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US offers Canberra a Doha fallback over trade

The Australian, Canberra

US offers Canberra a Doha fallback over trade

By Geoff Elliott and Sid Marris

29 June 2007

Australia could be invited to join the North American Free Trade Agreement as part of a strategy among Asia-Pacific nations to deal with the collapse of world trade talks.

The Bush administration will discuss with Australia and other Asia-Pacific countries next week the possibility of bringing together regional and bilateral freetrade agreements in the event that the Doha round of global free trade talks is finally declared dead.

The troubled round of negotiations stalled again last week because of a walkout by India and Brazil.

Pressure is also growing for Australia to use its position as chairman of the Asia-Pacific Economic Co-Operation forum this year to push for India to join the 21-member diplomatic club.

India’s critical role in a post-Kyoto climate change arrangement is adding weight for its involvement, despite the stern opposition of China.

In an exclusive interview before her trip to Cairns for next week’s meeting of APEC trade ministers, US trade representative Susan Schwab said alternatives to the so-called Doha round of global trade talks were being considered, with the US focusing on the Asia-Pacific region.

"You look at what’s going on in the Asia-Pacific - there’s so much promise, it’s so exciting, and so how do you make sure you sustain that and how do you make sure it grows rather than turning in on itself," Ms Schwab told The Australian.

"I think you will see a real acceleration of bilateral and regional deals including something like a free trade agreement of the Asia-Pacific if the Doha round really disappears from the scene.

"One of the big questions with the proliferation of bilateral and regional agreements is this: is there an inclination - and if so what would it take - to knit together multiple free trade agreements? Because all of us have multiple free trade agreements. That is another issue - we would talk about it."

Asked whether that could mean including Australia in the NAFTA - the regional agreement between the US, Mexico and Canada struck under the Clinton administration - she said: "Exactly." But Ms Schwab stressed that this did not mean that Washington was backing away from Doha.

"I think at this point most of us believe the single most important thing we can be focusing on right now as trade ministers is a successful Doha round, trying to save the Doha round, because it so very important," she said.

Prime Minister John Howard said last month that any failure of Doha would see Australia turn to the Asia-Pacific region.

A spokesman for Trade Minister Warren Truss said Australia’s priority was still the Doha round.

"But if it does fall over there is a whole range of other possibilities we would be looking at, one of which would be an APEC FTA," he said.

While lauding the success of the US-Australia free trade agreement, Ms Schwab also referred to some "growing pains", acknowledging that Australia had issues with the US’s farm subsidies. She also repeated Washington’s view that Australia’s single desk wheat-marketing arrangements, which have protected AWB’s monopoly, were a "serious irritant".

Her comments come as federal Agricultural Minister Peter McGauran is in Washington for meetings.

International Trade Strategies director and former trade negotiator Alan Oxley said any invitation from the US to discuss a trade deal, such as NAFTA, would be difficult to ignore.

He said he thought it more likely, however, that nations would find it more efficient to look to an APEC-wide deal.

Mr Oxley said that while the idea of an APEC free trade deal was given a boost at last year’s APEC meeting in Vietnam, the introduction of a trade deal between South Korea and the US had changed the landscape.

That deal had put greater pressure on Japan to make serious attempts at deals with other nations - including Australia - for fear of missing out on opportunities.

Mr Oxley said that, in turn, was putting more pressure on China.

"The real action in the trade area, and what really matters to Australia, is likely to (be) around an APEC configuration," he said. "But when America is genuinely saying they want to do something, it is hard to turn your back on it."

The Doha talks refer to Doha in Qatar, where in 2001 world trade ministers committed to a new round of trade talks with a focus on market access to developing countries and the dismantling of trade-distorting subsidies in developed countries.

Ms Schwab said next week’s APEC meeting of ministers in Cairns represented the most optimistic, pro-trade bloc in the world.

She said the possibility of a free-trade pact among the group was a live issue, and that it had been discussed last year.

But any movement on such a deal was a "long, long way off" and depended on the outcome of the Doha talks, she said.

Ms Schwab blamed Brazil and India, saying they showed no flexibility in reducing industrial tariffs, while asking for even bigger cuts to US farm subsidies.

"We really had our hopes dashed," said Ms Schwab, who had been optimistic ahead of last week’s talks, in Germany.