PRIME MINISTER
CHECZ AGAINRT nRELIVERy RMAR= ORf 1MT11L DELIVERY
Speech by the Prime Minister
Launch of Alan Oxley's ' The Challenge of Free Trade'
Sydney 19 November 1990
Alan Oxley has wihitten an extraordinary book.
The GATT the General Agreement on Tariffs and Trade is
not exactly the world's most easily understood or most
transparently lucid of organisations. Not for nothing has
it earned the nickname " The General Agreement to Talk and
Talk". As for the Uruguay Round, it has too often, especially in
its early years, run the risk of being mistaken for a kind
of Latin American dance.
If ever there was a topic that needed a knowledgeable and
readable author to explain its fundamental importance to
international affairs, then GATT is that topic.
And Alan Oxley is precisely that author. As Australia's
Ambassador to GATT from 1985 to 1989, he has spent more than
his fair * share of hours engaged in the hard, long-drawn-out
grind of international trade negotiation.
But instead of writing some dry-as-dust analysis, Alan's
book is fast-paced, engaging and even especially when you
get to Appendices Three and Four funny.
His subtle insight into how the crisis in the current round
of trade talks unfolded, his explanation of the profound
significance of this crisis, and his plea for a successful
outcome, are masterly elements of this book.
" The Challenge of Free Trade" will be rewarding reading for
the specialist, for the businessman and woman, and for the
general reader alike, and I hope it will reach the wide
audience it deserves.
This is also a very timely book, and I know I will be
excused if I spend a few minutes outlining Australia's views
about tbo. current impasse in international trade.
GATT emerged from the political and economic rubble of World
War Two.
3360 A
* 4ATVW
2.
With a certain degree of idealism it sought to establish an
international order in which free trade between nations
could flourish unimpeded by the senseless and vicious
bouts of protectionism that had so damaged the pre-war
global economy.
The fundamental principles of GATT are that open markets are
the most efficient, and that measures which impede trade
should have the least distorting effect on markets and
should be gradually reduced.
GATT has, by and large, been a resounding success. It
created a free trade umbrella beneath which the world has
enjoyed a dramatic and continued growth in prosperity since
the Second World War.
But as the GATT approached its fortieth anniversary, in the
mid-1980s, it was well and truly into a mid-life crisis.
Resurgent protectionism in a number of the more prosperous
countries was threatening to overturn the multilateral
system of trade rules the very system which had helped
make them prosperous in the first place.
So in 1986, at a meeting in Uruguay, the GATT members
decided to embark on a c~ ritical four-year round of.
negotiations to liberaliLse world trade and to revitalise the
GATT rules.
That Uruguay meeting wal3 an auspicious one. There were more
participating countries than ever before, including
developing countries; and there was a broader agenda than
ever before including the issues of trade in services and,
of special importance to Australia, trade in agriculture.
Because we believed it imperative to realise this first-ever
opportunity to establish a firm and sound basis for trade in
agriculture, Australia took the initiative to bring together
a number of other like-minded agricultural nations in the
Cairns Group.
This Group represents 25 per cent of world trade in
agriculture, and we have been relentless in applying
pressure on those agricultural producers whose protectionist
measures are distorting our markets and seeking to negate
our efficiency.
Ladies and Gentlemen,
GATT is now approaching the final few days of that four-year
negotiating period of the Uruguay Round.
And despite its auspicious start, it is no overstatement now
to say that the Uruguay Round is in a state of crisis.
The cause of that crisis is that the European Community,
stubbornly and short-sightedly, has refused to negotiate in
any genuine way on agric~ ulture. 3i 3~ 6 1
3.
If the Europeans do not shift their position on agriculture
if they do not show they are prepared to reduce the
massive distortions to the world economy caused by their
agricultural protectionism then the Uruguay Round as a
whole will fail.
I don't make that statement as a threat. I make it as a
statement of plain fact.
Agriculture has become the key to the success or failure of
the Round.
The Cairns Group the United States have made it clear
that the Europeans must agree to substantial and progressive
cuts in support and protection for agriculture, with
specific commitments on each of the three key types of
support.
