Speech on behalf of the Minister for Trade & Deputy Leader of the National Party, The Hon Mark Vaile MP

Delivered by Senator Chris Ellison, Minister for Justice and Customs

at the National Farmers Federation Annual Conference
Canarvon WA, May 23, 2002

National Farmers Federation Annual Conference

Introduction

Ladies and gentlemen.

The 2002 National Farmers Federation conference, here in the West, is being held at a time of renewed optimism for the farming sector.

Many sectors of Australian agriculture - and most regions - have experienced real increases in price received and farm incomes.

Prices received by farmers are estimated to be 8 percent more than last year, and 22 percent more than two years ago. Gross farm cash income is estimated to be up 10 percent over last year, or and 22 percent more than two years ago. And net farm cash income is estimated to be up 27 percent over last year, or 54 percent more than two years ago.

In particular, Australian agriculture has posted yet another strong export performance, with rural exports increasing by 13 percent in 2001 to $29.8 billion (following a 19 percent rise in 2000). Beef and lamb have stood out, with beef exports rising 25 percent from 3.6 billion to 4.5 billion, and lamb exports increasing from $824 million to just over 1 billion last year. And wheat exports rose by 14 percent to $4.3 billion.

That performance comes from the hard work of a productive and innovative sector that knows how to deliver its products globally.

It is a performance that has been built on - and reinforced by - good economic management.

And it is a performance which our trade policy has helped build, and will continue to reinforce, under the Liberal/National Coalition Government.

Economic management - getting on with the job ...

Under the leadership of John Howard and John Anderson, we are getting on with the job of governing - delivering results and providing leadership and certainty to the Australian community, particularly the 7 million Australians who live outside our capital cities.

The government has protected our borders against people smugglers. Together with our allies, we have taken a strong stand in the fight against terrorism.

We've revamped an outdated and plainly unfair taxation system - removing a burden of $3.5 billion, every year, for our export community.

We've reformed the labour market and industrial relations - in particular the waterfront, where productivity has been lifted to international standards.

And, we are determined to entitle employees to secret ballots, to strengthen trade practices law against secondary boycotts, and to create fair dismissal laws.

We've restrained government spending, and retired public sector debt. In fact, we've paid off almost $60 billion of debt, which sees us with one of the lowest debt to GDP ratios in the OECD.

The savings we are now making on interest payments allow us to spend on projects for our future - projects like the $1.2 billion Roads to Recovery program, with the money going directly to local Councils.

Australia has had the strongest growth record of all the larger OECD economies over the past decade - and this is set to continue with Australia forecast by the OECD to be the fastest growing economy in the OECD in 2002.

Our record is clear:

• high levels of growth - an average 3.8% since we came to office in 1996
• low interest rates - 6.5% (compared to 22% under Labor)
• low inflation - 3% (compared to 10% under Labor)
• and lower unemployment - 6% (compared to over 11% under Labor), expected to trend down to 6% by the end of the year.

In short our Government has created a much more competitive economy - and more and better jobs - including in rural and regional Australia where once again there is life in our country towns.

Agriculture - at the centre of the Government's trade policy priorities

Ladies and gentlemen

On Tuesday morning I got off a plane from meetings in Geneva, Paris for the OECD, Brussels and in Thailand, where I discussed two central planks in our efforts to open markets abroad - the new round of negotiations at the World Trade Organisation, and one of our prospective bilateral Free Trade Agreement negotiations.

I want you to know that the concerns of agriculture remain at the centre of these discussions.

In particular, I expressed Australia and the Cairns Group's extreme disappointment at the US farm bill. And I set out our very strong concerns over the direction of agricultural policy in both the US and the EU.

Agriculture remains at the centre of our trade policy priorities:

• agriculture contributes vitally to our nation's export performance - one in every four dollars earned from selling Australian goods overseas is earned by agriculture.
• agricultural markets are perhaps the most corrupted of all international markets.
• Australia has staked out a leadership role in the fight for agricultural trade policy reform, especially as chair of the Cairns Group. Our role is now even more important given the new strategic position of developing countries - and their interests in agriculture - in the WTO.

