Speech
Hotel Los Tajibos, Santa Cruz, BOLIVIA
Friday 18 October
Address to the Global Alliance for Sugar Trade Reform Luncheon
Thank you Bruce, as Chairman of this very very important body the
Global Sugar Alliance, to my co-host of the Cairns Group Meeting in
Santa Cruz in Bolivia this year, Minister Leibers thank you very much
for hosting our meeting here. Ministerial colleagues, ambassadors,
distinguished guests, ladies and gentlemen.
It was interesting to listen to the outline that Eduardo just gave
us with regard to the challenge consultations that are currently underway
with regard to the EU's trade of sugar from Australia and Brazil.
It's an area where we should recognise one of the fundamental reasons
why we belong to the WTO. When we believe the rules are not being
adhered to we have a right to take up the challenge on that. Certainly
in Australia's case we have always done that when we feel so inclined,
but I'll make further comment about that later on.
Ladies and Gentlemen we are at a very crucial stage in the processes
of the Doha Round particularly with regard to agriculture.
You're right Bruce, this organisation was one of the few positives
that came out of the failed meeting in Seattle in the end of 1999.
There probably were a few other things, but it provided us with an
insight in to the delicate balances within the WTO in terms of trying
to get decisions out of a consensus based decision making organisation
such as the WTO.
For all sorts of reasons we ultimately achieved that in Doha last
year by developing a mandate for the launch of a round of negotiations
and most importantly with a finite period of time for conclusion,
1 January 2005. This is going to present some serious challenges
to all of us in terms of pursuing that date. One of the critical
elements that we did identify, and one of the good things we did identify
in Doha was a date for the establishment for modalities, I'm sorry
Bruce but that's the language, in agriculture the 30th
of March next year.
We knew if we didn't mandate that as part of the overall declaration
last year we could end up in as much argy bargy as we did on industrials.
We didn't expect we'd have any dramas on industrials but we spent
the first six months of this year arguing a deadline on market access
on industrials.
We've done that with agriculture. So that gives us a finite period
of time in terms of getting positions down on paper and presented
to the agriculture negotiating committee in Geneva.
We have done that, the Cairns Group have done that, addressing those
key areas that focus those three key pillars interestingly and gratefully
the United States has also done that with a proposal that I will say
surprised most people following the passing of the farm bill earlier
this year. When you look at the year in terms of agricultural trade,
the low point of the year without fear of contradiction would have
been the passing of the farm bill. I'm no apologist for the administration
or the United States, but we should also recognise that farm bill
is fundamentally the American Congress' farm bill not the administration's
farm bill.
We should recognise that Anne Veneman did all she could to try and
introduce some disciplines in terms of the level of support and subsidy
and protection in US agriculture, largely without success, but she
did try. As a group we were very critical at the time and rightfully
so, but we should acknowledge that and we'll have the opportunity
tomorrow in the special guests section of our agenda to talk to senior
members of the Bush Administration, namely USTR Ambassador Zoellick
and also JB Penn a senior bureaucrat in USDA is here.
But I come back to the point, following that, the position put down
by the American's certainly surprised a lot in terms of their ambitions
as far as market access is concerned. When you analyse that it is
not overly ambitious but there are other aspects of that proposal
that are, but at least they're there. We've got the Cairns Group
clearly outlining its position in those core areas in the key reform
proposals that have been put forward by the Cairns Group, obviously
the elimination of export subsidies over three years for developed
countries, and six years for developing countries with an immediate
reduction of 50 per cent in export subsidies from the first day of
implementation of a new agreement. We've called for new rules to
discipline export credit and food aid. We've called for deep cuts
in tariffs. We've called for substantial increases in tariff quota
volumes and strengthened rules for tariff quota administration. We've
called for the elimination of all trade distorting domestic support
over five years for developed countries and nine years for developing
countries and we've called for additional special and differential
treatment for developing countries.
As I've said the next stage of this process is that the chair of
the agricultural negotiations, Stuart Harbinson, must put together
the guidelines for agricultural trade liberalisation in the Doha Round
by the end of this year. That is going to present a challenge to
Stu Harbinson, it's going to present a challenge to Dr Supachai, because
to date out of all the key players that focus their minds and their
energies of agricultural trade reform, it's only the Cairns Group
and the United States that have declared our hand in terms of what
our ambitions are.
The other key players, the European Union and Japan have to date
not put down anything. David Spencer and Sergio Marchi would be well
aware of the sorts of discussion taking place in Geneva and a lot
of those, it seems, are hankering back towards article 20, while as
far as our group is concerned, and the US is concerned, that is not
acceptable and will not deliver anywhere near the sorts of ambitions
that we require to acheive balance, that would encourage us to sign
off on an agreement before the beginning of 2005.
So the Cairns Group meeting this year, here in Santa Cruz, Bolivia,
is significantly challenged in that somehow we've got to work our
networks, our spheres of influence outside of our group to ensure
that we get the European Union and Japan to stop stalling and come
to the negotiating table with credible proposals so that the negotiations
can in fact begin. So that we don't end up wasting the precious time
that has been allocated to conclude this round.
We are in what we call in Australia 'real time' in this process.
We've spend a lot of time since the Uruguay Round, since the failure
of Seattle, talking, arguing about different positions, trying to
move different countries into different positions, line up the ducks
so to speak. We are down to real time. It is a critical issue as
far as the round is concerned for the Cairns Group, for Australia
and for the United States I might add. It's also critical for the
sugar industry globally and I'll get a little bit parochial, it's
particularly important for the Australian sugar industry. Most of
you would be aware of the very dire circumstances that the Australia
sugar industry finds itself in at the moment.
