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Thursday, 25 October 1973
Page: 2730


Dr PATTERSON (Dawson) (Minister for Northern Development and Minister for the Northern Territory) - by leave - The purpose of this statement is to inform honourable members of the outcome of the recent International Sugar Conference which was held in Geneva between 10 September and 13 October under the auspices of the United Nations Conference on Trade and Development. Honourable members will be aware that the present International Sugar Agreement is due to expire on 3 1 December next. The main objective of the Agreement is to regulate supplies to the so-called 'free market' in order to stabilise prices at levels which will be fair and reasonable to both producers and consumers. The present Agreement entered into force on 1 January 1969 after a long period in which there was virtually no international co-operation in sugar marketing. Prior to its entry into force, world prices were at disaster levels and created major problems for all sugar exporting countries. Most sugar exporting countries are underdeveloped and heavily dependent on sugar for their foreign exchange earnings. Fortunately, Australia does not fall into this category, although an increasing proportion of our sugar harvest is sold on the free market. In 1972, about 75 per cent of our total exports of 2.3 million metric tons was sold on the free market. This proportion will rise even higher in 1975 after the termination of the Commonwealth Sugar Agreement under which Australia supplies 361,000 metric tons annually to Britain.

It can be fairly claimed that the present International Sugar Agreement worked to the mutual benefit of both exporters and importers. The Agreement is essentially a market management device and over the first 3 years - 1969 to 1971 - the discipline of export quotas resulted in a better balance between supply and demand and progressive improvement in prices. Indeed, the average price realised on the London and New York terminal markets over this period closely approximated the price objectives of the Agreement. Since the beginning of 1972, due largely to relative crop failure in a number of major producing countries, the market has been exceptionally buoyant and export quotas have been suspended. In fact, market prices over the period have exceeded the supply commitment price under the Agreement, and to this extent member importers have received the bulk of their sugar at a discount.

Indeed, this created a major difficulty at the Conference because a number of developing exporting countries argued that these discounts represented, in effect, a subsidy to the major importing countries such as Japan and Canada. These exporters were distinctly reluctant to continue to accept this obligation in its existing form in any new Agreement. On balance, I am in no doubt that the present Agreement has worked to the mutual advantage of member exporting and importing countries. Equally, I am of the view that a new Agreement along similar lines to the present arrangement would have continued to facilitate the co-ordination of sugar marketing policies and the organisation of the world market. Certainly, the objective of the Australian Government at the Conference was to obtain such an Agreement and it was fully supported in its efforts by the Queensland Government and all sectors of the Australian sugar industry.

The Conference was attended by representatives and observers from some 90 countries and international organisations, reflecting the widespread interest in a new Agreement. The main issues for consideration by the Conference were basic export tonnages and prices. Substantial agreement was reached on a new schedule of basic export tonnages and net export entitlements proposed by the Chairman of the Conference, Mr Ernest Jones-Parry, who is also the Executive Director of the International Sugar Organisation. It is worth making a special mention of the fact that it was recognised by the Conference that any Australian sugar displaced from the British market after the termination of the Commonwealth Sugar Agreement at 31 December 1974 would be added, ton for ton, to Australia's basic export tonnage which was set at 1,650,000 metric tons-H)r some 550,000 tons above the equivalent figure in the present Agreement. Accordingly, even if the whole of Australia's negotiated price quota of 361,000 tons was displaced from its traditional British market outlet after December 1974, our basic export tonnage would have risen to over 2 million metric tons.

The other major issue at the Conference was the question of prices, including a supply commitment price at which member exporters are required to offer quantities of sugar to member importers based on the average of shipments to those markets in the 2 preceding years. Naturally, the views of importing and exporting countries on the question of price tend to vary considerably and this was the case in Geneva. A compromise proposal on prices was made by the Chairman of the Conference, in consultation with the Secretary-General of UNCTAD, in which he suggested a price range of 5.40 US cents per lb. to 7.90 US cents per lb. and a supply commitment price of 8.90 US cents per lb. These prices compare with the price range in the present Agreement of 3.25 US cents per lb. to 5.25 US cents per lb. and the adjusted supply commitment price of 7.60 US cents per lb. Australia, with the support of a large majority of countries represented at the Conference, accepted the compromise proposals covering both export entitlements and prices advanced by the Chairman.

Another area of disagreement concerned the issue of reciprocal rights and obligations of exporters and importers, including questions of supply and purchase commitments. As already noted, some of the developing exporting countries interpret the obligation to offer sugar under certain circumstances to the developed importing countries below prevailing market prices as a form of disguised subsidy. It is undeniably true that large suppliers such as Cuba have forgone considerable foreign exchange earnings over the past 18 months as a result of this obligation and further substantial losses will be incurred if market prices continue at or above present levels. The problem posed for such exporting countries are readily appreciated, but equally - given the basic objective of the Agreement, which is to stabilise prices - it is understandable that importers, whether developed or developing countries, should have the assurance of adequate supplies at fair and reasonable levels. In the event, this was the major issue over which the negotiations broke down.

