Ladies and
Gentlemen,
Most
of us here can remember when your country, like mine, preferred to
shut itself off from the rest of the world. Isolated by geography, we
chose to reinforce our isolation economically. It was understandable.
Insulating yourself from a rapidly changing world economy provides a
comforting, albeit false, sense of security. Doing nothing but
'tinker' was always the safest policy, the easiest road.
But
we finally realized that protectionism was a dead-end. It leads to
stagnation and decline. So we chose reform. National champions were
discarded in favour of international competition. Industries were
privatized and markets deregulated. Capital controls were abolished.
Foreign investment was welcomed with open arms.
It
was by no means easy. As we emerged blinking from the shadows into the
bright lights of the world stage, we tottered and stumbled. Turning
back was tempting. Thankfully, we persevered, a rough multiparty
consensus emerged, with key differences of how we did it, who paid,
not why we did it.
Australia
is now entering its tenth year of solid economic growth. Even the
Asian crisis barely dented the economy's performance. For the past
three years, the growth rate has topped 4%. Inflation is low.
Unemployment is falling. No wonder Paul Krugman, the famous American
economist, has called Australia a “miracle economy”. It is an
enormous tribute to successive governments.
There
are many reasons why Australia is so successful. But surely one of the
main ones is its greater openness to trade. In 1990, Australia's
exports came to 39 billion US dollars. Last year, they were an
estimated $69 billion. Ten years ago, imports came to 39 billion US
dollars. Now they are put at $77 billion. Total trade, exports plus
imports, now accounts for over two fifths of the economy. A decade
ago, it accounted for only a third or so.
What
do all these numbers mean? They mean that Australia is much more open
than it was. And because it is more open, it has become richer and a
better place to live. Trade works its wonders in many ways. Higher
exports help pay for goods and services that are more cheaply produced
abroad. The need to compete in world markets forces companies to
become more efficient. And exporting firms provide good, high-paying
jobs. A study by Tim Harcourt of the Australian Trade Commission
(download in pdf format, 23 pages, 164 KB, consult
the guide for downloading files) finds
that exporting firms pay 60% more than non-exporting ones. Exporting
firms also provide more employee consultation, more job security and
more training. In short, they are better employers. The best security
workers have is a healthy balance sheet.
Imports
too bring many benefits. Cheaper food and clothing for working
families. Cheaper and better cars and electronic goods. Cheaper inputs
that make businesses more competitive. And last but not least, new
technologies and greater competition, both of which boost economic
growth.
The
benefits of greater openness are not just economic. I love my country,
and I'm sure you love yours too. But it's great that we can read the
New York Times online, travel to Europe, and sing karaoke. Openness is
not just about getting richer. It's about enriching people's lives by
embracing, rather than shunning, what the rest of the world has to
offer. Opening up, which is basically what that ugly world
“globalization” means, is in keeping with the internationalism
that progressive people have always championed. The Asian crisis could
have turned truly lethal had leaders not stayed the course and had
markets closed. It happened before, during the great depression, which
gave birth to hostile trading blocks and to our organization, which
was created to prevent this. The system worked.
Our
challenge now is to continue to open up. Some people think that
globalization, on which every perceived ill is blamed, has gone too
far. They want to turn the clock back to a golden age that never was.
I'm old enough to remember those times: the stagnation of the 70s when
we lived in glorious isolation. Then, only the rich who could travel
overseas had consumer choice. Trying to go back to those old ways
is not an option.
Just
ask the Chinese. Their decision to join the WTO is momentous. They
have opted for reform rather than reaction. They have chosen openness
instead of isolation. 1.3 billion people will soon be joining the WTO.
This brings us ever closer to being a truly World Trade Organization.
China's long march towards WTO membership is not over yet. There is
still work to do in Geneva to reach agreement on its accession
protocol, which sets out the rights and obligations of WTO membership.
But we are nearly there. It is as Lee Kuan Yew has said, the single
biggest economic and political decision China has made since 1949.
Many
more countries should also soon be joining. Chinese Taipei, Armenia,
Moldova and Vanuatu for instance. Russia and Ukraine are also in the
queue.
These
accessions are one of our priorities for 2001. The other is to launch
a new round of multilateral trade negotiations. I am glad to say that
Australia has been in the forefront of efforts to launch a new round.