Now, there are some critics who say that this government concentrates too much on agriculture. They say that the international trade agenda is a broad one and that agriculture, being a difficult area, shouldn't be allowed to hold back other sectors.

Of course, manufactured products and, increasingly, services are critical to the future development of this country. But those who make the claim fail to understand the dynamics of the multilateral trading system - the key to success in the Doha Round of multilateral trade negotiations is agriculture.

Without progress on agriculture there can be no progress in other key areas such as services exports and automotive goods trade. Why? because of developing countries.

Developing countries now make up more than 100 out of the 144 WTO members. They are overwhelmingly agricultural exporters. And they are very unhappy that key developed countries insist they open their markets to industrial products, services and intellectual property rights while shutting them out in the areas in which they enjoy comparative advantage - especially agriculture and textiles.

I made it clear last week that there will be no Doha Round outcome without an outcome on agriculture. And everybody who is directly involved knows it.

So our emphasis on agriculture is not just because Australia produces and exports a lot of agricultural produce efficiently, or that agricultural markets globally are a mess, or that we have a record in fighting the good fight.

It is because without progress on agriculture, there will not be progress on any sector or other issue in the multilateral trade negotiations. Nothing is agreed until everything is agreed - there will be no early harvests.

It goes without saying, then, that it is essential the NFF - your leaders and your members - remain informed, active, and innovativein helping to shape Australia's trade policy.

US and EU Trade Issues

This is especially the case given recent setbacks to our cause.

US Farm bill

The US farm bill is especially frustrating - for all of us.

US farmers are simply producing too much of the wrong product at a price that the market won't pay. Production decisions are driven by subsidy programs rather than by what the market wants.  And, after years of increasing subsidies, many parts of the US farm sector are now more dependent than ever on handouts from the US taxpayer.

In the long run, these types of policies, just like the old socialist systems of Eastern Europe, are not sustainable. Eventually, they'll have to be reformed. But in the meantime, they'll cause severe damage to others.

The sheer size of US farm expenditure - at more than $US180 billion over the next decade - means that US farm policy will have significant impacts on farmers around the world - both here and in many developing countries.

The US action has only strengthened our resolve, as chair of the Cairns Group, to press for meaningful trade reform - reform that must be achieved out of the Doha Round.

As the Prime Minister has said: we will continue to complain and to fight for our rights and to campaign for reform over the longer term.

The European Commission and the US farm bill

The European Commission has tried to draw comfort from the US farm bill. The European Commissioner for Agriculture, Franz Fischler, has even attempted to criticise the US Administration for 'failing agriculture reform'.

Given the size of EU subsidies, and given the slow pace of change in Europe, this kind of comment should be seen for what it is. Despite the farm bill, the US Administration of President Bush remains much closer to Australia's outlook on agriculture than the European Union.

The overall size of US subsidies still pales beside that of EU subsidies.

In some US sectors, for example livestock, producers remain relatively unsubsidised. And in one or two areas - such as meat - we have reasonableaccess - even if, for lamb, we had to fight hard in the WTO to protect that level of access.

By comparison, Australian access into Europe for lamb and beef is pathetic.

There's no argument that the US farm bill is a marked retreat for the United States - not just in terms of its dollar impact, but also on the push to liberalise markets.

Now, more than ever, it is vital that the US Administration pushes hard for strengthened world agriculture trade reform. If they don't - and if we all fail - then the recent Farm Bill program will become the benchmark for further programs.

I am personally convinced that President Bush, USTR Bob Zoellick and US Agriculture Secretary Ann Venemann still believe in agricultural trade reform - and that they will carry the fight forward.

