2 July 2004

'Challenges beyond Doha'

Speech to the Institute for International Business, Economics and Law, University of Adelaide

Introduction

Thank you [Professor Stoler], distinguished guests, ladies and gentlemen.

I would like to start by thanking Professor Stoler for this opportunity to address the Institute and congratulate Professor Stoler and his colleagues for the contribution the Institute is making to public debate and education on trade issues.

Our discussion today is timely. The Doha Round negotiations have intensified dramatically in the last few months. As with previous Rounds under the GATT, it has been a long and difficult road. We are all making the utmost effort to reach agreement by the end of this month to lock down a framework for final negotiations on agricultural liberalisation, as well as for industrial products, development issues and services.

It will come as no surprise to you that the agriculture negotiations are the hardest, but they remain our highest priority. They are quite simply the key to the whole deal.

I was recently invited to join my counterparts from the US, EU, India and Brazil - or as we are known "The Five Interested Parties" - to try to find common ground and broker a deal on agriculture - we met in Sao Paulo last month, and plan to meet again soon.

If the agriculture framework includes elimination of agricultural export subsidies we will have achieved a long-time objective for Australia in pursuing a fairer international trade regime for our farmers.

As this Round moves towards a conclusion, it is useful for us to reflect on what challenges might lie beyond Doha...

...and how these may affect the landscape of the multilateral trading system.

While there are of course many issues I could examine, I have selected three that I consider to be crucial:

-bringing bilateral FTAs and the WTO together;

-resisting pressure for the WTO to become "all things to all people"; and

-balancing the needs and expectations of developing countries.

Convergence - Bringing Bilateral and Multilateral Trade Liberalisation Together.

It has been said that the pursuit by WTO members of an increasing number of bilateral or regional trade arrangements challenges the WTO's continued relevance and effectiveness.

I see such agreements less as competition than as eventual forces for the convergence of trade liberalisation.

Achieving such convergence of bilateral and multilateral trade liberalisation is part of Australia's integrated trade policy approach.

This seminar takes place in the midst of public debate on the successful negotiation of Australia's Free Trade Agreement with the United States.

The FTA with the US is truly a landmark deal.

-providing enhanced access for Australian farmers, manufacturers and service providers to the largest, most dynamic and innovative economy in the world.

Under the Agreement:

-almost all Australian manufacturing exports get duty free access from day one;

-two thirds of all US agricultural tariffs (including lamb and horticultural products) will be eliminated immediately

-and 9 per cent more will go within 4 years.

-we also achieved non-discriminatory access to the $200 billion Federal government procurement market, and over half of the US state government markets as well.

Australian industry has overwhelmingly welcomed these new opportunities.

-independent economic analysis suggests the FTA will result in a boost to the Australian economy of over $6 billion a year by 2014.

- and create more than 30,000 additional Australian jobs.

This Agreement is undoubtedly in Australia's national interest. We took an opportunity we could not afford to let slip by - just as we took it with Singapore and Thailand

-and will do again in future.

Some have suggested that the proliferation of such agreements undermines ambition in the WTO - challenging its future effectiveness.

It has also been suggested that so many new and individual commitments, disciplines and rules - particularly in dispute settlement - will clutter and complicate the international trading system:

-no-one will know the applicable rules

-sometimes several rules will apply

-and they might conflict.

As you might expect, I don't agree.

These agreements are 'WTO plus' - they build on, but don't supplant, the rules of the WTO. We are careful to ensure that our agreements are WTO consistent

-and we are working in the WTO and in forums like APEC to ensure that others can do the same

-ensuring greater transparency and strengthening rules governing WTO consistency.

Sure other WTO Members - particularly developing countries - will also become more active in pursuing closer economic relations with markets of particular importance - it will enhance their immediate economic growth.

But as new competitors emerge...

...or others seek to use new forms of protectionism or retaliation to gain new advantages...

