1.5 Multilateral Trade Policy and Negotiations

Table 14: Resources Summary for Sub-program 1.5

Figure 27: Multilateral Trade Policy and Negotiations Program and Organisational Structure as at 30 June 1998

Sub-program Objectives

In 1997-98, the objectives of sub-program 1.5 were to:

• advance Australia’s economic interests through trade negotiations and other consultations in the WTO, OECD and the UN Conference for Trade and Development (UNCTAD) as well as other multilateral and regional forums, and at multilateral, regional and bilateral levels
• ensure that Australia’s strategic trade policy framework is developed as an effective, coherent, coordinated and well-focused policy vehicle domestically and for securing Australia’s interests in pursuing the post-Uruguay Round trade and investment agenda
• develop initiatives which will support and strengthen the effectiveness of the multilateral trading system
• ensure that Australian business is aware of, and is able to capitalise on, market access opportunities arising from negotiations in multilateral forums and that regional trading arrangements result in fairer and more equitable market access opportunities for Australian exporters
• maintain and expand departmental links with business, NGOs, academia and the media to engage them as appropriate in the formulation of Australia’s approaches to international trade policy issues and to inform them of trade policy developments.

Description

The Trade Negotiations Division administers the sub-program. TND comprises four branches: Agriculture Branch, World Trade Organization Branch, Services and Intellectual Property Branch, and Trade Policy Issues and Industrials Branch. While most posts contribute to the work of the sub-program, particularly through economic reporting and representation on trade policy issues as required, TND is directly involved in coordinating and supporting the activities of two key Australian (trade policy) posts, Geneva WTO and Paris OECD.

The sub-program pursues strategies designed to help achieve four of the Department’s corporate goals: to promote Australia’s economic growth, jobs and standard of living; to enhance Australia’s security; to strengthen global cooperation in ways which advance Australia’s interests; and to promote public understanding of Australia’s foreign and trade policy. Strategies include advising the Government on the presentation of Australia’s international commercial interests in the multilateral trading system, which centres on the WTO. Through close liaison with state and territory governments, business and the community, the Department identifies Australia’s trade policy priorities and develops strategies to pursue these in the WTO and, as necessary, at a regional and bilateral level. It also provides advice on trade policy issues to the Government and supports and encourages full recognition of Australia’s international trade commitments in domestic policymaking. The Department provides a core of trade policy expertise for government as a whole. With growing community and international interest in the relationship between trade and issues such as the environment, health, social concerns, electronic commerce and intellectual property rights, the Department is increasingly called on to contribute to debate and policy formulation on such issues.

In the review period, responsibility for the ASEAN Free Trade Agreement-Closer Economic Relations (Australia and New Zealand) linkages, the Market Access working groups, the annual Trade Outcomes and Objectives Statement, and the periodic WTO Trade Policy Review of Australia was transferred to sub-program 1.6, Trade Strategy Development and Business Liaison.

Performance Information

In 1997-98, the Department indicated that it would evaluate its performance using:

• progress reached in WTO Accession, Balance of Payments (BOP) and Article XXVIII negotiations, in achieving improved market access— interim and longer-term— for Australian exporters; Australia’s accession negotiation priorities are China, Taiwan, Russia, Saudi Arabia and Vietnam, with India and Pakistan as priorities for eliminating BOP restrictions
• extent to which Australia’s position is advanced and understood in WTO dispute settlement procedures (outcomes from dispute settlement cases, particularly those addressing new issues, cannot be predicted)
• degree to which key WTO negotiations, such as on financial services and the OECD’s Multilateral Agreement on Investment, enable increased access for Australian exports and are consistent with Australian policies
• degree to which Australian positions are reflected in the work of WTO committees and working groups, including those on regional trade agreements, trade and investment and trade and competition policy, and in WTO reviews of the Technical Barriers to Trade and Sanitary and Phytosanitary Agreements
• effective preparation and presentation for the WTO’s review of Australia’s trade policy
• extent of support for broader Australian multilateral trade policy objectives, particularly with respect to the launch of a new round of multilateral trade negotiations by 2000, both multilaterally in the WTO, OECD and APEC and bilaterally with major trading partners
• degree to which results of meetings of the Cairns Group, APEC trade ministers, OECD agriculture ministers and other relevant groups reflect Australia’s multilateral trade policy objectives and advance the cause of further trade liberalisation
• extent to which other action, such as strengthened AFTA-CER links and the work of the market access working groups, improves access for Australian exporters, particularly to key sectors in the ASEAN economies
• impact of the Trade Outcomes and Objectives Statement, ministerial submissions and consultations both within government and with other clients, on developing economic, industry and trade policy in Australia and on the consistency of that policy with Australia’s WTO obligations
• degree of support from major clients, including the private sector, for approaches to multilateral trade policy.

