Speech

Introduction

Distinguished guests, ladies and gentlemen

I’m delighted to have been invited to speak at the Boao forum once again, having presented at the inaugural meeting in 2002.

In the intervening two years, it is clear Boao’s momentum has been building – and it continues to attract political, business and academic leaders from the region and beyond.

The title of this session is an interesting one.

It appears to raise two questions:

• Is there a difference in the multilateral trading system, pre and post, the WTO Ministerial Meeting in Cancun last September?

• Has there been an impact on Asian economic integration?

Not with standing the outcome of Cancun, Australia and all WTO members remain absolutely committed to the Doha round as the best means of delivering multilateral trade liberalisation.

The WTO has a proven track-record on global trade liberalisation and Cancun is not the first time, nor is it likely to be the last, that a WTO Ministerial Meeting has ended in disagreement.

In my view the Cancun meeting and the meetings leading to it have certainly help define more clearly the challenges that lie ahead and what needs to be done in the key areas of NAMA, services, agriculture and the Singapore issues to achieve an outcome this year.

I believe this is still possible.

The WTO is the only international body that provides a global framework of enforceable rules and disciplines for international trade – these rules ensure fairer and more secure access to world markets for all Members.

And the WTO offers the prospect of the largest gains, across the largest number of sectors, for the greatest number of economies.

The reality is that the most intractable problems in global trade - especially agricultural subsidies – need resolution through multilateral channels, with all key subsidisers acting together to remove distortions.

This is why we need the multilateral system.

However, Australia knows better than anyone that closer economic integration, particularly through bilateral and regional free trade agreements, can deliver gains more quickly than the WTO in some areas.

Closer regional economic integration is in fact complementary to the multilateral trading system.

If economies choose to pursue FTAs, they need to be comprehensive in nature and they need to be consistent with WTO obligations.

In this context, it is pleasing to note that countries in our region have been at pains to ensure that bilateral and regional FTAs meet these criteria.

WTO: positive signs

Ladies and gentlemen

I have faith that the WTO Doha round of trade negotiations can still reach a successful conclusion.

The world simply can’t afford to let this opportunity to reform the global trading system slip by.

Agriculture remains one of the most highly protected sectors, yet for the developing world it is often the dominant employer, a major source of export income and the largest contributor to gross domestic product.

The simple fact is that the Doha round cannot conclude without a satisfactory outcome on agriculture.

And this has now been accepted by nearly all WTO Members.

While negotiations essentially stalled following Cancun, we have seen some encouraging signs in the last few months that members are willing, to re-engage in the Doha negotiations.

Both the United States and European Union have indicated they are willing to work towards agreeing to a framework for the agriculture negotiations by mid year.

This political commitment by two of the major players has been welcomed by all WTO Members.

However, much remains to be done, over the next few months if we are to achieve a framework consistent with the Doha mandate.

Australia is actively engaged in the negotiations underway in Geneva, and playing its part in moving discussions towards a successful outcome.

For us, this entails putting in place a framework that preserves the ambitious agriculture mandate agreed in Doha.

The stakes are too high and the benefits too great for the Doha round to end in failure.

The importance of regional economic integration

Ladies and Gentlemen

At the same time, many countries and regions are also seeking to enter into free trade agreements, and other forms of closer economic cooperation, in order to keep the momentum of trade liberalisation moving forward.

Asia is no exception.

Traditionally, one of the major drivers of dynamism in Asia has been domestic demand in the United States.

With the US economy once again growing strongly – experts predicting at least 4 per cent growth this year – this is a good sign for the region.

We have also been heartened by signs of improvements in Japan’s economy, which is forecast to grow by over 2 per cent for the second year in a row – this too will help spur regional growth.

A significant element of Asia’s recent dynamism has been the sustained, substantial growth in the Chinese economy – which has averaged 7-8 per cent growth over the past 20 years.

China is stimulating regional growth by integrating itself into the production chains throughout the region.

And intra-regional trade is growing.

