Transcript - E&OE
23 June 2009
Interview: European Policy Centre breakfast, Brussels
Q and A session with Minister for Trade Simon Crean
Topics: Doha round, climate change
QUESTION: I’d like to mention here that in the last few years the European dairy industry has strongly increased its cooperation with Dairy Australia. We are working on items which binds us instead of items on which we are quite [indistinct]. Climate change, product quality in relation to, as to protein sources and things like that. So I think in this item, the cooperation is there and I have to say when I started working in this function the first years when I met the Australians, it was always about Doha.
The last two years I think we have said nothing about Doha. Nevertheless my question is about Doha. I'm a little bit afraid that the policy that is developed by your country, the [indistinct] group, your friends from New Zealand among others, that after you realised that the EU agreed to phase out the export [indistinct] that the EU agreed to reduce the surprise subsidies, the internal product, domestic product subsidies. At that time, you started a new offensive and you were asking for a market access.
I'm a little bit afraid that because of that, the negotiations on Doha, will go on, will go on, will go on. Whereas when we had agreed at the moment that on the two items that were initially for the agricultural trade and certainly for dairy on the agenda, when we would have had an agreement at that time, we would have had an agreement on Doha two or three years ago.
And in two or three years we could start a new round and I'm afraid that now before we are coming to a reasonable result, it can take a long time. Thank you.
MC: And there is a third one in the back. Yes.
QUESTION: Good morning. Liliana [indistinct] with MLex Market Intelligence. I've got two questions for you. I hear what you say about having to fight protectionism but on the other side, I heard what you said about having to assist on the climate change side of things, export-exposed industry.
Now, I wonder what Australia's position is on the possibility of a green border tax which the French and apparently the Germans are pushing for and even the US is considering for a few years down the line. And my second question is on carbon sequestration. This does seem to be the main tool for fighting climate change but in Europe at least there's rising popular opposition to CCS and rising scepticism. I wonder how viable you think that technology is and what the developments are in Australia on that? Thank you.
MC: Quite a large set of questions for you.
SIMON CREAN: On the Asia-Pacific community concept, go back to the Uruguay Round. When it was concluded, there was a realisation that, like all trade rounds - good progress, but still not enough.
Australia in those days then pushed for a regional complementarity to the Uruguay Round. We established APEC along with a lot of countries in the region, drove the initiation of - in fact Australia hosted the first meeting to create APEC and it was turned into a leaders’ meeting when Prime Minister Keating was still in office…[that led]… a declaration known as the Bogor Declaration which was another set of objectives for trade liberalisation within the region.
That has been terribly significant in terms of our economic development because if you look at China, you look at Vietnam, Indonesia, even Korea now, not that it's in - it's within the APEC region but these are economies that are still growing. Australia is in a position because it took the conscious decision to engage with Asia and to pursue market liberalisation, that we are in a position to secure better market share. But that's the trade relationship.
The challenge is - and this has been a problem, mainly because the US, for a period of time, lost interest in APEC. And, of course, you've got the China problem with the two Chinas as to how a structure like that deals with the strategic interests.
What has emerged is a number of other regional architectures. There's the ASEAN Plus Three concept which takes ASEAN and puts in China and India and Korea.
There's an ASEAN Plus Six which Japan and ourselves support that widens it to include - I'm sorry, India comes in, in the Six. It's Japan, Korea and China in the Plus Three but Japan with us is of - we are seeking to widen this. The problem with that structure is that the US isn't in it, neither is Canada. The advantage of APEC is it exists, it is leaders level, it's annual and it has a good mix, in my view, of developed and developing countries.
But if it can't deal properly with the strategic issues, how do we reform to enable that? Does that involve using and adapting existing structures or does it mean if the existing ones don't work we have to look at the evolution of a new structure?
This is the concept behind the APC. We don't come with a prescriptive view but we do say there's something that really needs to be developed in the fastest growing region in the world. And we're very pleased with the response to the debate, with any of these issues, the existing structures; people who have positions within them will feel threatened if a new one is being emerged. But these are issues that can be talked through, will be talked through, in the dialogue going forward. So we're very pleased with the response and the initiative that the Prime Minister has put on the table, which has started debate again in the region - almost the unfinished business from the initial concept of the establishment of APEC.
So you should watch with interest how the debate evolves. We certainly intend engaging fully on that front. I might say, in terms of trade negotiations, the other interesting development out of APEC is the emergence of a Trans-Pacific partnership. Already there are eight countries of the 21 that are in APEC signed up to this. This will be a Doha Plus or a WTO Plus trade agreement and we hope that if it's developed properly, it could also emerge as a docking-type concept into which people - other countries that were prepared to accept the multi-lateral basis upon which its framed, would be able to join.
On the other two questions of Doha. Look, I don't really want to get into a debate about the dairy because I think that would take a long time in its own right. The point that I do make though, is I do acknowledge the fact that there has been cooperation.
