AAP NEWSFEED | By Shane Wright | December 23, 2003
CANBERRA AAP - The running street battles of Seattle may not have been repeated in the sun-drenched hotels of Mexico's Cancun.
But the results of a World Trade Organisation (WTO) meeting at Cancun this year were just the same as that in Seattle four years earlier - a failure of world trade talks to get on track.
The timetable for a completed WTO round by January 1, 2005 - with major cuts in agricultural protection - now seems a distant dream.
Australia has pinned its hopes on the Doha round of WTO talks to deliver cuts in tariffs and subsidies used by much of the developed world to protect their farmers.
Farm sector protection in 2003 was estimated at close to $US400 billion - or more than $US1 billion a day.
Much of Australia's focus in the lead-up to Cancun had been on the agricultural issue.
But instead, negotiations broke down when a group of 21 developing countries - including China, India and Brazil - baulked at demands from the developed world for reform in trade in investment, government procurement and regulations.
The split seemed to catch the developed world off-guard which, until this year, had been able to press its own views through the WTO.
Even a rear-guard effort by the European Union, which dropped some of its demands on this front, failed to appease what became known as the G-21.
The creation of the G-21 particularly caught Australia by surprise.
Many of the members of the new organisation were also members of the Cairns Group, an Australian-led group of 17 free trading developing and developed countries.
It appears the G-21 came together in two or three days in direct response to a joint EU-United States position paper on agricultural reform.
The way in which the G-21 formed, and then dominated the Cancun agenda, fed into complaints that Australia had taken its eye off the main trade game.
The federal government's trade agenda has been dominated by attempts to strike a free trade agreement (FTA) with the US.
Negotiations for the FTA with the US have almost been concluded, while a deal with Thailand was signed off in the second half of the year.
The government has invested a huge amount of political capital in the US FTA, although there is debate whether the deal will actually produce any major benefits to the Australian economy.
A government-commissioned study found the FTA would boost Australia's GDP by around $3 billion a year.
However another study, not commissioned by the government, found the FTA could even harm the Australian economy.
In the US the FTA has been seen as a pay-off to Australia for its strong support of America in the war against terrorism.
The negotiations have not been plain sailing, with American farm interests - particularly in the politically sensitive area of sugar - swinging their weight against aspects of the deal.
In Australia, there were continuing arguments from various interest groups about what may or may not be in the FTA.
The television and film sector was particularly strong in arguing quotas on Australian content for future media should not be offered as a bargaining chip to get access into American farm markets.
Late in the year, Trade Minister Mark Vaile signalled Australia had plans to launch FTA talks with Persian Gulf states, while an agreement signed with China paves the way for a scoping study into a free trade deal.
It is part of the government's policy of competitive liberalism.
Under this philosophy, the government argues that by striking bilateral deals it puts pressure on the WTO to kick along the multi-lateral talks.
The government concedes multi-lateral agreements bring much richer rewards than bilateral deals.
While in the proposed FTA with the US, Australia can argue to knock down America's restrictive quotas in areas such as sugar and beef, it can't do a thing about domestic subsidies.
Multi-lateral talks are the only place that subsidies, such as America's Farm Bill or the European Union's Common Agricultural Policy, can be taken apart.
Competitive liberalism has not had a good year.
The year in trade was also marked by perhaps the pinnacle of Australian trade policy - the 20th anniversary of Closer Economic Relations (CER) with New Zealand.
Even those with concerns about bilateral trade deals hail CER as the best free trade agreement in the world because it has so few, if any, exceptions.
With the WTO now in danger of becoming bogged down in disputes between the developed and the developing world, deals such as CER and the proposed FTAs may dominate trade negotiations for the coming 12 months.AAP NEWSFEED:
