Speech to Fair Trade Forum

Minister for Trade, Senator Bob McMullan, Wednesday 18 October 1995, Parliament House, Canberra.

It is good to be here to acknowledge the effort you are making to draw together diverse views about the trade issues and to seek to put a bit of rigour into the thinking about the sometimes conflicting views, and sometimes the agreement, that we see in our community about trade issues.

The idea of developing a fair trade charter - work which I acknowledge and welcome, and that you have in the process sought to bring together diverse views - sometimes recognises differences of views. I think that is a very healthy thing.

Sometimes we seek to perpetuate the myth that we all agree, that all Australians agree. I was picked up on that the other day by a constituent for saying that I thought that all Australians were opposed to the French tests. Somebody wrote to me and said, "No, I am not". So I have to say, even on that issue, we can't say we have got absolute unanimity. Although I think I did have the numbers on my side on that particular occasion. But he was right to say that I shouldn't have said all Australians. But anyway that is not the most serious issue I have had to confront this year.

What I want to do today is not try to deal point by point with those things which I have seen in the charter that you are developing, although I do want to refer to those. I want to outline the potential benefits of APEC to the members and the region, and Australia in particular, and look at the way some of the concerns at least raised in the charter either are being addressed or can be addressed.

The implications for APEC. A little bit about what APEC is and a little bit about what it isn't because there are some mixed views about. Even sometimes in the Parliament I find people expressing views about what APEC may or may not do based on some assumptions about the nature of the process and the likely outcomes that are just misconstrued.

To set the scene a little, it has become almost a truism, almost a hackneyed phrase, to recognise that the Asia Pacific is now the most dynamic economic region in the world.

It is still valuable, I think, to remind ourselves briefly just how important it is, particularly for Australia. The 18 members of APEC represent in economic terms a market of 2 billion people. In 1993, they accounted for 40 per cent of total exports in the world and just over 50 per cent of the world's GDP. And the trade in this area is growing 50 per cent faster than it is growing in the world as a whole. Over the five years to 1993, exports from APEC grew at about 8.7 per cent. Imports grew by about 7.8 per cent. Which as I said is more than 50 per cent above the world averages, which are down in the 5 per cent range. Therefore, the share of world trade in APEC is growing rapidly.

At the end of that 5 year period in 1993, 71 per cent of the total trade of APEC economies was with each other.

What surprises many people is that one of the countries with the highest level of integration is Australia. The average is 71 per cent, while 77 per cent of Australia's exports went to APEC economies. We trade more intensively with this region than almost any other country. From Australia's point of view, our fastest growing export markets are within APEC and nine of our top twelve markets for Australian products are in APEC.

The region is important and of increasing significance to us.

The process that is APEC is also important. It is contributing to opportunities for Australia and for all the economies of the region by its commitments to liberalising trade and investment.

But, having said something about what it is, let's get clear about what it isn't.

APEC is very important, the reforms we are pursuing there, are vital. But, in perspective, APEC is not creating trade and investment liberalisation in this region - that was happening before APEC was considered and would happen if APEC disappeared. There are greater forces than APEC at work generating liberalisation of trade in this region and liberalisation of investment in this region. What APEC is doing is influencing the shape, the pace and the balance of that reform so that it isn't just being undertaken as a series of random events driven by a combination of domestic assessment of self interest and external pressure - but in a more coordinated and balanced way.

So that is the first and the high profile thing that APEC is doing with trade liberalisation. I don't mean by putting it in perspective to minimise it. It is contributing to market opening in the region, it is making it more balanced and more coherent, more structured, and this is very important. I just wanted to put a bit of balance to some of the enthusiasms on both sides about it.

There are other things that it is doing that are less noticed but can be equally important.

There is a lot of work going on to eliminate those sometimes unintended, sometimes intentional, trade impediments which are of the arbitrary administrative nature - not tariffs, but where, for example, you have to get the building material that is approved and it is good enough for housing in Australia and New Zealand or the United States or Canada, but has to be reassessed for quality to be acceptable in Japan. Or a fast ferry which is safe enough to traverse the waters of Australia, Latin America or Europe but isn't acceptable in the United States.

Or, as someone put to me in Japan the other day, "the shape of the waves is different in Japan". It is a very interesting thesis which I had not heard before.

But it is those barriers - the so called trade facilitation measures, getting the unnecessary duplication of customs classification so that if you have a washer for a piece of equipment, it is in the same customs classification in every country, so that you can just send the information around electronically instead of having to have people in all eighteen members re-classifying, checking, doing unnecessary costly things that simply make the supply of goods and services more expensive without adding any value. And deny consumers in whichever country, top quality goods and competitive prices.

APEC is also undertaking some even less noticed and less glamorous projects in some very important sectors, some of which are relevant to this Forum, which I will come back to in a moment.

But, in economic terms, also in transport, in telecommunications, just in terms of getting a greater level of understanding about the developments that are happening in the region, the greater level of coordination and cooperation.

