Speech by the Minister for Trade The Hon Mark Vaile MP Deputy Leader of the National Party of Australia to the National Press Club, Canberra, 26 November 1999.

"Sleepless in Seattle" Australia's fight for world market access

(Check Against Delivery)

Thank you for the opportunity to address the National Press Club.

I do so on the eve of possibly the most important international meeting that will take place this year - the World Trade Organisation Ministerial Conference in Seattle next week. In Seattle representatives of 135 member countries will have the opportunity to determine the direction of international trade policy for the next decade, to decide whether or not to continue the path of trade reform that's underpinned global economic prosperity for the past 50 years. And to decide whether to launch a new round of global trade negotiations as well as the scope of those negotiations.

The stakes for Australia are high. Trade matters enormously to Australia. Exports underpin our economy. One-in-every five Australian jobs - 1.7 million - depend on exports. Over two-thirds of our farm production is exported and the figure for minerals and energy is 90 per cent of production. The services sector is also a vital part of the Australian economy accounting for more than two-thirds of our GDP and almost a quarter of our total exports. Manufacturing is the third critical area for us in Seattle. Export-related manufacturing jobs pay on average 20 per cent more than other manufacturing jobs. That's why we'll be fighting to break down trade barriers in this area.

I can tell you, I'm extremely proud to be leading what I call "Team Australia" - the largest ever-private sector industry delegation to a WTO meeting. All the industries are united in the fight for better market access.

This week in Geneva trade officials abandoned attempts to write a draft declaration for Seattle. And I'm sure you've read the reports that the Seattle talks became gridlocked, with the EU's Trade Commissioner, Pascal Lamy, saying: "we mightn't be able to leave Seattle with a decision on opening a new round". The Europeans and Japanese and their friends are trying to set the agenda all their own way. Despite these difficulties, the world must go forward. And I've been heartened by US Trade Representative, Charlene Barshefsky's comment that: "Everyone knows that failure is not an option."

United with the rest of the Cairns Group of agricultural fair traders, we will highlight the sheer unfairness of the protectionists and their massive domestic support schemes in corrupting world markets and hurting efficient producers, and especially producers in poorer countries. At the recent CHOGM meeting, the leaders of nations representing hundreds of millions of people were united in calling for freer world trade so that developing economies could have greater participation in global economic growth.

A Market Access Round

Despite the difficulties we face, I can tell you, I have not given up hope, and will be pushing for a successful outcome. What we want from Seattle is very clear. A round that will benefit all - developed and developing countries alike - by tackling the barriers that hamper trade and economic growth … barriers that cost the world some US$750 billion a year, and our economy US$5 billion a year.

Our position for Seattle is:

. First, Australia supports the launch of a new round of multilateral trade negotiations that focuses on better market access in agriculture, services and industrial products;

. Second, the round should be completed in three years as a single undertaking: that is, results in all areas must be put into effect at the same time; and

. Third, Australia will seek a mandate that is capable of delivering fundamental reform of global agricultural trade. Indeed, Australia's support for a broad-based round will depend to a large extent on a satisfactory mandate for negotiations on agriculture.

 

Opening Agriculture Markets

I make no apology for the central importance agriculture &emdash; basic commodities and processed food products have in our approach to Seattle.

As a relative newcomer to international trade rules, agriculture has not had the benefit of the seven rounds of multilateral trade negotiations over the last fifty years that have given a much stronger set of international trade rules for manufactured products. One of our fundamental trade objectives is to have agricultural commodities and processed food products treated on the same basis as other sectors of international trade. Remember we're talking about the sector with the highest trade barriers, where rich countries spend huge sums to block exports from poor countries and from efficient producers like Australia and Cairns Group members.

To give you an idea of what the world is up against, the wealthiest OECD countries provided US$362 billion worth of farm handouts in 1998. Sugar is a classic example of the problems we face. There's something seriously wrong when the European Union - one of the world's highest cost producers of sugar - is also one of the world's largest exporters of sugar. In fact, subsidisation of sugar production, combined with non-tariff protection, keeps sugar prices for consumers and users in markets such as the US, EU and Japan at around three times the world price. In the case of the EU that has also resulted in massive exports of highly subsidised sugar. These policies severely depress the world price for sugar. The result is that current world prices for sugar continue to make life extremely difficult for our highly efficient cane farmers. They are also hurting the economies of developing countries that rely heavily on sugar exports.

A study I'll be launching in Seattle into the world sugar market undertaken by the Australian Bureau of Agricultural and Resource Economics and the US consultants, Sparkes Companies, shows that:

. World-wide market reform would result in world raw sugar prices increasing by over 40 per cent; and

. The removal of government support measures in the EU, US and Japan would result in savings to consumers in those countries of around US$4.8 billion a year.

The agriculture mandate

As I noted earlier agriculture is proving to be the most difficult issue. Efforts by the EU, Japan and their allies in Geneva to give so-called "non-trade concerns" in agriculture equal status to the agreed over-riding objective of fundamental reform are damaging prospects for a reasonable outcome on agriculture, as well as other areas of the negotiating mandate. I've raised our concerns directly with my EU counterpart, Pascal Lamy, and I'm in close contact with Cairns Group Ministers and my US counterpart Charlene Barshefsky. I've told the EU that it will have to agree to an ambitious mandate on agriculture if it expects others to accept ambitious mandates in other areas. We don't want any new barriers for our food exports. We'll continue to advocate a science-and rules-based approach to food and biotechnology issues.

