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Thursday, 13 May 1965


Senator HENTY (Tasmania) (Minister for Civil Aviation) . - I move -

That the Bill be now read a second time.

The purpose of this Bill is to seek the approval of Parliament to the signature and acceptance by Australia of the protocol extending by one year the International Wheat Agreement, 1962. Parliament in 1962 approved the acceptance by Australia of the International Wheat Agreement which had been drawn up in that year in Geneva. That agreement runs until 31st July, 1965. In normal circumstances, it would have been renegotiated this year so that a new agreement would take effect on 1st August, 1965.

At the present time, however, most of the trading countries of the world are engaged in the Kennedy Round of G.A.T.T. negotiations in Geneva. In these negotiations, the G.A.T.T. Cereals Group has been entrusted with the task of drawing up new world-wide arrangements which would regulate international trade in all major cereals and which, it is expected, would make redundant an international wheat agreement of the present type. In these circumstances, the International Wheat Council recently agreed unanimously that the most practical procedure would be to extend the existing International Wheat Agreement for one year, that is, until July 1966. Before this time runs out, it should be clear whether it will have been possible for the world's cereals trading countries to reach agreement on new international trading arrangements for wheat and other grains.

As the proposed one year extension of the current International Wheat Agreement is a direct consequence of the negotiations going on as part of the G.A.T.T. Kennedy Round of trade negotiations, it is appropriate that I should take this opportunity of informing honorable- senators - of the objectives of these negotiations insofar as wheat is concerned.

It will be recalled that upon the initiative of the late President Kennedy, comprehensive negotiations were to be conducted among G.A.T.T. countries with the objective of expanding world trade, through the reduction of tariff and other barriers to trade and the creation of acceptable conditions of access to world markets. Significantly, these objectives were to be equally applicable to the agricultural sector of world trade and not only the industrial sector as had been the case in previous G.A.T.T. negotiations. The G.A.T.T. Cereals Group was established to negotiate international arrangements for cereals, including wheat, as part of the total Kennedy Round objectives and negotiations.

Since 1949 there have been a series of International Wheat Agreements, each of which Australia has adhered to. The provisions of these agreements have been debated in the Senate on a number of occasions. I have arranged for copies of the 1962 agreement to be available on the table of the Senate for those honorable senators who may desire to study the text of the agreement. Honorable senators will recall that the main purpose of the agreement is to ensure some degree of stability in the range of prices within which wheat is traded commercially. In this respect the Internationa] Wheat Agreement has served a useful purpose even though the actual range of prices designated within it has not been totally satisfactory from our viewpoint. It has long been recognised, however, that the International Wheat Agreement type arrangement does not adequately cover all the problems encountered in the international wheat trade.

In the first place the International Wheat Agreement does nothing to inhibit the protection afforded to high cost wheat production. Highly protectionist wheat policies pursued by most industrialised countries have led to a shrinking or, at the best, a stagnation of their import requirements for wheat. The Kennedy Round presents an opportunity to negotiate for the containment of high cost production, thereby preventing the erosion of the commercial markets for wheat.

Secondly, the price level at which wheat is traded internationally is far from satisfactory. The so-called " world price " for wheat, which exporters of wheat are obliged to accept, bears no sensible relationship to prices being paid for the great bulk of the world's wheat production. At the present time, for example, the price of Australian wheat landed at German ports is about £25 sterling per ton. But when imported into Germany, this wheat attracts a levy of £25 sterling per ton so that the price paid to German producers of about £50 sterling per ton may be maintained. The same kind of disparity between ' the prices realised by exporters and the prices paid to highly protected producers occurs in many industrialised countries.

Over recent years world prices for exported wheat have been determined by the subsidy and dumping practices associated with the level of protection afforded high cost wheat production. In these circumstances, competition is not between producers, or exporters, but between national treasuries. A satisfactory world wheat agreement must ensure a better and more sensible price situation. What is needed is an effective floor price which will assure efficient wheat producers a remunerative return for export wheat.

Another important area of the international wheat situation is the position of manyless developed countries which need to import a great amount of wheat and which will need to import much more in the foreseeable future. Because of their foreign exchange position, such countries are unable to secure their requirements unless wheat is made available to them on concessional terms. The Government takes the view that, whilst the needs of such countries must be recognised and ought to be attended to, the reponsibility should not fall only on those countries which happen to produce wheat. There is a clear case, on the grounds of equity, that the burden of meeting the legitimate needs of these countries should be shared by all countries which have the capacity to contribute. This is another important sector of the international trade in wheat to which the G.A.T.T. negotiations are directed.

Honorable senators will appreciate that an international arrangement which adequately deals with all the issues I have referred to is obviously not a simple matter to negotiate. A satisfactory outcome to the negotiations requires Governments to assume commitments and obligations which impinge on their freedom of action in respect of national policies. Obviously, therefore, the negotiations are bound to be time consuming. Much groundwork has been done, however, and in preparation for the resumption of the G.A.T.T. Cereals Group in mid-May or thereabouts a strong delegation led by the permanent head of the Department of Trade and Industry has recently taken part in discussions in Washington with representatives of other wheat exporting countries. It may well be that as the negotiations gather momentum, negotiations at ministerial level will be necessary.

Meanwhile, the Bill before the Senate, which provides for the extension of the current International Wheat Agreement for one year, is a straight-forward measure which will no doubt command the support of all honorable senators. Australian participation in the successive International Wheat Agreements has consistently had the support of the Australian Wheatgrowers Federation. I commend the Bill to the Senate.

Debate (on motion by SenatorKennelly) adjourned.







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