THE World Trade Organisation (WTO) has criticised country-to-country free trade deals in its latest report, saying governments risk damaging the main multilateral system if they continue signing their own deals.
The report warned free trade agreements (FTA), such as the Australia-US agreement, would erode the global trade system.
The WTO is heavily in favour of expanding global trade and urged governments to take a more aggressive role in promoting multilateral deals, instead of bilateral or regional agreements.
The report also placed a strong emphasis on multilateral trade liberalisation and the Doha Development Agenda of 2001. This document calls for greater transparency, particularly in its recommendations for greater outreach to the public and civil society groups. It advocates open meetings for the settlement of disputes to provide officials and citizens with a better understanding of the global trade system.
Australia's FTAs with the US and Thailand came into force earlier this month and the Federal Government is considering pursuing another with China.
The WTO report said it was unconvinced by the economic case for FTAs and was concerned that preferential treatment was becoming a reward for governments pursuing non-trade related objectives.
The report said the only way to end the discriminatory preferences in the trade agreements was to reduce most favoured nation tariffs and non-tariff measures in multilateral trade negotiations.
Australian Trade Minister Mark Vaile hit back at the criticism, saying Australia's FTAs were in the national interest and would deliver benefits to Australians.
"The new opportunities that will flow to Australia as a result of the bilateral FTAs with the US and Thailand, which were WTO consistent, are enormous," he said.
Mr Vaile agreed with the report's call for FTAs to support the multilateral trading system and for the WTO to develop more effective disciplines on such agreements.
He also called for trade ministers in the WTO to commit to finalising the Doha round of trade negotiations as quickly as possible.
"Australia has key interests in the Doha negotiations and it remains our number one trade priority," Mr Vaile said.
"On agriculture, the government will be working to secure elimination of trade distorting subsidies and domestic support.
"We are also seeking increased access to global markets for Australian agricultural and industrial products.
"2005 will be a crucial year for the Doha round and I will remain actively involved to ensure positive outcomes that will benefit our world class farmers, manufacturers and service providers."
Mr Vaile will be attending an informal meeting of WTO ministers in Davos, Switzerland, this month to discuss how best to progress the Doha negotiations.
He will also chair a meeting of Cairns Group ministers in Columbia in March to work on strategies to advance agricultural negotiations.
Federal opposition trade spokesman Simon Crean said the WTO report validated Labor's concerns about Australia's FTAs.
"Consistent with this report, Labor believes FTAs should only be pursued if they genuinely advance multilateral trade liberalisation," Mr Crean said.
"This was not the case with the Australia-US FTA."
Cattle Council executive director Brett deHayr said the WTO criticism of FTAs damaging multilateral trade was correct in theory. But the reality was many countries participated in FTAs and Australia had little choice but to participate.
Mr deHayr said idealistically, what the WTO was calling for could only happen if FTAs were eradicated in one fail swoop, making multilateral trade possible.