In particular we're wary of proposals from the EU to insert a range of non-science-based issues relating to food safety, animal welfare and consumer concerns. This is little more than a stalking horse for the Europeans maintaining farm subsidies and trade barriers. Australia has for some time been a strong supporter of a new round but our support does not come at any price. No round at all might be better than a bad round, bearing in mind that agriculture and services negotiations will take place irrespective of whether there is agreement on a round. My message to the EU, Japan and the other agricultural protectionists at Seattle will be simple: you've already agreed to negotiations on agriculture but won't agree to a reform agenda, yet at the same time you call for others to accept negotiations in difficult areas like investment and competition policy. Why on earth would developing countries and agricultural exporters agree to a round as unbalanced and unfair as that?

Protecting Australia's Interests

Australia will be very much on the front foot in a new round. We have an open economy in agriculture, services and manufacturing. This new round must be catch-up time for our trading partners. I'll be focusing on ensuring that our trading partners open their markets like we have. In view of the significant reform in recent years of Australia's markets in areas as diverse as financial services, telecommunications and dairy production, to name a very small selection, I have no compunction in defending Australia's interests where the Government has agreed that we should hold firm.

Services &emdash; market access focus

Negotiations on services, like agriculture, have already been mandated by WTO members. We have a great deal to gain in the services negotiations. The Government recognises that high-quality services underpin the success of the whole economy and our export effort. That's why stronger international trade rules in sectors such as financial services, telecommunications and legal services are critically important to us.

And let's not forget the exploding world of electronic commerce, where one of our practical objectives in Seattle will be to see a continuation of the current moratorium that ensures electronic commerce remains duty-free. We support a comprehensive approach to the services negotiations. But any offers that we make of further opening any specific markets will take full account of our specific national interests, including such areas as audiovisual and health. In particular, I shall ensure that any negotiations in the audio-visual sector take account of Australia's cultural policy objectives. We promote our local film and television industry. We do so to define our identity at home and our image abroad - as do most countries.

Trade and the Environment

I've heard some concerns that trade liberalisation and the WTO take precedence over the protection of the environment. I understand these concerns, but they are misplaced. Trade liberalisation and positive environmental outcomes should, and can go hand-in-hand. They should be mutually supportive. Australia will seek trade reforms that benefit the environment, with priority on reducing agricultural and fisheries subsidies, both of which impose economic costs on efficient producers and environmental costs through the overuse of farm chemicals and over-fishing. In Seattle I'll also be calling for a clear recognition that the WTO does not prevent countries from protecting the environment, with the only proviso being that such actions do not arbitrarily impede trade.

Other issues in Seattle

The US has made a very strong pitch for the WTO to work on trade and labour standards. This has met with strong resistance from many developing countries, who regard it as a potential threat to their exports. Australia and the US agree on many issues, but we have concerns about the introduction of labour standards on the WTO's agenda. Australia believes that the observance of international labour standards should be pursued, but not in a trade body and not using trade tools. The International Labour Organisation is the organisation best placed to develop standards for workers' rights.

The Public Dimension

Unlike the former Labor Government, we have involved the public and industry in the formation of our trade policies by undertaking the most comprehensive set of consultations any Australian government has conducted, and we will continue to do so.

In the run up to Seattle public forums were held across Australia that canvassed wide-ranging views on where we should be heading. These views and submissions have been useful in determining our position. In this respect, I want to thank the many organisations, State and Territory governments and individuals that made submissions. As I've explained, I have a considerable negotiating challenge in securing the best possible negotiating mandates for a new round. Seattle will be a beginning - an important beginning setting out the scope and ambition of the round. Negotiations on the substance will then commence. There will be domestic consultation once the round is underway, and we plan to provide information through the DFAT web site and other consultation mechanisms.

Beyond this, it is clear that we need to continue to raise public understanding of the value of trade to the economy and of the benefits of opening new markets. There could also be far greater appreciation of the enormous value of being able to trade under a reliable system of rules - a value that would be only too apparent if the system were not there and global commerce was left to the law of the jungle.

Working with the region

I'm very conscious that while Seattle is the central focus of our trade agenda this year, we cannot neglect other parts of our trade agenda. As well as these multi-lateral negotiations, we have continually worked to strengthen our bilateral and regional links. Labor made the mistake of having all its eggs in this one trade basket. We are not making that same mistake.

Conclusion

On the eve of my departure for Seattle, I can only reiterate the importance the Government attaches to gaining better market access for our exporters through the launch of a new round. That's what I'll be fighting for in Seattle, though I'm under no illusion of the magnitude of the task that lies ahead. I'll be doing all I can to secure better market access for our exporters … access built on stable and workable rules. In Seattle, I'll be aggressively pursuing the policies I have outlined today and strongly defending Australia's national interests.

Thank you