Canberra, 14 September 2006

Introduction

I want to begin with a story about Peter Field, who was Australia’s chief negotiator in the Uruguay Round of multilateral trade negotiations.

Peter was at an early strategy session to discuss Australia’s objectives in agriculture. As you know, it’s the most distorted sector of world trade; Australia’s longstanding objective has been to make it more free. It would benefit Australian farmers, the developing world, and consumers in Europe, who would pay less for food.

One official expressed disbelief about Australia’s negotiating position. The official asked, ‘Surely you don’t really believe that we’ll ever get the Europeans to scrap their variable levies?’

Peter Field surveyed the assembled public servants, and said words to the effect of: ‘Well, what else would you prefer to be doing with the rest of your life?’

He recognised that trade is important, even though it can take a long time to get results. It’s important because it creates jobs and prosperity for Australians.

It’s also important because freeing up world trade is a simple matter of justice. Farmers in the developing world should be able to sell their products at a fair price.

Peter Field was right. Campaigning for Australia’s trade interests is worth the time and effort, no matter how difficult it may seem.

I’m proud of the role played by the public servants who advise the Government and carry out the details of our trade negotiations.

As a minister, I expect my department to provide frank, comprehensive, and timely advice. I expect officials to implement the Government’s policies impartially and professionally, which is what they do.

Continuity and change in Australia’s trade negotiations

Trade negotiations can never be approached from a zero sum mentality. To conclude a trade deal, both sides must feel that they have got something worthwhile. In that respect, the patient work of negotiating trade agreements has not changed much for decades.

But much else has changed. Globalisation means that today we operate in a much more open and competitive trading world. Countries around the world are trading more than ever – in the last 20 years world merchandise exports have grown by over $9 trillion.

Australia’s bilateral trade agenda has expanded, so we are doing more negotiations than ever before.

Those negotiations have become more complex. In the WTO we now negotiate with 148 other members.

We are not just talking about tariffs and other traditional barriers to trade. Trade officials these days have to deal with issues such as the environment, intellectual property, competition policy, government procurement and investment.

The only way we can deal with these challenges is to have the right structures in place.

The current Department of Foreign Affairs and Trade was established in 1987 when the Department of Trade merged with the Department of Foreign Affairs.

It was recently suggested that DFAT should be split apart again. I do not agree with those suggestions.

The previous Department of Trade

Before the merger, the Department of Trade was combined with a number of other departments including Customs, Industry and Commerce. Trade was grouped with domestically-focused agencies, so it tended to be inward looking and protectionist.

The Government pursued its foreign and trade policy objectives quite separately. As a result, it was common for the Department of Trade and the Department of Foreign Affairs to be at loggerheads - particularly about how negotiations should be pursued. For example, during the Uruguay Round the two departments couldn’t agree on a negotiating strategy.

The two departments had different cultures. It was, perhaps, reminiscent of days when there was an enormous social and professional divide between ‘deck officers’ and ‘engineering officers’ in the navy.

These differences were unproductive, caused confusion and made it harder to present a united front to other international negotiators.

The merger of the two departments brought about a number of results that are still delivering benefits to our international diplomacy and trade negotiations today.

A consolidated approach allows us to speak internationally with one voice. It reflects the fact that trade policy issues have broader foreign policy implications, and vice versa.

As I tell our new graduates, it means that every official in the department can expect to be involved in trade issues at some point in their career. It means that our ambassadors and other senior representatives overseas have a better understanding of Australia’s trade interests.

As the Trade Minister, I carry a full brief on both trade and foreign policy issues when I meet with a counterpart. The same applies to the Foreign Minister.

The establishment of APEC in 1989 highlights how globalisation has caused our foreign policy and trade interests to become more intertwined.

APEC was founded mainly on the pillars of trade and investment. But the forum has evolved over the years to address other issues. Today, the APEC agenda encompasses issues such as avian influenza and counter-terrorism. It would now be very difficult for separate departments of Trade and Foreign Affairs to manage our interests in the forum.

The Cairns Group of agricultural exporters is another trade-based group that has flourished in the amalgamated foreign and trade department era. The Cairns Group was instrumental in putting agriculture on the negotiating agenda in the Uruguay Round.

It was, and still is, an example of a coalition that is bound together by its economic exporting interests. Over time these trade interests have spilled over into our broader bilateral relationships with the individual Cairns Group countries.

