Speech by the Australian Deputy Prime Minister and Minister for Trade, The Hon Tim Fischer at the Grains Group Conference (Victorian Farmers Federation), Hamilton, 18 March 1998.


Introduction

Distinguished Guests, Ladies and Gentlemen.

It is a great pleasure to be in Hamilton, and I want to thank the Victorian Farmers Federation for the opportunity to address this annual Grains Group Conference - one of the highlights on the Victorian and Australian agricultural calendar.

Victoria's grains industry is going from strength to strength. It contributes more than $1.4 billion to the state's economy.

A sure sign of the industry's vitality is the fact that large investments are taking place in processing plants for high quality oil production, stock-feed and malting facilities for processing barley. Crops are changing and diversifying, along with the locations where grain is grown in Victoria. Red feed wheat, for example, is now being grown in the higher rainfall areas of the Western District, and in West and South Gippsland.

Over many years, the Australian grain industry's sustained and highly successful export orientation has fostered an industry which is finely tuned to developments in the global market place, and one which is very competitive.

But, with the international market's increasing sophistication - plus higher production levels and increased trade in grains - Australia can expect to face intensified competition across the globe.

We can also expect an even stronger focus by importing countries on quality control, product and market differentiation.

As the Conference theme - "Opportunities not Obstacles - Creating the Industry's Future " - makes clear, Australia's grains industry must be extremely well prepared to meet international challenges if Australian farmers and growers are to make the most of the export opportunities on offer.

The WTO and the Cairns Group - Playing By the Rules

Today I want to focus on the multilateral trade agenda given some very important meetings coming up in the next few months that will be vital for shaping the agricultural trade environment into the next century. These are the Cairns Group Ministerial Meeting which I will be chairing in Sydney on 2-3 April, and then the second World Trade Organization (WTO) Ministerial Meeting in Geneva on 18-19 May.

Our multilateral trade policy pursued primarily through the WTO is one of the main strands of the Government's integrated trade policy approach - the others of course being our bilateral trade effort which the Government has reinvigorated since coming to office, and of course APEC at the regional level.

As I made clear in the Government's Trade Outcomes and Objectives Statement tabled in Parliament earlier this month, this integrated approach is aimed at securing the best possible market access for our farmers and other exporters. It seeks to build Australia into a truly competitive nation, engaged with the world from a position of strength.

The WTO is important to Australia's farmers because it makes rules that deliver stability, predictability and fairness to the world trading system

Australia's trade - and your incomes and standards of living - would be at risk in the absence of a global rules-based system. The great achievement of the Uruguay Round of multilateral trade negotiations - when it ended in December 1993 - was to bring agriculture into a system of global rules.

There are clear signs that the disciplines of the WTO Agriculture Agreement relating to support arrangements and export subsidies have already begun to change longer term marketing policies, particularly in the European Community and the United States. Of course, while recently there has been some respite in the level of export subsidies, we must continue to keep a very close eye on EC and US export subsidy programs as production and market trends unfold.

The Uruguay Round outcome was a good outcome, but it was also a modest outcome because it left agricultural trade still with many more restrictions and distortions than are accepted for trade in non-agricultural products.

That is why Australia's overall aim is to put agriculture and processed foods on an equal footing with other areas of world trade in goods.

Sydney Cairns Group Ministerial Meeting

As many of you know, Australia is chair of the Cairns Group of fifteen agricultural exporting countries - a group that has done an enormous amount to put agriculture on the multilateral trade agenda and keep it there. The Cairns Group is the most successful and enduring issue-specific coalition in the multilateral trading system.

At its last Ministerial meeting in June 1997, the Group agreed on an internal work programme for the lead-up to the 1999 WTO multilateral trade negotiations. These 1999 negotiations will provide a landmark opportunity to achieve important agricultural trade reform and enhance trading conditions for Australia's food and agricultural exporters.

The Sydney Ministerial meeting early next month will be a key stepping stone on the road to that 1999 destination. Australia and its Cairns Group colleagues believe that effective preparation for the 1999 negotiations is essential. It will require the active support of all WTO members to ensure the negotiations move forward expeditiously and deliver fundamental reform and real outcomes for agricultural producers.

In Sydney, the Cairns Group will agree on a broad political objective for the agricultural negotiations and develop Cairns Group approaches to the 1998 and 1999 WTO Ministerial Conferences.

WTO Ministerial Meeting

The WTO Ministerial Conference in May is the next major landmark after the Cairns Group meeting. Australia is pushing for an ambitious outcome from the May Conference, in terms of setting a favourable framework for the agriculture negotiations. We expect the 1999 WTO Ministerial Conference to launch negotiations on agriculture.

These agriculture negotiations present a major opportunity for Australia, but we have a hard task ahead of us. Although there are some positive signs, it is hard so far to find any decisive global political shift to commitment for making multilateral reforms in agriculture.

