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

by leave—I have the pleasure to make a ministerial statement to update the House on developments with the WTO Doha Round of world trade talks, and the meetings I attended at the end of July in Geneva to attempt to conclude the main negotiating phase of the round. This is my sixth ministerial statement in the House setting out the way in which the Rudd government has recalibrated its approach to trade policy. I want to concentrate today on why, as a result of the Geneva talks, we are now closer to concluding the Doha Round and why we must now finish the job.

The decision by WTO Director-General Pascal Lamy to bring ministers together last month in Geneva was not without risk—it was a bold call, but it was the correct call and I said so at the time. We had called for this ministerial meeting—we had actively lobbied for it, including at the May meeting of APEC in Peru and at the informal WTO meeting that I chaired on the margins of the OECD meeting in Paris in June. Today, whilst I cannot report to the House the breakthrough from those Geneva talks that I and others had hoped for, I can report significant progress:

• significant enough to cause, in the immediate aftermath of the breakdown, calls to resume the talks to achieve resolution of the outstanding issues.

After 12 long and exhausting days of negotiations, the vast majority of issues in the negotiations—representing over 80 per cent of the negotiating agenda—were effectively settled. And all of this progress is still on the table. The problem is that 80 per cent is not 100 per cent—and the round clearly requires 100 per cent for resolution.

As I have said before, the Doha Round matters because trade matters. In the post-war period, world trade has been growing at three times the pace of world output. Each new round brings impetus to world trade and that dynamic drives global economic growth. A successful conclusion to this round would bring a much-needed economic impetus at a time of some uncertainty in the global economic outlook. It will also make a big contribution to efforts to address the surge in global food prices.

Having said that, what then was on the table? Agricultural subsidies in the United States would have been cut to US$14.5 billion—a level the United States has exceeded in eight of the past 10 years. Today, in fact, the US can spend several times this sum. As we have seen again this year, without the Doha Round we will get the US Farm Bill. Further, agricultural tariffs in the EU, the US and Japan would have been cut by up to 70 per cent. In addition, tariff quotas for agriculture would have had a substantial boost, in some cases with hundreds of thousands of tonnes of new market access for key products into developed country markets. Add to this the fact that export subsidies in agriculture would have been eliminated forever and there was a commitment to eliminate the special safeguards measure for developed countries in agriculture. These were significant gains in the agricultural sector. On industrial goods, their tariffs would have been brought down in most cases to single digits or to the teens. On services, there was real progress on freeing up markets in a key sector for Australia.

During the July talks, we held a groundbreaking services ‘signalling conference’. Australia had strongly advocated for this conference in the months leading up to the July ministerial negotiations. This conference allowed us to test the concept that a ‘critical mass’ of the top 30 or so markets, which after all represent the vast majority of world services trade, could get together and show their commitment to opening their services markets. In terms of this conference, Australia set the tone by expressing our willingness to consider flexibility in our services offer, conditional upon reciprocal signals from others. At the conference, we heard important signals of flexibility from a number of markets of interest to Australia in key sectors such as financial services, telecommunications, and business mobility and in the limitations applying to foreign equity caps. In sum, we had on the table potential gains to the global economy of very significant proportions across all sectors. Developing countries in particular stood to benefit from these gains. These included not only the general opening of markets and reductions to farm subsidies but specific outcomes such as on tropical products, on the long-standing dispute over bananas and on the gains on offer to the least developed countries. The proposals on the table for agriculture and industrial products alone could result in savings in tariffs paid of more than US$150 billion, with developed countries contributing two-thirds of the cuts and developing countries receiving two-thirds of the benefits. Such outcomes would if realised give real meaning to the Doha Round’s formal name, ‘the Doha Development Agenda’.

Just as we have the concept of common but differentiated responsibilities in the area of international climate change negotiations, a challenge in the WTO is to give effect to the concept of ‘special and differentiated treatment’ for developing countries. My point is that, whilst these are difficult concepts to negotiate in fact, it is necessary if we are to respect the fact that countries are at different stages of development. And with the right political will it is doable.