We must be concerned that, in an area of agricultural trade of such importance to so many countries, it has not been possible to negotiate an Agreement which would continue the degree of international co-operation in sugar marketing experienced during the past 5 years. It is disappointing that the tangible outcome of the protracted and complex negotiations was an Agreement which has no economic clauses although it will keep in being the International Sugar Organisation. It is proper to ask: What does this mean for the future? In the short term, it will have only a limited effect. The export quota disciplines of the present Agreement have been in suspense for almost 2 years and it is unlikely, given the buoyant market outlook, that quota restraints would have been imposed next year even if a new Agreement with full economic provisions had emerged from the Conference.

Moreover, the obligation on exporting members to supply sugar to importing members at the supply commitment price, which is presently about 1.9 US cents per lb. below the prevailing free market price, will cease on 31 December next. Accordingly, after that date our industry will be free to enter into contracts based on world market prices. The possible benefits to be derived from this new freedom of action will be limited with respect to returns from the current crop. However, the potential benefits could be important for the returns from the 1974 crop if the present buoyant market continues.

On the basis of the best expert advice available to me, the market outlook for 1974 is encouraging. However, I am concerned about the possible adverse effects in the longer term if a viable ISA, incorporating effective provisions covering individual country export entitlements and price objectives, cannot soon be renegotiated. Fortunately, the International Sugar Organisation has been authorised to arrange for studies to be made and discussions to be held between members and with nonmembers - notably the European Economic Community - with a view to determining the basis for such an Agreement. It will then be up to the International Sugar Council to recommend to the Secretary-General of UNCTAD a suitable time for convening a new United Nations Sugar Conference for the purpose of negotiating a new Agreement with full economic provisions. I hope that such a conference will be held as soon as possible, certainly no later than in the first half of 1975.

It is the firm intention of the Australian Government, and myself as the responsible Minister, to continue to work towards an Agreement with effective economic provisions because of the greater stability of prices and predictability of market outlets which such an Agreement offers. I would like to express my gratitude for the unqualified support I received from all members of the Australian delegation at the Conference and I received and welcomed their advice at all stages of the negotiations. The delegation included the Queensland Premier and Minister for Primary Industries, the Chairman of the Sugar Board, senior executives of the major industry organisations and of Colonial Sugar Refining Co. Limited, and senior officials from State and Federal Departments. The Australian delegation worked effectively as a team and was constantly approached by others for technical advice and assistance. Honourable members may be assured that the delegation did all within its power to achieve a successful outcome to the negotiations and its efforts were fully recognised by all participants at the Conference.


Mr Enderby - I move:

That the House take note of the paper.


Mr Sinclair - Before I ask that the debate be adjourned I would like to draw the attention of the Minister for Northern Development (Dr Patterson) to the fact that, when in Opposition, he was most persistent in asking that adequate notice be given of statements before they were introduced. Neither the spokesman for the Liberal Party nor I knew anything about this statement until a few moments ago. It was not distributed to the office of the Deputy Leader of the Opposition (Mr Lynch) or to the office of the Leader of the Australian Country Party (Mr Anthony). Consequently, we had no knowledge that a statement was to be made in the House on this extremely important matter.


Dr Patterson - This is not so. It was given to the Parliamentary Liaison Officer before lunch. He assured me that it would be distributed immediately after lunch.


Mr Sinclair - Neither the Liberal Party spokesman nor I have received it. It has not been received in the office of the Leader of the Country Party nor has it been received in the office of the Deputy Leader of the Opposition. In moving that the debate be adjourned I would stress that on future occasions the Opposition will not give leave to the Government to present statements of this character unless the papers are received and adequate notice is afforded to us so that we may reply. I move:

That the debate be adjourned.


Dr Patterson - May I have the indulgence of the House?


Mr Sinclair - We give you leave.


Dr Patterson - What the honourable member has said is true; when in Opposition I always wanted the courtesy of receiving statements, and I received them. I am assured by the Parliamentary Liaison Officer that at half past two this afternoon it was given to the Deputy Leader of the Liberal Party (Mr Lynch), as is the case with all ministerial statements. It is given to his office. That is quite correct. It is not our fault. Obviously there has been a breakdown of communications. I do not think you should argue with me about it-


Mr Sinclair - It should have been handed to the office of the Leader of the Country Party too. I do not know whether that was done.


Dr Patterson - I was not aware that that was the practice.


Mr Sinclair - That is the practice.

Question resolved in the affirmative.







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