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World trade towards 2000

Introduction

Members of the Foreign Correspondents Club of Hong Kong certainly don's need an Australian Trade Minister to point out how rapid and fundamental are the changes now transforming the pattern of international trade

. changes created by forces such as technological innovation, rising income levels, the shift of industrial production to developing economies, and the rise of new aggressive trading nations

. and a rate of change that is certain to continue

Nowhere have these pressures for change been more evident than here in our own Asia Pacific region.

It is one of the fascinations of public life, and perhaps of the human condition, that events which bring exciting new opportunities inevitably bring a host of new challenges as well.

I want to set out for you today an Australian perspective don these challenges and opportunities and how they will be played out in the few short years leading up to the end of the century

. about the adjustments to the global trading environment following the Uruguay Round trade negotiations

. and about new regional arrangements for enhancing trade

Government's role

There are, of course, many differing views about the proper boundaries between the public and private sectors in modern economies.

We in Australia fully acknowledge the importance of not exaggerating the role government plays in the economy

. it is self- evident that it is for business to do business

. but there can be little doubt about the central role of national governments in ensuring that the rules of the multilateral trading system work to make trade as free and fair and possible.

Australia and the countries of Asia have a major stake in the process of facilitating open trade.

We are economies of the region which is emerging as the principal focus of the world trade growth

. and we fully recognise how crucial trade liberalisation is for our economic well- being.

For Australia part we have a trade strategy which operates on three levels

. the multilateral global level, most notably our involvement over the past seven years in the Uruguay Round negotiations

- and establishing and participating in the new World Trade Organisation

. the regional level, in which we are heavily involves in new approaches to maximising open trading and regional trade growth

. and the more traditional bilateral trade activities

- to do with promoting two- way trade, improving consultation and fixing bilateral trade problems

All this translates into a complex, coordinated web of government activity.

Together with the structural reforms of the past ten years, it has transformed the Australian economy into one which is vibrant, outward- looking and highly competitive.

Australia's success is reflected in our strong trading and investment links with this part of the world

. our growing role in suppling elaborately transformed manufactures and quality services

. as well as the primary commodities for which we have traditionally been well known.

And it is, I may say, and approach in which we enjoy the closest cooperation with Hong Kong

. reflecting our strong shared commitment to the goal of trade liberalisation.

Global trade post- Uruguay Round

The successful conclusion of the Uruguay Round is, of course, of central importance to the global trading system

. we now have an outcome which will underpin business confidence.

Countries which are vitally dependent on trade for their economic well- being, such as Australia and those in Asia, have made particular gains

. to illustrate, we estimate that eventual benefits for Australia's exports directly attribute to the Round will be over A$5 billion annually.

The Round has produced a world trading system which is unfamiliar in many ways.

We have clear ideas as to how this new trade environment must work if the benefits of the long years of negotiations are to be fully realised.

First and foremost, it is however crucial that the undertakings countries made in the Round are fully implemented in the spirit of the final agreement.

We in Australia are greatly encouraged to see that the major trading powers have made clear their determination to complete their internal procedures for implementation by the target date of 1 January next

. the passage through Congress of the United States implementing legislation will be of great importance here

- and we urge all parties to the negotiations to redouble their efforts to implement their commitments as soon as possible.

We are also strongly committed to maintaining the momentum for agricultural reform which is so important a part of the final agreements, in particular within the G7 states.

This is why the Cairns Group of free trading agricultural exporting nations, which I chair, has decided to continue its work, with a focus on monitoring the way undertakings on agriculture are honoured in practice.

And, of course, it is vital that the WTO is set up in a way which allows it to discharge its functions fully

. as an agency to monitor the way its members implement their commitments

. and as a means of redressing complaints of unfair trading and for settling disputes

In these first years of its life, effective leadership of the new World Trade Organisation will take on a special importance.

We have made no secret of our view that we would like to see the WTO Director General come from within APEC

. and that we would be pleased if that should turn out to be Korea's candidate, Minister of Foreign Trade, Dr Kim Chulsu, who is eminently qualified for the position.

Together with these considerations, new international trade issues are jostling for attention, and for a place on the WTO's agenda.

Let me briefly outline two of these issues.

First, and important issue which has gathered force in recent years with the greening of world politics

. the relationship between trade and the environment.

We obviously need to strike an appropriate balance between the legitimate economic and trade demands of expanding, industrialised stated such as those of Asia, on the one hand

. and the imperative of containing and halting degradation of global environmental systems on the other.

For our part, we fully accept our responsibility to share in the protection of the global environment

. we have been prominent players in negotiating international environment conventions

. we support the establishment of the WTO Committee on trade and environment

. and we recognise the importance of making trade and environmental policies mutually supporting.

But it would be disingenuous to pretend that `green policies' to address the problems will always be without cost.

. for example, we need seriously to consider the impact international controls on the use of fossil fuel may have on Australia's interests as a major energy supplier - including through exports of coal - to the Asia region.

I believe a sensible balance of interests can be found here

. but the issues need to be thoroughly debated and explored to ensure that solutions are supported by consensus and involve equitable burden sharing by all members of the international community.

- we don't want some countries advocating heroic policies, secure in the knowledge that others will have to bear the consequences.

A second issue is the relationship between trade and labour standards, a particularly sensitive one in the new international trade environment

. as you will be aware, there are divided opinions about the appropriateness of the WTO even looking at this issue.

The Australian Government, as a government with close links to the trade union movement, does not question the need to enforce international prohibitions against such unacceptable practices as forced labour and child labour

. nor the importance of protecting the legitimate rights of workers, wherever they work.

But we would be concerned at any efforts to use such legitimate concerns as a veil behind which new forms of protectionism are hidden

. there is an important and sensitive balance to be struck here

- the countries of this region need to maintain a dialogue as this issue develops.

