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Responses to increases in United States wheat subsidies

ELLEN FANNING: Opposition Leader, John Hewson, is talking tough about the predicament in which the Australian Wheat Industry finds itself. Overnight, President Bush announced a $1.5 billion increase in the subsidy on American wheat to allow the US to off-load more than 30 million tonnes onto the world market. Well, the move has been rowdily seen as pork-barrelling during the US election campaign, but that gives little comfort to Australian farmers who thought they had a commitment from George Bush that his administration would not hurt them. The US Department of Agriculture says it will try to target the program to avoid damaging non-subsidised producers like Australia. The Prime Minister has condemned the move but, according to John Hewson, that's not enough. Dr Hewson says the Federal Government has to force the Americans to off-set any losses to our wheat markets caused by the increased subsidies. He says it's no good just complaining to George Bush; Australia needs to be in there demanding better access to other markets in return for wheat losses. But as Anthony Fennell reports, far from condemning Washington, John Hewson is actually proposing we join them.

ANTHONY FENNELL: Dr Hewson says lots of countries look down on us because we don't seem to realise what's in our best interest, and, according to John Hewson, zero tariffs are still the right way to head despite America's tariff hike.

JOHN HEWSON: The tariff cuts are fundamentally important to making Australia internationally competitive. We've been too lazy, for too long, behind high tariff walls. A lot of the union power that has ruined our system in Australia has been built up behind high tariff walls. But we're just not cutting tariffs. We're cutting tariffs in the context of genuine reform that dramatically lowers the cost base of Australian industry, and I've yet to see an example where they won't be significantly better off, even with negligible protection by the year 2000, because we front-end load all those cost benefits in the first couple of years we're in government. But over and above that, as I've said for some time, we should be having a completely different approach to international trade. We've pinned our hopes in the past on the GATT - we all hope the GATT's successful - but we can't rest on that. I mean, we should be doing bilateral deals in a very hard-headed way.

ANTHONY FENNELL: According to John Hewson, Australia should be actively pushing to join the North American Free Trade Agreement, but in the meantime, says the Opposition Leader, we have to show George Bush and the Americans we are not going to be pushed around.

JOHN HEWSON: When President Bush was here, he gave us a guarantee, in effect. He'd look at any collateral ancillary damage that would flow from any activities in the United States in selling subsidised wheat and other things to the rest of the world. Well, now's the time to call him on. Now's the time to go in there and argue in a very clear-cut way; don't just complain because we've done that. As I say, you get blue in the face complaining. Actually up the ante and say: Right, you know, this is worth so much in terms of dollars and cents to Australia; we want comparable access for other commodities into the American market or we want, down the track, consideration as a member of NAFTA.

ANTHONY FENNELL: Well, the Americans and the Europeans have shown absolutely no fear about going into markets or even established Australian markets using subsidies to burrow their way in. Now, we're a country of 17 million people trying to take on hundreds of millions, aren't we?

JOHN HEWSON: Yes, but we couldn't possibly enter the subsidy competition. I mean, they're spending billions of dollars. Our Treasury couldn't even contemplate getting into that game. No, the best niche for us is to get ourselves internationally competitive and get access to their markets, and we can do it. I can't see any reason why we can't hope, one day, to have much better trade access into the United States. I can't see why, in the Asia-Pacific region, we can't hope to eliminate a lot of the trading restrictions that are there. It's, after all, in everybody's particular interests to get a bigger international trading environment.

The bigger the market, the better we can all be as a result. And that's the challenge that's there, and it calls for, look, a completely different type of leadership. For 40 years in Australia - or more in the post-war period - governments have talked about doing something; they've rarely done anything. You've got a unique opportunity, now. The Americans have moved on wheat, so let's move in response and let's do something. Let's call on President Bush. He's given us the commitment when he was here, so don't just complain. Tell him what it's worth to us and tell him what we expect by way of reciprocal access. Otherwise, you know, we're just whistling Dixie, quite frankly.

ELLEN FANNING: The Opposition Leader, John Hewson. Well, we've been joined, now, by the Acting Trade Minister, Neal Blewett. He's on the line to Doug Weller in Canberra.

DOUG WELLER: Mr Blewett, you heard those comments there. Dr Hewson says we need a completely different approach on trade. He says we should join NAFTA. What do you say?

NEAL BLEWETT: Well, first of all, Australia has got three major trading areas. We've got a major trade with Asia - our biggest trade fair; we've got a significant trade with the North American group and we've got a very significant trade with Europe. So just simply to say, yes, we'll join the North American bloc, we've got to think through the consequences of any move in that direction. Indeed, despite the fact that Dr Hewson seems very condemnatory of the GATT approach that we've had, GATT is in our best interests because we are a country whose trade is not tied in to one major area. We've got big interests in all three and, therefore, it's going to require very balanced decision making - not an off-the-cuff decision that we go into NAFTA. What are the implications of that for our trade in Asia, for instance?

DOUG WELLER: Okay. But is it time to get tough with the Americans - stop talking, get tough?

NEAL BLEWETT: Well, I didn't hear anything in what Dr Hewson said that is very much more than simply more words. He accuses us of just talking, but I mean, it's simply whistling in Dixie or whistling Dixie - whatever his phrase is - to say that we'll somehow compel the United States to do a deal because of what they've done to our wheat. For instance, he talked earlier today about getting access to their sugar market. Now we've been fighting hard and we'll go on fighting hard to get access to their sugar market, but let me say, that sugar market, those sugar programs, are based under legislation in Congress, and I think that Dr Hewson understands that if we got access to that sugar market, so would many other countries. It can't just be a bilateral deal in relation to that sugar policy of the United States.

DOUG WELLER: Dr Blewett, you've just commenced action in relation to this under GATT procedures. Does that amount to a formal protest?

NEAL BLEWETT: Well, we think this is sufficiently a serious shift that we're going to make an effort to attack what has been done through the GATT procedures. Now let me say, the GATT is fairly weak on agricultural export subsidies, that's why we want to get a settlement in the Uruguay Round which will begin to wind these subsidies down, but there are rules in the GATT for the standards under which these agricultural export subsidies are used. We believe that what the Community, the European Community, and now the United States are doing, are really going beyond those rules, and, as in most of our actions, we will try to rally allies to this cause.

You see when Dr Hewson talks about Australia taking on the United States, it might sound good here and it might get him a bit of support round Australia, but the effective things we've done have been done in a coalition of countries. For instance, we got into the Japanese beef market, not just by ourselves, but by working with a group of countries to get the Japanese to change. We've managed to have a major role in the Uruguay Round because we work with a whole group of non-subsidising agricultural exporters. That's the way to go. To work with - for middle powers like Australia, you don't just - if you just make a noise to the United States, they won't take much notice. What you've got to do is work with other countries to get these things changed.

DOUG WELLER: Dr Blewett, the United States Embassy in Canberra told me, this afternoon, that the US will seek assurances that nations like Australia will not be disadvantaged before selling to our traditional markets. Does that mean anything or is that just more words?

NEAL BLEWETT: Well, I think that is the most important part of the American response on this particular wheat issue. I've looked at the details of that, and there are fairly firm commitments by the Americans that they will take concern for the interests of the non-subsidised - not just us - but they refer specifically, at times, to Canada and to the South American countries as well as to Australia. Now, we've got to make sure that in the particular markets affected, the Americans will, in fact, honour that commitment. I mean, a lot of the work our people have been doing and the wheat people have been doing, is to try and get some understanding on these matters.

Now, the Americans have said, in relation to India, in relation to Pakistan, in relation to South Africa - some of the new areas which they've moved into and which we are very critical of because, here, they're going up beyond some of the markets they've been moving in the past - but they've said in relation to those markets that, in their negotiations, they will take concern for the non-subsidisers. Now, we've got to make sure they're not just words. I mean, I think that's a good line to go down. I hope John Hewson will support us, there, to try and make that commitment by the Americans really mean something in terms for our wheat farmers.

DOUG WELLER: Dr Blewett, thank you.

ELLEN FANNING : The Acting Trade Minister, Neal Blewett, on the line there to Doug Weller in Canberra.