Interview with Tom Miles, Reuters

Subjects: WTO negotiations, trade facilitation, agriculture, services negotiations, plain packaging of tobacco.

Transcript, E&OE

5 October 2012

TOM MILES: I gather you’re here for a couple of days and you’ve been in Turkey. Can you just tell me anything about progress in talks? I guess it’s all about trade negotiations at the WTO.

CRAIG EMERSON: Yes. What we are trying to do is activate the agreement that was reached in December of last year at the so-called MC8 to look at new pathways for completing the Doha Round. Or, in alternative language, ‘fresh and credible approaches’, which involves breaking the Round up into its constituent parts and allowing those negotiations to proceed where there is a prospect of them coming to a fruitful conclusion. Importantly, therefore, to break all the conditionalities for most of them that had metaphorically caused a logjam, because everything depended on everything else. And if one thing didn’t move then that prevented everything else from moving. And so the idea is to recognise that we had come to a logjam on that path and to find other pathways.

The way that’s manifested itself is probably twofold: one is an emphasis on the negotiations on trade facilitation, which is to make it easier for products to enter countries, to get through their customs procedures, to get off the wharves and into their final destinations. We, Australia, identified this issue, with other countries, as one where there weren’t really winners and losers. Everyone’s a winner, because if you’re an importing country and you improve those processes you reduce the costs of imports, which for consumer goods is useful and valuable. For producer goods, with the increasing tendency to have production organised through regional and global value chains, you’re keeping costs down and you make it more possible to participate in those regional or global value chains. That’s one set of negotiations. There is a proposal to add into that some modest progress in relation to agriculture — that is, some particular aspect of agriculture, where again, the ideas have been defined by feasibility rather than picking issues on which no early agreement is likely and therefore stymieing progress.

The second part, or manifestation, of the new pathways is where we are, right next door, and that is the so-called ‘services plurilateral’. We now have around 45 countries if you count each of the Member States of the EU, involved in the services plurilateral, who are responsible for 70 per cent of global GDP and 70 per cent of global trade in services. And there there’s been good progress in settling the so-called architecture, or the design features, of this agreement. That, then, paves the way to get into the actual negotiations. A lot of work has been done on this in the past so we are not starting from scratch. But the idea again is to get a credible agreement and expand that in two ways: one, in ambition; and two, in membership. It’s generally agreed that this needs to be capable of being multilateralised so more and more countries would join. There is a model for that with the Information Technology Agreement and the Government Procurement Agreement. Both are under the auspices of the WTO; both are plurilateral; both have been expanded in scope and membership over time. So we can see a model way of proceeding with a services plurilateral.

MILES: On the first half, on trade facilitation and agriculture, have you given yourself an easy ride and been just talking to the coalition of the willing who think it’s a goer? Or have you also been talking to some of the more difficult ones, the holdouts, the Indians, the LDCs?

EMERSON: No, we’ve covered, through the discussions, everyone. I don’t feel in a position to go into detail about the nature of those discussions. But I didn’t come here to do the easy work and let others to do the hard work. I came to lend support and encouragement and to talk to those countries or grouping of countries who may be apprehensive and give them some reassurances. For example, in the area of trade facilitation, as important as it is — and it is estimated to account for about 44 per cent of the total potential benefits of the Doha Round — there is an understandable anxiety that people don’t pack up their tents at the end of a successful negotiation and leave unattended all of the other issues, which are of great interest to developing countries, including LDCs, such as agricultural market access. So that’s an assurance that we will give, for Australia, and I’m very happy to talk to other countries about giving. And I did report that I have never heard any country saying that this is a strategy for getting a harvest and cutting and running and leaving. But understandably they are looking for that sort of assurance and I think it can be provided.

MILES: Australia is an unusual player because it’s a developed country but, on the other hand, it is in favour of major agricultural reform. Have you spoken to the Europeans and the Americans about this agricultural plan? Do you think they might go for it? It’s just been launched so recently.

EMERSON: Yes, it has. That work was done before I arrived. The Brazilians, the G20, have already been in discussions with the EU and the United States. There aren’t any stop signs in relation to the proposals that have been floated. That is because the proposals were designed with the possibility of stop signs in mind. They’ve navigated a course that doesn’t involve getting stopped. They’re not, by any means, the whole deal on agriculture, but they are designed to be on issues on which progress can be made without causing major trauma in some of the big countries, including even as practical as not requiring necessarily any legislative change. If you need legislative change, you’ve got to say to the opposition and to the broader business community why you haven’t done the rest. I can’t say that in no instance would there be any possibility of legislative change, but I’m giving that as an example of the sensitivity that has been applied in coming up with some ideas, for example, in tariff rate quota administration.

MILES: Alright, and also in terms of scrapping export subsidies for agriculture?

EMERSON: It’s not in that. That would require legislation.

MILES: Oh right. So is that off the table?

EMERSON: No, it’s not off the table. It’s just not in this augmentation of the trade facilitation package. It’s not off the table by any means, but it does have the feature that it would require governments to go to their parliaments and the extreme likelihood of their parliaments then asking the question of what that country gets in exchange for it. And what that does is rebuild road blocks.

