Melbourne, 3 February 1995
I am delighted to be here this morning to launch Alan Oxley's CD-ROM on International Trade and Environment Agreements
The interaction between trade and environment agreements raises a number of complex issues and so I am only too happy to launch a product which will encourage more research and more debate on issues which I expect to be of increasing concern to policy makers
The CD-ROM provides both a core set of agreements and a useful set of commentaries by a dynamic and prominent commentator on the both sets of issues
Alan Oxley's experience in the GATT as a former Australian Ambassador and a Chairman of the GATT Council, and his subsequent incarnations as analyst and commentator are all brought to bear in a most useful fashion.
Earlier this week I celebrated the first anniversary of my appointment as Minister for Trade.
1994 was, of course, an important year for Australia's trade interests, with the highlights undoubtedly being:
More than anything else these milestones underline the Government's commitment to multilateral, regional and bilateral trade liberalisation and the benefits such liberalisation brings in terms of the efficient allocation of resources and economic growth and development
At the industry level liberalisation is about creating opportunities for Australian businesses to export their goods and services to international markets and providing a stimulus through international competition to be competitive and at the leading edge of international best practices.
In the coming year, one of my key priorities is to complete a review of Australia's trade policy framework to ensure that we maximise the opportunities for Australia in the post-Uruguay Round international trading environment.
I will come back to this issue in a few moments but, first, I know many of you are intensely interested in the debate as to whether Australia should introduce a carbon tax/environmental levy.
Many of you would have seen the Treasurer refer to this issue the other night on the 7.30 Report
He made it quite clear that the Government's consideration of the environmental levy proposed by the Minister for the Environment is not being considered in the Budget
The levy will be dealt with on the basis of its appropriateness as a measure to reduce Australia's greenhouse gas emissions rather than on the amount of revenue it might raise.
As you will all know, Australia has accepted commitments under the Framework Convention on Climate Change (FCCC) and the National Greenhouse Response Strategy (NGRS) to adopt measures aimed at reducing our greenhouse gas emissions. These commitments are, however, subject to important caveats that
Measures undertaken to meet these commitments have been on a "no regrets" basis involving no net negative impact on the economy.
These commitments are real and worthwhile and Australia has already made a significant, and often unappreciated, start to achieving them - current projections suggest that Australia's emissions by the year 2000 will be 7 per cent higher than they were in 1990, an outcome which is half that which would have occurred in the absence of the measures taken to date.
This would be a very respectable outcome in comparison to other developed countries, particularly taking into account factors such as the energy intensive nature of our economy and the rate of economic and population growth in Australia over the period.
Nevertheless I believe we are well placed to look at additional measures - for example through improvements in energy efficiency - which will enable us both to increase our international competitiveness and to further reduce our greenhouse gas emissions.
All controversial policy initiatives have both pluses and minuses associated with them and they often require the Government to seek a balance between competing interests - what is important to ensure is that the downside to such decisions is clearly acknowledged in the decision making process.
Before moving to the introduction of a carbon tax, we would need to be assured that it would contribute to the net welfare of the Australian people in terms of both environmental and economic outcomes.
An important consideration has be to the fact that Australia has a clear comparative advantage in fossil fuels and energy intensive activities.
What we need to avoid is any situation where we unilaterally place a wide range of export and import competing industries at a competitive disadvantage without actually contributing effectively to reducing global or domestic greenhouse emissions.
Where Australian industries such as aluminium are at the forefront of energy efficiency, it makes sense on a global emissions basis for aluminium to be produced in Australia and exported to other countries, rather than having it produced in other, less efficient countries which require greater energy inputs and produce higher levels of greenhouse emissions
Encouraging the movement offshore of such industries would result in both a worsening of global greenhouse gas emissions and the unnecessary loss of jobs and income to Australia.
The suggestion that raw materials such as coal could be exempt from any carbon tax could provide a disincentive for the further development of value-added processing industries in Australia - and if our customers of coal subsequently introduced carbon taxes we could even end up in a bizarre situation where the Australian coal was subject to a tax but rather than the revenue flowing back to Australia it was instead collected by foreign Governments.
These issues of policy effectiveness and the impact on trade competitiveness are factors which I intend to ensure are given the necessary attention in the Government's consideration of further measures to reduce greenhouse gas emissions - to achieve this I have been consulting with a wide range of industries and interest groups to ensure that I am fully informed on the costs of and alternatives to a carbon tax/environmental levy.
The climate change issue is a clear example of how at both the domestic and international levels policy debates increasingly have to deal with nexus between environmental and economic and trade considerations.