My only point is that if we can get that cooperation, why shouldn't we together be looking for some creative solutions for what is the biggest emerging dairy market in the world, China? It's got a compulsory milk program. It has state of the art technology in parts of it that I've visited, Mongolia, that recently had a huge health scare. It hasn't got an inability to produce milk, what it's got is problems, as have been demonstrated, in the quality. The innovation, the technology transfer, that's where we together can help. And that's where I'm arguing that if we can get beyond the tariff-related issues, if we can get - and I - it's true. I think between Europe and Australia we do have … and New Zealand - we do have a pretty good understanding as to what Doha will mean in a number of these sensitive agriculture areas.
But that isn't the reason that we haven't been able to conclude it, and I don't think there is any risk of those being re-opened. What we need is the political will in terms of India, the US, China and I think that we're close to getting that political will. Will that translate in fact? That's still the unknown question and that's what we've got to work on.
And as for the issue of protectionism, I think there is a real risk with the green border taxes becoming a new form of protectionism. And in many senses what we've got to try and get is to balance - in simple terms if we were all fully developed market economies developing a new market mechanism that rewards environmentally friendlier solutions, would be an easier concept. Because what are we trying to do? We're trying to put a price on carbon that changes behaviour. But, we're also dealing with a complex world of developed and developing countries.
We know that the solution for developing countries is through this concept of common but differentiated. In other words commitments to - whether you call them targets or objectives or whatever - but at different time sequences.
We know we can negotiate common but differentiated solutions because we've done it in trade talks. But in the circumstances of having a time distortion, or a timing that results in distortion, that's where you need to look at the measures that need to be taken in developed countries to ensure that carbon leakage doesn't happen from countries like us, who are efficient producers competing with countries that don't impose the same rigour. That's where the complexity of this comes in. If the solution is to say, we're not going to take your products unless they meet our standards and we'll impose the tax, I think the real risk in that is it leads to another level of trade distortion. And why would we want to go down that path when it's been hard enough in the trade negotiations trying to get rid of these things? So this is a complex set of negotiations. My view is that there has to be much more engagement by economic ministers, industry and trade ministers, because there are real job opportunities, not just the job threats.
The other interesting argument is that if you introduce an emission trading scheme you raise revenue. How is the revenue to be redistributed? I think most of us have come to the view that this has to be a revenue-neutral exercise. So business that's threatened, I think, really needs to be lobbying more effectively as to what its share in the redistribution is, and that can take many forms in terms of taxation treatment.
Anyway, that's a whole - another set of domestic negotiations flowing from it, but the challenge has to be to get the global solution and I think it can be done. I think that there are more difficulties because of the global financial crisis but there needs to be leadership, there needs to be commitment to try and develop the emission trading scheme that rewards good behaviour and punishes bad behaviour. Because that, after all, is what the scheme is about and we need to work a lot more closely with Europe in advancing that.
As for the sequestration issues, we have been developing quite successful technological solutions. I don't know - I think the Belgian Foreign Minister went up to Port Hedland. I don't think he went across to Barrow Island but Barrow Island is a big gas production facility which is putting the CO2 back into the ground. We're quite excited by a number of the developments in the sequestration area, in the sequestration space.
Yes, there's still a long way to go but that's where we need to draw much better on the scientific expertise and cooperate in the development. And I think that there is a huge opportunity in this space between Europe and Australia because what are you looking for? You're looking for a diversified energy alternative to where you get it from at the moment. And I'm talking gas and it can be more efficiently shipped by sea than some of the problems that you confront with pipeline movement at the moment. That's why I think that you will see more of the interest in Australia, not just in taking the resource, but in looking for energy conversion, and whilst it's true that we have big policy settings in terms of renewable energy and the 2020 formula, by far the biggest opportunities are going to come from more efficiency in current uses of energy.
We have to keep all those mixes in the game, but I am very pleased with the renewed interest in investment, not just in the resource and taking the commodity in the form that we would ship it, but also looking to more creative solutions to value add and develop our comparative advantage in cooperation.
That is quite exciting and I think that these are agendas that happen to suit and that's why the point that was being made before is that the framework partnership that we're talking about goes far beyond just the traditional trade areas. There are significant areas of cooperation; food security, energy security, these are huge issues for all of us but, coupled with the climate change challenge, I think we can come up with a very creative set of solutions if we work at it together.
MC: We have time perhaps for a last round, if there are comments, questions from the press. Are there? One there.
QUESTION: Tim Noonan, International Trade Union Confederation. Minister, the G20 is clearly taking on a more significant role in global affairs and already some of the decisions that were taken at the London summit are being implemented, Financial Stability Board, and some other areas.
Does Australia think that the current form of the G20, which is essentially a series of meetings with a rotating presidency, is sufficient, or does it need to develop beyond that?
MC: Any other questions or comments? If not, I will ask a question myself. Minister, first of all, congratulations on the fact that the DFAT, which is the Department of Foreign Affairs and Trade in Australia, is today one of the best equipped bureaucracies to deal with the comprehensive nature of foreign affairs. Because as we have seen also from our debate here it's not just about diplomacy, it's not about multilateral negotiations. It's about a number of issues that cover a very large ground and therefore there is a need for expanding the competencies and the expertise [indistinct] to foreign affairs. And that leads me to asking you a very direct question.