So why did the talks fail? Unfortunately they broke down over the issue of the developing country special safeguard mechanism for agriculture. Interestingly, the debate was not about whether there should be an SSM—there was acceptance of that—nor was it about whether we could ensure that it did not interfere with normal trade, as there was also acceptance of that. The issue was how we could give real effect to the formula by which that would apply. The truth is that it involves more than just a technical solution to address the problem—we also need political will to find our way through, and Australia is actively working with other key players to find this solution.

The amount of distance that we covered in July and the relatively short distance left to travel does offer hope that WTO members can get back to the negotiating table soon. We were so close and the gains on offer were so substantial that there is a widespread recognition, not just by ministers but, importantly, by global leaders, that we cannot allow the opportunity to slip away. With further and sufficient political will brought to the task, we have a real chance to move forward. The July talks took us closer than we have ever been to our goal and that is why, with this most unusual type of break-up, there is such a compelling case for us to get back together again quickly to finish the job.

I have not given up on the Doha Round but, significantly, neither has the vast bulk of the WTO membership. That is because it is a reflection of how close we got and an understanding by many members of just how close that was. Since the breakdown in talks both the Prime Minister and I have spoken to the WTO Director-General, Pascal Lamy, and to world leaders and trade ministers on numerous occasions, emphasising Australia’s commitment to concluding the round and pressing for early re-engagement. In the aftermath of the talks we immediately set about trying to build momentum to get back to the table. Since then, in all our discussions, we have been advocating a three-point plan aimed at doing just that: firstly, building political-level support for re-engagement; secondly, working at the officials level to find technical solutions; and, thirdly, building support for ministerial level engagement at the appropriate time, and before the end of the year if possible, to finalise the main negotiating phase of the round. I am pleased to say that as a result of these advocacy efforts there is strong support for getting back to the negotiating table.

The discussions in Geneva were significant not only for what was brought to the table but also for the nature of the debate at that table. Through the Cairns Group, which Australia chairs, the developing world has, since the Uruguay Round, had a strong role to play in the talks, particularly in keeping the pressure on the major developed country subsidisers, the US and the EU. This dynamic dates back to when the group was formed, under Labor’s leadership, during the Uruguay Round of negotiations. But the Doha Round has seen a new dynamic at work with the emerging global powers of the developing world along with the United States, the EU, Japan and Australia engaged in what was referred to as the G7 ministerial talks. At the July ministerial, Brazil, India and China, along with the EU, US and the Cairns Group, showed they were strong and constructive partners with a leadership role to play in the Doha Round. Interestingly, there was no north-south division as some had predicted in the July talks. In fact, there was a high level of pragmatism among those developing countries that wanted a deal.

I was very pleased to have been able to work extremely closely with China’s Commerce Minister, Chen Deming, during the Geneva talks. The political and technical complexities of multilateral trade require real global leadership to unlock the way forward. Concessions need to be made; risks need to be taken. That always requires leadership, but China’s positive engagement in the G7 group at the talks was, in my view, an excellent sign that it intends to play a leading role as we move on from the July meeting. The Prime Minister and I recently held talks in China to build on this momentum. I took the opportunity to meet again with Minister Chen Deming and to talk through options for concluding the round. We found an encouraging receptiveness in the Chinese leadership to arguments about the need to re-engage. I am confident that China is committed to achieving an outcome to the round.

Brazil is also a close partner of Australia. As a long-time member of the Cairns Group and leader of the G20 developing country coalition, Brazil has strong common interests with Australia in agricultural trade reform. Again, someone I worked very closely and cooperatively with in Geneva was the Foreign Minister of Brazil, Celso Amorim. We have kept in close contact and, indeed, we are honoured to have him visiting our country this week. I have, in fact, just come from discussions earlier today with Minister Amorim, and I am encouraged by his continuing strong commitment to concluding the negotiations. As a result of those talks we have in fact agreed to continue to work together closely both on the technical front and in generating the necessary political will to finalise the negotiations. We will be issuing a joint statement later today.

