Speech
at the Sydney Institute
Sydney, 18 November 2002
Sydney Institute
Ladies and Gentlemen.
Firstly, may I say thank you to Gerard Henderson for inviting me
here tonight.
It is an honour and a privilege to have the opportunity to address
the Sydney Institute.
We all know just how important a forum for public debate and ideas
the Institute has become under Gerard's leadership.
_____________________
Ladies and gentlemen
As we all know, the people throughout the world have faced times
of almost unprecedented horror in the last year as we face the threat
of a new kind of war.
There is now greater uncertainty and instability - particularly in
our own region.
The September 11 attacks on the US and the October 12 bombings in
Bali, have brought home the message that terrorism can strike anywhere,
and that our own region is not immune.
As well as claiming the lives of innocent victims, terrorism can
inflict serious and lasting economic damage.
In targeting New York, Washington, and more recently the tourist
centre of Bali, terrorists have sought to cripple economic activity,
to paralyse financial relations, and to create new barriers between
economies, countries and people.
In the aftermath of the attacks on the United States, we saw the
direct and ongoing impacts on the international aviation industry
- seriously affecting international business travel and tourism.
Already the World Bank estimates that, as a result of the Bali bombings,
weaker growth and a lower rupiah might push some 2 to 3 million people
into poverty in Indonesia.
The potential affect on trade is obvious. This is a real concern
in view of the significant and growing contribution of trade to growth,
prosperity and stability, especially in developing countries.
The challenge before us is to continue the momentum so successfully
generated in East Asia and elsewhere since the 1960s, in opening economies
to trade and investment.
We have to safeguard ourselves economically, as much as we do in
security terms, against acts of terror, and against the uncertainty
and instability that can result from acts of terrorism.
A Trade Strategy for Australia
Ladies and gentlemen
After years of hard work it has been a very busy and successful couple
of weeks for Australian trade policy makers.
- We have just completed the negotiations for a free trade agreement
with Singapore, setting new standards for trade liberalisation in
our region. This is Australia's first FTA in 20 years.
- I chaired an informal meeting of 25 WTO trade ministers here in
Sydney, which achieved a break-through for developing countries,
giving them better access to medicines and we received a commitment
from Japan and the EU, the world's two largest farm subsidisers,
on agricultural liberalisation.
- Last week we announced we intend to negotiate a free trade agreement
with the world's largest economy, the United States. This will
be the most challenging and significant bilateral deal in Australia's
history.
All three of these initiatives are part of a broad trade strategy
for the Coalition Government.
We are committed to an open and transparent multilateral trading
system - in which all WTO members can participate and from which they
can all benefit.
And we will pursue opportunities for market opening at the regional
and bilateral level - where they can support and even bolster the
WTO negotiations, and where they can deliver us faster and better
results.
We have consistently argued for a multi-faceted forward leaning trade
policy which will be in Australia's national interest.
. WTO informal meeting .
The first part of our strategy resulted in the launch of a new round
of global trade negotiations, last year at the WTO ministerial meeting
in Doha, in Qatar.
The Doha Round is much more complex and broader than previous rounds
of trade negotiations.
Not only does it encompass traditional negotiations over trade in
agriculture, industrial products, and services which are the core
business of the WTO.
It also covers intellectual property rights, trade and the environment,
trade and competition policy, trade and investment, government procurement,
trade facilitation, anti-dumping rules, electronic commerce and dispute
settlement.
The Round, importantly, also has a strong focus on development issues,
acknowledging the importance and influence of developing countries
in the WTO.
One thing the Doha mandate did was set out tight timelines for various
stages of the negotiations, with the Round to be completed by 1 January,
2005, requiring that we meet various markers along the way.
Some of these markers include decisions to be taken by the end of
2002, particularly on issues of direct interest to least developed
and developing countries, such as aspects of the TRIPS agreement affecting
access to HIV/AIDS treatments.
It was in this area that history will record the Sydney meeting as
an outstanding success.
And then there are some major markers to be reached in 2003, including
a framework for reforming agriculture by March, a round of offers
for liberalising trade in services the same month, and a framework
for cuts in tariffs on industrial products by May.
In addition, we have less than a year before the next WTO ministerial
meeting, to be held in Cancun, Mexico, next September, half way through
the Round.
All these factors - and the value I had seen drawn from the Mexico
and Sinapore informal meetings in the lead up to the successful Doha
Ministerial meeting - led me to conclude that the time was right to
convene the meeting in Sydney last week.
I invited Ministers from 25 countries, representing a cross-section
of regions, levels of development, and interests, attended the meeting
- as well as Dr Supachai, the new WTO Director-General.
It was not an official meeting of the WTO. Nor was it held under
WTO auspices.
Instead, it was an opportunity to share perspectives, build understanding
and develop ideas informally, without the constraints of a large,
official undertaking.