...the protection of the global trading system will again beckon.

We should also reflect on how participation in bilateral or regional liberalisation might slowly open up more protectionist economies...

...where commitment to ambitious multilateral liberalisation is lacking, or domestically difficult to achieve.

The main road will always lead back to the deeper benefits of multilateral liberalisation and the protection of multilateral disciplines.

-and FTAs and RTAs can also help put us all on the same road.

Australia is working to ensure that the WTO remains the point of convergence of an integrated global trading system - multilateral, regional and bilateral.

Maintaining Focus - The WTO cannot be 'all things to all people'

I think the second major challenge facing the WTO is the risk of Members losing focus on the core business of international trade liberalisation.

In part this is due to internal changes - negotiations in the WTO are much more complex than they used to be under the GATT, with many more players, new and evolving alliances and shifting interests.

Membership has grown significantly - now 147 against the 80 or so that commenced the Uruguay Round

-with developing countries now in the majority, and more set to join.

The negotiating agenda now covers areas which cross sensitive domestic and international policy issues as well as traditional tariff policy.

And since 1995 the WTO dispute settlement system has become more active, more adversarial and sometimes more controversial.

But the WTO is also now far more subject to external scrutiny and pressure.

There has been an explosion in the number of vested interests groups that see the WTO as the cause or cure of a multitude of global problems.

In particular, in recent years the WTO has had to bear most of the brunt of fear and protest about globalisation.

I saw this most clearly at the Seattle Ministerial meeting in 1999, where protestors wrongly associated the WTO with just about every grievance held about the modern world.

Globalisation is complex - we know that trade liberalisation is only one of its drivers.

The WTO in fact plays a significant positive role in assisting all countries - developing and developed alike - to make the most of the opportunities globalisation presents.

World-wide commitments to lower barriers to market access and remove distortions in international trade - particularly in agricultural products - enable developing economies to grow, generate wealth and become more robust.

Negotiations to discipline trade and open opportunities in new areas, like services, help developing economies diversify and become more dynamic and flexible in responding to change.

International trading rules and a binding dispute settlement system provide developing countries with protection and a level playing-field - I note the recent success by Brazil against US cotton subsidies as a case in point.

But the WTO can only deliver these benefits if its work program remains focused and achievable.

The WTO has its own responsibilities and capacities...

...But so do other international organisations and systems...

...we also have to recognise the responsibilities of states.

We must keep the WTO to its core business.

Trying to expand the WTO and its Agreements and negotiations into areas dealt with in other multilateral forums or instruments - for example environmental protection - only decreases its effectiveness in delivering economic growth and development gains.

And in some cases introduces the possibility of new trade barriers being created, further undermining the capacity of the international trading system to deliver further economic growth.

Similarly the WTO is neither an international development nor financing institution - although Members are committed to capacity building and technical assistance to developing countries.

Greater coherence, information sharing and co-ordination between multilateral institutions are desirable.

But this doesn't mean all such organisations take on each other's agendas.

Equally, multilateral institutions - including the WTO - should not be called upon to make up for lack of sound domestic governance or poor internal policy coherence.

WTO members' domestic responsibilities - including their responsibility to balance all their international obligations - should not be laid at the door of the WTO.

The exercise of good governance and policy coherence by WTO Members is far more effective than special pleading for maximising the benefits and minimising the negative impacts of globalisation.

Balancing the Needs and Interests of Developing Countries

In this context, I would like to discuss what I see as perhaps the major challenge before us ...

...how the multilateral trading system can adjust to and manage the needs and expectations of developing countries...

...particularly when these vary considerably...

...and may change over time as these countries develop.

As I have said, the majority of WTO members are now developing countries

-more will join in the next decade.

Developing country economies can benefit substantially from their own liberalisation.

They also benefit from the liberalisation of others - particularly from increased market access and removal of trade distorting domestic support by competitors in the North.

