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Free trade deal needed to fight financial cri -

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ELEANOR HALL: Synchronised, sudden and severe is how one international expert is describing the
worst global trade slump since World War II.

The latest World Trade Organisation figures show that international trade will plummet by nine per
cent this year, much faster than analysts had been predicting.

But this has not been enough to secure the global free trade deal which the Australian Government
says is vital to help drag the world out of its financial and economic malaise.

From Canberra, Radio Australia's Linda Mottram reports.

LINDA MOTTRAM: Australia's Trade Minister Simon Crean has a mantra - that trade is a multiplier.
Growing in the recent past at three times the rate of world output and therefore a vital element as
governments the world over try to stimulate their economies out of crisis.

It was an important step, in Mr Crean's view, when the G20 meeting last November ordered trade
officials to get moving on revitalising the failed Doha Round of global trade liberalisation talks.

The latter hasn't happened and the latest World Trade Organisation data shows trade will fall by
nine per cent by volume this year. Simon Crean says it puts the situation into stark focus.

SIMON CREAN: The multiplier is working in reverse. So if we want to generate economic activity and
sustain economic growth we've got to use the domestic stimulus packages and enhance them, to
liberalise trade markets, to open the markets up, to conclude the Doha Round.

I think the G20 is firmly apprised of that. The question now is the political will to conclude the
round.

LINDA MOTTRAM: Trade is the only area of international life where there is a global set of norms
adhered to by virtually all nations. But predictions for the future of those norms are mixed at
best.

Observers say the changing world power balance and the widespread success of regional trade deals
are a threat to the WTO and the trade system itself.

Some are even harsher in their assessment of the WTO's capacity.

A symposium of trade experts and professionals at the Australian National University in Canberra
heard from Professor of International Economics at the Graduate Institute in Geneva, Richard
Baldwin, who predicted a further turning inward on trade by key nations in the current environment.

RICHARD BALDWIN: Global trade is experiencing a synchronised, sudden and severe collapse but it is
especially regional. It is focussed to a good extent on the supply networks which are regional. And
I think that regionalism will be reinforced by this.

Because in fact we've had more effective regional responses to this than we have so far at the
global level and I think there will be a bit of a turning in, in East Asia, in Europe and in the
Western hemisphere in the sense that the protection may be biased to favour regional trading
partners.

LINDA MOTTRAM: In the absence of much hope for the ideal, a purely multilateral free trade system,
Professor Baldwin's answer is to work with the reality of regional trade deals, having the WTO take
on the role of making such agreements transparent and friendly to new entrants.

In effect, multilateralising them.

Professor Baldwin says that while the current crisis is not a good time to put new issues on the
agenda, failure to act risks a further erosion of the WTO's relevance.

RICHARD BALDWIN: Because as we let this thing slide, regionalism is taking over from
multilateralism as the way of liberalising trade.

LINDA MOTTRAM: Associate Professor Shandre Thangavelu from the National University of Singapore
told the ANU symposium that the ASEAN (The Association of Southeast Asian Nations) block, with much
of its trade in parts and components, has been hit hard by the global trade slump.

SHANDRE THANGAVELU: When the regional trade goes down very fast, the trade in parts and components
falls even faster.

LINDA MOTTRAM: So ASEAN is already thinking ahead about how the current collapse in global
investment will affect production worldwide and what ASEAN can do to better secure its future role
in production and trade.

Its regionalism again and questions about the WTO's future pursuing global trade deals persist.

ELEANOR HALL: Linda Mottram in Canberra.