Australian Trade Minister Sees Agenda Behind Seattle

Beyond Seattle: Australia's Trade Agenda In The Year Ahead

Speech by the Minister for Trade, the Hon Mark Vaile MP at a luncheon hosted by the Committee for Melbourne

Melbourne, 15 December 1999

(Check Against Delivery)



Introduction

Thank you. Good afternoon, ladies and gentlemen.

It's a pleasure to have the opportunity to speak to you about Australia's trade policy. As 1999 comes to an end, I want to talk about our trade outlook for the year ahead.

The Seattle Ministerial Conference Outcome

As you know, I attended the recent WTO Ministerial Conference in Seattle. I'd like to discuss the disappointing outcome of that meeting because it will help to set the scene for Australia's future efforts to improve our trade performance.

I led a strong Australian delegation in Seattle that included industry representatives, key Government agencies and the Opposition spokesman on trade. The strong commitment shown by our business representatives in Seattle was most welcome, and underlined the strong commitment of Australian industries to keeping export markets open.

The business representatives played a key role in creating a real sense of "Team Australia" at the Conference. Many of the Australian industry groups in Seattle ran events to support and encourage progress with the agriculture talks.

The National Farmers Federation held meetings of farm leaders from the Cairns Group of agricultural fair trading nations. The Australian sugar, grains, dairy and processed food industries ran seminars and other activities in support of our agricultural reform objectives.

The Australian Government and its Cairns Group partners, united with our agricultural industries, did make significant progress on many of the difficult issues surrounding agriculture.

However, similar progress was not achieved in other areas.

Contrary to media reports, the riots were not a major problem for the Conference. The real stumbling blocks included:

an unwieldy agenda;

unrealistic ambitions in new areas like investment and competition rules;

an excessive emphasis on labour standards despite determined resistance from developing countries;

and strong demands from developing countries that sought to renegotiate Uruguay Round agreements as part of a new round launch.



In the end, not enough compromises were made in the time available to achieve the objective of launching a new round.

The rioters were made up of supporters of any and every cause, many contradictory to each other. While claiming to support poor nations, demonstrator' demands were flatly rejected by the leaders of all the developing countries and, and here I'm talking about labour and environmental standards.

Supporters of Lyndon LaRouche joined with left-wing anarchists in unholy matrimony against trade reforms. Conspiracy theorists abounded amongst the young, student idealists as their mentors took to the shop fronts with bricks.

As a National Party MP from regional Australia, I have seen this sort of misdirected discontent before. In Australia this sort of discontent has manifested itself in One Nation. We are seeing it in a different, but still clearly recognisable form in the US.

It is the responsibility not only of governments, but also business leaders to stand up and point out the advantages of open markets for citizens of all nations. Trade must not be used as the scapegoat for domestic political problems. The sort of left and right wing extremist nonsense that was aired in Seattle must not be allowed to prevail.

Looking Forward in the WTO

It would be wrong to think that no progress was made in Seattle. We made good progress in agriculture and services, and in some other areas.

We are hopeful that these results can indeed be "frozen", and in recent days I have had discussions with WTO Director-General Mike Moore on how we ensure that that progress is not lost.

Significantly, agriculture and services negotiations are already mandated and will begin early next year. On agriculture, almost all WTO members agree that they want to:

* move toward the elimination of export subsidies;

* avoid the protectionist banner of "multifunctionality";

* achieve substantial and progressive reductions in domestic support;

* pursue market access negotiations aimed at the broadest level of liberalisation; and

* deal with issues like environment and rural welfare in ways that do not distort production and trade.


These elements will provide a very positive direction for next year's agriculture negotiations.

The mandate for the services negotiations has not been controversial. We can expect to make progress on market access in sectors such as financial, telecommunications, professional services and electronic commerce. We will also continue to work on the full intellectual property rights agenda.

Australia stands ready to see these negotiations incorporated in a broader Round as soon as possible. In short, we will continue to argue for a new Round while getting on with the agriculture and services negotiations.

We will also continue to express our concern at attempts to overload the WTO agenda with complicated and controversial issues. However, we do support sensible work programs in the WTO Committee on Trade and Environment and the Committee on Trade and Development to ensure that efforts to free up trade are mutually supportive with environmental goals, and advance the broad objective of sustainable development. On labour standards, we continue to hold the view that such issues are better dealt with in other international forums, like the ILO.

Australia will pursue other WTO matters in the year ahead. We will press our dispute actions against the infamous US lamb safeguard tariff quotas and Korea's beef restrictions. We plan to work, through the WTO Dispute Investigation and Enforcement mechanism I announced in September, to identify and pursue any other areas where our trading interests are being damaged through non-observance of the WTO rules by others. And we will do all we can to see China and Taiwan accede to the WTO early next year, given the sizeable trade benefits in prospect for our exporters.

The Global Outlook and Regional Recovery

Despite the outcome in Seattle, there has been some good news over the past few months. The global economy is looking healthier than it has looked for quite a while, which is good news for trade.