The meeting last week was a success because it achieved breakthroughs
on issues of real concern to developing countries, such as access
to medicines for developing countries.
It also was a success because it delivered a big message to the major
developed countries - The European Union, Japan and the United States
- that developing countries will not accept a Round without substantial
market access.
This is especially the case in agriculture.
Nearly 60 years after the Bretton Woods system was established, and
the GATT formed to lower barriers to trade, agricultural products
are still being treated differently to industrial products under the
rules based system this is neither fair nor sustainable.
And markets for agricultural goods remain skewed by protectionist
barriers -- tariffs on agricultural products, on average, are 3 times
higher than on any other product you might find in the supermarket.
The World Bank has estimated that rich countries subsidised and protected
their farmers to the tune of US$350 billion in 2001.
That is nearly US$1 billion every day ... or 7 times the value of
official development assistance from OECD countries to developing
countries ... or twice the value of all agricultural exports from
all developing countries.
Last week I pointed out that in the European Union, it has been estimated
that the average EU cow receives about $4.00 in taxpayer funded support
every day - more than 3 billion people in the world's developing countries
earn each day.
I pointed out that in the United States, a highly restrictive and
complex quota regime on sugar is accompanied by an extraordinarily
high out-of-quota tariff barrier calculated at 181 percent.
And I pointed out that in Japan, the rice market remains protected
to an unprecedented degree - according to the WTO, Japan's rice tariffs
are 406 percent.
Australia has led the fight for agricultural trade policy reform
in the WTO, especially as Chair of the Cairns Group of agricultural
exporters which brings together developed and developing countries.
I make no apology for pointing out the hard facts on agriculture
to our friends in Brussels, Tokyo and Washington.
Nor do I apologise for pointing out that with their newfound influence,
developing countries have said they will not accept the status quo,
and that without a satisfactory conclusion on agriculture, there will
be no conclusion of the Doha Round.
As I told other ministers last week, this is not an attempt to hijack
or blackmail the Round - it simply reflects the strength of the Doha
mandate, and the new balance of power realities in the WTO.
Last week's meeting was the first informal gathering of trade ministers
since Doha and - dare I say it - it will not be the last before concluding
the round.
I believe the Sydney meeting was an important marker for the road
ahead - because it launched what no doubt will be a series of informal
meetings across the broad membership of the WTO.
The process kicked off last week recognises the place and influence
of developing countries in the WTO, and - I hope - will be remembered
as the beginning of new understandings and a new relationship on trade
and development issues on the international agenda.
. free trade agreements .
The other big event of the past week was our announcement that Australia
and the United States will begin negotiations for a Free Trade Agreement
between our two nations.
This comes on top of obtaining a comprehensive and genuinely liberalising
free trade agreement with Singapore - setting a high standard for
other agreements in the region - just a week beforehand.
I am absolutely delighted that the US Administration has now formally
notified the US Congress of its intention to negotiate with Australia.
The announcement marks the culmination of two years' effort to build
the necessary political and economic momentum, both in Canberra and
in Washington, by Australian and US Administrations, and by the Australian
and US business communities.
It marks the beginning of a truly new chapter in Australia's relations
with the United States.
Our Ambassador, Michael Thawley, and his team at our Embassy in Washington,
in particular, are to be congratulated for their work.
Now, of course, comes the challenging part!
I believe an FTA would fulfil extensive commercial as well as long
term strategic interests for Australia, and for the United States.
And I believe the arguments for an FTA are compelling.
First of all, of course, there would be the straightforward economic
gains from reducing remaining barriers to trade between us.
Second, there would be a very significant 'head turning' effect from
an FTA in attracting investment, with subsequent gains in employment
and productivity.
Third, an FTA would result in greater business integration, as Australian
and US companies realise synergies in innovation, research and development,
material sourcing, product development, marketing and - especially
- in information technology.
And fourth, an FTA could be an important factor in what Bob Zoellick
has coined "competitive liberalisation", whereby an FTA has an important
'demonstration effect', ratcheting up other trade negotiations, in
particular at the WTO.
There is an important opportunity here to 'raise the bar', if you
will, not just bilaterally, but regionally and multilaterally - and
especially for the global trade negotiations at the WTO.
. why Australia ...?
One might ask why an FTA with Australia should be a priority
for the United States.
Well, for starters, we are a significant and dynamic economy in our
own right - the fifteenth largest in the world and the tenth largest
WTO member.
In fact, Australia's economy is bigger than the combined GDP of the
two countries the Administration is negotiating bilateral FTAs with
- Chile and Singapore - and the ten other countries it has just listed
as priorities for negotiating FTAs with.
[Morocco, the members of the Southern Africa Customs Union (5),
and four central American countries - Guatemala, Nicaragua, Honduras,
and El Salvador].
We are also a significant player for the United States. Australia
ranks 15th as an export market for US goods, and 11th
as an export market for US services.