It is going to be hard to get from the 1999 negotiations the kind of reforms that Australia needs as an agriculture and food exporter.

Australia is pushing strongly for the mandated agriculture negotiations to be rolled into a comprehensive round of trade negotiations - the `win-win' round - rather than be dealt with on a stand-alone basis

We support this approach because it will make it possible to turn linkages in other sectors to our advantage.

The Vital Role of Industry

That leads me to the vital role that industry can play in this exercise.

During the Uruguay Round, the Government's partnership with industry played a key role in ensuring the best possible outcome. This close cooperation will be equally important as we prepare for the next round of multilateral negotiations.

Companies and industry associations such as the Victorian Farmers Federation have a great stock of knowledge, experience and ideas which are crucial to the process of policy development and priority setting in advance of the negotiations

We are tapping into this through extensive consultation with industry. Discussions on broad strategic and tactical questions are already taking place in the Agricultural Trade Consultative Group (ATCG) which I chair with the Minister for Primary Industries, John Anderson. Complementing the ATCG are consultations with individual sectors on specific priorities for the negotiation.

Industry is also making its own strategic linkages with counterparts overseas. An excellent example of this is the Cairns Group farm leader's meeting which is taking place - for the first time ever - in parallel with the Cairns Group ministerial meeting in Sydney.

We are hoping that this meeting of farm leaders will convey a positive message to Cairns Group ministers, and a wider audience, about the urgent need for and benefits that will flow from trade liberalisation.

The Importance of China's WTO Accession

In addition to the Cairns Group, there are other significant issues wrapped up in the WTO which have major implications for Australia's rural community. More than 30 countries are seeking to negotiate accession to the WTO. These negotiations offer a unique opportunity to address existing trading problems, secure new market access, and achieve commitments which provide a substantial degree of transparency and security in future trading conditions.

China is one of the few major economies which is outside the system of world trade rules. It is in the interests of China, Australia, and the WTO that China becomes a WTO member. That is why Australia strongly supports China's early membership. It will be an important step in China's integration with the world trading system and the region, and it will encourage China to persist with market reforms.

Australia and other countries have stressed to China that accession must be on a basis of an appropriate level of market access opening for both goods and services, and a strong level of commitment to the WTO rules. I had substantive discussions on the accession with Chinese leaders during my visit to Beijing last September, stressing this point. Much progress has been made in the negotiations, but there are a several knotty issues yet to be resolved.

The Australian Government wants an outcome from the negotiations that advances the interests of the Australian grains industry. China is an important market for our wheat and barley in particular, and potentially an important market for grains such as rice and for oilseeds.

A significant issue for Australia is China's desire to be able to control imports of wheat and rice through a system of tariff quotas. One of the practical outcomes of my visit to Beijing last September is that China indicated that it will not proceed with its earlier plans to introduce tariff quotas on barley imports. The Government is looking for outcomes from the accession negotiations that will secure existing trade in grains and oilseeds, and provide a liberalising and predictable basis for its growth in the future.

The Government's Comprehensive Support for Exporters

Finally, I want to mention briefly that the Government will also be pursuing vigorously our bilateral market access efforts for farmers in 1998 - building on what we have achieved in 1996 and 1997 - in tandem with our equally comprehensive regional trade liberalisation and sectoral agenda through APEC.

The overall impact of the Asia Pacific's economic crisis on Australia's agricultural sector is likely to be mixed. There are new opportunities for Australia's agricultural producers, as well as new challenges to be overcome. The negative impact is likely to be felt proportionately more by Australia's processed food exporters than by primary food exporters.

Earlier this month, Prime Minister Howard announced that the Government will provide up to $380 million of EFIC credit insurance to the Australian Wheat Board under the EFIC national interest provisions - for the balance of the AWB's wheat sales to Indonesia. The decision demonstrated the Government's commitment to help Australian farmers and exporters maintain traditional markets.

Australia has been the largest supplier of wheat to Indonesia in the past few years, and the provision of this insurance cover is crucial to maintaining Australia's market share, particularly in light of the potential for increased credit-based competition from United States and Canadian suppliers.

Conclusion

I want to conclude by returning to my major theme - the importance of the global trade agenda to Australia's farmers and exporters.

It is true that the Government and industry together have set ambitious targets for the 1999 agricultural negotiations. But these far-reaching goals are necessary if we are to deliver real and significant benefits.

Australia's preparation for the negotiations, as well as our participation, will require a very high level of sophistication and analytical capacity, of energetic trade diplomacy, and lobbying on a global scale.

I can assure you that the Government will be doing all of this and more - putting in the `hard yards' in the Cairns Group and elsewhere in the months ahead, as well as pushing hard in the bilateral and regional arena - because the potential rewards to Australia's farmers are immense, and because it is vital for jobs and prosperity - not just in Victoria but right across Australia.

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