But it was only earlier this month, with merely a few weeks
to go before the end of the Round, that the Europeans
finally made an offer on agriculture and it was an offer
that fell far short of what we have been seeking. It
contains no prospect that the Europeans will significantly
cut their subsidies of agricultural exports, nor that they
will open their markets to imports.
And since they tabled that offer, it has become plain that
the European Governments have given their representatives no
significant scope to negotiate.
In other words, with time running out, we are deadlocked.
Let me make quite clear to you what I believe is at stake.
Success in the Uruguay Round will offer the opportunity to
borrow from Alan Oxley's crisp summary
to increase global growth;
to break the developing-country debt cycle:
to increase global food production;
to underpin economic and political renewal in
Eastern Europe; and
to apply the dynamism of the information age to
-expand global trade.
Failure in the Round will not only mean we have missed the
opportunity. 44to reap those benefits, it will also see the
start of a slide into the economic and political dangers of
renewed protectionism.
As I said at the outset, GATT was established explicitly to
prevent a recurtence of the economic mismanagement of the
1930a that helped bring about the Second World War.
336~ 2
4.
The Europeans of today seem to have forgotten what the
founders of GATT knew, from their own terrible experience of
the 1930s: that protectionism is not just an economic
disease but a potential source of political friction and
conflict. r"
That is why the weakening of GATT, brought about by a
failure of the Uruguay Round, would not only pose a grave
threat to the world's prosperity but would also be a
tragically regressive step at the very time when we should
be trying to make permanent the truly positive trends that
are emerging in the world.
Surely, the lesson of the 1930s is a lesson too costly to
repeat. With that much at stake, you can well understand why it has
been my Government's high priority to ensure a successful
outome to the Round.
Even with the prospects of success as dim as they now are,
we must not simply lie down and die. We have to fight this
out to the end.
That is why I spoke to President Bush last Friday. And it
is why I have written today to the leaders of the European
Community Chancellor Kohl, Prime Ministers Rocard,
Andreotti, and Thatcher, EC President Delora, and the
leaders of the other Community members urging them all to
exercise real political leadership in the interests of the
international system.
In these letters I expressed my deep concern over the future
of the Round In the light of the totally unsatisfactory
nature of the European offer on agriculture.
That offer was too restrictive on access by other nations to
the European market, and failed to reduce the export
subsidies which are the most trade-distorting of all
policies. They are also the most damaging to efficient agricultural
producers and I said in my letters that the rural
economies of Australia and of many of our Cairns Group
colleagues are being devastated by export subsidies.
Of course it is relativ'ely easy to spell out the damage
protectionism is causing countries such as Australia.
It is more difficult, but equally important, for the
European leaders to understand that their own people are
being hurt.
I said in my letters that I understood the internal
pressures that made it difficult to cut support for
agricultural producers. 33 a
But underlying this must be the recognition of the fact that
morq open markets will mean much cheaper food costs for
European consumers; while the elimination of subsidies will
liberate taxpayers of the massive burden they bear in
supporting inefficient farmers.
In other words, the ordinary man and woman in Europe will
enjoy the benefits of a more efficient economy in which the
resources of the community are directed towards productive
investment not poured into the bottomless pit of farm
supports. And consider . the context in which this situation has arisen.
The European Community is poised on the verge of an historic
breakthrough the creation of a single market in 1992 which
will, if it is an open market, dramatically improve the
living standards of Europeans and generally provide a boost
to world economic prosperity.
It is a triumph of mature and far-sighted political
leadership; a demonstration that the Europeans can overcome
the obstacles that stand in the way of an even more
prosperous and more productive life.
At the sane time, Western Europe is facing up to the
challenges of closer economic integration with Eastern
Europe, now being freed from the shackles of central
planning. What a tragedy it would be what an absurdity it would bel
if at the time of these historic developments
developments which demonstrate the unqualified merits of
competitive open markets the Europeans were to deny those
merits, and undermine their bright prospects, by a failure
of will in agriculture.
