Statement by the Minister for Trade the Hon Simon Crean, MP
9 September 2009
Injection of Momentum into the Doha Round negotiations resulting from the meeting of trade ministers in New Delhi, India
I am pleased to inform the house of important progress that has been made in our efforts to conclude the Doha Round.
New Delhi Outcomes
Last week in New Delhi, the Indian Government hosted a trade minister’s meeting which was significant for two reasons:
First, 35 countries attended, meaning this was the most representative meeting of trade Ministers since the talks stalled in July 2008.
Ministers were not just there in their own right, but also representing all the significant groupings in the WTO.
Second, with India as the host, it represented the significant reengagement of India, which was seen by many last year as an obstacle to conclusion.
Arising from New Delhi, significant and strengthened political momentum was injected into the Doha Round negotiations.
With a direction to Chief negotiators to intensify their efforts next week in Geneva.
There was unanimous recognition that we are in the “end game” of the Doha Round.
There was unanimous support for a new and broad-based commitment to intensifying negotiations to conclude the Doha Round in 2010 – a commitment to focus not only on the agriculture and NAMA issues, but to negotiate horizontally across the range of Doha issues, such as services, rules and trade facilitation.
This outcome built on momentum from the significant reengagement on the Round since June.
This outcome in instructing chief negotiators to meet next week is designed to enable significant progress to be reported to the G-20 Leaders’ meeting in Pittsburgh later this month.
This is another hard won outcome. It has come after long periods of strong and sustained advocacy by Australia.
For the last 18 months this Government has done everything possible to reactivate the Doha Round. To find a way through the obstacles. To work with key players. To find solutions.
This Government inherited less than ideal parameters in which to purpose Australian interests
This point was highlighted in the August edition of the Farm Institute Policy Journal which noted:
“In 2001-2002, perhaps Australia could have negotiated differently within the Cairns Group and perhaps that might have made a difference”
But we haven’t used this as an excuse and just blamed our predecessors. On the contrary we have accepted the legacy and tried to build on it. To fight for gains for our industries and to fight for export markets that mean more Australian jobs.
Frankly, we’ve had to work hard to put Australia back at the centre of the world trade talks.
We got very close to concluding the Round in July last year - we solved around 80% of the major issues.
Last year India and the US were seen as the major players holding-up a Doha outcome. Since then, Australia has been at the forefront of drawing these countries back into the negotiations – culminating in the outcomes in India last week.
Progress since July last year has been difficult. The timing of the appointment of the new US Trade Representative and Indian elections have hampered efforts at quick resolution of engagement and quick resolution of outstanding issues.
We took the first decisive road back to engagement at the Cairns Group meeting I convened early in June in Bali. A meeting that is widely acknowledged as having provided a new boost of political momentum to the Doha Round.
A considerable amount of the credit for that reengagement should go to the host, Indonesia - not only a strong Cairns Group Member but also the Chair of the G-33, the grouping of developing countries in the negotiations. Despite its own elections in July, Indonesia saw the need to show leadership in the Round.
The Cairns group meeting engaged the new US Trade Representative Ron Kirk and the new Indian Commerce Minister Anand Sharma – barely one week into the job.
That meeting started the momentum for the new political will needed to conclude – an instruction called for at the earlier London meeting of G-20 leaders.
The political will generated in Bali was further built upon at a meeting we hosted in Paris, on the margins of the OECD meeting. Collectively, the results from the Bali and Paris meetings fed into L’Aquila, Italy where Leaders called for conclusion of the Round in 2010.
Then followed meetings of APEC in Singapore and ASEAN in Bangkok.
These combined efforts prepared the ground for the successful outcomes we had in New Delhi. Prime Minister Singh told us personally in New Delhi that India is committed to concluding the Round in 2010.
He strongly supported us in getting the job done.
Progress has been evident on a number of fronts since July 2008. There have been two important factors
First, the impact of the Global Financial Crises had a significant bearing. In responding to the Crises, Leaders recognised trade is a key ingredient of the global recovery.
I want to address the question of why do G-20 and G-8 Leaders so squarely place their weight behind conclusion of the Doha Round? The answer has four parts.
- there is a new realisation of the importance of trade and how central is it to the global economy.
Trade is an economic stimulus. History shows world trade has grown three times faster than world output and each successful trade round has enhanced the multiplier effect.
- world leaders know that Doha offers us an insurance policy – insurance against a rising tide of protectionism, insurance that the world trading system will be reformed and insurance that a robust rules based system will prevail.
- Doha benefits will significantly boost the development of the world’s poorer countries – through tariff reductions and opening of advanced country export markets, particularly on agriculture.
- Because of the importance of trade and concluding Doha, world leaders stand ready to become engaged.