At the OECD in Paris last week Deputy USTR Peter Allgeier, delivered a message on behalf of the Bush Administration that was particularly positive. He said;

"I'd like to address directly a concern on the mind of probably everyone in this room. In the light of recent legislation in the United States, as well as proposals being debated in the US Senate in the context of TPA [Trade Promotion Authority], many of our trading partners are asking, "Is the US committed to the Doha agenda, and indeed to trade liberalisation in general?"

"The answer is unequivocal. Yes, we are committed to exercising the same leadership in negotiating the Doha agenda as we exercised - with many others - in defining the Doha agenda last November."

"Yes, we are committed to an ambitious negotiating result in agriculture, encompassing all three pillars enunciated in the Doha Declaration. Proposals we present in Geneva will demonstrate that."

I also am convinced that in the end, despite the farm bill, the United States will keep a weather eye to opening up international markets for its own exporters. There will remain domestic pressure for the United States administration to drive international reform.

There will be no ambition on agriculture from the EU. It will be largely preoccupied with internal considerations, such as how best to accommodate its enlargement to the east.

The Commission may tinker with the CAP - and may seek to use the Round for its own internal policy reform purposes - but it certainly won't drive international agricultural reform.

Still, even the EU will need to open its agricultural markets if it wants to achieve gains in other sectors of interest to the membership.

So, I will continue to work with the US Administration and encourage US leadership, to push for a successful and ambitiousconclusion to the Doha Trade Round.

The Doha Trade Round

Of course, the Doha Round is still in its early stages. Australia fought long and hard to get this new Round launched. We now have a mandate for an agreement with a number of key elements. The Agreement must:

• Improve market access for agricultural products;
• Substantially reduce domestic support; and
• Reduce with a view to phasing out all forms of export subsidies.

The Doha Trade Round offers the best opportunity for Australia and the Cairns Group to press for liberalised trade. But, clearly, the path ahead won't be easy.

On domestic subsidies, the US farm bill has shown up the kinds of defects in the current agreement that need to be tackled. Getting a watertight agreement to reduce domestic subsidies in a transparent fashion will be a challenge. But we must try to prevent similar US farm bills to this one in the future.

On export subsidies, the Doha mandate calls for their eventual phasing out. This is an important new step. Completely eliminating this form of unfair export competition is an important goal for Australia. When it comes to export subsidies the main offender is the EU. And it is the EU - which accounts for 90 percent of all export subsidies - that is the principal target.

This puts the EU on the defensive. It is now attempting to throw up at every turn new obstacles to agricultural trade. There are a number of EU ideas that should worry us a great deal

Trade and environment and GMOs

The first is trade and environment. At Doha, the EU insisted that WTO members negotiate on trade and the environment in the face of intense and almost universal suspicion. As a result some carefully described and verylimited trade and environment issues will be addressed in these negotiations.

The EU will now continue to push - in every possible forum - its interpretation of "precaution" which, if not resisted energetically, will lead to 'non-scientific' formulae being used to justify trade restrictions.

In our view existing WTO agreements already provide adequate rules to manage these questions. We will ensure that the integrity of WTO rules that rely on science-based decision making are upheld. And we will oppose those who seek to use environmental causes as an excuse for trade protectionism at every turn.

Geographical Indications (GIs)

A second issue concerns the EU demand that the WTO heighten protection for geographically-linked terms - so-called "geographical indications" (GIs).

I am not about to let product names universally understood by consumers around the world - "parmesan" for cheese, or "kalamata" for olives - be claimed for exclusive use by EU producers. This is just protectionism in another guise.

You will be aware of the difficulties that we and many other countries have already had with this issue in relation to wine and spirits.

We have been working hard in the WTO to oppose the extension of the GIs mandate beyond wine and spirits. We don't want a repeat of the wine experience with other products.

The road ahead

All of the issues that I have raised are important to the future of the international trading environment for agriculture. They are also, no doubt, more complex than I have painted here in just a few words.

I encourage the NFF, therefore, to continue to debate these issues. And I call, in particular, for you to consider your stance on science-based decision making - both in the WTO context as well as bilaterally.

