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Monday, 29 November 1999
Page: 10982

Senator COONAN (10:09 PM) —One of the most important meetings for the future of international trade is currently taking place in Seattle in the north-west of the United States. Trade ministers from 135 countries, members of the World Trade Organisation, are gathered for what is referred to as the Seattle Round. Their task will be to agree on a road map for negotiations over the next three years to free up global markets and trade in agriculture, services and industrial goods. It is not only to liberalise trade further but to improve trade rules, which is something I want to refer to a little later. On any view, the Seattle ministerial is an ambitious plan to launch a millennium round of trade liberalisation. The real difficulty, however, is what should be on the agenda.

In the lead-up to Seattle, the major trading blocs of the United States, the EU and Japan have pushed for the inclusion of their own priorities at the expense of securing a balanced negotiating mix. The United States is keen to link labour standards with trade. This connection is resisted by developing economies fearful of labour conditions being attached to their exports. The EU, Japan and Korea are pushing for the inclusion of investment and competition. France and Germany are still at loggerheads with the United Kingdom over beef exports. There are innumerable lobby and antitrade protest groups agitating for everything from environmental standards to threats to disrupt the proceedings altogether.

Where does Australia stand in the fray? Unequivocally, Australia's interests lie in pushing a firm line on agriculture, elimination of export subsidies and substantial reduction in tariffs and other barriers as the most desired outcomes. The potential benefits of further trade liberalisation are enormous. The Department of Foreign Affairs and Trade estimates the global welfare gains from halving trade barriers at around $US400 billion annually, including a gain of $7.5 billion per year to Australia. It must be acknowledged that freeing up trade in agriculture does pose significant and particular problems that were left over from the Uruguay Round. As Fred Brenchley, Canberra correspondent for the Bulletin, observed in a recent article:

Agriculture remains the trade Cinderella. Tariffs of more than 300 per cent are not uncommon, and export subsidies flourish.

ABARE, the Australian Bureau of Agricultural and Resource Economics, has identified that the most pronounced distortions are to be found in wheat, rice, feedgrains, oilseeds, sugar, milk and beef, and in sheep meat, sugar and milk in the United States. These subsidies and distortions impact upon Australia's more efficient farmers.

In an ambitious pitch for agriculture to be treated on the same basis as trade in other goods, Australia's Minister for Trade, Mark Vaile, is also pragmatic. The battle lines are no longer distinct, with new and emerging coalitions of interests taking a cue from the success of the Cairns Group of 15 agriculture and farming export economies, including Australia, all pushing for agricultural trade reform.

Developing economies have formed alliances to counter the large trading blocs and to resist changes that will expose inefficient local industries to finely honed foreign competitors. Recently, there have emerged variously named interest groups such as the Like-Minded Group, the Friends of Multi-Functionality and others. Clearly, in a rules based system, improving trade rules, access and transparency are crucial factors for Australia's successful participation in the WTO.

Established four years ago, the WTO's binding dispute settlement system has taken no prisoners in opening up markets. Australia has succeeded in its complaint against Hungary over export subsidies and India over other trade restrictions. It has been forced to remove the ban on imports of uncooked salmon and remove subsidies to Victorian leather producer Howe and Co. Australia has lodged complaints with the WTO against the United States over lamb and against Korea over beef. Last Monday, it was announced that the WTO had decided to establish a dispute settlement panel to consider Australia's case against the United States restrictions on imports of Australian lamb. The WTO dispute settlement body is required to make a ruling by next August. Clearly, Australia needs to take a proactive approach to trading partners that do not play by the rules.

The government has recently established a Dispute Investigation and Enforcement Unit in the Department of Foreign Affairs and Trade to assist business in dealing with trade problems. This response to the burgeoning power of the WTO is timely. The United States, for example, has a well-resourced pro cess that allows the United States administration to be informed about and target any measures that are adverse to US trade interests and to take pre-emptive action through the WTO.

The WTO dispute settlement system is efficient, but it is also legalistic. Since it was launched in 1995, it has dealt with 170 cases, and the real growth is yet to come. The WTO case load has expanded, with the WTO agreement covering services and intellectual property as well as trade in physical goods. There is considerable debate internationally about an extension of the rules to include environmental and health standards. Environmental and health standards are already part of the equation in disputes brought before the WTO.

The rules in dispute settlement procedures do not prevent governments from taking actions which are needed to protect the environment. Indeed, the rules contain specific provisions aimed at ensuring that they do not inappropriately restrict the ability of governments to achieve environmental objectives. It is often mistakenly said that the WTO seeks to promote free and open trade at the expense of the environment. In fact, the WTO recognises that the protection of the environment is as important as promoting the benefits of more open trade and that both are essential for achieving sustainable development. However, it is also a fact that environmental concerns can sometimes be used to justify trade protectionist actions. It is the proper business of the WTO to discipline these sorts of inappropriate or unnecessary trade restrictive practices.

There is considerable scope for other developments. All of the growth industries—such as the telcos, intellectual property and financial services—can no longer be regulated effectively on a national basis, and there is a compelling argument for a discrete WTO agreement on electronic commerce. In its November publication, the Australian Chamber of Commerce and Industry identifies the natural fit between the WTO system and electronic commerce. It says:

From `Put simply . . . market entry'.

Put simply, the Internet as the platform for electronic commerce has the potential to create a virtual global marketplace for goods and services and to overcome the tyranny of distance and cost for many traders and consumers, while the WTO system is intended to reduce or make transparent the tangle of different barriers to market entry.

With the broad range of WTO agencies having a foothold in aspects of electronic commerce, it will be important for the framework for e-commerce not to become fragmented.

Drawing these themes together, the new trade round will be vital for Australia's future. Not only must there be further inroads into remaining tariff barriers, but we must have stronger rules so that commitments to open markets are actually carried out. Difficult areas like agriculture must not be put aside at the end of the round. The results of negotiations in all areas need to be finalised and implemented at the same time by all WTO members as part of a single package. It must be acknowledged that some sections of the community argue that further trade liberalisation exposes countries to the volatility of the global marketplace, with the consequent loss of jobs and a good deal of social and psychological pain and dislocation. This is largely because the benefits of globalisation are not equitably shared, while those who suffer in domestic markets are easily identified and vocal.

If the momentum for reform is to be maintained, we must do more to ensure that the benefits are equitably shared and the victims of change receive appropriate adjustment assistance. However, it must also be borne in mind that trade means jobs and economic growth for all Australians. In fact, 1.7 million jobs, one in every five, depend on trade. For these reasons, it is important that all Australians understand and support Australia's efforts in Seattle. Australia has much to gain by accessing hitherto unavailable agriculture markets. We hope that our delegation will not be sleepless in Seattle, but we do hope their grasp of these issues will give us the best chance to secure a very good outcome.