India also has a seat at the table of the WTO talks. While Brazil and China were satisfied with the emerging package on the SSM, we did not have the same level of success with India. I am, however, confident that we can engage India to find a solution to the SSM that will also allow world trade in agriculture to continue to grow. Despite its concerns on this issue, India has recently also expressed an encouraging mood of willingness to re-engage. This political commitment, I believe, is matched by key developed country members, including the EU, US and Japan. Director-General Lamy held a successful visit to the United States late last week and was able to report a readiness on the part of the US Administration to re-engage. My recent conversation with US Trade Representative Susan Schwab also confirms this. I have been in close and regular contact with EU Trade Commissioner, Peter Mandelson, who is also doing all he can to support these efforts. I also hope to engage Japan’s Trade Minister Nikai in Singapore later this week to build on the very constructive contribution Japan played in Geneva in July in moving the round forward.

Multilateral trade negotiations are tough but they are also worth fighting for. The Uruguay Round took longer to conclude than the Doha Round has taken so far and it involved a far less complex negotiating agenda. We now have a WTO with 153 members, about 50 per cent more members than during the Uruguay Round. The most recent addition, Cape Verde, was joining the WTO as we were gathering in Geneva in late July. The truth is that this is an institution that countries want to belong to. There are many more players, many more issues and, as I mentioned earlier, a new dynamic with the leadership role being taken by several key developing countries. Decision making in this environment can sound daunting but there are mechanisms that help. Negotiating groups like the Cairns Group and other groups can help the decision-making process. So too can small groups like the G7, because there is a recognition that these groups can help manage the complexity of the WTO’s membership and agenda.

I want to pay tribute to my colleagues in the Cairns Group for their collaborative approach. The Cairns Group met regularly throughout the talks and played a constructive and pragmatic role. I also want to thank the Australian industry representatives who were part of my delegation in July: the National Farmers Federation and other agricultural peak bodies, and representatives of the manufacturing and services sectors. I appreciated their activism, their advice and their constructive role in the talks.

We remain within sight of a conclusion to the Doha Round. What is needed now is a combination of political leadership and technical ingenuity to help complete the job. Doing so would give a major boost to the global economy at a time of significant uncertainty. It would deliver significant commercial gains to Australia right across the board. It would strengthen the multilateral trading system and, whilst it is true we cannot achieve everything we want at the multilateral level, it is important to use the multilateral system to lay the most ambitious platform as the basis for continuing trade reform at the regional and bilateral levels. The government is actively engaged in building the regional architecture. It is committed to FTAs that enhance and build on the multilateral system, not those that detract from it. That has always been Labor’s longstanding policy. It is also what we have moved to secure within the first nine months of office in government.

I have already reported to the House the conclusion of an FTA with Chile, the most comprehensive bilateral trade agreement Australia has ever entered into. We are also negotiating FTAs with China, Japan and the Gulf Cooperation Council. We have FTAs in the pipeline with Malaysia, Indonesia, India and, I hope soon, the Republic of Korea. In fact, I will be attending over the next three days an important and, I hope, final negotiating session for the ASEAN-Australia-New Zealand Free Trade Agreement. This will take place at the ASEAN Economic Ministers Meeting in Singapore. We are also working to build on these efforts regionally and I will be involved this week also in important discussions in the East Asia Summit process. In addition, we are working intensively on a strong forward agenda for APEC beyond the leaders meeting in Peru in November, engaging the next three chairs of APEC: Singapore, Japan and the US. But none of this activity detracts from our efforts to secure a strong multilateral platform for our trade reform efforts internationally, a platform that brings order to world trade and that will boost world trade and economic growth. The relationship that we build at the WTO level creates a level of trust with our negotiating partners that will ultimately boost our prospects for stronger trade reform at all levels.

We stand on the cusp of a substantial breakthrough in Doha and we need these relationships more than ever. Persistence pays with the Doha Round. The world needs a successful Doha Round. The benefits on offer are simply too important for us to allow them to slip away and the platform it creates for further trade liberalisation is too important not to secure.

