Speech
Australian Minister for Trade, Mark Vaile
Banff, Canada 11 October 2000
Speaking notes for a speech by the Minister for Trade The Hon Mark Vaile MP at the opening session of the Cairns Group Ministerial Meeting
Introduction
Welcome all.
On behalf of the other Cairns Group members I would like to thank Canada - and Minister Vanclief, personally - for hosting this Ministerial meeting, the first since the agriculture negotiations began - and, of course, the first since Seattle.
I'd also like to join them in welcoming EU Agriculture Commissioner, Franz Fischler, Egyptian Minister for Economy and Foreign Trade, Youseff Boutros-Ghali and the chair of the agriculture negotiations, Peru's Ambassador to the WTO, Jorge Voto-Bernales as special guests to this Ministerial meeting.
The issue of reform in world agricultural trade is the reason we are here in Banff for this Cairns Group Ministerial meeting.
The key objective of the Group, which we drove home in Seattle, is the need to remove the gross discrimination against agriculture and agricultural exporting countries embedded in the world trading system.
Australia's Prime Minister strongly made the point at the recent World Economic Forum in Melbourne that the existing imbalance in international trade rules denies efficient agricultural exporters the ability to trade their way to sustainable growth and higher living standards. The work of the Cairns Group is essential if we are to solve this problem and rebuild confidence in the multilateral system.
The stark reality is that developed country protection against agriculture imports is five times higher than protection against manufacturing imports.
Last year, total support to agriculture in the OECD reached US$360 billion and the share of farm income derived from government support rose to levels not seen since the start of the Uruguay Round.
In no other area of trade do we still allow export subsidies - they were recognised early in GATT as the most harmful form of subsidy.
Rebuilding developing country confidence in the world trading system
There were several key messages for me from the failure to launch a new round of global trade negotiations in Seattle last year. One of the clearest was that the framework for further liberalisation must take account of the particular needs of developing countries and support their economic development.
The reality is that the majority of WTO Members are developing countries including the 45 new members who have joined since the Uruguay Round began.
The opening of world markets has underpinned fifty years of growth in the world economy. Trade has expanded fifteen-fold since the 1950s, world economic production has grown six-fold. Trade has been an essential factor driving an unprecedented increase in quality of life for much of the world's population.
But despite this progress, the stark reality is that there are still almost 3 billion people trapped in poverty, living on less than $2 a day.
Why is this so?
One major reason is that we have not ensured that developing countries have full access to the world trading system. The new Managing Director of the IMF, Horst Kohler, identified the essence of the problem when he said : "protectionism in industrial countries is the core problem in the fight against poverty".
The World Bank estimates that OECD tariffs and subsidies cause annual welfare losses in developing countries of about USD20 billion; about the same amount as aid flows in 1998. Industrial countries must open their markets more completely to poor countries, especially in agriculture.
Agricultural trade reform is essential for poverty alleviation
International reform in agriculture offers developing countries the strongest prospects for alleviating poverty and reducing the threat of hunger and malnutrition.
This stems clearly from the fundamental role of agriculture in developing countries. It provides, on average, 70 per cent of employment and 30 per cent of output. In many cases it has the potential to make a major contribution to foreign exchange earnings, to provide essential inputs and a necessary demand stimulus to the rest of the economy.
The Cairns Group is the leader for this reform agenda
The Cairns Group was founded on the realisation that there was an equity issue in agricultural trade distortions - not just an economic problem. The Group is therefore not new to the concept that agricultural reform is important for global development. Indeed 15 of its 18 members are developing countries.
The Cairns Group proposals that are being introduced in Geneva this year tackle the distortions head on. The Group has been out in front, both in terms of generating ideas and in working to generate broad support for reform across the WTO membership.
We have already proposed the complete elimination of export subsidies over a specified timeframe with a sizeable downpayment in the first year. We are particularly encouraged by the fact that the United States has made a similar proposal for the elimination of export subsidies, although we want to see its subsidised export credits eliminated also.
