong Kong was about re-thinking the WTO.

World Trade Organisation boss Pascal Lamy - waxing lyrical at a midnight press conference - could be forgiven for drawing a demarcation line between his first ministerial meeting as director-general and the acrimonious collapse of the past two full-blown WTO meetings: Seattle in 1999 where Mike Moore (a former New Zealand Prime Minister) had to deal with large-scale, anti-globalisation riots, and, Cancun in 2003 where Supachai Panitchpakdi faced a walkout from the least developed nations.

Lamy rated the Hong Kong Government 19/20 for logistics. But on technical progress - the measure of what got done - he awarded the delegates a 12/20 score.

The French technocrat was overly generous.

The most that can be said about the draft declaration issued after six days of exhaustive politicking is that it keeps the talks alive. Agreement in principle was reached to eliminate export subsidies by 2013 with a substantial amount scrapped by 2011; agreements to eliminate cotton subsidies, classify various domestic subsidy structures, negotiate guidelines for services trade and different tiers for agriculture tariffs.

But the detail has been left to negotiations in Geneva in four months.

It defies credibility to believe Lamy can raise the trade talks tempo after having dramatically lowered expectations before the Hong Kong meeting.

PR fluff transformed some micro-movements into major wins leaving the major issues untouched. Take export subsidies - which dominated the news media agenda - and took up almost 30 hours of "green room" talks. The plain fact is the WTO trade ministers had agreed to end subsidies last year - the only thing missing was when.

This has been portrayed as a defeat for the European Union. But in reality, because the EU's two dominant economies - France and Germany face budgetary constraints as their populations age - axing bloated farmer subsidies was only a matter of time. The EU has better things to do with the €2.5 billion to €3.5 billion it will save.

Even the pledge to cut export subsidies is a conditional one in the "nothing is agreed until everything is agreed" paradigm for WTO negotiations.

The devil is also in the detail.

Take the "duty-free, quota-free" access to WTO markets heralded as a win for least developed nations. The aim was for 99 per cent of products to fall into this category; the upshot was 97 per cent was agreed, leaving 3 per cent of LDC imports facing full tariffs. Rich countries can still get out their protectionist blankets by declaring some products"sensitive" - this will allow the US, for instance, to protect its textile sector by keeping Cambodian imports behind a tariff barrier. Hardly free trade or fair.

Similarly, the cotton agreement does not address domestic subsidies.

The WTO process has serious defects which make it difficult for Lamy to apply the accelerator in the new year when, as Moore says, "any of the 150 members can put their feet on the brakes at any time".

First: British PM Tony Blair's decision to get the G8 together - with some key developing countries - to push movement on big issues like tariff reductions is seen as "anti-democratic" by some smaller nations who believe it should have been addressed in Hong Kong where they would have had a voice.

Second: No full-scale ministerial meeting is scheduled in 2006 - adding further to the claims the process will disappear behind the major players' wall. After the South Korean farmers' Hong Kong riot no other WTO member has put itself forward as a candidate to host a meeting next year to get the final elements of the Doha Development Agenda in place.

Third: Power politics have shifted markedly in favour of the Brazil, India, China nexus which controls the G20 group of developing nations. The days when the "quad" (US, EU, Japan and Canada) ran the show are gone. But the US and EU have yet to work through an effective formula for the trade-off they must make with the new power players in an agriculture access for industry opening tit-for-tat.

Fourth: Non-Government Organisations (NGOs), welcomed by Lamy as part of the process in Hong Kong , have to work out whether they want to promote trade - or stop it.

The amount of frank disinformation promoted by some NGOs - who were trying to persuade less developed nations to mount another walkout - was unpalatable. The number of free-market NGOs - such as former Australian trade diplomat Alan Oxley's World Growth Forum - are hardly thick on the ground. This means the upside of expanding world trade is not promoted in a comprehensive fashion.

The ultimate issue facing the WTO is that the global trading system does not yet have the tools to deal with the rapid emergence of China and India which are putting the old laws of comparative advantage to the test.

This is the central issue which the WTO must confront - but so far there are no takers.