' 7
FOR PRESS 14 APRIL 1978
AMERICAN NATIONAL CLUB DINNER ADDRESS
Those of you here tonight who are avid readers of the financial
pages of the press will be aware that there is at the moment
quite a flurry of international activity.
On Tuesday, President Carter unveiled his plans to attack
inflation and promote growth in exports. On the same day,
Mr. Healey, the British Chancellor of the Exchequer, brought
down a budget described as Britain's contribution to boosting
world economic recovery. President Carter is soon to have
discussions with Mr. Fukuda and other world leaders. At the
end of May, I and the leaders of a representative cross-section
of other nations will attend a special meeting in Jamaica, and
the seven countries, which attended the summit meeting in London
last year, will have a fourth summit meeting in Bonn in July.
What has prompted this sudden escalation in international
consultation at the highest political level? I imagine you
can guess the answer; the world economy and why it is failing
to perform as well as we would all like. Everywhere countries
are facing, to differing degrees, the same problems: inflation,
which in Australia and some other countries has come down
markedly, but is still too high; sharply fluctuating prices,
particularly for commodities; sluggish rates of growth; and
unemployment, especially amongst the young.
I need hardly remind this audience that all these difficulties
have been compounded by quite dramatic fluctuations in the
U. S. dollar and other currencies. In the past 13 months, for
example, the Swiss Franc has appreciated against the Canadian
Dollar almost 50%. Over the same period, the U. S. Dollar has
depreciated against the yen by over
The causes of these problems, to the extent that they are known,
are many and complex but they are clearly a world-wide phenomenon.
The major world economies do seem to be staging a tentative
recovery but it has not been enough so far to reduce the numbers
of those looking for work.
It has been estimated that total output needs to grow by about
per year if unemployment is to start to decline across the
world. Growth in 1977 was lower than this, and will probably
fall short of this figure again in 1978. / 2
2.
Growth in international trade in 1977 was also sluggish and
the prospect is that the same will occur this year. It is
in this area that both the mighty American economy, and our
small but highly developed Australian economy, have of late
been sharing some uncomfortable experiences.
On the one side, we have both felt acute social problems
notably high unemployment in sensitive sectors. A sharp rise
in imports from the industrialising countries has been a
contributor to this. We have both been obliged to take the
inevitable palliative action to protect employment while at
the same time acknowledging that the carefully regulated and
coordinated reduction of barriers to international trade is
the best long term guarantee of prosperity, of progress
and incidentally of peace.
On the other side, both our countries have felt the lash of
protectionism applied against our own exports On this score,
Australia's experience has been more painful, more dramatic
than Americals. After all, what has happened to our exports
of agricultural products to the European community in recent
years is quite extraordinary.
Through no fault of our own indeed while * in most areas we
have been boosting our capacity to supply quality food cheaply
and reliably we have seen our sales of beef, cheese, wheat
and fruit to the community plummet. Its purchases of our sugar
have virtually ceased and, while in 1966 we were selling over
60,000 tonnes of butter to Europe, last year we were permitted
to sell the princely amount of one solitary tonne. Yet we
permit some 4,000 tonnes of heavily subsidized European cheese
to enter this country annually. In all, our exports of
foodstuffs to the European community over the past four years,
have been reduced by over
We recognize that the common agricultural policy is an integral
part of the social and political fabric of the European
community and no one is seeking to have this dismantled. What
we do seek, and the United States share this objective, is to
have the more extreme aspects of the C. A. P. modified to have
alterations made at the margin to provide relief to
efficient producers.
All Australia desires is a reasonable degree of access to
European markets, and more restraint on the part of the Community
in its practice of exporting artificially generated agricultural
surpluses to other markets which have previously been supplied
by Australia.
Although Australia's principal concern with E. E. C. trade
relates to agricultural products, there are problems in other
sectors as evidenced by the Community's action to restrict
imports of steel. / 3
Last June, the President of the E. E. C. Mr Jenkins, and I
agreed that bilateral discussions would be held to find meaningful
solutions to these problems. We put forward specific
proposals in October, and talks were scheduled for mid-May
to hear the Commission's response. This week we were told
that the Commission was not ready to have such talks, that
they must be postponed until June even though the Commission
had had our propositions for eight months.
I recognise it is now impossible to hold the discussions on
the due date, and that the postponement is an inevitable fact.
But I find it incomprehensible that after eight months, the
Commission has directed so little attention to the matter that
they have not yet done their homework.
Now some elements in the Commission are apparently suggesting
that there be no bilateral talks at all, that they be encompassed
in the general multilateral trade negotiations that have been
dragging on for some time.
