Serving Australia's Export Interest - WTO Negotiations on Services

Speech by the Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party & Minister for Trade
to the Australian Coalition of Service Industries

Sydney, 17 March 1999

(Check Against Delivery)

Thank you for inviting me to speak to you tonight. The fact that you are here is another tribute to the organising, lobbying and advocacy skills of the Australian Coalition of Service Industries. ACSI tonight has a new Chairman of the Board, John McGuigan, to take over the excellent work done by the outgoing Chairman, Don Mercer. I wish them both well. I also join in welcoming some distinguished new members to the ACSI Board.

The services sector: A dynamic contributor to the economy

Through your own firms and indeed your own careers, all of you here tonight already recognise the importance of the Australian services sector. Let me remind you, though, of a few essential facts. More than 8 out of every 10 jobs in Australia are in the services sector - 81.3% of total employment to be precise. And the services sector accounts for more than two thirds of our GDP (71.3%). Services comprise almost a quarter of Australia's total exports (23%).

That is a snapshot of the position now. But let's look at the economy through time-lapse photography, to see how strongly and consistently the services sector has grown. At the beginning of the Uruguay Round, in 1986-87, Australia's services trade amounted to $18.4 billion. A decade later, in 1996-97, the figure had more than doubled to $47.1 billion at a yearly growth rate of nine per cent . Such phenomenal growth sees many of our large banks now bigger than most of our resource companies, and tourism and education services provide more for us in export revenue than do most of our primary commodity exports.

I mention those figures to make one simple, fundamental point: all of us have a vital interest in the services agenda for the next Round of multilateral trade negotiations. As companies, you cannot insulate yourselves from the tensions and problems created by your competitors and your trading partners. As a government, we cannot isolate Australia from the pressures and strains in the global economy. All our interests are directly and critically engaged in the next Round. WTO negotiations in Geneva will crucially affect planning in Wollongong, production in Perth, and distribution in Darwin.

Without agreed international trade rules, without the General Agreement on Trade in Services (or GATS) and related WTO Agreements, we would have no secure or stable framework to manage our trade. There would be no agreed standards or constraints on unfair practices, no limits to subsidies or dumping, and indeed no rules to regulate trade in the largest and fastest growing sector of the global economy. Crucially, we would have no ready or reliable way to expand our access into new markets overseas.

The WTO GATS - a good first step

In the forthcoming WTO services negotiations, those agreed rules will need to be developed and improved. We often talk about the architecture of the international trading system. In the case of services, though, the architecture is simply scaffolding. The GATS was the first go at drafting a trade treaty covering services. It is a good, first step - but necessarily not more than that. Now some of the scaffolding needs to be removed, after having served its purpose. Deeper foundations need to be laid. Other elements of the architecture need to be built up, filled in, put in good working order.

In services, trade barriers are more subtle and less transparent than they are in agriculture or industrials. I am sure that you are more than familiar with the range of protective barriers to overseas markets that exist in your own industries, whether it be a maze of restrictive regulations, divergent requirements for different services providers, or unreasonable and often impenetrable obstacles to the market for new entrants.

I mention these barriers not to deter or discourage you. They do not discourage me. They simply highlight the job we have to do. We are a long way yet from a level playing field. The next Round especially will involve a long, hard slog for our negotiators, with reservations at the beginning, arguments in the middle, and a deal at the end. I can promise you we will be vigorous in proposing reform, protecting our interests, promoting our exports, defending our companies, working for a better, bigger future for Australian exporters.

How will we do that? We are going to work with you and we are going to rely on you. We need your guidance, your advice and your assistance to ensure that our key market access problems are at the top of the negotiating agenda.

ACSI has already made an excellent start, with the "Australian Service Sector Review" published late last year. That review appraises our services sectors and is particularly useful in assessing new alliances, new players and new challenges. It is certainly challenging in its conclusions. Take the final judgment on financial services, for instance: "what is needed is for regulators and policy makers to develop an internationalist mind set, and this needs to be reflected in taxation policy, corporations law and accounting standards". That is one sector where I had thought that our mind set was already determinedly internationalist, but the Review shows us where more work needs to be done, including in our efforts to establish Sydney as a great regional financial centre and headquarters for regional corporate operations.

Towards a new WTO Round

Building momentum for a new WTO round will be a key focus of Government activity this year in the lead up to the WTO Ministerial meeting in Seattle at the end of November. Already I have called for public submissions on our negotiating priorities for the new round and I would encourage all interested groups, including those in the services sector, to submit your views to the Government by the 1 May deadline. At this preparatory stage, we need to define clearly exactly what our practical interests and problems are, then to concentrate our negotiating plans on those areas of direct benefit to us.

For the services sector the next step will be a seminar in Melbourne on 15 April. The aim of the seminar will be to further the process of industry consultation to ensure that the Government has a clear understanding from the services sector of what its key negotiating priorities will be.

The Government is also preparing a study on the benefits of a new round which I plan to release at the OECD ministerial meeting in May. This will set out the benefits to the global economy from a progressively higher level of trade liberalisation - in services, in intellectual property, in industrials, and in agriculture. The study will be distributed widely to influence thinking and planning in the lead-up to the next Round.

In the meantime, we have already followed up an initiative I took during my visit to Santiago late last year. We have commenced consultation and cooperation with Chile and with New Zealand on the scope and the agenda for the next Round of services negotiations. We hope to bring other negotiating partners into that planning process soon.

We are working to reinvigorate the APEC Group on Services, to tie that group's work program more tightly to the objectives and demands of the multilateral trade negotiations.

We are also intending to make a substantive contribution to the World Services Congress in Atlanta. I note that the WSC Congress is driven by private-sector interest and funding, and therefore by a recognition on the part of the private sector of the interests engaged and the stakes involved in the Geneva negotiations.

These are some of the milestones for us on the road to the Seattle ministerial conference this year which I am increasingly hopeful will launch the next Round of multilateral trade negotiations.

Now is the stage, during the next nine months, when we must organise a strategy to see us through the first phase of formal negotiations next year. Now is the time when we have to set priorities. Now is the opportunity for the practical definition of Australian interests. We cannot afford to waste any of this time.

Conclusion

In starting on our work together, I would ask you to consider some threshold questions about the next WTO Round. Ask yourself where you want your company to be in the next five to ten years. Give us a wider-range and a longer-term assessment of your problems and your prospects. Think also about your continuing engagement in Asia, as well as in other emerging markets. Services providers, whether firms or professionals, have not panicked and have not retreated from Asian markets. But think now about how your engagement in Asia can best develop and grow over time.

I ask you also to discourage anyone in your firm who might be tempted into the delusion that multilateral trade negotiations do not directly affect you. They do. Our negotiations help determine your profits, your share prices, your returns on investment.

We are offering a serious, sustained partnership between government and business in preparing for the next Round, but that partnership must be reciprocal if it is to work. I am counting on your help.