What are we to make of a Europe which in respect of the 1992
Single Market is capable of vision and wisdom, and which in
respect of agricultural protection is capable-of selfishness
and short-sightedness? At the very least, the claims of
Europe to a position of respect and influence in the
international community will be significantly diminished if
it caves in to the pressures of its farm lobby.
My appeal is not for favours to Australia or charity to the
Cairns Group. it is an appeal to the European Community's
own long-range self-interest. The-subsidisation of
inefficiency cannot serve that self-interest; nor can the
imperiling of a negotiation which in so many other sectors
of fers:. Burope great benefits and opportunities.
All this underlies my plea to the European leaders to exert
political muscle in the final days leading up to the
ministerial meeting in Brussels in early December.
3364, 77, a-
6.
I know from my conversation with President Bush that he and
Secretary of State Baker will be urging the Europeans to
adopt a more reasonable stance and I unreservedly welcome
the pressure that the US has exerted and continues to exert
in these vital talks.
To be sure, we have no fondness for American export
subsidies, and I have never neglected to criticise them
publicly or privately. But the difference is that in the
Uruguay Round, the United States is willing to cut, and cut
substantially, if others will do likewise. The onus
therefore lies squarely with the European Community.
I stress that it is still the very earnest wish of the
Australian Governmrent to see the Brussels meeting yield a
successful outcome.
However, I have ma~ de it clear that should it fail, then I
would see merit in bringing Heads of Government together in
a subsequent meeting not to settle fine points of detail
but to give the process new impetus and firm direction from
the top.
We simply must do whatever we can to ensure a successful
outcome of the Uruguay Round. We cannot afford to fail.
Ladies and Gentlemen
Throughout the entire Uruguay Round, Australia has
diligently and ardently pursued what we consider to be our
essential interests ensuring our farmers get fair access
to the world's markets, and generally protecting the global
system of unimpeded trade.
It was very much iLn pursuit of these interests that we
established the Ca~ irns Group so that nations with similar
interests can spea~ k with a collectively louder and more
influential voice.
The Cairns Group activity in the Uruguay Round is but one
example of Australia's increasingly productive emphasis on
multilateral diplomacy.
Be it in international trade talks, or' in global or regional
efforts to ban chemical weapons, or the campaign to ban
mining in Antarctica, or the initiative to find a peaceful
solution in Cambodia, or the Asia Pacific Economic
Cooperation initiative, or indeed the task of building a
stable post-Cold ' Wiar world order in the United Nations,
Australia is prepared to do the hard work of multilateral
diplomacy. We stand to gain and the world community stands to gain.
I want to take this opportunity to say a few words about the
men and women who are at the coal-face of this work -people
like Alan Oxley. 3365
7.
Multilateral diplomacy demands patience, commitment and an
unshakeable perception of the long-term goals. It may not
be particularly glamorous work but it is essential and it is
an increasingly important part of what diplomacy is all
about. Australia is particularly well served by its overseas
zepresentatives and I want to take this opportunity to
record the Government's appreciation of their work. In
particular I want to say to those engaged in the
multilateral efforts I have outlined, how much the
Government respects the contribution they are making to
aidvancing our national interests.
3: had the opportunity to see Alan Oxley's work at close
quarters when I visited Geneva in October 1987 to deliver a
Cairns Group address to GATT. As he records in this book,
t~ he preparation of that speech couldn't be finalised untiliahall
we say quite late in the piece and required a degree
of international coordination of Cairns Group members. That
the speech went smoothly was of course a tribute to Alan's
e~ fforts, and I express my thanks to him for that.
Ladies and Gentlemen,
, rhis is as I said at the outset an extraordinary book.
In addition to all the other reasons I have outlined, it is
extraordinary because it tells a story as intricate and as
dramatic as any detective thriller.
It is about nothing less than how the world managed to get
itself to the edge of a precipice.
And unfortunately for the world, this real-life thriller
doesn't yet have a last chapter.
We don't know if the world crawls back from the abyss or
whether it plunges down to the depths.
It is my very sincere and profound hope that commionsenseand
a greater degree of political leadership by the European
Community will ensure that there is a satisfactory ending
to this tale.