• agricultural market access (where the EU - amongst others - was defensive)
• agricultural domestic support (where the US was defensive) and 
• non-agricultural market access (a defensive area for key large developing countries).

Even if these obstacles were overcome, it is naive to suggest that the negotiations could otherwise have been concluded, given the lengthy list of other unresolved issues on the table, including:

• further trade liberalisation in services (these negotiations had drifted as a result of the slow progress on the agriculture and non-agricultural negotiations)
• geographical indications
• patentability (or non-patentability) of plant and animal inventions, and the protection of plant varieties
• trade and environment issues
• fish subsidies and other issues relating to rules (notably anti-dumping and subsidies)
• trade facilitation 
• special and differential treatment for developing and least-developed countries.

Beyond this, the Trade Promotion Authority (TPA) of the US administration expires mid-2007, which means that the US will be unable effectively to negotiate broad ranging trade agreements such as new WTO commitments or large-scale free-trade agreements (FTAs). It is generally accepted that the TPA will not be renewed during the term of this President, and perhaps well into the future.

Multilaterism stalls…disputes, bilateralism and regionalism gain momentum
One likely consequence of the failed negotiations is a significant increase in disputes initiated within the WTO's dispute settlement framework. This is particularly likely in controversial areas such as agricultural market access in the EU (where the EU's preferential access schemes may come under renewed attack) or US domestic agricultural support—especially if programs from the 2002 Farm Bill are rolled over. Agricultural export subsidy programs and intellectual property rights enforcement are also prone to challenge.

While recent cases provide grounds for strong legal challenges it remains to be seen whether the US or EU (or others) will be prepared to implement dispute settlement decisions on such sensitive areas without a broader negotiating framework.

Pressure on the WTO's dispute settlement system could facilitate a relaunch of negotiations in several years' time. Equally, consistent non-compliance could fundamentally weaken countries' faith in the dispute settlement regime—a regime that has, throughout the paralysis of the Doha negotiations, acted as the WTO's one good lung.

Another possible consequence of the failed negotiations is greater effort put into pursuing regional and bilateral FTAs.

The threshold issue for FTAs is what will happen in the US. US trade policy, which has been very much in favour of bilateral agreements, has driven much of the current high level of global FTA activity. With the expiry next year of the TPA (which applies to all trade negotiations) it is hard to judge which direction US trade policy will take.

The way forward
Commentators have focussed on opportunities lost by the stalled talks and the potential risks for the global economy.

Optimists argue that the talks can be resurrected if business interests can be galvanised into action. Others have suggested that the collapse of negotiations represents an opportunity to rethink and introduce greater social justice into the process of "globalisation" with which international economic governance bodies, such as the WTO, are often associated.

In any case, fundamental change is needed for the WTO to move forward from this current state of affairs.

Consequences for Australia and New Zealand
Australia and New Zealand must approach potential FTAs from a strong understanding of its likely strategic and trade significance. Clearly, China will be at the forefront of such an approach, but it applies to other FTA endeavours too, especially with those trading partners where the benefits of an FTA will be far more tangible and significant.

It will do no one any favours to attempt to produce easy, quick fixes with some of our smaller trading partners. The focus has to be on delivering tangible benefits to key sectors of our respective economies.

As a corollary to a renewed focus on regionalism and bilateralism, the WTO (and multilateral) system will come under renewed pressure and criticism. Governments will inevitably seek to downgrade their activities in the WTO.

Australia and New Zealand inevitably benefit far more from the multilateral trading system than from bilateral initiatives so it will be important for both countries to participate constructively and consistently in the WTO arena.

The whole multilateral system is at risk at this point in time. WTO members like Australia and New Zealand can play a critical role in ensuring that the system is not completely undermined or discarded during the next few years.

Finally, this new environment for trade policy provides all players in the global economy with an opportunity to work with their respective governments to reorientate themselves and get a better sense of the real priorities. For some sectors, this will be in the guise of a more active presence in dispute settlement, for others it will result in governments being more acutely aware of the priorities in regional and/or bilateral FTA negotiations. In many cases, it will be a bit of both.

The key is for all players to have a solid understanding and appreciation of what their priorities should be.