Australian companies are the eighth largest foreign owner of US assets,
directly employing around 85,000 American workers.
Australia invests more in the US than the US invests in Australia
- think about it!!
They are leaders in broadcasting, mining, shopping malls, real estate
management, construction, building materials and steel manufacturing.
Not only is Australia a significant and advanced economy in its own
right - it is also a strategic economy vis-à-vis the Asia-Pacific
region.
We are the fourth largest economy in East Asia, and heavily enmeshed
in the future growth of the region through our role as a leading supplier
of primary goods - minerals and agriculture, in particular - and associated
services.
The same qualities that makes us attractive for US companies to invest
and base their regional headquarters in Australia also make an FTA
with Australia a strategic asset for the United States.
In short, what we offer is the prospect of a high quality agreement
with a dependable and mature partner strategically located in the
world's fastest growing region.
It is an offer that has been judged too good to refuse by the US
Administration, the US Congress and US business.
Ladies and gentlemen
For several months now the public debate in Australia on an FTA with
the United States has been dealing with the question "what if?"
Now we have to deal with the more difficult questions of "what?"
and "how?"
I have a view on the areas I want to pursue but everybody - government,
business, academia, and forums such as the Sydney Institute - needs
to think about what should be covered in the Free Trade Agreement,
and how.
We need to think strategically about where we want to be in terms
of our economic engagement with the United States -- and more broadly
with the entire globe, given the size and influence of the US economy
- and how an FTA might help get us there.
And then we need to translate that broader vision into the detail
of a deal that must be comprehensive, that will realise substantial
economic gains, and that should be ground breaking in the example
it sets to others.
I suspect the FTA negotiations will spur new thinking about the Australian
economy, our economic settings, and our strategic place in the global
economy.
We should not be afraid of that - rather, we should be thinking about
how the negotiations with the United States (and in the Doha Round
at the WTO) can help the process of reform that must accompany our
engagement with the world.
Of course, change brings with it uncertainty - and in the case of
FTA negotiations with the United States, some disquiet amongst so-called
"sensitive" sectors of the economy.
I am constantly asked questions about whether an FTA will bring into
question our foreign investment provisions, our commodities marketing
arrangements, our local content rules, our pharmaceutical benefits
scheme, aspects of our intellectual property regime, and our industry
support programs, to name but a few.
I can understand these concerns: at this stage I think it best to
say three things:
- Firstly, I am not going to pre-empt things by ruling anything
in, or anything out, of the FTA. That's not a smart way to begin
a negotiation.
- Secondly, the Coalition Government is not about to negotiate away
long established and hard won public policy goods that are overwhelmingly
in the interests of Australians;
- Thirdly, let's not forget the opportunity we have here to break
down barriers to the largest, wealthiest and most successful economy
in the world -- this negotiation is a two way street.
Bob Zoellick made a very good point in the Prime Minister's press
conference last Thursday: "let's not make the perfect the enemy of
the good".
By definition, a good deal will be one where both sides win, and
can walk away saying we got we wanted on some issue, but had to give
a little on others.
Conclusion
Ladies and gentlemen, in conclusion .
We can't stand by and expect to prosper while the rest of the world
moves on and dictates what happens to us.
This maxim applies whatever the context: political relations, security
relations, or our trade and economic relations . . . we must remain
engaged.
The global trade agenda has changed enormously in the past few years.
In addition to a new round of global trade negotiations, we have
a plethora of preferential trade arrangements being strengthened,
expanded or being negotiated -- within regions, and between individual
countries.
We do not want just to be part of that trend, we want to be the trend
setter.
We are leading the way in accounting for new power realities in the
multilateral trading system, and finding a new balance between developing
and developed country interests in trade and investment liberalisation.
And we are setting the example for preferential trading arrangements
that complement and bolster the multilateral trading system while
delivering quicker and deeper gains to Australia.
To Labor's Trade spokesman who claims our Government has turned its
back on Asia I have only this to say. It is:
- our Government that negotiated a Free Trade Agreement with Singapore
- our Government that has (along with NZ) forged the closest economic
links of any country with our 10 South East Asian neighbours
- our Government that is negotiating a Free Trade Agreement with
Thailand
- our Government that is working towards Trade and Economic Agreements
with Japan and Korea and
- our Government that is pushing a treaty level framework agreement
with China
Not one of these proposals was pursued under 13 years of Labor Government.
In fact, what Labor refuses to acknowledge is that of all the bilateral
agreements we're working on only one - the Free Trade Agreement with
the US - is not in Asia.
The Labor Shadow Minister is still to learn that to have credibility,
you have to be credible.
Gerard, on behalf of Australia's exporting community, I seek your
support, and would welcome your contribution, in continuing our trade
efforts.
Thank you.
Local Date:
Saturday, 22-Nov-2008 08:07:31 EST