MILES: Right. Is there a chance you could get to a trade facilitation deal where everybody agrees on the text but it’s not actually implemented because there is not yet a wider political deal? Is that feasible?

EMERSON: I think that’s something that is not an immediate concern. It’s more that in order to get an agreement on trade facilitation, developing countries, including the least developed countries, would need to feel confident that they have the support for building their capacity to conform to the agreement they have signed. And that means streamlined customs procedures and so on. And that means support from international agencies such as the World Bank, the African Development Bank and other regional development banks. The task here is to strike a balance. In an ideal world, a pre-commitment of a set amount of money from each of those institutions and pouring it into a fund. Well that’s not going to happen. Or, on the other extreme, a statement of noble intention but with nothing behind it. We need to find a middle path that gives genuine comfort to countries who understandably might be worried that if they sign up to an agreement without any support, they may not be able to comply with the terms of that agreement.

MILES: I think the Europeans were saying that the WTO should aim to fill the time between now and Bali, which is 14 months away, to get a deal. Do you think that is a feasible?

EMERSON: I just said in the meeting there that I am neither a young nor an old Trade Minister in terms of longevity. I’ve learnt enough that setting deadlines, which is a perfectly understandable human trait, can actually prejudice outcomes. So I’ve moved from the desirability when I was first appointed Minister of saying that we want something done by the end of the year or the middle of the year, only to find that that prejudiced the successful conclusion of negotiations. But that doesn’t mean that we are sanguine and that negotiations should just trundle along at a very slow pace. It just doesn’t seem to have helped in the past to set deadlines.

MILES: But is it feasible — not desirable but feasible — to think about some deal before Bali or at Bali?

EMERSON: Well, what’s feasible is literally what’s in the minds and the wills of the participants. We want to have those participants in the best possible disposition. And if we start setting deadlines and telling them to go harder and faster, that could actually be prejudicial to any successful outcome.

MILES: Moving to services, have you got to a stage now of agreeing on some kind of structure?

EMERSON: I don’t know that any last detail has been hammered out. But now it’s not looking like it will be an impediment to the actual negotiations. So that’s a good thing.

MILES: Will it be more of an open structure, something that can be expanded and multilateralised and put into more ITA than GPA?

EMERSON: Yes, it’s as plurilateral as the ITA and the Government Procurement Agreement are, and both of those have been expanded over time in ambition and scope and in membership. That’s what we see as the model for the services plurilateral. We still retain strong ambition that it becomes multilateralised. The design features will be sensitive to that. But the most important thing is just to get on with it. There is a very big meeting going on right now.

MILES: So is it a negative list or a positive list?

EMERSON: Well, it’s a hybrid. I don’t want to get into exactly how it would work. It’s a workable solution that takes into account everyone’s interests. They seem to be now pretty confident that, if not in the last bit of detail, they effectively settled the design features. Then we move to content.

MILES: So are we going to cement these design features and have an end of the architecture design stage. Will there be a declared end of that? Is there a possibility it can be reopened? When do we move to content?

EMERSON: We’re moving to content now. Is that fair enough?

BRUCE GOSPER: Yes. I think there will be another meeting past this to finally settle elements of architecture. The content is obviously interwoven in discussion, as you would expect. And sometime early next year people will be ready to move to a more substantive negotiating phase.

MILES: So early next year we can look forward to negotiations starting on the actual ‘what’s in it’?

EMERSON: Yes, and because these aren’t sequential matters I’m sure there will be plenty of informal discussions about the potential content of this agreement. That won’t start on the first of January next year. People will be thinking about that now so we’re not in a world where the architecture needs to be finalised in the last word in a document before anyone starts thinking about what this agreement might look like.

MILES: Right. And just to put it in terms that the layman can understand, what would the services deal mean for an Australian? Does it mean you want Australian doctors to be able to jet over to Europe and plug straight in, or lawyers?

EMERSON: Ultimately, but my own view is to nail down something that is achievable, that might bind some of the activities or present practices, without necessarily immediately diving into areas that are very difficult, so that we can establish a credible foundation for the agreement and then build on it over time. And I think that’s better than spending many years getting the perfect agreement with the perfect level of ambition and doing nothing and settling nothing until that happens. That has been one of the defining features of the Doha Round that has led us nowhere.

MILES: You talk about multilateralising but, as far as I know, nothing has ever been multilateralised from a plurilateral. What gives you the confidence that services, for example, could?

EMERSON: It will be a preferential agreement. It does mean that others coming in would have to make similar or the same commitments. Whether they do or not, time will tell. But there will be advantages in being in that agreement. It already, in terms of membership, covers 70 per cent of global GDP and 70 per cent of global trade in services. That’s likely to be a club that people would want to join.

MILES: But it won’t have any benefits for those who are on the outside?