The growing concern by the public and governments with preserving and protecting the environment often leads to discussions about the link between trade and environment objectives -there is a tendency sometimes even to question the commitment to free trade because of fears that somehow this conflicts with achieving environmental objectives.
Let me make it quite clear: I see no necessary contradiction between trade and environment
I believe trade and environmental considerations should and can be mutually supportive.
Let me give you a few brief examples.
Trade liberalisation is about ensuring that Australia's and the world's resources are used efficiently and combine to produce the highest levels of economic growth and development
The deleterious impact of Europe's Common Agricultural Policy (CAP) on international trade in agriculture is well documented but equally the CAP has resulted in enormous environmental damage in Europe through unintended consequences such as the over use of fertilisers, water pollution and land degradation
Australia's clean coal resources have the potential to reduce harmful effects on the environment like air pollution and acid rain : what subsidies and trade barriers do is artificially depress the international price for coal, increase demand for it relative to other alternative energy sources and stop countries from gaining access to coal sources with the most environmentally "friendly" features
Three of the environmental spin-offs of economic growth and development in developing countries are that awareness levels of environmental problems are raised, the demand for environmentally based goods and services is increased, and the countries are provided with the capacity to respond more effectively to environmental problems
None of these outcomes could be construed as evidence of any ideological conflict between trade and the environment.
This is not to say, however, that there are not occasions when trade restrictions might be seen to be necessary to support domestic or global environmental objectives
The issue in these cases is to ensure that trade restrictions are indeed the best and most effective way of addressing environmental concerns and that they enjoy wide multilateral agreement
if they must be employed, then it should be on a non-discriminatory and transparent basis and in ways which do not work against either our trade or environmental interests
The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) which has been in existence since 1973 is a good example of how multi-laterally sanctioned trade restrictions can provide positive outcomes for the environment.
In framing our approach to climate change issues, including the merits of a carbon tax, it is essential that perspectives of industry be taken into account
In this context, I have been encouraged by the generally constructive contributions of industry representatives to the discussion of these issues
While I would surmise from the consultations I have undertaken that, by and large, industry would not favour a carbon tax, nevertheless I have found a generally positive attitude - and I think a genuine commitment - towards achieving credible reductions in greenhouse emissions through "no regrets" measures.
As I mentioned in my opening remarks, one of my key priorities in the near term is to complete the review of trade policy I initiated last year - and canvassing the views of industry will be central to completing the review.
Accordingly, within the next few weeks, I propose to release a consultation document seeking industry views on establishing a modern trade policy framework to guide Australia into the next century.
With the establishment of the World Trade Organisation on 1 January 1995, the world trading system has entered a new era
It is an era involving a more complex multilateral trade agenda, one which covers not just the traditional trade issues of tariffs and non tariff barriers, but also services, intellectual property, investment and trade and the environment.
Suggestions are already being made by a number of the G7 countries that there be a new set of multilateral negotiations to establish stronger rules in areas such as investment, information technology and services.
At the same time, the world trading system is undergoing major realignments involving a greater degree of regionalism
The European Union is expanding, the Americas has positioned itself at the Miami Summit to establish an integrated market and APEC is moving towards the goal of free trade and investment in the region.
In short we are in a period of significant change, which provides Australia with opportunities and challenges including how to shape the direction of change in the multilateral trading regime and the trading architecture in our own region.
It is against this backdrop that the review of trade policy priorities must occur.
Much of the focus of our trade strategy must be on emerging markets with the greatest potential for Australia - unquestionably, most such markets are in Asia.
However it is also important not to neglect traditional markets within APEC and in other parts of the world
We retain significant trade and investment interests in traditional markets and we need to nurture them if we are to gain the full benefit from our role as a global trading nation.
The United States is an enormous and sophisticated market but it is clear that its importance as an export destination for Australia has declined over the past decade, even though it continues to be a major source of investment in our economy.
The question which we need to ask is what is happening to traditional markets such as the U.S.? And we need to ask:
It is with these sorts of questions in mind that I am announcing today a review of our trade relationship with the United States
I see this as an important start to a process which will reaffirm that our economic future requires that we focus on both new and old relationships - traditional markets can only be ignored at Australia's peril.
I have covered a number of different issues this morning but the common thread, I think, is that good policy is informed by a wide range of views and perspectives
As important stakeholders, industry has the right to be consulted - and Government has the responsibility to ensure that meaningful consultation occurs on issues of vital economic and trade interest
This is a process which is a priority for me and my Department and I urge you to take full advantage of it to ensure that in national policy - making the voice of industry is heard.
Thank you.