Minister for Trade

The Hon Mark Vaile MP

to the

The Fourth annual Conference on International Trade

Introduction

Thank you Peter Lloyd; corporate supporters of the Australian APEC Study Centre, ladies and gentlemen.

It is a great pleasure to address this Conference, especially on a topic of such importance to Australia. I want to congratulate Alan Oxley and his team for putting this Conference together at this critical time, and also for stimulating debate on APEC issues over recent years.

In just two months since I became Minister for Trade, I have chaired a meeting of the Cairns Group of agricultural free traders in Buenos Aires, and attended the APEC meeting in Auckland. Both meetings gave me a strong appreciation of the significance of the forthcoming WTO meeting in Seattle, and that its successful outcome will be crucial for Australia's continued economic prosperity well into the next century.

What I want to do this evening is to set out for you Australia's perspectives on a new trade round - why we need it, how it might be run, and what we can do here in Australia to ensure the most favourable outcome for us.

Why the world needs a round

There are three compelling reasons for launching a new trade round.

First, the potential benefits are enormous. Work commissioned by my Department estimates the global welfare gains from halving trade barriers at around $US400 billion annually.

Second, the so-called built-in agenda of the WTO, including negotiations in services and agriculture, is not enough. Gains there could be large, but could be even greater if accompanied by negotiations on tariff barriers on industrial goods.

Third, a new round would help governments avoid backsliding on market access commitments. Protectionist sentiment is growing, as Australia knows only too well from US actions against our lamb exports. The most effective way to counter those pressures is to keep global trade reform moving forward by launching a round.

I know that some sections of the community argue that further trade liberalisation exposes countries to the volatility of the global market place.

My response is that, as a relatively small market, Australia must use trade to generate new jobs and greater wealth. The global market will inevitably become more competitive. Australia, like other countries, can further improve its international competitiveness and grasp new export opportunities, or can be left behind.

Of course, governments should help industries cope with adjustment problems. But Australia's best protection from international market volatility is the sound macro-economic policies and structural reform we have put in place in recent years. These, against the expectations of many observers, insulated us from the worst effects of the East Asian crisis.

Proposals for a round

There is now less than three months to the Seattle meeting, and there are quite different visions for the future of the trading system.

The United States proposes a round focused on major improvements in market access in agriculture, services and industrial goods. It also wants the WTO to work on what it calls the "civil society agenda" - much of which, however, is opposed by most WTO members and almost all developing countries, particularly in relation to labour standards. My feeling is that such issues are so controversial that some countries would rather have no round at all.

The other WTO heavyweight, the European Union, is calling for a comprehensive round. In addition to market access negotiations - where I have real doubts about the EU's readiness to contemplate significant concessions in agriculture - the EU seeks new trade rules in important but difficult areas like investment, competition policy and trade facilitation.

So we have two different agendas from the two largest WTO members. At the same time I hear some - though far from all - developing country members say they would rather re-negotiate existing WTO rules than take on new commitments in a new round.

An ambitious but pragmatic way forward

What is the way forward? I propose a very Australian approach: let's focus on practical results that will benefit all, and maintain a level of ambition tempered with pragmatism.

We should tackle the barriers and distortions that continue to hamper trade and impede economic growth - at a welfare cost to the world of US$750 billion per year in services, agriculture and industrial goods. And we should aim to do so in what, by the standards of the multilateral trading system, is the short time of three years.

We should focus on areas that will produce results. WTO members have already agreed to make further reductions in support and protection in agriculture, and to pursue the progressive liberalisation of trade in services. And any new round of trade negotiations must continue to make further inroads into remaining tariff barriers. Finally, to be practical, we must have stronger rules so that commitments to open markets are actually carried out.

We need a balanced agenda that doesn't just reflect the interests of rich countries. Like Australia, developing countries would benefit greatly from reduced barriers to trade in agriculture and industrial goods. Difficult areas like agriculture must not be put aside at the end of the round. The results of negotiations in all areas must be finalised and implemented at the same time by all WTO members as part of one single package. As the negotiators say, nothing is agreed until everything is agreed.

