4 March 2009
Abare Outlook 2009 Conference
Subjects: Questions from the floor - Minister for Trade Simon Crean and WTO Director-General Pascal Lamy
QUESTION: ...Australia, we are losing face. We're losing our children off the farms, they're not staying. We're losing our capacity to farm and now we've got - we're importing more food than we're exporting. And I think we've got a real serious problem in Australia with our foods committee(*) and our ability to feed ourself as we go on.
What's happening is that we're losing our capacity. People are moving away from the farm and selling their water off to farmers, so that land is not going to be available to come back into production.
And I don't think we can wait until 2015. I think that too impairable damage is happening now. Thank you.
SIMON CREAN: Well, we don't want you to wait until 2015 either and that's why we've been pushing so hard. In fact, when we came back into office this was the immediate priority. And I think in terms of the initiative that was taken in Davos in January of last year, that was a significant kick-start again to the Doha Round. You might call that when we were meeting last time, we were meeting in the context of skyrocketing food prices as a reflection of this imbalance, this structural imbalance, supply and demand; and how much the world has been turned on its head since that time.
Look, we know it's not the level playing field. But that's why the whole purpose of these negotiations is to try and make it more level. No one's pretending that Doha is the best outcome that we would like. But it is achievable and it's significant, and importantly it's a platform.
But not to be deterred from the July frustration, we proceeded immediately to conclude the ASEAN agreement. Now ASEAN is a group of countries, is our biggest trading partner - $18 billion in two-way trade. It's bigger than China, bigger than Japan, bigger than the US. These are the market access opportunities that we are striving to open so that competitive, efficient productive agriculture can participate and you can get market access.
But the other point I think is terribly important, don't just think of agriculture and what your kids do as being confined to producing the commodity. The services dimension of agriculture is another comparative advantage for this country. The opportunities, whether it's in value-added food manufacture and in the context of our dairy industry, and the recent Chinese scare with the poisoning. Think of the potentials if we think investment in other countries, not just sending commodities to other countries or products to other comun... countries.
And then of course there's the whole service dimension of the agriculture sector; land management, dry land farming, water management, all of these things are the expertise that we've got to nurture.
Now that requires us, as Government, to invest int he infrastructure, the broadband rollout, the technology and the skills development.
And that's what we're doing to sus... to support the sustainability of your sector beyond the commodity base. Not moving away from the commodity base, because we do have to concentrate on it, but doing more with the commodity base and opening up the market opportunities, not just at the agriculture tariff level, but the behind the border issues that could otherwise constrain the opportunities in the services sector.
QUESTION: Andrew Stoeckel Centre for International Economics. I wrote down a thing that - question to Mr Lamy. You said trade was going to decline and that's - and the train has basically left the station, and that's going to happen whether we like it not, and it's true.
And really our challenge is the trade policy to make it better. And will - can trade policy make it better or worse? And the thing there, of course, that's just holding the line, is going to be an enormous challenge. We've seen the buy American provisions and this radar screen that WTO is going to have is - seems to have caught on. And so yesterday's Financial Review, the bottom right hand corner, there was the unions putting forward a buy Australian sort of program. And this is all protectionism, it all restricts trade, it's all costly.
And part of the trouble, is and why there's no Doha deal now is, really there's not much on the table to take it away from the table. To bring it back to terms of these people, you know, I mean this is a country, where here this is the world's largest producer of sheep meat. You come from Europe. Europe is the world's largest consumer of sheep meat. Now what's on the table is basically one extra lamb chop per person, per year.
Now you and I know that that's pathetic. And so there's no diagnosis in your address in terms of why is that so poor? What is the real political situation and why can't we change that?
So question one is really, well, what are you going to do about that? Just another sort of forceful message to the G20 is not going to do it. Within 36 hours of the last G20 meeting in November, Russia and India put up to - some tariffs. So even though they declared they wouldn't put up tariffs, that isn't [indistinct].
So these messages, so, why do they need to be made, there's got to be a better strategy.
So, my second question, is why is it that you don't - there is another strategy that could work and those countries that have tried this strategy have gone to freer trade.
And that strategy is one where they've actually measured the benefits and the costs of those trade barriers to themselves in a way that they've understood.
Now one of your predecessors Oliva Long(*), put out a little policy report on this, on trade policy transparency. And this doesn't replace the negotiations or anything, it would supplement, it would add to it.
So my question is, why is it that you have chosen not to push that strategy forward?
CHAIR: Thanks Andy. Pascal.
UNIDENTIFIED MALE: [Indistinct] brief reactions to that?
PASCAL LAMY: First, and I read your piece about transparency and I think I even wrote you a letter thanking you for this piece and giving you a few observations.
I disagree with this premise of yours that there is not much on the table. One of the reasons why we have a difficulty including this round is precisely because there is a lot on the table. And any serious research in numbers would show that dividing, by two, the amount of duties collected worldwide is not negligible.
It's a huge package. And if you look at tariffs and subsidies, just to focus on Australian main interests, the economic value of what's on the table, at this stage, which need to be topped up to conclude is three times the value of the [Indistinct] round.
So please look at the numbers before starting from an assumption that there's not much on the table.
Second, on the G20 prescriptions, the dominations, whether or not they're serious about their commitments are true. India raised a bit of its tea tariff from five per cent to nine per cent, whereas their band tariff is probably 30 or 35. So not a big sin. Okay it's more than just keeping where it is, but not to a big magnitude.
Russia you're absolutely right. Russia happens not to be a member of WTO yet, so the notion that they would be bound by international disciplines has probably yet to percolate into the Russian system the way it has percolated in other WTO members.
Now, your final point, and I know your views on this, and it's perfectly legitimate, respectable and rational academic argument, which is that if all countries were all intelligent they all would do unilateral trade liberalisaton because this is what benefits their economy and their consumers. In the ideal world of academics and science this is a truth.
It simply happens that in all WTO members, or nearly all, in order to do that you have to go to your parliament and the number of parliaments that would agree with the notion that the right thing to do in trade policy is disarm unilaterally, 99.5 per cent of parliaments of this planet will say no.
And that's the simple condundrum we're in, which is why we need negotiations, trade-offs so that Governments, when they want to open more their economy or where they want to discipline the level playing field which plays nice to some constituencies and terrible to other constituencies, they need to be able to show that overall the sum of cost and benefits, gains and losses, is the right one. Which by the way is not that difficult to do, because by definition if you create more efficiencies, at the end of the day you've got more to share than the sum of the concessions which you don't.
So that's the political reality within which we are operating. Now does this mean - and I go in new direction - does this mean that the WTO, or more precisely the WTO Secretariat could not do more in analytical work in education, numbering, substantiating this notion that opening trade creates more benefits than costs? You're absolutely correct on this. We should do more. But - but we need our members to give us the necessary margin of manouevre to do that.
We don't want to be quoted on this, but just give you a fact. Three years ago one of our members asked us to work on a study on the consequence for textile, including trade on this planet of the elimination of quotas. Another of our members strictly and definitely opposed that. We remain member trader, and until and unless our members are sort of - have a wider conception of what we can table in terms of analytical work, we have to be extremely careful.
And this is something which if organisations think things like this one and others, and there are many good places where good people know about good trade policy, if they can help us convincing our members that putting a bit more of this intellectual material on the table would serve us all, I'll be with you.
CHAIR: Thank you. On that very realistic and hard note, I think we have to close our session. Our guests have a sharp time frame to work with. Can you join me all in giving thanks in the normal way. [Applause]
[ENDS]
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