I ask leave of the House to move a motion to enable the member for Groom to speak for 21 minutes.

Leave granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent Mr Macfarlane speaking for a period not exceeding twenty-one minutes.

Question agreed to.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

Can I say how much I admire the optimism of the Minister for Trade. Speaking as an optimist, I am sure it will take every bit of that optimism if we are going to see any resolution to the Doha Round. I also join him in thanking the Australian industry representatives who were part of his delegation, particularly my old colleagues at the NFF and other agricultural peak bodies and also, of course, the manufacturing and service sector.

It is indeed a disappointment to Australian exporters and the export industry in general to see a breakdown in the Doha Round of world trade talks. The Doha Round represented a rich opportunity for Australian exporters who have much to gain from the continued pursuit of a robust trade liberalisation regime. The market-access gains from a successful conclusion to the round would have been considerable and would have benefited Australia’s traders greatly, stimulating global economic growth from which Australia could profit. The World Bank estimates that full merchandise trade liberalisation could boost global income levels by as much as US$287 billion in 2015.

The coalition understood exactly what was at stake at the Doha Round and had invested strongly in securing a positive outcome in the interests of Australian exporters and to open up commercial trade opportunities for agricultural produce, goods and other manufactures, and services. The Doha Round had the potential to open vast new markets for Australian exporters. Before the ministerial talks, the coalition had laid out objectives that the minister must meet in order to secure a positive outcome for local exporters. These objectives included dismantling farm subsides in the EU and the US; overcoming barriers in Europe to new opportunities for Australian agricultural exports; slashing applied tariffs in all markets; preventing special exclusions for certain products and long lead times; and, finally, ensuring new opportunities for agricultural exports, manufacturing and services in developed and developing nations. So, yes, it is indeed a disappointment that the global free trade talks have failed.

I have not received a briefing from the minister so I do not fully understand the depth of the cuts that were being offered, particularly the cuts to US trade subsidies. But it is my understanding that, based on current commodity prices, those cuts proposed and outlined by the minister may in fact not have had a great deal of impact in current economic times. I was not given the opportunity to understand what the coefficient that was going to be used on tariff reform was going to be set at or what its potential impact on industries such as the automobile industry was going to be. I look forward to having it explained to me what services concessions were going to be achieved, which countries we would get those concessions from and which countries would actually allow us better services access. But all that lies in the future.

Beneath the disappointment lies a fundamental issue: the way this government has pursued trade policy. The collapse of the round held recently in Geneva has exposed the weakness of the Rudd government and its chaotic, haphazard and politically motivated approach to trade. During its nine months in office this government has repeatedly gambled with the futures of Australian export industries and the investors in those industries by taking a narrow approach to trade that has undermined the pursuit of bilateral free trade agreements. The trade minister has told the House today that this is his sixth ministerial statement. But, as with everything we have seen from this government, those empty words have delivered nothing for the Australian businesses and families involved in exporting. The minister has omitted to mention that, even after six statements, the government has been caught out with a flawed trade policy that in the wake of the collapse of the Doha talks has left Australian exporters in a precarious situation. The member for Hotham speaks ad nauseam about being ‘so close’ to a deal on Doha, but we on this side of the chamber know that ‘so close’ is nowhere near good enough. Do you think the Australian pace bowler Stuart Clark takes solace after every delivery by saying to himself, ‘That was so close’?

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

You never got on the wicket!

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

Madam Deputy Speaker, I did not get on the wicket because the Minister for Trade, who is at the table, did not have the decency to invite me, despite the fact that the previous government took him to trade negotiations on numerous occasions.

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

Did not!

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

I will check the record for you, Member for Hotham, and see what it comes up as, but I understand you did quite well. That aside, there is no point rehashing what could have been. We need to give some comfort to our exporters by showing them that this government has something to deliver to them in the future. The minister cannot lament what could have been. He is in the position to effect change and must take responsibility for trade policy. He cannot hide behind reviews and David Mortimer forever.

