Published in The Weekend Australian on 14.12.13
ONE year ago I wrote in these pages that the world's trading nations must not give up on successfully completing the decade-long global trade talks.
The Doha Round of multilateral trade negotiations had gotten nowhere since its launch in 2001. Confronted with the cynical refrain that Doha was as dead as a dodo, I argued that the dodo could yet take flight. Last Saturday, the Doha dodo achieved lift-off. For this, Australia can take much credit.
At a time when the global economy -- especially the developed world's -- is struggling for new sources of growth, another failure in the world trade talks would have delivered a devastating blow to confidence. It would have signalled a reversion to protectionism as nations sought in vain to protect their own jobs at the expense of others, leading to fewer jobs worldwide, slower economic growth and a return to recession.
The World Trade Organisation's 159 member countries agreed in Bali last weekend on a substantial down-payment on the Doha Round. Trade would be facilitated by improved Customs procedures, cutting down on the costly and wasteful delays leading to equipment and food sitting on wharves awaiting clearance.
Some modest reforms in agriculture would be implemented, together with measures to give the world's least-developed nations better access to rich-country markets. While this may seem a modest breakthrough, the trade-facilitation agreement alone is estimated to account for 44 per cent of the total prospective benefits of the Doha Round, with two-thirds of that gain accruing to developing countries.
How was the Bali agreement possible after 12 years of failure? Australia played a pivotal role. Just months after prime minister Julia Gillard appointed me trade minister in October 2010, I found myself in a chairlift high above the ski resort of Davos in Switzerland, heading for a dinner on a mountaintop. Six other trade ministers attended -- those from the US, China, the EU, India, Brazil and Japan. Our task was to revive the flagging Doha Round.
That Australia, as the smallest country in attendance, had been invited to the dinner spoke volumes of the credibility we had built up in the multilateral forum over decades. We had come to be seen as a genuine liberaliser, not waiting for the world to move first before reducing our own trade barriers. And we had a reputation for coming up with new ideas to help break deadlocks.
While the conversation was amicable and the dinner companions expressed good intentions, there was no big new idea. But the mountaintop image stayed with me. I recalled a conversation many years before with a school friend, Paul Godsell, who told me of a Martin Luther King speech in which the civil-rights activist declared: "I have been to the mountaintop." In telling me this, Paul invoked the saying of many philosophers that there were many paths to that mountaintop.
In the ensuing months, I pondered our dinner atop a snow-covered mountain, the impassibility of the pathway that had been trodden for a decade and the need for finding new pathways to the summit. It became clear to me that the Doha Round was too big, involving too many issues.
Countries refused to budge on one issue unless others gave ground on unrelated issues. Manufacturing tariffs would not be reduced unless agricultural export subsidies were reduced. No progress would be made on services without an agreement on reducing farm subsidies.
The idea occurred to me that we should try a new pathway to the Doha mountaintop, breaking up the round into separate negotiations and completing them as they were ready.
Gillard successfully championed this "new pathways" idea through the 2011 meetings of the Commonwealth Heads of Government, the Asia-Pacific Economic Co-operation forum, the G20 and the East Asia Summit. The Americans picked it up and lent it their weight, rebadging it as containing "fresh and credible approaches". The World Trade Organisation formally adopted it as a way forward in December 2011. At that Geneva meeting, China indicated it was open to "exploring new pathways".
Success was achieved at Bali through the negotiating skills of WTO director-general Roberto Azevedo and Indonesian host Gita Wirjawan, together with the goodwill of key countries such as the US, which had been unfairly criticised for years for intransigence. The first multilateral deal in 20 years had been reached.
An agenda for a further instalment and a pathway for achieving it must be developed. But as Martin Luther King demonstrated, there is nothing more powerful than the power of a good idea.