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PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING, MID
PRESS CONFERENCE, PARLIAMENT HOUSE
16 DECEMBER 1993
E& OE PROOF COPY
PMV: Well, the Uruguay Round of the GAT -T,_ long in the making, has finally
come to a conclusion. And, for those of us who have been talking about it for
so long, and participating in it for so long, one would have to say, it is well
worth the wait. And it has been well worth the wait.
Because the Government has had an approach to trade, to multi laterali sm,
and to open markets right through its history, from 1983, and the changes of
which we have made in opening Australia up and in reducing tariff protection,
and abolishing'quotas on the 1 960s, all of those things were predicated upon
us having an open trading opportunity in the GATT Round, of the likelihood of
the GATT actually coming to some conclusion.
Now, as a consequence, we have built Australia's policy expressly on the
GATT Round. And the GATT Round has now come to fruition and as a result
there will be at least conservatively $ 2.5 billion worth of benefits for Australia,
including $ 1 billion of benefits from an agreement on agriculture. And they
mean that there will be cuts in subsidised export volumes of 21 per cent by
the end of the 6 year period, the elimination of non tariff barriers by
conversion to more transparent tariffs, -an average cut-in agricultural tariffs of
36 per cent, a 20 per cent cut in trade sorting domestic subsidies for farm
production and incomes.
Across Australia's key agricultural exports this could see an extra $ 340
million per annumn in beef exports, $ 200 $ 250 million in wheat exports, $ 125
million in dairy, $ 90 million in coarse grains, $ 40 million in sugar, and
million to rice growers. So, this is, in a nut shell, a very substantial outcome
which could only, in agriculture, be achieved by a multilateral trade
agreement. And, of course, in agriculture it wouldn't have been achieved
without Australia injecting agriculture into the Round, in putting the Cairns
Group together, and in fighting the agriculture issue right down to the end.
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Now, what it will mean is that in terms of the US and EC subsidised export
sale of wheat, which will give an indication, there wilt be 50 million tonnes
less subsidised wheat and flour over world markets over a six year period.
US and EC subsidised wheat exports are likely to be--down by a third by the
year 2000 compared to current levels. But because it was expected that EC
and US subsidised wheat exports would grow, the outcome will now actually
b~ e about a half the expected level. It is a third off the current level, but about
half the expected level of wh~ ere it would be by the year 2000.
So, this is a fairly remarkable change. And other important breakthroughs
have been In other key agricultural markets; in the US there will be a 25 per
cent increase in access for Australian beef in 1995 compared with the level in
prospect for 1994. In Japan the rice ban will be lifted and rice imports will
grow to around 800,000 tonnes by the year 2000 that is around twice
Australia's total current rice export and tariffs on beef, dairy and sugar will
be reduced. In the European community area access will improve for
Australian exports of meat, milk, powder, butter and cheese. And we have
also continued the European assurance not to sell subsidised beef exports to
key Asian markets which has undefined growth in Australian exports to these
markets of 200 per cent since 1985.
So, that's the picture in respect of agriculture. I will just say something in
respect of manufacturing on industrial goods we expect average tariff cuts
on the products of interest to us to be over 50 per cent, as closely as we can
calculate it to be about 53 per cent. Now, that is the tariffs of other countries
which we are facing in terms of our products, including key product areas
such as, non ferrous metals, medical and scientific equipment,
pharmaceuticals, chemicals and beer. The United States, and the European
community, and Japanese offers represent tariff cuts of around 60 per cent,
and alone cover Australian exports totalling $ 18 billion. So, $ 18 billion of our
exports now will be dealt with by this reduction of tariff cuts in the US and
European community, and Japan, of over 60 per cent.
The new GATT agreement on services ensures Australian service exporters
can compete on an equal footing in the fastest growing area of world trade,
and that, as you know, is growing very rapidly for us.
So, I might also add that Senator Cook has over night obtained an agreement
from the United States that it will not export subsidised rice to the Japanese
and Korean rice markets, so our farmers will be competing on a level playing
field there.