The minister is correct in what he says about trade: it does matter. It matters a great deal. It is a pity that he has not carried this through in delivering a clear, coherent trade policy that allows exporters to plan with certainty and apply for EMDG with certainty. Instead of embracing a broad and comprehensive trade policy that incorporated both Doha and new free trade agreements, the Rudd government has taken a policy approach that has dismissed the benefits of FTAs and so compromises the opportunities available to Australian exporters. Exporters are now paying the price of a policy based on Labor ideology rather than on an understanding of the reality of world trade reform. The trade minister’s inability to put forward a coherent and achievable trade policy has left the Rudd government scrambling for a backup plan while Australian exporters are left high and dry. Remember that it was department officials who told Senate estimates in June that they had not been instructed to work on a backup plan should the Doha Round talks fail.

We have repeated evidence of the contempt in which this government has held bilateral free trade agreements. The Prime Minister claimed in 2006:

Multilateral trade liberalisation must be prioritised to number one, two and three—bilateral FTAs come in my view a distant fourth.

Then in 2007 the trade minister said before this House:

Bilateral trade deals are a very poor second cousin to multilateral or regional agreements.

But, while this government has been playing Russian roulette with the livelihoods of Australian exporters, free trade agreements negotiated under the previous government continue to deliver for exporters. The coalition government delivered FTAs, including those with the United States, Thailand and Singapore, and also did the heavy lifting on the preparation of the Chile FTA.

The US FTA is delivering real benefits to Australian industry and consumers. As well as providing enhanced market access for Australia’s services, manufacturing, agriculture and resources sectors and progressively eliminating tariffs on goods, it also works to make these sectors more productive by stimulating investment. Although the US FTA is in its early years, exporters have already taken advantage of the improved access that it provides, with significant increases in our dairy, lamb, mutton and orange exports.

The government cannot continue to base its trade policy on ideology. After nine months of reviews and policy confusion this government must get serious about trade policy. The Minister for Trade and the Prime Minister cannot cut and run or hope for the best.

On top of Fuelwatch, ‘grocery watch’, ‘childcare watch’, ‘obesity watch’, ‘alcopops watch’, ‘job-loss watch’, ‘tooth watch’, ‘pension watch’ and a whole range of other ‘watches’, we now have ‘trade watch’. There is simply too much at stake to just stand there and watch. There are enormous opportunities available for Australian exporters with a range of trading partners, especially China and South Korea—a market that a non-government study has shown could be worth an extra US$22.7 billion to Australia’s GDP. But they are not gains that can be won by an expensive photoshoot or by offering a token reference to bilateral agreements during overseas trips.

I agree with the member for Hotham, who, 12 hours after the Geneva meeting, stated that the breakdown in the Doha Round does not bode well for the Copenhagen summit on climate change next year. He conceded:

… if you think about it, we’re just about to get into the climate change discussions.

…         …         …

If we can’t resolve trade talks that recognise the balance between developed and developed countries and get stuck on a single issue, we’ve got to find a better mechanism to take this forward …

Unlike climate change negotiations, which essentially impose costs, Doha trade talks are about creating winners, especially in developing nations. The Doha multilateral trade round highlights the perils of reaching a global climate change deal without China, India and Brazil. As we work forward, we must not be deluded about just how difficult the tasks of resolving the Doha Round and achieving multilateral climate change reform are going to be.

Despite international support, the Doha Round of multilateral free trade has collapsed. And so the Doha Round rolls on unresolved, which is why the coalition government pursued FTAs and why the coalition opposition continues to pursue the policy that trade negotiations need to be based on both multilateral and bilateral trade reform. The World Trade Organisation remains an important framework for delivering further trade liberalisation. We should not resile from our commitment to trade liberalisation or use the breakdown in the Doha talks to fragment any other policy. We must work harder on free trade agreements, and the government must act quickly before Australian exporters pay the price, yet again, for its current policy chaos.