The second point I wanted to make here is that we also learnt the lesson from placing too much emphasis on one Ministerial. As important as the meeting of July 2008 was, it seemed to place all our eggs in one basket.
It was a significant meeting because that political engagement got 80% of the way there. The remaining 20% has remained elusive ever since.
To bridge the gaps we agreed to more frequent engagements by Ministers, in an informal way, - to reinforce political will, and to give continued and strong direction to negotiators - and to establish an iterative process between political will and the technical solutions to outstanding Doha issues
The Way Forward
Our senior negotiators will meet in Geneva next week with clear instructions to do just that – resolve issues or narrow the gaps.
The forward agenda will focus on key agriculture and NAMA issues. But it’s also accepted that we need to intensify progress across the Doha landscape – including on services, rules, trade facilitation and other areas.
This is the progress we will report to the G-20 leaders.
This is the momentum we must maintain at every opportunity remaining this year – as part of an intensified effort to conclude the Round..
Recent Critics of Doha
I think it is important to use this opportunity to address a couple of issues raised in two recent commentaries on Doha and on trade protectionism initiatives.
The August edition of the Farm Policy Journal makes two key arguments.
First, it suggests that what’s on the table on Agriculture is worse for Australia than existing trade opportunities.
Nothing could be further from the truth.
Doha offers enormous potential gains to the Australian people – to Australian workers, not just to Australian farmers, to Australian businesses.
For our farmers, Doha would deliver:
- Cuts of up to 70% on developed country tariffs
- Reductions of between 70-80% in domestic support subsidies for major subsidisers such as the EC, Japan and the US
- For the EC, this would mean a reduction from around 118 billion to 23 billion euro per annum
- For the US this would mean a reduction of farm support from US$48 billion to US$14 billion
- The complete elimination of export subsidies by the end of 2013
As recently as last Thursday I met with EC Commissioner Fischer-Boel to continue our push for the EC to end its dairy export subsidy program – a program that endangers the interests of our dairy exporters.
Whilst we seem to have had some success in limiting the impact of these detrimental policies, the subsidies still remain.
Only the conclusion of Doha would ensure the eradication of these sorts of policies, and give us an insurance policy against future use of these policies – by the EC, the US or anyone else.
Beyond agricultural gains, Doha would mean real market opportunities for our industrial producers and for our service providers. It would mean breaking down behind the border barriers to trade. It would make overseas investment easier and more reliable.
And it would mean jobs for Australians. One in five Australian jobs is generated by businesses involved in trade.
Quite simply, the benefits from the Doha Round would be unparalleled and unequalled by any other trade agreement.
- WTO Director-General has said that the Round would bring benefits of $150 billion, per year, in increased trade through reduced tariffs alone
- A recent report by the US-based Peterson Institute estimated that the annual boost to the world economy GDP from a Doha outcome could be between US$300 billion and US$700 billion
- Concluding Doha is an economic stimulus that doesn’t require government spending
- Concluding Doha takes us beyond discussions of an exit strategy. This is about building an ongoing and sustainable strategy.
With the growing momentum for the conclusion of Doha, and emerging signs of economic recovery, it is time to strive for more than an “exit strategy” from the global recession.
It is time to strive for the higher goal of sustainable economic growth – growth that can create ongoing employment and deliver higher living standards.
Second, the Farm Institute journal also calls into question the role of the Cairns Group.
The Cairns Group occupies a unique position in the WTO negotiations, being the only agricultural negotiating bloc that brings together developed and developing countries. Despite this mix, it provides a united, strong voice in the WTO against further agricultural trade distortion.
Regardless of criticisms of the conduct of the Group in the past, no-one can question the leadership of the Cairns Group over the past 18 months. We convened the Group regularly in the lead-up to and during the July 2008 Ministerial.
The Cairns Group meeting in Bali this year is widely considered to have kick-started the Doha negotiations. And most recently in New Delhi, the Cairns Group statement delivered strong impetus to the important outcomes from that meeting.
I have heard no calls from farming groups – the very people that benefit from our leadership of the Cairns Group – to discontinue the grouping or to walk away from the Doha agriculture package.
And the Rudd Government has no intention of walking away from the Cairns Group; a grouping we initiated, a grouping we have re-energised, and a grouping which is helping Australia strive for the best possible Doha outcome.
Trade Protectionism and the G-20
The second publication I wanted to refer to was the Lowy Institute paper which recommends further G-20 action to counter protectionist trade policies.
In particular, I note the paper calls for greater domestic transparency to counter domestic pressures for trade protectionism – particularly on so-called non-tariff barriers.
But I think we need to go further.