Last week in Auckland, Australia played a key role in delivering APEC support for this objective. APEC economies agreed that there should be scope to implement any early results on a provisional basis, while at the same time preserving the link to the overall outcomes of the WTO round negotiations.

My view is that issues that will take longer than three years, such as a far-reaching agreement on investment, should not be added to a round. And we shouldn't undermine negotiations by including issues that are clearly too controversial for members, like labour standards.

I do understand the importance to some WTO members of issues like investment and environmental standards. We might have to come up with some innovative ways of handling these concerns - but they shouldn't distract us from a short, sharp, market access-focused round.

From now to Seattle: the domestic front

Getting agreement on an ambitious but realistic round of global trade negotiations at Seattle, and ensuring the negotiations start in earnest in 2000, will be major priorities for our Government in the coming months.

On the domestic front we need to know what business wants from a round, and also understand community concerns. This month, my officials are holding a series of public hearings in capital and regional cities to build on submissions we've already received in response to our Government's historic public call for comments on the agenda for the new round. I will also be intensifying my own program of consultations, meeting with peak agriculture, services, intellectual property and manufacturing groups. And I will ensure that information on developments is easily accessible to all, including through a special Seattle Ministerial web-site.

Dispute Investigation and Enforcement Mechanism

While we fight for further market access, we must also ensure that trading partners live up to their commitments. The WTO dispute settlement system is crucial to this, and is one of the Uruguay Round's great successes. It guarantees Australia treaty-bound access rights to WTO markets and in instances of discrimination against us, like lamb or Korea beef, the dispute settlement provides an avenue of redress.

This key aspect of the WTO system needs to be better understood by Australians, including business people, particularly as we move towards a new round. That is why I am pleased to announce tonight a domestic initiative - the WTO Dispute Investigation and Enforcement Mechanism - to encourage greater participation by the commercial sector in prosecuting and enforcing our WTO rights.

The mechanism will complement and extend existing channels for exporters to seek Government assistance in resolving market access problems. Based in the Department of Foreign Affairs and Trade, it will give exporters a formal means to request that the Government exercise Australia's WTO rights on their behalf. It will help maximise the benefits of the WTO's dispute settlement mechanism for Australian exporters, including smaller companies and exporters in newer areas like information technology and services. I encourage you all to familiarise yourself with this important Government initiative.

Working with others

On the external front, I will be working to win others to Australia's ambitious but realistic approach to a new round. I mentioned that I recently chaired a meeting of the Cairns Group and participated in the APEC Trade Ministers meeting. Both groups are solidly behind a liberalising role for the WTO in the coming years.

In October I will participate in a key ministerial meeting in Lausanne, involving a range of influential countries. A few still do not support a round while others hold ambitions that could hamper major market-access gains within a relatively short time. I will be seeking to convince them of the merits of Australia's vision for an ambitious but realistic round, focused on market access.

In my meetings with other ministers I will encourage them to see that we can be ambitious and realistic and win tangible gains for all in a relatively short time-frame. I will be keeping in close touch with the newly installed Director-General of the WTO, Mike Moore of New Zealand, with whom I have already discussed these issues, urging him to see the Australian approach as the way forward for Seattle.

Conclusion

Our Government sticks to this task because, as I have said, trade means jobs and wealth for all Australians. In fact, 1.7 million jobs - one in every five - depends on trade. Our domestic market of 19 million simply cannot afford to turn in on itself. If we want to maintain our standard of living, and keep Australia as strong as it is today, we must keep focused on the export game.

In fact, for all countries - not just Australia - trade matters more and more. Trade openings and trade rules are not esoteric matters for a small group of people from rich countries. For small companies and large, and also for the wider community, the outcomes of the Seattle Ministerial will matter, as will the subsequent negotiations. By welding ambition to realism, we must give ourselves the best chance at Seattle.

ENDS