24 March 2009
ANU Symposium on Multilateralising Regionalism
Thank you Andrew [Macintyre] and Ann [Capling] for the opportunity to participate in today’s symposium.
I very much welcome the opportunity to outline the Government’s position on this important debate on multilateralising regionalism.
It’s a critical debate – and it is a debate which is at the forefront of trade policy today.
I said almost one year ago – here at the Crawford School’s symposium on the Warwick Commission – that I welcomed the Commission’s recommendations on multilateralising regionalism, a priority of mine since my time as Opposition Spokesperson for Trade.
Multilateralism – that is, trade reform that covers all the WTO members – delivers the greatest gains, both in terms of efficiency and welfare.
Labor has long believed in the importance of multilateralism and working together at the global level. That’s why our Government has put multilateralism back at the centre of trade policy.
We are pursuing trade liberalisation at three levels:
Australia has been the leading advocate of stronger rules on regional trade agreements at the WTO, including through the establishment of the WTO’s FTA Transparency Mechanism as part of the Doha Round of negotiations. Exposing FTAs to the light shed by the Transparency Mechanism will help keep standards high in future FTA commitments and implementation.
As I’ve often said, the Rudd Government is guided by the firm conviction that ultimately Australia’s trade interests, indeed the interests of all countries, will be best served by an early, successful outcome to the Doha Round.
Recent assessments of the global economy, including by the International Monetary Fund and the World Bank, have been bleak. We can expect global economic growth to continue to fall while the numbers of unemployed rise.
Only today we have the latest update on the impact of the global economic crisis with the World Trade Organization forecasting a 9 per drop in exports by volume in 2009.
This is the biggest contraction since the Second World War.
It brings into even sharper focus the importance of next week’s meeting of G20 leaders in London and the need to resist moves towards protectionism.
This new data means more than ever, nations must resist the pressures to put up trade barriers, in the misguided belief it can protect jobs.
It will do the opposite.
Importantly I note that it is the developed world that the WTO predicts will feel the brunt of the export downturn.
Exports from developed countries are forecast to fall 10 per cent on average, while exports from developing countries are predicted to fall between 2 and 3 per cent.
Trade flows have suffered significantly in the global economic crisis. And trade policy will clearly have an integral role to play in our response to the crisis.
The Government is determined to ensure that trade policy will play a positive role in global recovery efforts.
I’d be preaching to the converted if I spent much time talking to this group of eminent trade policy specialists about the virtues of trade reform or the dangers of protectionism. But there cannot be enough done internationally to promote the benefits of reform at this time.
That’s why I welcome the fact that the OECD is releasing next month some important new work on the benefits of trade and trade reform. These findings include that:
There is no more important time for our efforts to press for trade reform.
In terms of concluding Doha, Australia will be working to ensure that G20 Leaders, in London early next month, reinforce the need to conclude based on progress achieved to date. Apart from the stimulus it would provide for world trade flows, Doha also offers better insurance against a new outbreak of protectionism.
We’ve also made huge inroads in concluding the Doha modalities – we’re 80 per cent there – and we need to finish the job.
If we can conclude on agriculture and NAMA, we will also be able to secure other benefits from the Round. There is significant liberalisation on offer in services as evidenced by the services signalling exercise last year. The Round has also helped to bring into focus the WTO’s work on aid for trade, which is crucial to helping developing countries integrate into the global trading system.
We need also to look to opportunities to reinforce the principles of multilateralism at the regional and bilateral levels.
That’s why in the wake of the stalled talks in Geneva last July we moved very quickly to conclude AANZFTA, a new regional FTA with the countries of ASEAN and New Zealand, which I signed in Thailand last month.
AANZFTA will provide a boost for regional economic integration. AANZFTA is the most comprehensive agreement ASEAN has ever signed. It is the first FTA Australia has signed with a region.
The AANZFTA agreement – a plurilateral agreement involving twelve countries at various levels of development – demonstrates what can be achieved with a diverse group of countries to promote regional economic integration.
Not only did we take into account differences in levels of development, particularly through the use of transition periods, but we also included new aid for trade initiatives.
It’s also important to remember that parties to the AANZFTA represent a significant sub-grouping of APEC, and that the AANZFTA agreement will contribute to achieving the APEC Bogor goals of free and open trade and investment in the Asia-Pacific.
Multilateralising Regionalism
Richard Baldwin, who’s with us today, defines the term “multilateralising regionalism” in the introduction to the volume of conference papers he published recently through the WTO as:
‘the non-discriminatory extension of preferential trading arrangements to additional trading partners’
and says this can occur:
‘either through including new members in existing agreements, or by replacing existing agreements with new ones that extend to new members’.
We need to think broadly about this process and be creative in advancing it – I’d describe it as bringing in as many partners as possible to undertake deeper liberalisation, in a way that reinforces efforts at the multilateral level.
The fact is that trade reform in regional and bilateral agreements can drive deeper reform in ways that can be captured in further multilateral reform efforts.