Free Trade Agreements

This government's efforts to advance our exporters' interests have not stopped with the WTO. We are working at every level - multilateral, regional and bilateral - to secure better trading circumstances for our exporting community.

In fact, no Australian government has ever pursued a more ambitious and diverse trade policy than has our government.

I mentioned earlier that I was in Thailand two days ago, discussing a possible bilateral Free Trade Agreement.

We also are pursuing an FTA with the United States.

This is the government's highest bilateral trade priority - it offers the most potential gain for Australian exporters - including, I would argue strongly, farmers.

Some of our agriculture producers and representatives - and, it now seems, the opposition - are skeptical of FTAs, and have been particularly critical of the proposal for an FTA with the United States.

I can't, for the life of me, understand this line of reasoning. In fact, I think it would be irresponsible of me not to accept the challenge of negotiating a Free Trade Agreement with the world's most powerful nation.

First, there is the potential for market access gains to the world's biggest market. We have never said that an FTA would be easy to negotiate. Quite the contrary. But we already are an open market for agricultural products - unlike the United States. A negotiation would offer us the opportunity to protect and improve market access for our agricultural products to the US market.

Second, we cannot discount the possibility that the WTO round will not deliver a result - in agriculture, or in any other sector for that matter. The WTO now has over 140 members and a more complex agenda than ever before. We need to keep pushing for greater market access in every possible forum, not just multilaterally.

Third, turning our backs on a possible FTA does not mean that we can preserve the status quo in international markets. Indeed, if we do nothing, things will probably get worse for us. The US Administration has said, for example, that negotiating the Free Trade of the Americas Agreement - which will undoubtedly include agriculture - is a high priority. Our South American friends would get preferred and improved access to the US market - at out cost.

So the message is that we can go backwards by standing still - if others are negotiating FTAs and we simply watch.

Fourth, the argument put by some academics that we can't walk and chew gum at the same time and therefore should focus exclusively on the Doha multilateral negotiations rather than an FTA with the United States - or with Singapore, or Thailand, or in our prospective trade agreements with Japan and China - is nonsense - pure and simple.

I've ensured that our trade negotiating resources have been strengthened so that we can do all these things effectively. I've created an Office of Trade Negotiations in the Department of Foreign Affairs and Trade. I've appointed additional senior negotiators to deal specifically with agriculture, in Canberra and Geneva, as well as with negotiations for bilateral trade agreements. There are now 60 percent more officers devoted exclusively to trade issues than there were at the Uruguay Round in 1995.

I can say that the Department, nowadays, is a much more trade oriented organisation.

In short, an Australia/US FTA has the potential to remove trade barriers, attract new investment, forge commercial links, and to minimise competitive disadvantages we face as a result of US agreements with other countries.

That goes as much for agriculture as it does for other sectors of our economy. To walk away from that opportunity, simply because it looks hard, or for want of progress in other negotiations, would be foolhardy at best.

Conclusion

Australia has always relied on selling our agricultural products on overseas markets.

We have also had to always confront the realities of government intervention and the protectionist pressures inside many of our major markets.

The Doha Trade Round will have an important bearing on the trading environment for agricultural exporters. It offers the potential for improved market access. And it will have implications for the rules that govern export competition, and those that govern interventions in the market place.

In these circumstances Australia needs an active trade policy with agricultural objectives at the core. I can assure you that my highest priority is to seek a fair go for Australian farmers - and for farmers of other countries which do not, can not, and will not spend head over heel in subsidising them.

What we are asking for is nothing less than a fair go.

I seek your help in that - the NFF is ideally placed, especially with a fresh leadership and direction for the organisation, and with the renewed vigour and strength of the rural sector behind it.

Now - at the beginning of the Doha Round and with prospective gains for agriculture in our bilateral trade negotiations - is not the time to shirk from the big picture.

Thank you

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Local Date: Saturday, 22-Nov-2008 10:53:37 EST