Such a course is totally unacceptable to.-Australia. I would
regard it as a flagrant abrogation of the agreement reached
between myself and Mr Jenkins less than a year ago.
What faith can we ha ve in the Community when they show such
a blatantly self-intL-erested attitude as this? Whey they show
so l-ittle interest and concern in important bilateral issues?
Let me say that concern at the European attitude is not confined
to Australia and the United States. It is one which has come
to be widely shared, especially amongst developing nations.
I well recall that I was one of the very few members of the
Australian Parliament who strongly supported Britain's entry
to the E. E. C. when this was first mooted in 1961.
The Treaty of Rome seemed to offer the real prospect of European
unity and cohesion, an opportunity for Europe to take a constructive
role in world affairs. It would be a tragedy if these original
high hopes were not fulfilled and the European community continues
to be primarily a narrow, self-interested trading group, seeking
to make the rest of the world dance to their tune.
Letme say that attitude will not survive. It cannot survive.
The world is coming to demand a responsible international
attitude from all nations not least from the great and powerful
E. E. C.
In the coming months, Europe will have to make a fundamental
decision. Are they going to use current depressed economic
conditions as an excuse for refusing to modify their trade
barriers or even increasing them? Or are they going to
decide to move towards freer trading conditions? It augurs
poorly for the success of the multilateral trade negotiations
due soon to recommence, when in the one international commodity
agreement finalised in the past year the sugar agreement
the E. E. C. resolutely refuses to be a member. / 4
What confidence can this inspire in the developing world?
Australia has already made its move. Since our 1973 average
tariff rate has been reduced by some 30%, and our use of nontariff
barriers is very much less than in the major trading
blocs. Regrettably, our tariff reductions were made unilaterally on
our part, without deriving any commensurate reductions in
trade barriers inhibiting our own exports. As a result, we
now have little room to manoeuvre in tariff reductions,
especially when we are faced by the non-tariff barriers which
apply to much of our exports a practice which regrettably
is applied against us both in Europe and in North America.
The developing countries have also been facing more than
their share of problems, for they too rely heavily on exports
of agricultural goods and other commodities. What they seek
is a narrowing of the gaps between themselves and the developed
countries in fundamental human needs in nutrition, literacy,
life expectancy, education and other pub lic facilities.
So we have two pressing international economic problems
which require urgent action and reassessment: the slow rate
of economic growth and the unemployment to which this gives
rise; and the need to accommodate the developing countries
as a growing political and economic force in the world.
Both these problems must be tackled now they can be bypassed
no longer and it may well be that there are some areas where
actions on both sets of problems can be combined. That is to
say, there are things which all countries can do jointly that
will at one and the same time re-structure trading relations
between the developed and developing worlds and assist us to
boost world growth.
Any lasting solution to current world economic problems must
involve the developing countries. The leaders of the major
western economies have to re-assess their trading relations
with the developing countries acknowledging those countries'
need for wider access to markets if they are to attain greater
self-reliance and adopting policies which assist the
achievement of that end.
Such a reappraisal is required on grounds of justice and
equity for we must do more to reduce world poverty and want.
but such a policy would also be in the interests of the
developed world for in the creation of bigger markets in the
developing countries lies the potential for revitalisation
of world trade.
World markets must be allowed to grow at a faster rate for if
this fails to occur, there can only be increasing bitterness
and despondency as countries fight over the break-up of
existing markets.
If we can succeed in boosting world growth and world trade in
a non-inflationary manner, economic recovery around the world
will be achieved very much faster. Our factories, farms, mines
and other enterprises can then operate at full capacity again
and that means the creation of more jobs throughout the
developed world.
Various formal discussions and negotiations held recently on
international trade problems have not progressed far and unless
there is a major reassessment by the developed nations,
forthcoming meetings will fare little better.
Many world leaders, including President Carter, are conscious of
the significance of these coming discussions and negotiations.
That is why the next 3 months will see government leaders across
the world meeting informally to make sure that all avenues are
explored in finding practical and equitable solutions.
We Australians are conscious of our responsibility to take
an active role in this process. My talks in Tokyo next
week with President Fukuda are in direct response to the
concerns felt by the Japanese Prime Minister and myself
on these issues.
Progress in defining and implementing solutions will be
neither quick nor painless. But I am hopeful that, with
a common sense of urgency and commitment, solutions can be
found to the mutual benefit of all trading nations.
Mr. President, this is one field in which the United States
and Australia can and must cooperate. It is vital for us
both that the right solutions be agreed upon without further
delay.