APEC also fits within the broader global pattern in which the global economy is becoming more integrated, where more and more trade is flowing across the borders.

And, as a consequence, governments are responding with demands for better rules and harmonisation, with attempts to set the framework within which this emergence of the global economy might best be managed.

The highlight of APEC up until now - and I don't want to reiterate things we all know - was the Bogor Declaration last year setting down the goal of free trade and investment in the region with the differentiation of end dates between those industrialised economies and developing economies, so that the progress can be proportionate to our respective capacities - but not the same.

We have been working very hard this year on an action agenda to be submitted to the Ministerial meeting and then the Leaders meeting in Osaka where we might set down some basic sets of principles to guide the overall liberalisation process. It should be the road map to the achievement of the goal we set down at Bogor.

I don't want to dwell too much on the matters I have been debating publicly here and around the region but I do need to reiterate briefly our great commitment to the principle of comprehensiveness in the Osaka action agenda - that people can't ask everybody else to open their markets and say, "but it is too hard for us". I want to make it very clear in this forum that if we don't get that comprehensiveness, the market opening won't be balanced, the liberalisation process will not be equivalent to our respective capacities. You have to remember in the pursuit of exemption or exclusion or qualification of comprehensiveness, it isn't the poorest country that is trying to protect against the unreasonable depredations of the wealthiest. It is, in the main, the people on the wealthy side of the APEC equation trying to protect vested interests within their economies often from the products of the poorer countries.

Now, Australia - because it is a senior developed country with a profile in exports, which has some of the characteristics of the developing economies in terms of our great interest in agriculture - shares common cause with Thailand and Indonesia and the Philippines and those other countries who are pushing so hard for comprehensiveness as we have been over so many years working together in the Cairns Group. We tried to get the European Union and the United States and Japan and Korea to open their markets to compete more fairly in the global agricultural trade.

That is the background. I don't want to take too much of your time, I know that you have a lot of speakers who wish to speak to you today.

But I do want to make a couple of comments about the major issues raised in the charter for fair trade as I have seen it. I don't come to you pretending to be an expert about everything that is in it. I have had one look at it and I certainly don't tend to come along just because there is an audience of people who are probably sympathetic to it, and say, "Oh yes, I agree with everything that is in it". That is not true, but I agree with some of the things in it which I will seek to make clear. And I certainly recognise, and the government recognises, that you are raising very important issues which need to be addressed and we will seek to address them. Not all of them today but over the period, because APEC is not going to finish at Osaka, notwithstanding the fact that every now and again we get a press report suggesting that it s just about to collapse.

It is not going to finish at Osaka and there will be interesting and further opportunities for us to continue to discuss these issues over the next few years.

But the charter, as I saw it, says that trade rules should be applied openly and transparently. I absolutely agree with that.

That there should be consultation on trade policy. Yes, there should, and there is. There seems to be a concern that most of our consultation is with business. I am not ashamed in saying that is true. Why is it true? There are two principal reasons that it is true. They are the people who can give us the best advice on the priority sectors. They are the people who are best placed to say if reform takes place, 'here' there is benefit to Australia more significant than if it takes place over 'there' because they are the people who will make the decisions about how we might take advantages of the opportunities which arise. And they are the people with the information we need to put together the priorities, the planning and to assess the national interest objectives we try to pursue through APEC.

So, I don't make any apologies for saying "yes, that is where most of our consultation takes place". But not all of it. All the bodies through which we consult with business - fundamentally, the Trade Policy Advisory Committee and its sub committees - involve the ACTU. There are none which do not.

In addition, both the department formally, and ministers occasionally formally (and regularly informally) have consultations with NGOs and the ACTU about trade and related issues.

I don't want, though, in these brief remarks to use brevity as an excuse to duck a couple of difficult issues that are controversial in the international trade negotiations - not just in relation to APEC, in fact not particularly in relation to APEC, but more so elsewhere. I'm talking about issues of workers' rights and the environment.

I don't want to use this Forum to deliver some new major policy statement for the government. Our position is reasonably well established. But I do want to do you the courtesy of responding to these two issues which are important.

The Australian Government, as a Labor Government, puts very high priority on labour standards and labour rights around the world, as we do on civil and political and economic and social rights that we have argued for in various forums internationally for a long time. And we sought to put our money where our mouth is through bilateral development assistance projects to assist labour standards to support the non government activities, support the trade union activity - funding through the International Labour Organisation and in other ways specifically targeted to seek to strengthen workers' organisations. To conduct research into the issue of exploited child labour in south east Asian countries. To identify circumstances where programs can be of assistance. You would all know we have a tripartite working party, chaired by the former Trade Minister, Michael Duffy, looking at ways to strengthen adherence to all labour standards, particularly in our region.

They are important and we are trying to play a positive role in the international debate about trade and labour standards.

