Big picture
The Asia-Pacific Economic Co-operation forum was established in the 1980s and was the first regional meeting featuring mainland China, Hong Kong and Taiwan in the same room. Each had their own Chinese translators. How times have changed.
Apec has an ambitious agenda, and noble and worthy objectives of free trade for developed countries by 2010, and among developing countries by 2020. Ten years ago, 2010 seemed a long way off. While none of these objectives are binding (leaders have always had ambitious plans for 20 years in the future), Apec is important. It has done some good work. At the time of the Asian financial crisis, no nation surrendered to protectionism. Year after year, in communique after communique, they endorsed the logic of open markets.
The Financial Times, in an October 20 editorial, said that Apec's only purpose was to keep multilateralism alive. The problems faced in Geneva at the World Trade Organisation, and the deep divides on issues and the sequence of negotiations, are no easier to settle at Apec than in the WTO. This only makes Apec more important, because it is representative of wider differences.
Predictably, Apec leaders reasserted their commitment to the Doha Development Round when they met last month. Everyone called on others to be more flexible, which really means: agree with me. The good news is that leaders seem to have agreed that the 'text' delivered at the failed Cancun conference by Mexican Foreign Minister Luis Ernesto Derbez should be the basis for negotiation. Unfortunately, it is my experience that leaders say one thing, but their ambassadors in Geneva read out tired, old positions that have failed before. Ambassadors are obliged to follow instructions from their capitals. It is true that most help shape those instructions, but when in doubt, the safest thing is to say no. That is where capacity-building and technical assistance comes in.
For example, it was a colossal failure at Cancun that the implications of the European Union compromise to withdraw the contentious issues of competition and investment from the agenda were not properly understood. Some countries argued as if there had been no change and then fought to the bitter end against transparency in government procurement and trade facilitation.
Apec has done good work on trade facilitation issues; its own research shows the grouping has more to gain from trade facilitation than tariff reform. An Apec protocol on chemicals is shaving 10 per cent off the unit price. Yet some Apec countries opposed even starting negotiations on the subject.
In the end, agriculture is always a deal-maker and a deal-breaker. Europe's subsidies equal Spain's total economic output; half of all the money spent by Brussels. Enlargement will make this even more costly. That is why the Europeans have, for the first time, opened the door. The big players - the United States, the EU and Japan - need to be more forthcoming, even if it is in private at this stage.
The creation of the new group of developing countries is a good thing. If nations with as diverse an agenda as India, Brazil, China and South Africa can have a more common goal, then it could signal the start of something big.
We ought never to forget that one reason for the creation of the Gatt-WTO was to prevent the potential rise of hostile trading blocs; a bitter lesson from the collapse of the global trading system in the 1930s. Yet the grim reality of the Apec meetings was that more time was spent advancing bilateral and regional deals than on the specifics of the Doha round. By the end of 2005, if regional deals reportedly planned or already under negotiation are concluded, they could number up to 300.
The big players have options. They can call the tune. It is only in the multilateral system that smaller players have any levers. But those representing 90 per cent of world trade cannot, in the long run, be stopped by those representing 10 per cent of trade. It is shortsighted that in Geneva or at ministerial meetings some argue against opt-in or opt-out clauses for issues, praising the principle of multilateralism and simultaneously working on other deals which will include issues they reject in the multilateral system.
It is chilling to hear some officials talk of extending the round by a few years. It is time for some risk-taking in capital cities and for officials to listen to the words of their leaders. No trade round has ever failed; they just take years longer than necessary. The difference this time is the unpalatable options. The WTO will never be the League of Nations. In fact, it might become irrelevant only for a few years.
Mike Moore, a former prime minister of New Zealand, was the World Trade Organisation's first director-general