There has been much, can I just say on the question of the export
enhancement program, which has been an issue in Australia with the United
States. I just can't put my hand on the figure but there is a substantial
reduction in the impact of that, from about $ 1 billion of subsidised product to
about $ 3.40 million over the six year period. So, all in all, I think this has been
a remarkable outcome. Its the largest ever world trade deal and an
enormous shot in the arm for the world economy. At a time when economies
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have been struggling to grow, that we are seeing growth of ourselves, the
United States growing, Japan still finding itself in recession, Germany the
same, this will be a huge boost to confidence. Apart from the financial effects
and commercial effects this will be a huge boost to cor-fidence.
The OECD has estimated that for agricultural and industrial products alone, it
will result in an increase in global economic activity of up to $ 418 billion by
the year 2002. And, as I have said, that translates to us at about $ 2.5 billion
per year. More recent assessments by the Industry Commission suggest
there may be as much as $ 5 billion increase in exports and a $ 3.7 billion
increase in Australian GDP.
So, it's a tremendously important outcome and could I say that a statement
issued today by the Trade Negotiations Advisory Group, by Geoff Allen... it
said, ' The Australian business community is delighted with the achievement
of a meaningful result in the Uruguay Round; we will not get all we want but
the result will be overwhelmingly positive for all Australians. In this eighth
round of negotiations under the GATT there has been unprecedented
cooperation between government and the business sectors, it has
represented a model for close government/ business collaboration in
international affairs."'
So, I'd like to, again, record my appreciation for the work which has been
done jointly by Australian business, with the government. But, again, I signal
that what has happened here is a very definite view, by the government, of
the kind of society and country it wanted Australia to be. And that was an
efficient, open, exporting country. And that's changed from the day we
removed exchange controls in 1983 and started reducing tariffs in 1988.
And, as a consequence, we're now set up to face the world but it wanted, in
our terms, to be a world which was open and more free. This we've achieved
under the GATT and, of course, where the GATT leaves off APEC will take
over in the Asia-Pacific where we can do other things of the trade facilitating
kind which are not part of the general reductions in protection under the
GATT. So, Australia has been turned into a competitive,. open,. trading economyby
a Labor government and then we have set in place structures; by
putting together the Cairns Group in the Uruguay Round and getting
agriculture into the round... set in place structures which will also help now
with APEC to complement, again, the work of the GATT. So, in all, Australia
should be well placed to grow its commercial sectors as our economy picks
up and our competitiveness is now so strong. And, I think, as a leader of the
Cairns Group we have, at the same time, played a role for those countries in
the Cairns Group of countries and, not just played a role but kept faith on the
big issues which are important to them.
I'd like to take this opportunity to congratulate Peter Cook and his negotiating
team in Geneva on the effort that they have led in the last week, but most
particularly in the last year. I'd also like to thank those who have been
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involved in this over such a long time seven years. In the first place, the
Treasurer who was then Minister for Trade and who put the Cairns Group
together, John Dawkins, followed by Michael Duffy who pl5-yed a -very
important role at a key time in the round, as also did.-Weal Bleweti and John
Kerin. This has occupied the time of many ministers and many officials, I
might say, who have had to endure those many nights locked up in hotel
rooms and conference rooms arguing over these points. One of those people
is with us today, Peter Field, and I'd like to pay a tribute to Peter's work as
Deputy Secretary of the Department of Foreign Affairs and Trade ( DFAT) who
had the principal carriage of this responsibility for most of the period and
other people of DFAT who were involved in it throughout the period.
So, could I wrap up my remarks by saying it's a tip-top outcome for Australia,
well worth the wait, the largest world trade deal ever done, a great thing for
the world economy, a bull point for markets around the world and giving
Australia the trading environment it could only have dreamed of seven years
ago. J: Can you bring all these billions home to average Australia? What's it
going to mean to workers, to families, to young people?
PM: Well, it's going to mean a pick-up in employment the best we can
estimate this at quickly is around 50,000 jobs which is a very large
complement. It's going to add another $ 3.5 billion to Australia's GDP
which is an Important addition. And what it means is that we'll have
the confidence that as we grow these markets and commodities of
ours, we'll be growing them into markets where we have access. So,
the confidence that Australians and their children will have jobs and
that they'll be able to trade Into this area, into these markets, will, I
think, be very high.