EMERSON: No, because it is preferential. Perhaps that answers your question. Because it is preferential, would you rather be outside that tent or inside the tent? It doesn’t mean that there’s anything automatic about it being a fully multilateral agreement. But there are incentives for non-members to become members of the agreement.

MILES: And, would they have to buy their way in or just come up to standard?

EMERSON: We haven’t even discussed that. We’re just in the philosophical camp that we would be very happy for it to be multilateralised. That’s a signal that we are sending to everyone. It’s a signal that’s being received. Just in the last little while Turkey has joined this negotiation, a very substantial and rapidly growing country with a lot of credibility around the place. And Panama is attending its first meeting.

MILES: When did Turkey join?

EMERSON: They announced their attention after the summer break. They weren’t in the group that put out the statement before the beginning of the summer break. So it’s quite recent but we have known for at least a month that they were coming in.

MILES: Any chance of getting Russians in?

EMERSON: It’s up to them. We haven’t actually gone around knocking on doors. We’ve just got a general ‘welcome’ sign up.

MILES: How do people know what’s on offer without joining up to the club?

EMERSON: Again that’s up to them. There’s no secret in this. It’s not a closed forum. We’re happy to share with everyone. One of the undertakings that Australia has given is that we brief other countries on the negotiations as they are occurring, so it doesn’t have any sense of exclusivity about it. It is a voluntary decision by countries not to join at this stage. But they don’t have to fill out lengthy application forms or anything. Just turn up, in good faith.

MILES: And on trade facilitation, it’s obviously a great idea. It could be a good idea for countries that join. But it may not get multilateralised because some linkages and niggles on the negotiation front. So if you can get text, why not start off by plurilateralising that? I mean the people who are willing to do it go for it and open up on an MFN basis, obviously, because you’re offering that benefit to everyone.

EMERSON: Well, we’re more optimistic than that. Sure, there are some countries who still would prefer the whole package to be done as a single undertaking. Our response to that is that 10 years is long enough to demonstrate that the single undertaking is not going to work. So it’ll be a matter for those countries who still think that there needs to be quite dense and quite complex linkages to other negotiations to change their attitude. But there is very strong support for the agreement subject to the resolution of some of these matters such as giving developing countries, and especially the least developed countries, comfort that they will have the support through regional and multilateral financial institutions to be able to meet their obligations under the agreement. This is important capacity building.

MILES: OK, well I think that wraps up what I wanted to ask you about the negotiations. I have a couple of other small questions. One is about the tobacco cases, one case with three different opponents. Is there anything you can say about where things are? It looks like it is definitely going to court, basically.

EMERSON: Yes, that’s right. The second request for a panel has been made by the Ukraine, so a panel will be formed and we’ll be obviously engaged in those processes as we have in the past with great vigour. We are very confident that this measure is fully compliant with our obligations and so we’ll let that take its course. I did meet Margaret Chan, the head of the World Health Organization (WHO), yesterday and she assured Australia of the strong support of the WHO for what we are doing.

MILES: Okay. Do you think the other two – Ukraine has already gone to litigation – Dominican Republic and Honduras, do you expect them to do the same thing and join the Ukrainians?

EMERSON: That is literally up to them. That is, they haven’t yet requested the formation of a panel. If that does happen, we are unlikely to agree to that first request. If it then becomes the second request and a panel is formed there are efficiency benefits in having it as a single hearing, but we can’t control that.

MILES: Okay. And the last thing I want to ask about was Lamy, you know his successor. The race for his successor is going to be open in December. Not asking unless you want to, to name a horse in that race or a favourite candidate.

EMERSON: I don’t know the field.

MILES: Right. You haven’t been reading my stories.

EMERSON: Hard to pick a winner if you’re not sure of who’s in the field.

MILES: I can tell you, but I wouldn’t want to embarrass you by putting you on the spot. Given the position is obviously an important one but it’s got quite limited sort of specific powers. What would you want to see somebody coming to that job doing? What sort of attitude? What sort of person would you want to see?

EMERSON: Passionate, commitment to the global trading system and someone who has the negotiating skills to be able to merge the inevitable divergent interests of the membership, which is now more than 150 countries. You know, it’s a long time since two or three major groupings could determine the outcome of any negotiations. And that means that the whole process of getting agreement is much more complex than it was even a decade ago. And it will require extraordinary skills. So good luck to the field whatever it may be.

MILES: Lamy has got quite a specific … I mean he’s sort of put his mark on the organisation and is very much associated with the Doha Round, which is obviously, well you can’t say it but I will, dead as a door nail.

EMERSON: I can’t agree with that.

MILES: Okay. What do you think should be the attitude of somebody who comes into the job in terms of the trade negotiations? Assuming you think that they have a role to steer it.

EMERSON: This new pathway is, we think, the way to go. That makes, we think, the negotiations more manageable. It will remain true that some of the most difficult negotiations will still take time. But that shouldn’t prevent the conclusion of negotiations where they are capable of being concluded.

MILES: Okay. Anything else you want to say or you think I should know.

EMERSON: No. We’ve covered the field whatever it is.

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