TCS Daily

The View From Another Planet

By Charles Finny - January 9, 2006 12:00 AM

For the second time in less than a year outside the Ministry of Foreign Affairs and Trade I have been subjected to stinging attack from New Zealand's Trade Minister Jim Sutton. As with the first occasion I suspect that the Minister was reacting to media versions of what I said rather than my actual words. I doubt Sutton would have accused me of "living in some other planet" or of "scraping the bottom of the barrel" had he read the comments I made praising him personally and his team, for the progress they achieved at the Hong Kong WTO Ministerial on agricultural export subsidies.

What appeared to anger the Minister was my suggestion that not enough has yet been achieved in other areas of the negotiation for us to be satisfied with the progress made in the WTO Round. In particular I expressed concern about the huge amount of work needed in 2006 if we are to achieve good outcomes on non-agricultural product market access and on the liberalization of trade in services - sectors that make up far more of the New Zealand and other OECD member economies than agriculture. And within agriculture I suggested that there was still more work to be done on domestic subsidies and market access - are export subsidies not a very small part of the overall subsidies available under the EU's Common Agriculture Policy?

A couple of contributors to TCS have been far more critical than I have been of the WTO Hong Kong Ministerial. I think that some comments have been too harsh. But I could not agree more with Alan Oxley's comments on the "dumbing down" of expectations that is occurring right now in the WTO. And Minister Sutton's comments are part of the problem. I think WTO Director-General Lamy had it about right in describing the Hong Kong Ministerial Meeting as bringing the negotiations "back on track". Australia's Trade Minister Mark Vaile was similarly cautious but a little more upbeat in describing the outcome as a "significant step in the right direction" (unfortunately the caution went out the window when he commented positively on the progress made in Hong Kong to liberalize trade in manufactured goods and services).

But here in New Zealand the Hong Kong Ministerial apparently achieved a "stunning result". I actually agree that the elimination of agricultural product export subsidies by 2013 would be a "stunning result". Unfortunately we haven't quite achieved this goal. When reading the fine print it is clear that the EU has ample room to withdraw from this commitment at a number of points in 2006 - e.g. "The date above for the elimination of all forms of export subsidies....will be confirmed upon the completion of the modalities" - the modalities still require considerable work.

There were also clear links made in the Hong Kong text between progress on agriculture and other areas of the negotiation - the text talks about the need for comparable levels of ambition in market access for both agriculture and non-agricultural market access. If we want the EU to make some good commitments on agricultural market access we are going to have to be offering some good commitments on non-agricultural product market access.

It is also my view that a good outcome on services will both be positive for continuing growth in the global economy and will increase the chances of the EU being willing to buy into a good outcome on agriculture at the end of the day. Unfortunately the outcome from Hong Kong gives little encouragement on services. No liberalization has yet to make it to the table on services after several years of negotiation. So I take little comfort from Jim Sutton and his Ministerial colleagues in Hong Kong "urging all Members to participate actively in these negotiations towards achieving a progressively higher level of liberalization of trade in services" (translation: we admit that many Members have not yet participated actively in these negotiations of critical importance to close to 70% of the OECD economy). This same group of Ministers have been "determined to intensify negotiations" before -- and failed.

So this is why I urged my Government to re-double efforts to achieve good outcomes across the board in this WTO Round. I also suggested that New Zealand lead the way and put some extremely ambitious offers on the table in both the non-agricultural product market access and services areas. If others follow such a lead we have the prospect of achieving something good from the WTO Round. And if we don't achieve something good in other areas do we really believe that the EU is going to make major concessions on agriculture? How is Chirac going to explain that to his farming constituency?

Well that is how it looks from up here on another planet. Rather than scraping the bottom of the barrel in my comments I suggest that unless these talks take a new direction quickly, we are not going to see much more than barrel scrapings as the outcome. Hong Kong has put the WTO talks back on the tracks. But there is much more to be done to achieve a good outcome. Such an outcome is not going to be achieved if we focus on the dumbing down of expectations and talking up what is on the table so far.

Charles Finny is CEO of the Wellington Regional Chamber of Commerce and formerly director of New Zealand's Ministry of Foreign Affairs and Trade China FTA Task Force.


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