Simon Crean (Hotham, Australian Labor Party, Minister for Trade) Share this | Hansard source

by leave—I am pleased to inform the House of important progress that has been made in our efforts to conclude the Doha Round.

Last week in New Delhi, the Indian government hosted a trade ministers’ meeting, which was significant for two reasons. First, 35 countries attended, meaning that this was the most representative meeting of trade ministers since the Doha talks stalled in July 2008. Ministers were not just there in their own right, but also representing all the significant groupings within the WTO. Second, with India as the host, it represented the significant re-engagement of India, which was seen by many last year as an obstacle to conclusion.

Arising from New Delhi, significant and strengthened political momentum was injected into the Doha Round negotiations, with a direction to chief negotiators to intensify their efforts next week in Geneva. There was unanimous recognition that we are in the ‘end game’ of the Doha Round. There was unanimous support for a new and broad based commitment to intensifying negotiations to conclude the Doha Round in 2010—a commitment to not only focus only on the agriculture and NAMA issues, but negotiate horizontally across the range of Doha issues, such as services, rules and trade facilitation.

This outcome from New Delhi built on momentum from the significant re-engagement of the round since June this year. The outcome in instructing chief negotiators to meet next week is designed to enable significant progress to be reported to the G20 leaders meeting in Pittsburgh later this month.

The outcome of last week is another hard won outcome. It has come after long periods of strong and sustained advocacy by Australia. For the last 18 months this government has done everything possible to reactivate the Doha Round, to find a way through the obstacles, to work with key players, to find solutions. This government inherited less than ideal parameters in which to pursue Australian interests. This point was highlighted in the August edition of the Farm Policy Journal, which noted:

In 2001-2002, perhaps Australia could have negotiated differently within the Cairns Group and perhaps that might have made a difference

I have not used this as an excuse and just blamed predecessors. On the contrary we have accepted the legacy and tried to build upon it, to fight for gains for our industries and to fight for export markets that will result in more Australian jobs. But the legacy has meant that we have had to work hard to put Australia back at the centre of the world trade talks. We got very close to concluding the round in July of last year—we solved around 80 per cent of the major issues.

Last year the US and India were seen by many as the major players holding up a Doha outcome. Since then, Australia has been at the forefront of drawing these countries back into the negotiations—culminating in the outcomes in India last week. Progress since July last year has been difficult. The timing of the appointment of the new US trade representative and Indian elections have hampered efforts at quick resolution of engagement and quick resolution of outstanding issues. We took the first decisive road back to engagement at the Cairns Group meeting which I convened early in June in Bali, a meeting that is now widely acknowledged as having provided a new boost of political momentum to the Doha Round. A considerable amount of the credit for that re-engagement should go to the host, Indonesia—not only a strong Cairns Group member but also the Chair of the G33, the grouping of developing countries in the WTO. Despite its own elections in July, Indonesia saw the need to show leadership in the round.

The Cairns Group meeting also engaged the new US trade representative, Ron Kirk, and the new Indian commerce minister, Anand Sharma, for the first time—the latter barely one week into the job. That meeting in Bali started the momentum for the new political will needed to conclude—an instruction called for at an earlier London meeting of G20 leaders. The political will generated in Bali was further built upon at a meeting that we hosted in Paris, on the margins of the OECD. Collectively, the results from Bali and Paris fed into the L’Aquila, Italy, meeting, where leaders of the G8 plus an additional eight called for conclusion of the round by 2010. Then followed meetings of APEC in Singapore and ASEAN in Bangkok. These combined efforts prepared the ground for the successful outcomes that we had in New Delhi. Following that meeting, Prime Minister Singh told us personally that India is committed to concluding the round in 2010. He strongly supported us in getting the job done.

Progress has been evident on a number of fronts since July 2008. There have been two important factors in the way forward. First, the impact of the global financial crisis had a significant bearing. Leaders recognised trade is a key ingredient of the global recovery. Leaders have squarely placed their weight behind conclusion of the Doha Round, and the reasons are threefold.

• There is a new realisation of the importance of trade and how central it is to the global economy. Trade is an economic stimulus. Historically, world trade has grown three times faster than world output and each successful trade round has enhanced that multiplier effect.
• World leaders know that Doha offers the best insurance policy against the trend to protectionism, insurance that the world trading system will be reformed and insurance that a robust rules based system will prevail.
• Doha benefits will significantly boost the development of the world’s poorer countries—through tariff reductions and opening of advanced country export markets, particularly on agriculture.

Because of the importance of trade and concluding Doha, world leaders stand ready to become engaged to achieve that objective. So what we have is significant buy-in to the political will needed to achieve this result.

The second point I wanted to make here is that we also learnt the lesson from placing too much emphasis on just one ministerial meeting. As important as the meeting of ministers was in Geneva last July, it seemed to place all our eggs in one basket. It was a significant meeting because the political engagement got 80 per cent of the way there. The remaining 20 per cent has remained elusive ever since. To bridge the gaps we agreed that there should be more frequent engagements by ministers, in an informal way—to reinforce constantly the political will and to give continued and strong direction to negotiators—and in effect to establish an iterative process between political will and the technical solutions to outstanding Doha issues.

Our senior negotiators will meet in Geneva next week with clear instructions to do just that—to resolve issues or to narrow the gaps. The forward agenda will focus on key agriculture and NAMA issues. But it is also accepted that we need to intensify progress across the Doha landscape—services, rules, trade facilitation and other areas. This is the progress that we will report to the G20 leaders. This is the momentum that we must maintain at every opportunity remaining this year—as part of an intensified effort to conclude the round.

I think it is important to use this opportunity to address a couple of issues raised in two recent commentaries on Doha and on trade protectionism initiatives. The August edition of the Farm Policy Journal, which I referred to earlier, makes two key arguments that I wish to respond to. First, it suggests that what is on the table on agriculture is worse for Australia than existing trade opportunities. But nothing could be further from the truth. Doha offers enormous potential gains to Australian workers and Australian businesses, not just Australian farmers. For our farmers, what Doha offers is this:

• Cuts of up to 70 per cent on developed country tariffs
• Reductions of between 70 and 80 per cent in domestic support subsidies for major subsidisers such as the EC, Japan and the US
• For the EC this would mean a reduction from around €118 billion per year to €23 billion per year in support measures
• For the US this would mean a reduction of farm support from US$48 billion to US$14 billion
• The complete elimination of export subsidies by the end of 2013

On this point, last Thursday I met again with EC Commissioner Fischer-Boel to continue our push for the EC to end its dairy export subsidy program—a program that endangers the interests of our dairy exporters. Whilst we seem to have had some success in limiting the impact of these detrimental policies, the fact is that the subsidies still remain. Only the conclusion of the Doha Round would ensure the eradication of these sorts of policies and mean that they cannot be used in the future. That is what I mean when I talk about strengthening and building the insurance policy against the future use of policies detrimental to our farmers.

Beyond the agricultural gains, Doha would mean real market opportunities for our industrial producers and for our service providers. It would mean breaking down behind-the-border barriers to trade. It would make overseas investment easier and more reliable. It would mean jobs for Australians—and it should be noted again here in the House that one in five Australian jobs is generated by businesses involved in trade. Quite simply, the benefits from the Doha Round would be unparalleled and unequalled by any other trade agreement.

• The WTO has said that the round would bring benefits of $150 billion per year in increased trade through reduced tariffs alone
• A recent report by the US based Peterson Institute estimated that the annual boost to the world economy, the world GDP, from Doha could be between US$300 billion and US$700 billion
• Concluding Doha is an economic stimulus that does not require government spending
• Concluding Doha, quite frankly, takes us beyond arguments about exit strategies because it is about building an ongoing and sustainable strategy

With the growing momentum for the conclusion of Doha, and the emerging signs of economic recovery, it is time to strive for more than an ‘exit strategy’ from the global recession. It is time to strive for the higher goal of sustainable economic growth—growth that can create ongoing employment and deliver higher living standards.

The second article I want to refer to from the Farm Institute journal calls into question the role of the Cairns Group. The Cairns Group occupies a unique position in the WTO negotiations, being the only agricultural negotiating bloc that brings together developed and developing countries. Despite this mix, it provides a united, strong voice in the WTO against further agricultural trade distortion. Regardless of criticisms of the conduct of the group in the past, no-one can question the leadership of the Cairns Group over the past 18 months. We convened the group regularly in the lead-up to and during the July 2008 ministerial meeting.

The Cairns Group meeting in Bali this year is widely considered to have kick-started the Doha negotiations. And most recently, in New Delhi, the Cairns Group statement delivered strong impetus to the important outcomes from that meeting. I have heard no calls from farming groups—the very people that benefit from our leadership of the Cairns Group—to discontinue the grouping or to walk away from the Doha agriculture package. The truth is that the Rudd government has no intention of walking away from the Cairns Group—a grouping we initiated over 20 years ago, a grouping that we have re-energised and a grouping which is helping Australia strive for the best possible Doha outcome.

Another publication that came out recently was a paper from the Lowy Institute which recommends further G20 action to counter protectionist trade policies. In particular, I note that the paper calls for greater domestic transparency to counter domestic pressures for trade protectionism—particularly on so-called non-tariff barriers. I agree. But I think we need to go further. This government takes the view that transparency of trade policy development is not just about exposing protectionism—it is also about greater transparency and understanding of the benefits of trade. Put simply, we need to highlight why trade is good, not just here but globally.

As part of my recent intervention at the OECD ministerial meeting in Paris, I urged that further analysis be undertaken by the OECD on the significance of trade as a stimulus both domestically and globally. How expanded trade brings benefits to an economy. How better to quantify that. In the same way that the Australian government recently released a study into the impact for Australia of trade liberalisation over the past 20 years.

What that Australian study showed was that trade liberalisation, along with the structural reforms of the 1980s, and intensified focus on Asia, had been significant factors, along with the fiscal stimulus, in cushioning Australia from the global financial crises. And these are some of the major reasons also why Australia has the fastest growing developed economy in the world. What the study showed was that, as a result of trade liberalisation:

• in the last 20 years, GDP growth has increased by 2.5 per cent to 3.5 per cent (relative to where it would have otherwise been) and
• average household income had increased by $2,700 to $3,900 per annum

We have got to build on that legacy. There is much unfinished business, not just with opening markets but also structural reform and lifting productivity. There is not any point opening markets if countries are not competitive enough and productive enough to take advantage of those openings. The reforms of the 1980s showed the importance of action on both fronts. In fact, the combination of Labor’s reform initiatives led to the biggest step-up in productivity the country has ever seen—delivering productivity gains of more than 3.3 per cent through the 1990s.

We have also widened the focus of our trade agenda beyond agriculture and product markets to include services and investment. Services constitute 80 per cent of the Australian economy and yet service exports represent less than 30 per cent of our exports. Investment is another area of huge potential. I regard it as the crucial new form of trade. Our challenge is to tackle the behind-the-border barriers to these forms of trade, but also to better facilitate investment flows, enabling businesses to get closer to the bigger economic markets and to engage better in global supply chains. So greater transparency by openness in these areas, coupled with greater analysis of the benefits of trade, would be enormously beneficial to our efforts to maximise the flow of a range of Australian exports.

As part of building-in the analysis, we need to build bipartisan support for trade liberalisation. That is why in this parliament I have initiated an organisation called the Friends of Trade, which invites members from all parties in the houses of this parliament to participate.

Of course, it is important to see our work on Doha in context. Doha is our trade policy priority, but that certainly does not mean it is our only priority. This government has managed to balance our drive for Doha with our drive for better regional integration and our drive for key bilateral agreements. Our renewed focus on Asian trade has been a critical part of the cushioning for the Australian economy during the global recession. Our reorientation of trade and diplomatic focus towards Asia gives us greater opportunity as Asia, now more than ever, is emerging as the centre of world economic growth. That is one reason why we have been negotiating greater access for Australian exporters to these markets and also engaging in commercial promotion.

As Minister for Trade I have visited China six times, Indonesia four times and Singapore and Thailand multiple times. I have also visited Japan, Malaysia, the Gulf and Vietnam. We hosted the Malaysian minister here last month as part of that bilateral. I have just returned from India and plan to be back there again at the end of this month. I plan also to travel to Japan and Korea next month. It is Asia where there is growth and huge opportunity in dynamic markets. Australia and New Zealand have recently signed a free trade agreement with the 10 ASEAN nations, and that comes into force on 1 January next year.

Last month in Bangkok Australia worked together with others to push for track 1 status of an examination of a new Free Trade Area spanning the 10 countries of South-East Asia, the ASEAN countries, plus India, Japan, China, South Korea, New Zealand and Australia. This East Asia Summit-wide, or ASEAN+6, would cover three billion people and have a collective GDP of over $US14 trillion. This complements our strong push for bilateral agreements with key trading partners in the region, and I speak here of China, Japan, Korea, Malaysia, the Pacific Islands through Pacer Plus and the Trans Pacific Partnership members, as well as prospective members to those structures. I also hope that this list of negotiations will soon include the launch of bilateral negotiations with India and Indonesia.

I note that a significant factor in this regional engagement is the recalibration on ‘aid-for-trade’ to trading with developing countries. In our view our trading agreements with those countries are more than just agreements. They have to also involve capacity building—ensuring that those developing economies are able to participate more comprehensively in opportunities that more open markets should provide. This can also open new opportunities, of course, for Australian business in the services, investment and value-added aspects of our traditional strengths, beyond just resources—meaning that our competitive advantages are on show in a much greater way.

In conclusion, it is with great optimism that I report the positive outcomes from New Delhi last week:

• the re-engagement of India
• the unanimous recognition that we are in the ‘end game’
• the unanimous commitment to conclusion in 2010
• the translation of political will into specific instructions to senior officials to make it happen, and
• the commitment by ministers to remain involved in the process and, importantly, the commitment by world leaders to stand ready to also engage themselves

These outcomes would not have been possible without Australia’s strategic and sustained advocacy. The Rudd government will continue to use every opportunity to pursue our trade priorities across a range of fronts and will use every opportunity to make sure that we conclude a successful Doha deal. It is too important for Australia and the global economy. We persist in this endeavour with renewed determination.

Mr Speaker, I ask leave of the House to move a motion to enable the Leader of the Nationals to speak for 26 minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent the Leader of the Nationals speaking in reply to my statement for a period not exceeding 26 minutes.

Question agreed to.

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