Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the Symposium on Agricultural Trade Strategies organised by the Centre for International Economics on behalf of the Rural Industry Research and Development Corporation, Canberra, 29 September 1997.

Thank you Andy Stoeckel.

I am very pleased to have this opportunity this evening to address such an impressive range of experts taking part in this symposium.

At the outset, let me thank RIRDC and CIE for organising the symposium and inviting me to address you tonight. Let me briefly acknowledge just two amongst you: our overseas guest, Hugh Corbett, from George Washington University, whose perspectives on the political economy of agricultural trade reform will be most welcome, and Peter Field, who of course has looked into the eyes of the enemy and can tell us what battles lie ahead.

We all know that the agriculture and food sector is, and will remain, a vital part of Australia's economy. The agri-food industry is among the largest sectors of the Australian economy and is one of its biggest export earners.

In 1995-96, agricultural and food exports were valued at over $21 billion and made up almost 30 per cent of total Australian merchandise exports. Over 70 per cent of Australia's farm production is exported.

Australian exporters, both of commodities and processed foods, continue to face a restrictive and distorted world market, with the prospect of new barriers emerging. So it should be no surprise that agriculture and food form a significant part of our overall trade policy.

And you are here for this symposium because of the important role of intellectual leadership in developing and prosecuting our agricultural trade policy objectives.

Australia has considerable weight in international negotiations on agriculture, which is beyond our overall trading status. Partly this is because of our role as a leading agriculture producer and exporter. But importantly our standing is enhanced many times over because of our capacity to generate ideas and innovate.

We did this during the Uruguay Round by initiating and developing framework proposals which became the basis for negotiating positions. Many of you will understand this only too well because you have been part of our effort to achieve reform of world agriculture for a long time.

And you will all understand that the need for leadership on reform of world agriculture is as clear now as it ever was.

We are continuing to do this through our activist approach to discussions in Geneva on preparation for the next negotiation. These are taking place under the heading of "analysis and information exchange". In the WTO Committee on Agriculture, we have already led the way by presenting papers on tariff quota administration and domestic support.

Others value and appreciate our role, especially as chair of the Cairns Group. At the last meeting of the Group, in Rio de Janeiro, the role played by Australia was openly and sincerely recognised.

Clearly this intellectual leadership needs to be fostered by vigorous exchanges of ideas involving government, industry and the academic community, exemplified by this symposium.

So I look forward to your contributions to the enterprise of preparing for the next agricultural negotiations.

I will not try to pre-empt or revisit the kinds of more detailed discussions you are having. I understand these cover not only traditional issues, including subsidies and barriers to trade, but also emerging issues, such as the trade treatment of sanitary and phytosanitary issues and biotechnology.

What I would offer are my own perceptions of the main strategic elements.

The climate in which we will be negotiating is a tough one for us, one that will call on all our skills to achieve a positive result in a reasonable timeframe.

We do not have a level playing field.

We can illustrate this by recent PSE figures - producer subsidy equivalents- I might add, a technique fostered by Australia to demonstrate the effects of agricultural protection.

In 1996, Australia had a PSE of 9 per cent, the second lowest in the OECD after New Zealand's 3 per cent. This compares with high levels in some of major markets, for example Japan's 71 per cent and the EU's 43 per cent.

I can also illustrate more graphically perhaps by a couple of anecdotes.

A couple of months ago I had occasion to speak with a UK farmer enjoying a holiday in Australia. He told me he operated 3000 acres of grain production outside Coventry. I asked him about his trip out, and he said no problems, he went British Airways first class. He went on to say that fortunately, his cheque from the EU had arrived just a few days before his trip, so the expense was manageable. I couldn't help myself - how much was the cheque for, I asked. The answer: about $500,000.

It is also worth noting that Franz Fischler, EU Commissioner for Agriculture, recently said that the level of red tape associated with the agricultural protectionism of the EU has, and I quote, "left farmers scouring the pages of the official journal of the European Communities instead of responding to market signals, and made small fortunes for consultancy firms offering subsidy-optimising software."

So we will need to work in an international political climate that is not totally promising.

I have been public about my views of the recent proposals for CAP reform in Agenda 2000. Frankly they do not provide us with a hopeful prelude to the EU's engagement in the negotiations.

And in the United States, despite some progress in the FAIR Act last year, there are worrying signs of recourse to subsidies and restrictions, notably in dairy and sugar. I am very concerned about the absence of real engagement by the US in the process of preparation for further negotiations, a matter I will return to shortly.

In Japan and Korea we are continuing to have to deal with strong political opposition to further reform of agriculture. This often finds its expression in concerns about food security, and demands for food self-sufficiency.

The negotiations on accession of China to the WTO offer some great challenges on agriculture. I can say that Australia and the Cairns Group have taken a very prominent role in ensuring that we get the best possible outcome on the agriculture commitments China will take on at the time of accession.

We have been successful in keeping a seat at the main table for these negotiations, a reflection of our specific bilateral trading interests and also of our leadership role in agriculture. And this has already borne fruit in the commitment of China not to take up agricultural export subsidies.

And we must not forget South East Asia. In the Uruguay Round, this region didn't get much attention. But the region is important to our agricultural and food exporters and we must ensure this doesn't happen again. How the current currency crisis plays out and influences economic policy and reform is something we will need to watch closely.

Lastly, we need to have an eye to the developing countries. We share a strong interest with many of these countries in combating high levels of agricultural protection.

Of course, a key issue affecting the environment for reform is whether or not there is a comprehensive multilateral round of trade negotiations. This is because it will be more difficult to engage those such as Japan, Korea and EU in agricultural liberalisation if we can't offer the incentive of liberalisation in other areas.

But we are working hard to build a dynamic and critical mass for negotiations which will allow a big result to be delivered.

As I said earlier, the lack of US leadership on the agricultural trade front at this time is a major disappointment to us. While the EU gets a free run on pushing through minimalist reforms to the CAP, the US puts valuable resources and time into issues like Howe Leather, a small Australian firm with a small toehold in the huge, billion dollar, US leather market monopoly.

So its about time the US looked more clearly at both its own interests and at the obligations of leadership. This is a point I will be making very clearly to the US in the period ahead.

The WTO negotiations offer a rare chance to address a broad range of problems in one hit. They will be vitally important both in terms of the immediate problems they resolve and the ongoing disciplines they will provide. And our approach must be based on the premise that the 1999 negotiations may be the last real opportunity for some time to achieve fundamental reform of world agriculture.

To make the most of the opportunity, we will have to be ambitious and dedicated in our efforts.

It is vital to work jointly with industry and with the academic community. In this context I should say that I look forward to discussions with industry in the newly established Agricultural Trade Consultative Group which I propose to chair on 22 October with my colleague John Anderson, the Minister for Primary Industries and Energy. This Group will provide the peak forum for consultation and coordination with industry as we build towards further multilateral negotiations.

I say coordination because it is important that government and industry work together on analysis of the environment, on setting our objectives, and on building the constituency for reform.

Let me finish by stressing that I will be committing myself personally to work on these multilateral negotiations on agriculture.

As chairman of the Cairns Group I will be taking a direct role in ensuring that the Group continues to develop an ambitious negotiating agenda and works effectively together. And I will be driving that agenda forward with ministers from the major players.

I look forward to working with you over the next few years in the cause of liberalisation in world agricultural trade and ensuring that efficient Australian exporters face a fair and open world market.