At the negotiating session last month, the Group put forward a proposal to phase-out all forms of trade-distorting domestic subsidies, again with a 50 per cent cut up-front.
By November we should be ready to submit our proposal on the remaining market access leg of the reform process.
While the Cairns Group's market access proposal is still at a preliminary stage, our objectives are already set out in the Group's Vision Statement. We want to progressively open up tariff quotas with a view to having tariffs as the only form of protection, eliminate tariff escalation, and reduce tariffs to levels consistent with trade in other goods.
Tariff escalation is a particularly important issue. The Uruguay Round delivered some liberalisation to bulk agricultural commodities but left distortions in processed food largely untouched. This hinders the development of value-added industries in Cairns Group and other developing countries.
Overall, proposals from the Cairns Group are about fairness. They will reduce disparities in market barriers and support worldwide, and help ensure that farmers and processing industries are competing against each other based on productivity and skill, rather than against government treasuries.
I need to stress that our target is the insidious combination of export subsidies, domestic support and market access restrictions in a few major OECD countries.
We are not targeting legitimate policies used by developing countries for food security and rural development.
Those opposing reform
Protectionist countries are very active in promoting their schemes for entrenching their high cost agriculture and will try to internationalise as much of the burden of their support policies as possible.
For example, some claim that the reform agenda being promoted by the Cairns Group will only benefit agricultural exporters. One example often rolled out is that the elimination of export subsidies will increase the food security concerns of net food importing developing countries (NFIDC).
This is clearly not the case and a recent discussion paper by Brazil and other Latin American countries outlines why. Far from being a permanent solution for concerns with food security, the perpetuation of export subsidies constitutes, in fact, a special and differential treatment in favour of some rich developed countries. A clear and balanced set of disciplines will ensure more equitable participation in world trade and will help guarantee the distribution of income and wealth, necessary not only to develop domestic agricultural activities, but also to finance the imports of food not produced locally.
This view is backed up by the fact that the objective of eliminating export subsidies has attracted overwhelming international support. This includes support from APEC and developing countries groups, including the G-15, and G-77, and countries participating in negotiations towards a Free Trade Agreement of the Americas.
Those resisting reform continually point to social and environmental dimensions of rural activity. More recently they are aggressively promoting a number of new, controversial issues - such as food quality and animal welfare. Our concern is that they see all of these as grounds for continuing high support and protection levels.
We all have social and environmental concerns relevant to our rural areas. Other issues may well be of increasing public concern in the EC and other countries. However, we believe that they can be addressed without maintaining or creating new trade distorting measures. In many cases they can be tackled domestically through non-trade distorting measures. It is vital that the WTO's key role as a trade rules forum is not forgotten. Introducing these issues is likely only to divert and delay WTO negotiations.
There is no justification for using trade-distorting measures to address the policy objectives encompassed in "non-trade" concerns. We all need to work constructively at home and abroad to secure measures and agreements that support the benefits of international trade rather than the vested interests of protectionist lobby groups.
Objectives for the meeting
We have some important ground to cover over the next day and a half.
This includes discussing how to take the negotiations forward so that they are completed as soon as possible. Another element we will pursue is how to work with our partners, both developed and developing, to understand better their concerns and how they can be met in ways complementary to reform. This is an important role of the Cairns Group. We have already been active on outreach but I'm convinced there is much more we could do. To this end I'm particularly pleased that Dr Boutros-Ghali will join us to share his views.
It is also a great pleasure to welcome Dr Fischler for the first time to a Cairns Ministerial meeting. His participation will be important for a number of reasons. The EU is a major player in these negotiations and we are looking to it to further reform its agricultural policies. We want to explain our approach to Dr Fischler and explore areas where we may be able to work together.
We also welcome the presence of Ambassador Voto-Bernalese, the chair of the agriculture negotiations to discuss progress in the first phase of the negotiations. I very much look forward to working closely with you all.