Australia has taken the view that transparency of trade policy development is not just about exposing protectionism – it’s also about greater transparency and understanding of the benefits of trade. Put simply, we need to highlight why trade is good.
As part of my recent intervention at the OECD Ministerial meeting in Paris in June this year, I urged further analysis be undertaken by the OECD on the significance of trade as a stimulus domestically and globally.
How expanded trade brings benefits to an economy. How we quantify that.
In the same way that the Australian Government recently released a study into the impact for Australia of trade liberalization over the past 20 years.
What the Australian study showed was that trade liberalisation, along with the structural reforms in the 1980s, and intensified focus on Asia, had been significant factors along with the fiscal stimulus, in cushioning Australia from the Global Financial Crises.
And these are some of the major reasons why Australia has the fastest growing developed economy in the world.
What the study showed was that, as a result of trade liberalisation:
- in the last 20 years, GDP growth has increased by 2.5% to 3.5% (relative to where it would have otherwise been) and
- average household income had increased by $2,700 to $3,900
We must build on that legacy. There is much unfinished business. Not just with opening markets, but also structural reform.
There is no point opening markets if we are not competitive enough and productive enough to take advantage.
The reforms of the 1980s showed the importance of action on both fronts. In fact, the combination of Labor’s reform initiatives led to the biggest step-up in productivity the country has ever seen - delivering productivity gains of more than 3.3 per cent through the 1990s.
Services constitute 80% of the Australian economy and yet services represents less than 30% of our exports.
Investment is another area of huge potential growth. I regard it as a crucial new form of trade.
Our challenge is to break down behind the border barriers to these forms of trade, to get closer to the bigger economic markets and closer to the global supply chain.
So greater transparency by openness in these areas, coupled with greater analysis of the benefits of trade, would be enormously beneficial to our efforts to maximise the flow of a range of Australian exports.
As part of building in the analysis, we need to build bipartisan support for trade liberalisation. That’s why I initiated the Friends of Trade Association group of the Parliament.
A Broader Trade Agenda
Of course, it’s important to see our work on Doha in context. Doha is our trade policy priority. But that certainly doesn’t mean it’s our only priority.
This Government has managed to balance our drive for Doha with our drive for better regional integration and our drive for key bilateral agreements.
Our renewed focus on Asian trade has been a critical part of the cushioning for the Australian economy during the global recession.
Our reorientation of trade and diplomatic focus towards Asia gives us great opportunity as Asia, now more than ever, is emerging as the centre of world economic growth.
That is one reason why we have been negotiating greater access for Australian exporters to these markets and also engaging in commercial promotion.
As Trade Minister I have visited China six times, Indonesia four times, Singapore and Thailand multiple times. Vietnam last month, and I met the Malaysian minister in Melbourne recently following my visit there last year.
I have just returned from India and plan to be back there again at the end of this month. I plan to travel to Japan and Korea next month, having already visited Japan in early 2008.
It is Asia where there is growth and huge opportunity in dynamic markets.
Australia and New Zealand have signed a Free Trade Agreement with the ten ASEAN nations, and that comes into force on January 1, 2010.
Last month in Bangkok Australia worked together with others to push for track one status of an examination of a new Free Trade Area spanning the 10 countries of South-East Asia known as ASEAN plus India, Japan, China, South Korea, New Zealand and Australia.
This East Asia Summit-wide, or ASEAN+6, would cover some 3 billion people and have a collective GDP of US$14.1 trillion.
This complements our strong push for bilateral agreements with key trading partners in the region and I speak here of China, Japan, Korea, Malaysia, Pacer Plus Pacific Island members and Trans Pacific Partnership members and prospective members. I hope that this list of negotiations will soon include the launch of bilateral negotiations with India and Indonesia.
I note that a significant factor in this regional engagement is a recalibration of our approach on “aid-for-trade” approach to trading with developing countries.
In my view our trading agreements with developing countries are more than just agreements. They are also about capacity building – ensuring that developing economies are able to participate more comprehensively in opportunities open markets provide.
This can also open new opportunities for Australian business in the services and investment value added aspects of our traditional strengths, beyond just resources – meaning our competitive advantages are so much greater.
In conclusion, it is with great optimism that I report the positive outcomes from New Delhi last week:
- the reengagement of India
- the unanimous recognition that we’re in the “end game”
- the unanimous commitment to conclusion in 2010
- the translation of political will into specific instructions to senior officials to make it happen
- the commitment by Ministers to remain involved in the process
These outcomes that would not have been possible without Australia’s strategic and sustained advocacy.
The Rudd Government will continue to use every opportunity to pursue our trade priorities across a range of fronts.
And we will use every opportunity to make sure we conclude a successful Doha deal– it’s just too important for Australia and for the global economy.
We persist in this endeavour with a renewed determination.