Following a turbulent 1998, growth forecasts having been regularly revised upwards. The US economy has continued to grow strongly, the EU is emerging from its slowdown and East Asia is clearly in recovery mode.

There are still some risks to the positive scenario I've just described. The most serious would be a sharper than expected slowdown in the US, or a relapse in Japan, both of which could destabilise the global economic recovery.

Looking at East Asia, the region has bounced back strongly from the depths of 1998.

It gives me great pleasure today to launch a new publication in the TradeWinds series produced by the Department of Foreign Affairs and Trade. This volume, titled East Asia: Recovery Underway, takes stock of economic developments in the region and Australian trading strategies that have adapted to the new environment.

East Asia's economic rebound this year has markedly exceeded expectations, with all economies in the region - with the possible exception of Indonesia - forecast to grow during 1999.

The strength of Korea's recovery has been remarkable, with growth of over 12 per cent through the year to the September quarter. There have also been strong rebounds in Singapore, Thailand and Malaysia.

Economic indicators such as industrial production and private consumption are progressively returning to their pre-crisis levels. Regional stockmarkets have largely recovered and foreign investors are returning to the region.

The question now is how sustainable the recovery will be over coming years. The region remains susceptible to a sharp downturn in demand for its exports, for example as a result of a hard landing in the US, or stalling of growth in Japan, or protectionist tendencies in major economies.

The East Asian economic crisis had some positive effects that are important for our longer term relationship with the region.

It prompted regional economies to undertake a range of fundamental domestic policy reforms. Some of the region's key economies have embarked on rebuilding financial sectors, improving corporate governance and reducing debt levels.

These reforms are fundamentally improving these economies, making them more efficient and competitive, and less susceptible to external shocks. Australian commercial interests will benefit from these reforms.

Australian business has better investment access in most countries in East Asia than before the crisis - in areas such as financial services, distribution and manufacturing. It also faces lower tariffs, and more transparent and simpler domestic regulations. For example, Thailand's tariffs on cotton - Australia's biggest export item to Thailand - have been removed; restrictions on foreign investment in wholesale and retail trade in Indonesia have been removed; and Korea's import diversification program has been effectively dismantled.

Government's Trade Agenda for 2000

The Government is positioning Australia to take advantage of the economic recovery underway in the region. We'll be pressing to invigorate the APEC trade liberalisation and facilitation process when Australia hosts the APEC Trade Ministers' meeting next June.

We'll also be strengthening our relations with our ASEAN neighbours. In October, I reached agreement with my ASEAN and New Zealand colleagues to set up a high level task force to examine the feasibility of establishing an AFTA-CER free trade area by 2010.

This would include all the nations of the ASEAN Free Trade Area and Australia and New Zealand. Last week, I appointed former Deputy Prime Minister and Trade Minister, Tim Fischer, to be Australia's representative on the task force.

The Government's decision to explore an AFTA-CER free trade area gives us an opportunity to look at ways to enhance access to ASEAN markets for goods, services and investment.

More generally, the Government is open to concluding free trade agreements where they would give Australia substantial gains in market access that Australia could not get elsewhere in a similar timeframe.

The Market Development Taskforce in my Department will continue efforts to open markets and promote exports in both traditional and emerging markets.

I was very pleased just before today's lunch to present export awards to five outstanding Australian companies that are boosting our exports to Israel. We have been building business missions in both directions over the past two years and we are now seeing some of the payoffs.

Australia's Trade Performance

Turning to our own economic achievements, Australia has weathered the East Asian crisis exceptionally well.

Despite our exposure to the region, this Government's sound economic management, combined with the benefits of over a decade of economic reform, enabled Australia to maintain one of the highest rates of economic growth in the developed world.

Economic improvements in East Asia in particular are beginning to be reflected in Australia's trade performance. Merchandise exports to East Asia in October this year were 4% up on October 1998.

In trend terms, our total exports of goods and services have risen for the past six months. In October 1999 our exports were 2% above October 1998.

Conclusion

Australia has a vital interest in maintaining and building the global trading system. The Federal Government will continue to explain the message - that trade is vital to the economic wellbeing of Australia.

An important part of my job in the year ahead will be to get this message out to regional Australia. Regional Australia is the driving force behind rural and mining exports that together account for 45% of Australia's total exports. Regional Australia also generates manufactured and services exports, such as wine and tourism.

Regional Australia accounts for around one-third of Australia's workforce. Obviously, export performance is critical for the people and industries of regional Australia. There is no argument that productivity and competitiveness have improved markedly in recent years, particularly in regional Australia, and we must ensure that the regional Australia, and particularly the workers of regional Australia, receive an equitable share of the benefits that flow from our increased export efforts.

Australia has a huge stake in the global trading system. We must continue to pursue our international trade policies with maximum energy at the multilateral, regional and individual country levels - and continue to build a stronger domestic support base for the Government's trade work.

Ends