These, then, are some of the main features of the new global trading arrangements.

I believe there is potential benefit in them for the states of our region, and certainly nothing which need threaten the interests of any of us

. there can be no successful attempt to impose uniformity, or to construct a brave new world in which all states will be expected to behave in exactly the same way.

We see the WTO being able to accommodate highly diverse interests

. and to operate effectively because, despite this diversity, we know broad areas of common interest will emerge

- to make the GATT and the new WTO more comprehensive, and to strengthen the role of the Asia- Pacific region in those forums.

Australia strongly supports the membership of both China and Taiwan in the GATT and WTO

. these organisations are incomplete without two of the world's major traders

. and the voice of the Asia- Pacific region will be louder with the support of such important economic forces

. but they must accede in a manner that is consistent with basic GATT principles in order to reinforce the rules- based global trade regime

. and Australia has some special areas of interest to pursue in the accession negotiations

- notably wool, but also services, horticultural products, and coal, to cite a few.

My visit to China comes at a time of intensive negotiations in Geneva on China's accession to the GATT

. and I will use this opportunity to underline Australia's particular interests during discussions with the Chinese leadership.

Regionalism

There is a direct connection between the emergence of these new arrangements at the global level and action at the regional level.

Because, while the international trading system is still absorbing the outcome of the Uruguay Round, governments are looking at other opportunities for action on trade groupings

- as long as the new arrangements are consistent with multilateral rules and are trade enhancing, rather than trade diverting, in their overall effects.

Carefully crafted and skilfully developed regional initiatives can even be a catalyst for global trade liberalisation.

In our own region, APEC has assumed central importance in our efforts to remove obstacles to continued rapid economic growth.

. its role in collecting, disseminating and analysing economic and trade- related information so that business and policy makers can gain a more accurate picture of developments in the region

. its rapidly developing program of trade facilitation, in areas such as standards and conformance, customs procedures, and an investment framework for the region

. and as a force at the leading edge of trade liberalisation which profoundly influenced the trading majors to reach agreement in the Uruguay Round negotiations.

Regional trade liberalisation

But we are among those who are not content simply to rest on our laurels or to leave APEC processes to continue at their present pace and at their present level, successful as they are.

We believe the time is coming when APEC should take on a new and even more significant role

. and we are pleased to have the opportunity to support the trade liberalising objectives of President Suharto and the Indonesian Government in the lead- up to the Bogor Leaders meeting.

Our vision of APEC is as a vehicle for the economic integration of the Asia- Pacific Region - the means by which trade in the region is to be made free

. a vision we believe is shared by all APEC's members.

But while there is a common understanding on the goal of free trade, how this is to be translated into practice is still not clear.

It will, of course, involve confronting the central hard- core issue of reducing of eliminating tariff and non- tariff protection.

But there are differing ideas about the specific process by which a free trade regime should be established

. whether the benefits of free trade should be confined to APEC members of whether they should be available to countries outside the APEC community and, if so, on what terms

. with a number of more detailed considerations such as possible transitional arrangements, timing, and methods of achieving desired outcomes

The issues have been comprehensively canvassed in the report of APEC'S Eminent Persons Group released just a few days ago

. the main recommendation of which is that APEC should aim to achieve free trade within the region by the year 2020.

The Report will provide a most valuable input in the series of high level APEC meetings which will take place over the next two months

. in particular, the November meeting in Bogor under President Suhorto's chairmanship, where we hope APEC leaders will draw up their vision for free trade in the region.

While APEC leaders in Bogor are unlikely to decide on detailed issues of implementation, we hope they will at least agree on a definite time frame in which free trade within the region can be realised

. whether it is EPG timetable or another, faster timetable.

As will be very clear from what I have said, there is still much debate over the shape of trade liberalisation in APEC, but Australia is fully committed to principles we believe must form the basis of any agreement

. there must be a 'standstill' on existing trade impediments to provide credibility for any commitment to liberalisation

. whatever the new trade arrangements, they must be in full conformity with GATT/WTO rules

. and there must be acceptance of member's differing stages of economic development and of the need for them to move at a pace with which they are comfortable in adopting new arrangements

- provided we all reach the full trade goal by the agreed end- date.

This, then, is a brief picture of the way we in Australia have set about pursuing global and regional trade activity.

Hong Kong

I would like, finally, to mention the way that Australian trade activity relates to Hong Kong, and its implications.

We have extensive interests here

. Hong Kong is our tenth largest trading partner, a major gateway to China and home to some 25,000 Australian citizens

. around 350 Australian companies have offices in Hong Kong and more than 1000 companies have representatives here.

So, Australia has a strong interest in Hong Kong's smooth transition to Chinese sovereignty in 1997.

We hope to see maintained the positive environment that has made Hong Kong the success story it is today.

And, as I have mentioned, we have shared views on issues of trade liberalisation and economic deregulation.

I am convinced we can work together in the region to advance our common interests and those of the region.

Conclusion

This is indeed a momentous time in the freeing of the world's trade, when the opportunity for truly bold advances has never been better

. bold advances such as only APEC can provide in our region.

We know the countries of Asia have a full agenda of trade preoccupations at the global level - including, in some cases, question of GATT membership and relations with the WTO

. but it is more than ever important that they recognise the opportunity APEC is offering them.

They - we - are part of a region which is the world's most dynamic, which is at the cutting edge of further trade liberalisation, and which stands to gain the most from that process.

But we cannot afford simply to sit back and wait for liberalisation to happen

. we - Australia, Hong Kong and other countries of our region, must seize the moment.

We must see past the complexities of how we achieve this goal to make certain that we set ourselves a goal worth achieving

. and then do what it takes to achieve it.