4 February 2009
Radio Interview - BBC World Today
Subjects: Buy America; trade retaliation; European dairy export subsidies
INTERVIEWER: President Obama seems to have backtracked on this Buy America clause. Does this settle the matter?
SIMON CREAN: Well, I think it’s a very important signal from the President because not only does it show he’s heard the concerns that we and others have raised about the Buy America campaign and steel restrictions, but his statement shows a real commitment to openness in world trade. And so apart from the specifics of the Buy America campaign, the commitment to openness in world trade is a very important signal to be sending in the current circumstances. But the reason for that is that world trade is a stimulus. There isn’t much point calling for coordination around the world in fiscal stimulus packages for domestic demand unless you’re going to also enhance it through the multiplier that is world trade. World trade grows faster than world output, if you’re going to put the effort into the fiscal stimulus you’ve got to enhance it through world trade and that’s the challenge now to get Doha concluded so that we can enhance the multiplier to domestic impact.
INTERVIEWER: Mr Crean as you know economics is one thing, but politics is another, at a time when the world is facing recession how strong is the temptation for countries to pursue protectionist policies?
CREAN: Well, it’s very strong indeed and that’s why we’ve got to use the peer pressure but also the importance of why it’s wrong. And it’s not just wrong because protectionism closes markets. It’s wrong because it sets back the agenda in terms of trying to advance the positive side of the equation. What we’ve got to do is to not just rail against protectionism, that’s important to do, but we have to keep reinforcing the dynamic that trade flows are to world economic recovery.
INTERVIEWER: But protectionism to some extent is tied to jobs, at least those who argue in favour of it talk about the loss of jobs and the American economy is clearly bleeding. How long can President Obama resist moves of what is very clearly a very aggressive Congress?
CREAN: He has to resist it because it invites the retaliation. And what’s the point of America saying “all steel has to be produced here” if Korea then starts putting bans on US autos, or US beef. It’s that retaliation that will send the world into a downward spiral, it will worsen the global crisis that we’re already in. So that’s the immediate answer to your question, and I might say the same problem is true in terms of the EC (European Commission) and what they’re doing with dairy exports. So let’s not just put all the focus just on the US here. The EC are to blame as well and that will invite retaliation and there are already signals that the US is going to embark on a retaliation with dairy. Now, we’ve got to stop this mad rush to the bottom, but it’s not just a question of railing against protectionism, it is showing that there is a positive to growth, growth is a stimulus. Everyone is searching for the stimulus that is going to give us global economic recovery. Fiscal stimuluses have been called for, the monetary stimulus through the reserve bank and reductions in interest rates, we have to multiply the impact by opening up trade not closing it down.
INTERVIEWER: So Mr Crean do you then share perhaps the frustrations of some of our listeners from developing countries, countries that cannot retaliate, who look at the subsidies that are given to European or American farms and farmers?
CREAN: I sure do and this is the whole reason why I’ve been a consistent advocate as chair of the Cairns Group, a group of countries around the world that are committed to the reduction in these subsidies and supports. And bear in mind, if we conclude the Doha Round, export subsidies would be outlawed. At the moment they’re legal, so no one’s saying that what Europe is doing is illegal, that’s not the point…, it sends a terribly wrong signal, just as bad as the Buy America campaign, but under what we’re trying to achieve, they wouldn’t be able to be accessed. And this is why it is so important that in this time of great crisis facing the globe we should understand the real opportunity there is now. Seize the moment, move forward in terms of what is going to be an important stimulant, and most significantly an under-pinner of sustainable economic growth going forward
INTERVIEWER: ….thank you for time.
CREAN: Thank you very much.
[ENDS]
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