Molesworth & Featherston (Weekend) – July 30 2006

Direct Link To This Week's Weekend Update Edition:
http://molesworthandfeatherston.info/pdf/MandF30Jul06L.pdf

After the suspension of the Doha round of trade talks New Zealand’s focus will now switch to trade agreements reached through ASEAN or the East Asia Summit. The latter brings together the ten ASEAN countries Asia as well as China, Japan, South Korea, India, Australia and New Zealand. The US, which is not part of the East Asia Summit, has been giving signals about using APEC as a starting point for regional trade expansion.

While New Zealand and Australia have been talking about a regional deal by the end of next year, it is at best a tentative prospect.

ASEAN countries meeting this week have exposed deep divisions over their own approach to a free trade deal. India, for example, was intransigent in the Doha talks, refusing to expose its 650 million subsistence farmers to more competition. It’s difficult to see why it would see things differently in a regional deal. This week Asean called off talks on a trade deal with India, which in turn (rather hopefully) said it would look to the EU and Japan.

Our trade officials believe New Zealand is well-placed to be part of talks on any regional agreement. Talks on a trade deal with China are already well-advanced and bilateral ties with Malaysia, South Korea, Japan and the P4 Trans-Pacific grouping. If the bloc is widened we have effective ties with the Gulf Co-operation Council (comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE).

Trade negotiators believe the ‘suspension’ of Doha talks is not the end of the road. The Uruguay round of talks was a longer and more testing round but eventually achieved success. And Doha has been in crisis before, when it all looked over after Cancun. New Zealand officials think that could take 2-4 years.

That’s optimistic - moving deeply held positions a long way will require an intervention such as major political change or fresh pressures. There is little prospect of a fresh political tone on trade in any major country. The best prospects for re-starting Doha will be successful regional pacts that create anxiety among excluded powers. Those deals will take time to pull off. Agricultural trade reform on a global scale therefore won't be in prospect in the next five years.

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Direct Link To This Week's Weekend Update Edition:
http://molesworthandfeatherston.info/pdf/MandF30Jul06L.pdf

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