Your minister, Mark Vaile, loudly beats the drum for freer trade. He
is right to do so. Halving trade barriers around the world would add
over 380 billion US dollars a year to the world economy, according to
a study by the Tinbergen Institute.
Australia
has many interests in a new trade round. Lower industrial tariffs
would boost manufacturing exports. Services liberalization would help
new-economy companies blossom. But perhaps the biggest gains could
come in agriculture. Farming is one of Australia's greatest strengths.
A
new round would help. Negotiations on agriculture and services are
already underway at the WTO's headquarters in Geneva. These two
sectors account for two thirds of the world economy. The aim of the
agriculture talks is to reduce protection and discriminatory support
in farming. The aim of the services talks, which cover everything from
telecoms to tourism and finance to freight transport, is to expand the
services agreement's country and sector coverage and to remove
restrictions on market access and national treatment.
Both
sets of talks are going well. But they pause for stocktaking next
month. This pause could easily become a deadlock. Several countries
have stated that they will not negotiate meaningfully on liberalizing
agriculture unless they can open new markets for their exporters in
other sectors at the same time. We need trade-offs that only a wider
negotiating agenda can provide. Capitals and leaders must engage; show
the flexibility that is necessary.
A
deadlock would deal a big blow to chances of launching a new round
soon. Positions would harden. Tempers might flare. The progress made
in the past year at improving relations between the WTO's 140 members
would be jeopardized.
That
is a perilous prospect, especially now. The business cycle is not
dead. America's long boom appears to be drawing to a close, with
potentially worrying consequences for the world economy.
We
must not forget that if the big guys are not doing well, neither will
the small guys. We need the US, Japan and Europe growing strongly and
keeping their markets open. Just think how much worse the Asian crisis
could have been had the big guys closed the markets. It is a tribute
to the WTO and even more so to political leadership in the North that
their markets stayed open.
But
although it's not politically correct to say so, the big guys also
need new markets to ward off protectionist pressures at home. The use
of anti-dumping and countervailing duties is soaring, threatening the
gains from past liberalization. Producer support estimates for
agriculture are rising again, according to the OECD. The siren voices
of protectionism beckon.
Another
big danger is that regionalism could come to be seen as a substitute
for multilateral liberalisation rather than a complement to it. I
understand why politicians and officials do this. Ambitious people
want results. Ministers like something to sign. Some may think its
politically easier, but it's not. New Zealand's tiny deal with
Singapore has caused greater political problems than the Uruguay
Round. I understand this impulse; as New Zealand's Minister, I tried
both.
The
recent explosion in bilateral and plurilateral trade deals is
worrying. By definition, such deals discriminate against other
countries. The longer we delay before launching a new round, the more
the big players will be tempted to act unilaterally and seek improved
market access through preferential trade agreements. The rule of law
could gradually give way to the law of the jungle or a jumble of
rules.
We
urgently need a new round of trade negotiations. Without the
trade-offs that only a broader negotiating agenda can provide, the
potential gains to Australia and the world from freer trade in
agriculture and services will be lost. That means fewer exports,
slower economic growth, and less money to spend on health, education
and welfare.
Without
a new round, most of developing countries' many demands for a
rebalancing of past WTO agreements will go unmet. We can squabble
endlessly in Geneva about the perceived injustices and imbalances of
previous trade agreements. But while we do so, we are doing nothing to
prevent even greater injustices in future. Poor countries, who can
least afford to miss out on the opportunities of the global economy,
would lose out on the 155 billion US dollars a year that the Tinbergen
Institute estimates further trade liberalisation could bring to
developing countries. That is over three times the $43 billion they
get each year in overseas aid.
Australia
is playing a pivotal role in pushing for a new round. You have the
moral authority from your past reforms. You have influence in the
Cairns Group, in APEC, and in the Commonwealth. And you have the
potential to lead by example, by showing the political courage to
question narrow interests in pursuit of the greater good and by
combining flexibility on the means of achieving freer trade with a
steely resolve about your ultimate ends.
A
new round will not happen by default. Nor will it happen unless the
big guys want it. But the smaller players have a big stake in egging
them on. You are well aware of the benefits of a rules-based system.
You know that your future depends on access to foreign markets. Now is
the time to come out fighting for a new round and more justice,
growth, jobs, stability and security that this will produce.
Thank
you.
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