An example is in services, where trade commitments at the bilateral and regional level can often go much further than is initially possible at the WTO. Once these commitments are made to one set of trading partners, it is often easier to extend this openness to others. For example under AANZFTA we were able to go further on services than we have been able to go in the Doha Round negotiations. Various ASEAN countries made commitments in sectors such as professional, education, financial and telecommunications services that go beyond what they have foreshadowed in the Doha Round.
We’ve been driving reform and ambition on all fronts at the multilateral level – and we need to reinforce this at the bilateral and regional levels and find groupings that give us the best of chance of success.
That’s what we’ve done with the AANZFTA Agreement and that’s why we’re looking at other opportunities in our region to drive reform that is supportive of the multilateral system.
Emerging Developments in the Region
There are some important ideas emerging these days on how we might build a larger free trade area that might contribute to the Asia-Pacific regional economic architecture.
Some of these proposals include the Comprehensive Economic Partnership in East Asia (or CEPEA), and a Free Trade Area of the Asia-Pacific.
It’s worth noting that in the context of APEC’s work examining the feasibility of an FTA of the Asia-Pacific, Australia has been contributing to analytical work on how large FTAs can be formed.
I hope that the dynamic of this symposium enriches and
steers us in creative ways forward. I genuinely encourage
your input going forward.
The Trans Pacific Partnership
In that context I want to discuss with you one important initiative that has the potential to grow into a much bigger regional arrangement, and therefore to help meet the kind of goals we are talking about today.
The Government made an announcement – at the APEC Ministers Meeting in November last year – that Australia will participate in negotiations for the Trans Pacific Partnership (TPP) initiative.
The TPP has been conceived as a platform for trade reform in the Asia-Pacific, and has been designed to bring in new members. It is the kernel of something that is destined to grow bigger, and which we hope will set a high benchmark for the region.
The TPP will build on an existing and high-quality Agreement between Brunei, Chile, New Zealand and Singapore, which has been in force since 2006. This was known as the P4 Agreement.
The P4 countries envisaged their agreement as a potential building bloc for a regional FTA. I welcomed the US decision in September last year to broaden their engagement to include trade in goods as well as financial services and investment.
I’ve been encouraged by the continuing recent expressions of support for the initiative in the US Congress, such as by the recent letter sent by 45 members of the House to President Obama.
The initial parties to the TPP negotiation are likely to be Brunei, Chile, New Zealand, Singapore, Australia, Peru, the United States and Vietnam.
The Government’s decision to join these negotiations was taken in the context of an initial public consultation process, held in October 2008.
Public reaction to this consultation was positive.
The widespread view was that Australia should participate in this Agreement and be involved from the outset, to ensure that we are able to help shape the Agreement in a way that benefits Australia.
This view was supported by the Mortimer Review of Export Policies and Programs released last September, which recommended that Australia participate in negotiations for the Trans Pacific Partnership Agreement as a basis for negotiating an Asia-Pacific regional trade agreement.
Australian participation in the Trans-Pacific Partnership is consistent with the Government’s goal of deepening its strategic engagement in the Asia-Pacific region.
I am hopeful that the first meeting of the Trans-Pacific Partnership negotiations is expected to be held by the middle of this year.
Our engagement in this next stage of the initiative – in the officials’ discussions over the coming months – is critically important to its success.
We need to get the ground-rules right if this initiative is going to become an effective vehicle for trade reform in the region that others will join. We’ve signalled to others interested that they need to pay close attention to its early development so they have a clear sense of it and are comfortable with joining a process already commenced.
There is already increasing interest from a range of other economies in the Asia-Pacific to participate in the Trans-Pacific Partnership. I understand that up to five countries are seriously examining the initiative, but have yet to publicly announce their interest.
There is much still to decide in how the agreement is put together. But part of the promise of this initiative is that ultimately it could allow us to achieve greater harmonisation of the complexities inherent in the existing suite of FTAs in the region.
There are possibly a range of potential harmonisation benefits in areas like rules of origin, intellectual property standards and investment protection.
As services and investment become increasingly important to Australia’s economic integration with our region, Australian businesses are looking for initiatives such as these.
Australian trade with parties to the TPP Agreement negotiation amounts to more than 20 per cent of Australia’s total two way trade in goods and services. The agreement would deepen those trading relationships and further strengthen commercial opportunities.
The Trans-Pacific Partnership Agreement has the potential to spread the benefits of comprehensive and high-quality FTAs to a wider group of nations.
While it’s early days yet, the TPP agreement is an
exciting concept and could well establish itself as the basis
for a future Asia-Pacific FTA.
Conclusion
This initiative of the TPP is one important way we are working to support regional and bilateral efforts that underpin the multilateral system.
I am confident, given the composition of this group and your creativity that you will develop helpful suggestions in this new area of opportunity. I want you to work with my Department in developing the agenda.
I look forward to hearing the outcomes of your deliberations.
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