Just recently our government announced an adjustment package to try
and refocus and reform the Australian sugar industry. It's very difficult
when they face global prices of five and six cents US a pound and
competing against intervention pricing that allows 25 cents US a pound
in countries like Europe and also the extremely restrictive and protective
regime that exists in the United States. We need not let the United
States off the hook in this regard as far as distortions in global
sugar trade are concerned.
This organisation has done an enormous amount of research work.
We need to be able to substantiate and base our arguments on statistical
facts. This report that Bruce has launched today is very very important,
if you can't go out and mount a substantive argument for your case
then you will get dismissed very quickly and shot down in flames.
This organisation has done an excellent job in terms of doing that
and this study by the Centre for International Economics entitled
Targets for OECD Sugar Market Liberalisation adds to the work
done on sugar liberalisation by the Australian Bureau of Agricultural
Resource Economics and Spark Companies in 1999.
This report notes some very worrying trends. It concludes that the
level of trade protection has risen in recent years as the world price
of sugar has fallen. Levels of protection have risen while the global
price of sugar have fallen. Little wonder an industry likes ours
in Australia that is open absolutely to the influences of the open
market place is suffering the way it is. Levels of protection have
climbed to around 400 per cent in Japan, 225 per cent in the UE,
and 150 per cent in the US. We are always asked why do you attack
us, why to you attack our industries? Well that's the reason why,
that's exactly the reason why. When we're trying to compete fairly
in the global marketplace against those levels of protection.
The study also provides useful estimates of the value of the removal
of all protection by 2012. The CIE modeling indicates that the world
price of sugar would increase by around 60 per cent relative to the
average world price over the last four years. That would mean an
increase from around six to eight cents a pound at the moment to around
between 11.5 and 13.5 cents per pound, still well short of that intervention
price. Perhaps more importantly the study aims to build a better
understanding of which policy instruments in which countries are the
most distortionary to domestic sugar markets and world prices. Based
on this information priorities for reform are identified in the study.
For example the study concludes for the EU, a 50 per cent reduction
in the EU intervention price would effectively lead to full liberalisation
of the EU sugar market, that's just by a 50 per cent reduction in
the EU intervention price. For the United States a maximum 25 per
cent tariff on sugar would lower the producer price and therefore
the loan rate to around 13 cents a pound and result in imports increasing
to around five million tonnes, effectively going 85 per cent of the
way to full liberalisation of the US market. The good news is that
a maximum 25 per cent tariff is exactly what the current US WTO proposal
is.
While there's a long way to go in these negotiations in the WTO it
is heartening to finally see a proposal which would actually mean
something to our sugar industries. It is also worth noting that proposals
by Cairns Group members would mean even more liberalisation for our
sugar industries. Cairns Group members and the United States have
both proposed a maximum tariff of 25 per cent. Cairns Group members
have also proposed increase in tariff quotas for sugar by 1.8 million
tonnes in the US market and 2.8 million tonnes in the EU market.
If I could just conclude ladies and gentlemen on a couple points
firstly let me reinforce again the significance of agriculture in
these negotiations. There will be no conclusion to the Doha Round
unless there is an acceptable outcome as far as agriculture is concerned,
that includes sugar, but not just specifically sugar. I see in the
room we've got representatives from just about all the agricultural
sectors that are taking a keen interest in these negotiations. The
Cairns Group and the United States are now playing a crucial role
trying to leverage other countries forward. We must now build on the
pressure we have started to apply to the EU and to Japan to show their
hand in enough time for Harbinson to develop his negotiating modalities.
If we don't then we're going to waste a lot of next year arguing about
these issues of process. We need to be very very strident in our
determination to ensure there is a clear understanding that we will
walk away from other issues if we don't get fairly treated with agriculture.
The other point I wanted to make Mr Chairman, and it would be remiss
of me not to mention in this gathering the current situation Eduardo
Cavallo (ph sp) mentioned with regard to the consultations being conducted
in Geneva on sugar with the EU by Australia and Brazil. All we're
trying to achieve is that we want to ensure that the European Union
is complying with their WTO commitments. We consider there's a strong
case that they are not, so we've begun this process.
I understand Mr Chairman that this action has created some sensitivities,
some tensions within the Global Sugar Alliance. Let's be clear on
one thing, we are either in favour of reform or we are not. We are
either in favour of reform or we are not. If we are then we must
be active at every level in pursuing it. You can't have it today
and not tomorrow, you can't have it on one hand and not on the other.
We have structured a rules based system that we are committed to,
that we continue to lecture our respective communities about the benefits
of, and if we believe those rules are not being applied properly or
complied with properly, then it is our right to challenge those rules.
There are countries that there are, and quite rightly so, that get
preferential access. We had a meeting with Fiji in Australia this
week and discussed this issue. As Eduardo said the action that has
been taken in no way is targeted at those special preferential access
arrangements.
I say again, if we are serious about reform we must actively pursue
it, we must actively pursue it wherever we can. It should come as
no surprise to anybody in this room that Australia always has, Australia
will and always will where we believe we have a case, we will mount
that case. Other countries that have a grievance with Australia will
challenge some of the things that we do. We are always prepared to
go and actively defend those, because we believe in and comply with
the rules. All we ask is that other countries do the same. In this
case we don't believe that is the case and we believe that is our
right as does Brazil to have adjudication on that. But as far as
the existence and the focus of the Global Sugar Alliance is concerned
I leave you with that point. We are either in favour of reform and
improvement in an inequitable system in making it fairer and more
equitable or we are not. You cannot have two bob each way on this
issue.
Thank you ladies and gentlemen.
Local Date:
Saturday, 22-Nov-2008 11:36:11 EST