Performance Outcomes

1.5.1 Multlateral Trade Organisations

The Department made a major effort to influence the outcome of the second WTO Ministerial Meeting through advance consultation with like-minded countries. Ministers attending the meeting agreed to preparatory processes likely to lead to a broadly-based round of multilateral negotiations on agriculture, services and industrial products. (The mandated negotiations on agriculture and services were integrated into this process.) The outcomes reflected and served Australian objectives.

Photo: Deputy Prime Minister and Minister for Trade, Tim Fischer, at the second WTO Ministerial Conference in May in Geneva. (photo: Lightmotif-Blatt)

The Department refined Australian policy on regional trade arrangements. This provides criteria against which to assess requests for RTAs from our trading partners.

The Department worked closely with the salmon, trout and recreational fishing sectors and the Tasmanian Government to defend Australia’s quarantine restrictions on salmon in a WTO panel. The panel report (which is appealable) included some findings adverse to Australia on the product coverage of risk assessments and on different quarantine arrangements in place such as between salmon and certain other fish products. Importantly however, the report did not affect Australia’s sovereign right to maintain a conservative quarantine approach to human, animal and plant life and health.

Following a request by the United States to establish a second WTO panel to examine the Government’s assistance measures to producers of automotive leather, the Department began to prepare Australia’s defence. In this process, Australia reserved its rights on a number of procedural concerns it raised about the establishment of this second panel.

Following the Department’s initiation of WTO dispute settlement proceedings, India agreed to Australia’s request to a transitional timetable for the removal of balance of payments-linked import quotas on a wide range of agricultural and manufactured goods of export interest to Australia.

The Department successfully used the WTO’s consultation and dispute settlement processes to reach an agreement with Hungary to bring Hungarian agricultural export subsidies into line with the WTO Agreement on Agriculture.

The Department protected Australia’s commercial and wider trade and trade-related policy interests by intervening as a third party in panels dealing with the US shrimp import embargo. The successful outcome was a panel ruling consistent with the position Australia argued.

The Department also protected Australia’s interests in effective and appropriate disciplines on the use of sanitary and phytosanitary measures through participating in the WTO Appellate Body’s review of the dispute settlement panel report on EU import restrictions on meat produced with hormonal growth promotants. The Appellate Body’s findings were in line with Australia’s view that the EU measures were WTO-inconsistent.

The Department continued its efforts to secure better market access through WTO accession negotiations, although progress was slow in the continuing negotiations between Australia and the priority markets of China, Russia, Saudi Arabia and Vietnam. This was because those countries were reluctant to commit fully to policies which would promote more liberalised domestic trading regimes.

The Department advanced a number of important Australian trade interests in negotiating outcomes with China in the context of that country’s accession negotiations to the WTO. As a result of these negotiations, China’s tariff on wool is now applied at the lower rates of 1 per cent and 3 per cent for wool tops (down from 3 per cent and 5 per cent respectively). The Chinese also have agreed not to introduce agriculture export subsidies and have improved their offers on industrial tariffs, services and barley.

The finalising of market access packages relating to WTO accession with Latvia and Kyrgyzstan secured new commitments for Australian exporters of sugar, dairy, grains, meat, wool and a range of industrial products. The outcomes take full account of Australia’s principal interests in these markets and preclude these countries from introducing export subsidies that would damage commercial interests in third markets.

The Department played a major role in drafting general procedures for inquiries into whether increased imports justified emergency safeguard action. The procedures ensured that the safeguard mechanism established was fully consistent with the requirements of the WTO, particularly the Agreement on Safeguards and Article XIX of GATT 1994.

The Department was instrumental in having new industry schemes for the passenger motor vehicle and textile, clothing and footwear sectors in Australia take full account of Australia’s international commitments. The Government accepted and acted upon departmental advice on industry arrangements in the telecommunications and processed foods sectors.

Despite some questioning of the benefits of trade liberalisation, the Department sustained a high level of support from major clients, including industry and peak associations, and the financial media, for its approach to multilateral trade policy. The Department contributed to informed domestic debate on the relationship between trade and the environment through public consultations and dissemination of information.