The WTO – Australia’s highest trade priority

Our number one trade policy priority is achieving an ambitious outcome to the Doha Round of multilateral trade negotiations.

This is because we will get the most wide-ranging trade benefits if the 149 WTO members agree to liberalise their trade regimes together. By negotiating multilaterally, we can reduce the tariffs and quotas that restrict our access to overseas markets. We can liberalise important services industries. It is also the only way we can curb damaging domestic and export subsidies in the agriculture sector.

The WTO has facilitated the massive growth of global trade that has occurred since 1995. The WTO agreements that underpin this growth are legally binding. Countries can test other countries’ trade measures – regardless of their economic or political size - through the WTO’s dispute settlement system.

Australia has had some big trade wins through this system. Most recently we successfully brought about reforms to the European sugar regime. These outcomes are worth millions of dollars to our agriculture, industrial and services industries.

Similarly, Australia’s policies are scrutinised closely by other WTO members for consistency with our WTO obligations. We have to be mindful of this across the government when we are developing policies that may affect our imports or exports. A wide range of departments, including DCITA, AGD, DITR, Customs, DAFF, DoTARS and Treasury have international responsibilities.

So we need strong trade expertise throughout the public service. DFAT runs trade policy training courses twice a year, which we open to all agencies in an effort to build those skills.

My department is also able to provide guidance on specific policy proposals including advice on how best to structure them to align with our international obligations.

Despite the recent suspension of WTO negotiations, I think it’s very important to keep pursuing our trade goals in the WTO. In fact, one of the great challenges that public servants have had to face through the history of trade negotiations has been the stop-start process of negotiating.

The Uruguay Round took eight long years to negotiate, and the trade negotiators of the day will attest to the fact that there were many peaks and lulls – it’s part of the journey.

I am very disappointed at the current suspension of negotiations, but I believe that we can still achieve a successful outcome. We are working to get the major players back to the negotiating table.

The implications of free trade agreements

The Coalition Government has expanded Australia’s trade approach to include bilateral and regional free trade agreements, in addition to our multilateral negotiations.

These are complementary approaches to freeing up trade, because high quality free trade agreements can spur on trade liberalisation at the multilateral level.

We have now negotiated free trade agreements with Singapore, Thailand and the United States, in addition to the existing CER agreement with New Zealand. The results of those FTAs were immediately visible, and the benefits have started to flow. We are now working on FTAs with China, Malaysia and ASEAN in conjunction with New Zealand.

To manage our growing trade agenda, we’ve had to make some changes in the way we run negotiations. There is no doubt that the demands are wider reaching, more expansive and more time and resource intensive now.

There is no such thing as an easy trade negotiation. It’s is a highly specialised business. It’s frustrating, technical and slow. And there’s a lot at stake.

We have established taskforces to handle our current FTA negotiations. The taskforces draw in expertise from around the department and coordinate with other agencies. They also lead the negotiations. Our FTA teams look into specific industries and sectors in great detail, such as the analysis of the Pharmaceutical Benefits Scheme during the negotiation of the FTA with the US.

Our bilateral negotiations also require greater domestic consultation procedures. Once the negotiation is complete the teams disband and the geographic areas within the department manage the implementation of the agreements with the support of specialist areas in the Office of Trade Negotiations.

Bilateral negotiations have meant that the geographic divisions in DFAT require trade expertise to implement the agreements and advocate their outcomes to business.

Our FTAs may extend beyond existing WTO disciplines in areas such as telecommunications, intellectual property and into new areas such as investment.

This brings real benefits to the Australian economy and our exporters, but it may, at times, have implications for domestic policy-making as we implement our treaty obligations.

An important role of the officials in DFAT is to work with other agencies to bring about greater awareness of these intersections and to encourage early consultation.

Conclusion

So in conclusion, the public servants implementing the Government’s trade policy agenda have worked their way through important structural changes and policy shifts.

• There was the amalgamation of the Department of Trade and Department of Foreign Affairs in 1987.
• There was the shift towards engaging in bilateral and regional free trade agreements.

These shifts have increased the breadth and depth of our trade negotiators’ skills and expertise.  As a result, we are better prepared now than at any other time to advance our trade interests and to secure Australia’s economic future.

Thank you.