As it relates to APEC, I have to say most of the references I have seen are concerns about how APEC might in some way exacerbate the labour standards issue. It is fundamentally a concern about how trade or economic growth or globalisation might affect labour rights. There is nothing inherent in APEC that will do it, and I want to come back to that in a moment. The issue of increased trade and increased growth and increased globalisation will occur whether we have APEC or not. We don't want to be talking about what are we going to do in APEC, that is merely arguing the process. What you want to do is assess the substance of the issue.

So how are we going to address the issue? On that question, APEC is a tangent. There is a second reason why I wanted to say that. This is not NAFTA. We are not negotiating a legally binding treaty.

What we are doing is forging a consensus where leaders commit their countries to continue to proceed in a certain direction. It is not a body with enforcement procedures. Although some people talk about the dispute resolution mechanisms in APEC, as if they should be in some way either similar to or maybe have some variations from NAFTA. It is just entirely off the point. Those issues are not going to arise in APEC in the foreseeable future, we are not negotiating that sort of document, it is not conceivable in the foreseeable future that we could.

We don't have any particular desire to, but if we had a desire to, we could not get an agreement amongst the eighteen members of APEC for that sort of document. We are essentially moving towards coordinated unilateral action by eighteen members - not a free trade area of the NAFTA or European type. That might occur at some future stage. It is an issue that we will confront if it does, but that is not the direction in which it is going at the moment.

So a lot of those issues about how can we take the NAFTA lesson and apply it to APEC are entirely irrelevant to the process we are undertaking.

I will just say something very briefly about the broader trade and labour standards issue in the World Trade Organisation because I know there are many people here concerned about that as we are, and we have been involved in discussion within the WTO and the OECD.

Within the WTO, there is absolutely no possibility that a consensus will emerge for trade and labour standards to be dealt with in that forum. I know of no member of the G77 who will agree. I don't know any. From the most progressive to the most conservative, I know of no G77 country who will agree to trade and labour standards being discussed in the WTO.

So we can all make ringing speeches in the halls of the world if it will make us feel better. No worker will be one iota better off as a consequence. It will not happen. So I don't mind how much time you want to spend on it, but I hope you will excuse me if I don't spend much.

Any time it comes up, we will seek to play a positive role by speaking about the importance of workers' rights and seeking ways in which we can effectively contribute to them.

However, I don't want to preempt the working party about how we might best proceed.

We will continue to speak up. It might not be comfortable in our region, because most people in our region don't have the same attitude to trade unions and worker rights that we have. I don't mean that they have no interests, they just have different views from us, but we will continue to articulate our views.

It is not going to arise much in APEC, for the reasons I said before, but I didn't want to duck the issue. I thought I would tell you directly my views about it in the WTO. But in the OECD ,and in every forum where it comes up, we will seek to be a voice for the rights of workers and we will seek through our bilateral and regional activities to support anybody, most particularly the ILO, but not only the ILO, that has an effective role to play in improving the living standards of workers and dealing with some of the complex issues about exploitative child labour, prison labour etc, on which the working party is focusing its attention at the moment.

I want to say something briefly about the environment and I will get out of your way and let you get on with your important business.

There is a lot of concern and it is reflected in the charter about the potential for development to cause environmental problems and it is very important. The Australian government policy in economic and development forums, the WTO, the World Bank etc, is to look at this issue and focus attention on the issues of sustainable development. There are many international and regional organisations whose priority concern is to address issues of environment - and we participate in those forums.

We sometimes take positions that aren't shared by many of the other developed countries, because Australia has some unique interests in this area. I don't apologise for that. We will continue to seek to be a voice for sustainable development when it is popular and when it is unpopular. But APEC environment Ministers and environment experts in APEC working groups are working on a range of issues within the environment area in our region.

That is not a centrepiece of APEC, it is not what APEC was originally envisaged for, but there is a willingness to do so, to participate in these forums amongst all the members. We are delighted to have the opportunity to share and participate in that, and we will continue to do for so long as people are happy to work with us, both directly in the groups of environment experts and in the activities of the energy working group, the tourism working group and others who are looking at environmentally sensitive issues.

The process of economic adjustment that is underway with globalisation and trade liberalisation can be difficult, can sometimes be painful, but it is inevitable.

What we want to do is talk about the ways in which this change takes place, the assistance that can be provided to ease the pain of those who are disadvantaged by the change. So that beneficiaries compensate those who are disadvantaged, how we might equitably proceed to get the benefits of change while focusing on the equitable distribution of the benefits and of the burdens.

So APEC is very important. It has the potential to deliver to Australia, and to our region, great economic benefit, great social benefits as a consequence, and to play a significant role in enhancing the security and stability of our region. So it is central to Australia's national interest. We need to be active participants in it, we will seek to be constructive and positive participants in it, and we will always be prepared to be involved in any dialogue within Australia - amongst interest groups, business, trade union, farmer groups and other NGOs who wish to participate and discuss issues relevant to APEC and the overall trade agenda.

I welcome the fact you are having this forum. I am delighted to have the opportunity officially to open it and I look forward to hearing the outcomes of your deliberations.