1.5.2 Trade Rules Negotiations (Commodities)

The Department drafted and gained support for key elements of the Vision Statement adopted by Cairns Group Ministers at their meeting in April in Sydney. The Vision Statement sets out the group’s aspirations to achieve ambitious market access gains and reductions in agricultural support and export subsidisation through further agriculture negotiations.

Photo: Parliamentary Secretary (Trade), David Brownhill, Deputy Prime Minister and Minister for Trade, Tim Fischer, and the Malaysian High Commissioner to Australia, Dato' Adnan Othman, at the press conference at the conclusion of the Cairns Group Ministerial Meeting in April in Sydney. (photo: Peter Kelly Photography)

The Department played an important role in negotiating constructive language on trade and agriculture issues in the communiques adopted by OECD Agriculture Ministers and the OECD Ministerial Council Meeting. These references were important in keeping trade work in the OECD focused on assisting preparations for a new round of multilateral trade negotiations. Also OECD Ministers agreed to intensify efforts to achieve meaningful disciplines on export credits (especially on agricultural products) in OECD negotiations, and a work program which, in the light of the East Asian economic crisis, will devote more OECD resources to such issues in the Asia Pacific region.

Through the WTO Committee on Agriculture, the Department effectively monitored the implementation by WTO members of domestic support, export subsidy and market access commitments in the Uruguay Round Agriculture Agreement. This ensured that Australian exporters would receive maximum benefit from the disciplines negotiated in the Uruguay Round, thus improving market access and limiting the impact of export subsidies in global markets.

The Department provided detailed technical advice to ministers; this helped secure good outcomes in a number of bilateral areas of concern, such as the US Export Enhancement Program, Dairy Export Incentive Program and US remedies on wheat gluten imports.

Responding to the rapid increase in Australian wine exports, the need to protect and promote this industry’s interests in the multilateral trade system, and the need for an integrated trade policy strategy, the Department (with the Department of Primary Industries and Energy) initiated a policy-level dialogue with industry. This is designed to help position the industry take advantage of changes in multilateral trade rules, thereby expanding its market access.

The Department worked to enhance liaison between Cairns Group member countries, thereby helping to maintain the group as a cohesive force for agricultural liberalisation. It also established a number of consultative mechanisms, including the Agricultural Trade Consultative Group, to explain better Australia’s approach to agriculture trade negotiations with key industry groups, and to understand better the priorities of these groups.

Both bilaterally and in the WTO Committee on Sanitary and Phytosanitary Measures, the Department worked to ensure that quarantine measures did not create unfair barriers to Australian exports.

1.5.3 Trade Rules Negotiations (Services)

The conclusion in December of the WTO Financial Services Negotiations produced major access gains in this sector in key Australian markets, including Indonesia, Thailand, the Republic of Korea, the Philippines, India, Japan, Singapore and Malaysia. The WTO Agreement involves 102 countries and 90 per cent of global financial services trade. The Department played a key role in securing a successful outcome, including initiating a regional caucus during the negotiations.

The Department secured new access for financial services— insurance, merchant and consumer banking— from WTO members. Priority requests were met, for example, in Malaysia (a significant improvement in the treatment of foreign-owned insurance companies) and in Thailand (a relaxation of limits on foreign equity participation in locally incorporated banks and finance companies).

Departmental officials argued forcefully in the Working Party on Professional Services for strong multilateral disciplines to ensure domestic regulation in the accountancy sector does not constitute unnecessary barriers to trade in these services. Members are now close to finalising the text of the disciplines. They contain provisions which respond to priorities Australia set on behalf of accountancy firms wishing to export their services, although some of Australia’s objectives have not yet been met as a result of strong resistance from other members of the working party. Work is underway on preparing negotiations for other professional services sectors.

The Department finalised Australian acceptance of the WTO Agreement on Basic Telecommunications. Australia accepted the protocol in November, and the agreement entered into force in February. Countries which accepted the agreement represent over 90 per cent of world trade in telecommunications services, and new opportunities for Australian telecommunications exporters will now open up. Under the agreement, all Australian key markets have made access commitments and most offered improved access. The European Union, Japan, the United States, Canada, the Republic of Korea, the Philippines and Singapore will undertake further market opening.

The Department’s efforts in the WTO helped achieve the momentum necessary to secure a ministerial declaration on electronic commerce at the second WTO Ministerial Conference. This included a standstill on the introduction of customer duties which gave multilateral effect to the Prime Minister’s announcement in 1997 that the Australian Government would allow goods ordered and delivered electronically through the Internet to enter Australia duty free.