Contributing to this growth is the range of economic and trade linkages that are being established throughout our region:

• ASEAN intends to establish an ASEAN Economic Community (AEC) by 2020 – accelerating free trade in goods and liberalising services and investment;

• China is negotiating an FTA with ASEAN;

• Japan and ASEAN are negotiating a Comprehensive Economic Partnership (including an FTA);

• India and ASEAN have agreed to negotiate a Regional Trade and Investment Area (again including an FTA);
  
  and

• Japan, Korea, China and ASEAN are discussing closer economic ties;

Australia takes a close interest in these developments.

And we welcome initiatives that will improve regional economic growth and liberalise trade.

We believe such initiatives facilitate the ability of Asian members of APEC to meet the Bogor Goals of free and open trade and investment in the Asia Pacific region by 2020.

However, the success of all of these ventures is not guaranteed and many hard issues – for example the opening up of sensitive sectors – will need to be resolved if genuine economic integration in the region is to be advanced.

APEC can play a useful role in ensuring FTAs complement, rather than become stumbling blocs to broader liberalisation.

And I expect this will be one of the key issues for discussion when we attend the meeting of APEC Ministers Responsible for Trade (MRT) in Chile in June.

Australia will continue to undertake FTAs where they offer the prospect of delivering significant benefits more quickly than might be possible through WTO negotiations.

And they can be done in a comprehensive and WTO consistent manner.

Our recently finalised FTA with the United States is an example of this policy.

In the past two years, we have also completed FTAs with regional partners – Singapore and Thailand.

These FTAs are trade liberalising agreements, providing substantial new market access opportunities for business.

But Australia’s engagement with regional partners is not only focussed on FTAs, but on a range of issues crucial to building substantive economic ties.

Australia has been pursuing a Free Trade Agreement between ASEAN and the CER economies (Australia and New Zealand) since 2000.

Until this week ASEAN has not been ready to move to this right away, but we certainly welcome ASEAN’s decision to look at ways to further deepen our economic partnership, including through examing a free trade agreement.

This welcome step forward by the ASEAN Economic Ministers reflects Australia’s successful and broad engagement with the countries of our region.

In 2003 we concluded important Trade and Economic Frameworks with both Japan and China.

Our Framework arrangement with Japan includes a package of eleven initiatives aimed at improving commercial and policy linkages.

And the Trade and Economic Framework we signed with China sets out an agenda to deepen economic integration over next 5-10 years.

This Framework includes a joint study into a possible Australia/China FTA – which is progressing well.

The Framework also includes a commitment to strategic cooperation in a broad range of key sectors, including agriculture and mining.

This strategic cooperation reflects the fact Australia’s bilateral commercial links with China, particularly the long-term supply of Australian resources, are forging ahead.

The strength and stability of the Australian economy adds to this competitiveness.

Australia is enjoying the longest unbroken period of economic growth since the 1960s.

Australia has achieved better than OECD average economic growth in 7 out of the last 8 years.

And inflation, interest rates and unemployment, are all low.

As a result, many multinational firms have made Australia the headquarters for their regional operations.

Conclusion

Ladies and gentlemen

Some positive signs are emerging that give me hope that there will indeed be a successful conclusion to the Doha round of multilateral trade negotiations by this year’s December 31 deadline.

This would be a significant outcome for global trade liberalisation and the multilateral trading system. Most importantly, it would provide a great boost to all our economies for many years to come.

In the meantime, many countries including Australia, are pressing ahead with bilateral and regional initiatives to increase economic integration

It is vital that these agreements are comprehensive in nature and meet WTO commitments.

The proliferation of regional and bilateral trade agreements highlights the fact that the dynamic economies in our region are not prepared to move at the pace of the slowest common denominator in the multilateral system.

Our clear view is that pursuit of regional and bilateral agreements and pursuit of a successful conclusion of the Doha round are not mutually exclusive objectives, but indeed are complementary objectives.

Thank you.