How do you rate the chances of success of Doha at this stage, and not just Doha as a large comprehensive field, but also the sort of mini field that could, at some point in time, appear on the horizon? Because it is a very strong concern, especially here in Brussels about the fact that whatever the good intention of President Obama may be, after all US Congress is dominated by Democrats right now and Democrats are usually averse to trade [indistinct], especially at a time of crisis. And therefore, in the end, what is going to call the shots in the negotiations could be the attitude of the - not simply the US administration but the US State in this particular respect. Your closing argument, Minister?
SIMON CREAN: Okay, on the G20 structure, I'm not sure what the best ongoing mechanism is going forward, except we are convinced that the G20 is more representative of where the geo-political power is these days and can become, if it's worked at, the structure by which global issues can be more effectively dealt with. I think it is significant that there is a lot in common in terms of what the G20 is striving for. In an odd sort of way, what it's looking for is a new rules-based system globally in the international financial architecture.
This is hard because it is going to involve, in a number of cases, the - not just the recognition of China's role but what does that mean in terms of representation on the IMF - those sorts of issues. But in an interesting way, what we've got in the WTO is a rules-based system that does employ, that does provide important disciplines, and to which countries are continually are aspiring to join. No one forces them to join but if they come in they have to accept a lot of disciplines. And I think that that is a healthy sign.
There's already 153 members. I mean part of the difficulty with trying to negotiate it now is when we did Uruguay it was something over 70. So you've got not just the doubling of numbers, you've got an emergence of groupings within the WTO. It's a forum that I'm much more familiar with than I am the G20 dynamics.
But I simply reflected… because it is possible to get agreement across groupings through representative structures within a multilateral framework that will be reflected in a rules-based system. Part of the difficulty we've got is that people know that the rules-based system produces new disciplines and whilst there's been a preparedness to negotiate, you can't conclude until everything's finalised. We're 80 per cent of the way there. We're still trying to bridge that 20 per cent.
Now, this comes to the second question about the likelihood, the chances of success. I think chances of success are still strong. They're not certain but they are strong. Why? Because (a) we're 80 per cent of the way there and (b) we've got now a leadership involvement and direction to conclude as part of the G20 mechanism.
So that leadership involvement and preparedness to assist to bring about a conclusion was a commitment made last November, but which has run into a hiatus in the last six months because the fact that we live in democracies - and that means we have elections - there are always interruptions to timetables. And so the US election and the transition and the appointment of a USTR put us in something of a stalled pattern and then we had the elections in India.
But what was very interesting was that Indonesia convened - hosted a meeting of the Cairns Group which I chaired only a couple of weeks ago in Bali, to which we invited not just the Cairns Group members, but the EC, Japan, China, all three represented at ambassador level. But interestingly, India and the US represented at ministerial level.
Both ministers and the three countries represented in addition to Cairns made a very strong commitment to direct officials to reengage to try and resolve the differences. I hope that this is an agenda that we can take further on the margins of the OECD meeting in Paris in the next couple of days, which has an important focus on trade.
I'm absolutely convinced that you need a parallel approach to these trade negotiations. One, we need to keep finding the technical solutions and we are well served by terrific technicians and senior officials that, in my view, are capable of coming up with the technical solution if they get the political will and the political direction to do it. What we've got to do is to engage much more that political will. And I think the other lesson out of the Doha Round is that more can be achieved by regular informal meetings at the political level, than trying to put all the eggs in the basket of the one big ministerial where there is a lot of pressure on everyone to conclude. And usually, with all the scepticism that surrounds it, more disappointment when - even when you make the progress, it's not measured by the progress, it's measured by the fact that you haven't concluded.
So I think that what we have adapted to is the circumstances now where we've got to keep this parallel track going. We've got to send a political message to officials to try and conclude. Those mechanisms have to be done within the multilateral framework. That, of course, is the nature of the WTO. That there has to be much more engagement in a range of other groupings to try and resolve the differences. If we can get that right, then I think there is a reasonable chance of concluding it and certainly there is very strong commitment and preparedness on the part of both India and the US to want to move us towards the end game.
That's a very encouraging development. We've got to make the most of it and part of the purpose of me being here this week, despite the Parliament sitting back home, is to participate and take the opportunity at the OECD meetings to advance that political agenda.
MC: Minister, thanks a lot for the generosity and confidence with which you have answered our questions and all the best for the rest of your European mission. I understand that the next step for you in Australia is a planned visit of President Barroso to Australia. It was already planned for earlier this year then was postponed. In light of the conclusions of the European Council last week, I understand that when he eventually comes to Australia will speak with a stronger mandate on behalf of the European Union. And I think we just confirm at least in principle as president of the commission for five more years.
But for the time being, we are very, very grateful to the Minister for his speech and presence here today. I thank you all for having been with us today and have a good day. Thanks a lot.
[ENDS]
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