Trans-Pacific free-trade pact 'old-fashioned': ex-WTO chief

Protesters raise their fists and chant slogans during a rally against the Trans Pacific Partnership (TPP) trade deal in front of the prime minister's official residence in Tokyo on May 13, 2014. -- PHOTO: AFP
Protesters raise their fists and chant slogans during a rally against the Trans Pacific Partnership (TPP) trade deal in front of the prime minister's official residence in Tokyo on May 13, 2014. -- PHOTO: AFP

SYDNEY (AFP) - Plans for a vast trans-Pacific free trade pact including the United States and Australia were "good" but "old-fashioned", former World Trade Organisation (WTO) chief Pascal Lamy said Wednesday.

Lamy, who stood down from the WTO in September, also said that cutting tariffs was no longer the force it once was in advancing trade, in comments to Fairfax newspapers.

"The Trans-Pacific Partnership agreement Australia is negotiating with the US and 10 other countries, it's a good, old-fashioned agreement," Lamy told The Age.

''It's about goods, services, government procurement, a bit of intellectual property, but it's the last of the big old-style agreements." The Trans-Pacific Partnership has 12 prospective members - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam - with trade ministers this month agreeing to intensify talks on the deal.

The ambitious pact, which would cover about 40 per cent of the world economy, has stalled as the United States and Japan lock horns over key details, including Japanese tariffs on agricultural imports and US access to its ally's huge auto market.

If agreement between the US and Japan could be reached, it would raise hopes of a wider pan-Pacific agreement.

''Look at the US-Japan agreement," Lamy said. ''It's about pork, beef and rice. They are not exactly 21st-century trade opening topics," he said.

''Pursue the Trans-Pacific Partnership if you think there's something in it for you. But it's the last of the big old-style trade agreements."

Speaking about tariffs, the Frenchman likened them to "dead stars" whose light could still be seen across millions of kilometres despite them being long expired.

"They have been dead for thousands of years and you still see the light of the star. That's what tariffs are like, tariffs are dead," he said.

Lamy was, however, enthusiastic about a US-EU free trade pact which is under negotiation, the so-called Transatlantic Trade and Investment Partnership (TTIP).

''The new era begins with the Transatlantic Trade and Investment Partnership," he said of the deal which would vastly expand the US-EU economic relationship.

The TTIP includes tariff cuts and improved market access but one of its most ambitious objectives is common regulatory standards for goods and services.

Lamy said agreeing to common standards would make an "enormous difference" to trade because global corporations could "truly take advantage of economies of scale".

Australia has just concluded free-trade agreements with Japan and South Korea but Lamy, a former EU trade chief, conceded that businesspeople often did not use these kinds of deals.

''They make ambassadors feel good, but they are not worth the effort," he said.