Participation in ambitious multilateral commitments is therefore in their interest.

But balancing this, we have to ensure that their legitimate development needs and concerns are recognised.

-particularly those of the most vulnerable.

This will require leadership and compromise.

I think UN Secretary General, Kofi Annan, hit the mark recently when he said at the eleventh session of the United Nations Conference on Trade and Development.

"Rules designed to liberate ought not to create new barriers. Countries which press others to liberalise trade should be willing to do so themselves. If they don't, we politely call it lack of [policy] coherence; but we could just as accurately call it discrimination."

At Cancun the opportunity to take such leadership was missed. Two major northern agricultural protectionist economies - the EU and US - put up a take-it-or-leave it joint proposal offering far too little on subsidies or market access.

-but they, and we, know that more equitable conditions of global agricultural competition would make a huge difference to many developing countries.

Australia and the Cairns Group have strived to show such leadership.

We have made considerable efforts to bridge the North-South divide.

We work very closely with the G20 in the agriculture negotiations

-because we share many of the same trade interests

-and also because we recognise and support the development gains that will result from deeper agricultural liberalisation.

However, complicating efforts to balance the needs and interests of developing countries in the WTO work programme is the diversity of those interests.

Several major developing country economies have a great deal in common with some of the more open developed countries...

...and take positions far in advance of other developing country colleagues - the G20 being an example.

These developing country members are well aware that multilateral liberalisation will bring the greatest benefits to their economies and take down the toughest barriers to their own trade

-including those applied by other developing countries.

It is true some developing countries are major agricultural or industrial exporters. Others have developed sophisticated and successful strategies to pursue new opportunities in tourism, IT or services.

But while such developing countries may have vibrant economies of regional and global importance...

...they may also suffer crippling poverty or great imbalances across sectors of their economies...

...hence they also have called for assurances of protection in the negotiating process.

Least developed countries and small economies also face particular and specific difficulties in accessing global markets.

-these needs have to be accommodated.

We, and all WTO members, need to recognise and work with this diversity if we are to achieve results in future Rounds that are effective in supporting development...

...but at the same time are effective in delivering commitments and disciplines that are truly multilateral in scope...

...and fully integrate developing countries into the global trading system.

This is why we have supported appropriate special and differential treatment provisions for developing countries in the current negotiations...

...and the ongoing review of special and differential treatment provisions in the WTO agreements with a view to making them stronger and more precise, effective and operational.

But it is also why we do not support other potentially divisive proposals for blanket exemptions for some developing countries from further commitments:

-which are also opposed by several developing countries themselves.

Inevitably I think we will see even deeper engagement by many of the larger developing country economies in bringing the current Round to a successful conclusion

-and more participating in future in further commitments

-particularly as we expect many developing economies to grow and diversify substantially in the next decade.

I also believe that if greater leadership is displayed by some of the largest developed country protectionists...

...and they make real commitments to further liberalisation...

...that this will be the single largest factor in encouraging developing countries to join them.

Conclusion

Ladies and gentlemen

These are some, but certainly not all of the challenges that the WTO and its Members will continue to face after the Doha Round concludes.

We must all ensure that bilateral and regional liberalisation supports further multilateral liberalisation, not conflicts with it.

We must all ensure the WTO agenda does not become diverted and overloaded...

...by matters which are the responsibility of other areas of the international system...

... or which are the responsibility of states themselves.

Finally, we must show leadership...

...in balancing the need for all members to be involved in comprehensive multilateral commitments...

...while taking care of the legitimate needs and interests of the more vulnerable.

No doubt there will be other challenges.

Australia will be there - as it has been there from the inception of the GATT more than 50 years ago -to help find solutions.

The greatest benefits in expanding and diversifying trade for our world class farmers, manufacturers, miners and service providers remain in continuing multilateral action to open markets...

...forcing others to remove the sorts of subsidies and protectionist practices that we abandoned long ago.

Thank you