World Trade Organization Negotiations on Services

Address by the Deputy Prime Minister Leader of the National Party Minister for Trade The Hon Tim Fischer MP to the Department of Foreign Affairs and Trade Workshop on Services Trade

Melbourne, 15 April 1999

(Check Against Delivery)

Introduction

Thank you for coming today. The range of participants at this workshop underlines the spread, the diversity and the importance of the services sector in the Australian economy. I am also grateful to the Department of Foreign Affairs and Trade for organising today's proceedings.

Close cooperation between government and industry is a key plank in our preparations for trade negotiations, including those on services in the WTO mandated for next year. In this regard I would like to pay tribute to the work of the newly established Australian Services Network which was launched only last month as a successor to the Australian Coalition of Services Industries.

I am confident that the ASN will be able to build on the good work of ACSI by providing additional focus and commitment in representing services sector interests before Government, and also at the industry level. It is particularly important from my perspective because of the forthcoming WTO negotiations - the subject on which most of you have turned up today to hear more on what the Government is doing.

Services sector and the Australian economy

Before focusing on the trade and WTO issues, it is important to recognise the importance of the services sector to the Australian economy. I'm sure that I am preaching to the converted here today - but it is surprising how little attention is paid to the compelling statistics that emphasise the importance of what you do.

Our services sector, for instance, creates more than 8 out of every 10 jobs in Australia and accounts for more than two thirds of our GDP. Services also comprise almost a quarter of Australia's total exports. At the end of the Uruguay Round, our services credits were worth more than a third as much again as all our services trade at the beginning of that Round. More importantly still, the services sector has demonstrated a capacity for strong and sustained growth - across many sectors, despite financial crises in the region and against increased competition from overseas.

The second point is a word of encouragement rather than a reminder. Ask yourself today where you want your company to be in five years, when the Round concludes, or in ten years, when the Round is bedded down. Give us - during this workshop or afterwards - a wider-range and longer-term assessment of your problems and your prospects. In addition, give us something else as well. I want all of you to contribute to raising the profile of the services sector, to making sure that our fellow Australians are all aware of the stake which each of them has in a productive, efficient services sector. We cannot export anything - not agriculture, not manufactures, not services - without reliable, quality services all the way along the chain of production, distribution and sales.

Government and industry working together

I would like to see a close partnership between government and business in our preparations for the next Round. We cannot afford to have any silent partners in such an arrangement. I would welcome your suggestions about how best to raise the profile of the services sector, but I also want to offer some ideas of my own.

First, I recommend that you highlight in company annual reports the share of your revenues and profits which comes from exports. Second, think about how your efficient provision of services provides a new and different job ticket for people in regional and rural Australia. There is a gap of twenty years - but a whole world of difference - between a kid on the pedal wireless trying to hear the School of the Air through the static, and the kid in the bush today, logged into computer lessons, into the world of the Net, and into satellite television. Third, talk to all our Members of Parliament about the ways in which services underpin job creation, exports and new investments. Fourth, be actively engaged in ASN's comprehensive survey of business interests and priorities for the new Round.

WTO negotiations - proper preparation is vital

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 in the WTO next year. Those negotiations are mandated and scheduled; they are going to happen whether we are ready or not. 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.

In services, we know what we need to do. We are starting with a key Article in the General Agreement on Trade in Services (GATS), with Article 19.1, which states clearly and firmly that the objective of negotiations must be to achieve "a progressively higher level of liberalisation" in services trade. To achieve that objective, the scope of negotiations must be comprehensive, with no sector excluded as a matter of principle. If we do not negotiate on everything, we may end up negotiating on nothing at all.

As a corollary, all four modes of supply of services should be thoroughly examined, with a view to improving and expanding liberalisation commitments in all those modes. I acknowledge that developing countries have a particular interest in Mode 4, the movement of natural persons, and Australia has already presented a paper on ways to begin a negotiation on that mode. To begin with, we think that the name should be changed to a title which better reflects the substance of the agenda, something like "short-term mobility for business professionals". Mode 3, commercial presence overseas, also needs intensive work, both in examining the way in which it covers investment and in reviewing the coverage of business offices overseas.

To be effective and to be credible, the negotiations must focus on expanding market access. Expanding market access entails re-visiting the GATS rules, re-building the architecture. I urge you to look at Articles VI, VII and IX, because that is where we will be starting. Those Articles cover what regulation should involve in practice, how to address abuses of monopoly power, and what to do about restraints of trade. We will be sending you regular reports on how the negotiations are going, on our work in progress, but I wanted to start you thinking now about the structural as well as the operational elements of those negotiations. Serious, binding, legal commitments in the rules underpin sectoral, schedules-related gains in market access.

Conclusion

My officers will be explaining our objectives and our priorities in the WTO negotiations in more detail later this morning. We want to make sure that you have all the facts you need, as well as all the insights we can provide into how negotiations may proceed in Geneva. For our part, we need your support, your guidance and your assistance. We must work effectively together if we are to make the WTO negotiations work for Australia.

Thank you for this opportunity to speak to you today.