The Department established a sound policy basis for the 1999 review of the Trade Related Aspects of Intellectual Property Rights (TRIPS) provisions by participating in a TRIPS policy forum and a high-level roundtable on WTO aspects of biotechnology and agriculture, and by consulting with industry. Through participating in regional meetings and consultations, the Department also developed regional cooperation towards effective implementation of the strengthened intellectual property norms the WTO Agreement on TRIPS established. This cooperation should help produce favourable outcomes from the review of TRIPS in 2000.

The Department provided the vehicle to develop a joint federal-state approach to WTO government procurement issues by convening a consultative group on the issue, which will provide advice for ministers. In this way, the Department helped establish the basis for developing a consolidated Australian position, especially in the context of a likely new trade round.

Although principal responsibility for this issue rests with the Treasury, the Department provided considerable input, particularly on trade rules issues, into Australia’s participation in negotiations for a Multilateral Agreement on Investment. The complexity of the negotiations prevented their conclusion however, and an effective six-month negotiating pause is in place until October 1998.

1.5.4 Trade Rules Negotiations (Manufactures)

The Department resisted efforts to exclude a number of items important for Australian industry from a second round of negotiations under the umbrella of the Information Technology Agreement. Despite considerable efforts, negotiations had not been finalised by the end of the review period. The Department gained recognition of the importance of non-tariff measures in the Information Technology Agreement through bilateral and plurilateral efforts amongst its participants. Consensus now exists for a work program on this issue.

The Department helped substantiate Australia’s approach to the APEC Early Voluntary Sectoral Liberalisation Program which aims to contribute to open regional trade liberalisation. Consultations with industry associations and individual firms helped identify areas of difficulty for industry and, in many cases, resolve them, as well as confirming key markets in which to concentrate priorities.

The Department completed redeveloping its Trade Negotiations Analysis System database. The new TNAS better supports ongoing efforts to improve market access for Australian exporters by maintaining up-to-date information on applied tariff levels in Australia’s major trading partners. Tariff data for countries representing over 90 per cent of Australia’s trade is currently on the TNAS system and Australian industry uses it to assess potential export markets.

Other Performance Outcomes

Other developments in activities conducted under sub-program 1.5 were numerous. Through contributing ideas, analysis and information to WTO working groups, the Department stimulated an increased understanding both within Australia and internationally of the interaction between competition policy and trade policy, and the relationship between trade and investment. This work forms an important basis for analysing how domestic regulations affect Australia’s overseas trade and how global trade rules might be developed to create better market access for Australian traders. The Department also expanded its links with other agencies and industry, thereby enhancing the level of influence we can exert in WTO sectoral and other committees.

The Department promoted Australia’s interests in a balanced debate on trade and the environment by ensuring that discussions in international forums, including the WTO, OECD and UNCTAD, recognised the potential environmental benefits of trade reform on issues like agricultural and fisheries subsidies. The Department also ensured that trade considerations were addressed in major international environmental negotiations, including on climate change, biosafety and chemicals, to promote mutually supportive trade and environment policies.

After close liaison with Australian standards-related bodies and agencies, the Department submitted an issues paper to the First Triennial Review of the WTO Agreement on Technical Barriers to Trade. Underpinned by focused and conciliatory negotiations in the review, Australia was able to achieve the incorporation of the priorities identified in its paper as final report recommendations for future action by the TBT committee.

The Department’s contributions helped achieve agreement in the OECD to produce a major OECD study on the benefits of trade and investment liberalisation, Open Markets Matter. This was successfully launched at the 1998 OECD Ministerial Council Meeting.

Although UNCTAD did not feature highly in work under this sub-program during the review period, the Department worked to ensure that the outcome from the UNCTAD-WTO High Level Meeting on Least Developed Countries in October met Australia’s objectives.

Advanced departmental planning, including producing policy issues papers and participating in informal dialogues, for scheduled WTO reviews of the Dispute Settlement Understanding, the Sanitary and Phytosanitary Agreement, and WTO institutional transparency arrangements, ensured that Australia’s policy interests were reflected in the agendas for formal WTO consideration of future arrangements in these areas.

Through participating in APEC meetings on dispute mediation, the Department ensured that the APEC dispute mediation agenda did not duplicate or conflict with existing WTO dispute settlement mechanisms. The Department also contributed to promoting a dialogue on the WTO Dispute Settlement Review between APEC members, which fostered informal dialogue between Geneva-based representatives.

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