The GATT Round, the GATT outcome is largely an employment and
wealth outcome. And, I said recently, GATT equals growth equals jobs
I'd repeat that and say this is a place where Australia's view of itself
and Australian diplomacy has played a really important role.
J: When do you think that Australia will actually start seeing some of
these benefits flow through? The implementation period on most of
these doesn't start until 1995 but do you expect any immediate
benefit?
PM: Well, that's when it does start. I th ink that it's going to flow through
earlier because, like all of these things like the time we announced
tariff reductions behaviour changes almost Instantaneously before
the actual changes take place. And I think this will be true here
you'll see a change in the way countries approach markets. When
they know protection Is coming down and they know they're going to
have to earn their keep in these markets they start changing their
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habits and I think, as a consequence, it will start to pay off for us much
earlier rather than later.
J: Do you think we'll get an even better outcome' with the negotiations
that Peter Cook's still going on with in Geneva?
PM: Well, I think it's a case of watching the bouncing ball. Obviously, in
particularly some commodities, these things are changing by the hour
and that's why you have to be on the spot, you have to be in there for
your chop and arguing your case. And Peter Cook, who has rung me
a couple of times since the weekend, has been in there arguing his
case on these particular things. Arid, I might just say, he just turned up
another one on rice, by getting that assurance from the United States
that they will not be exporting subsidised rice to those two markets
which I mentioned Japan and Korea.
J: Are there any further details about that rice assurance from the
Americans?
PM: We've got officials here and you're welcome to talk to them after I'm
finished, if you like.
J: The United States has been fairly generous with its market access
package but the European Community doesn't seem to have been,
does that disappoint you?
PM: Well, I think the Europeans will pay a price for holding onto the tenets
of protectionism in some of these areas and I think this is going to be
an expensive lesson that you can't hope to give Europeans the
living standards that they wish and the income and employment levels
that they wish if a large part of their product is being funnelled into
subsidies for agriculture. And while it may suit a particular political
need at the time I don't think, over time, it's going to help. A couple of
key things have happened in the United States that are well worth
recording... one is the very deliberative vote of the American Congress
in favour of NAFTA -which is a-trade liberalising--decision-. and -now. the
support through three administrations Reagan, Bush and the Clinton
administration for the GATT round and open trade and the fact that
they have held on to the Blair House. Sure, the impact will come a
little later rather than earlier, but it is largely held there I think speaks
volumes for the United States view of open multi-lateral trade. This is
not the view of the European community, It is the view of some
members of the European community, but it is not the view of some
countries and as a consequence the rest of us will have a higher
standard of living and better incomes relatively speaking than will
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J* Prime Minister, there was one area that the United States specifically
wanted us to open our markets on and that was access to their
television and film material. Have we given any ground on that?
PM: No, we value substantially the maintenance of our capacity to produce
cultural material here which reflects our own culture and our own
needs and while we see value in general trade in these particular
commodities and there is, as you know, Australian audio visual
services take a lot of American product, we still have a cultural product
to protect and we have argued that case. I think what has happened
so too has the French and others and there has been an agreement to
disagree on the part of the United States and European community on
this question. So audio visual has effectively fallen out of the Round
and with it falls away any need for a commitment by Australia.
J: Is it possible to spell out what changes we will have to make to our
own rules as a result of this sort of zero, zero agreements and other..
PM: I think you can ask the officials Tim ( Dodd) and they would be glad to
tell you.
J, With the boost that this will give business competence, what effect for
the European, American economies and recoveries and then what
effect for ours?
PM: There has been a very large change in the United States economy as
there has in Australia, a lot of de leveraging by companies, essentially
the accounts of most companies are now in better shape as you know.
In this country our profit share Is very high; we are starting to see
investment take off again; we have seen very strong profit
performances and therefore a strong stock market performance, a lot
of capital has been raised; a lot of capital has been marshalled. I think
a decision like this, an outcome like this just adds to that aura of
confidence which is developing around the motor economies and
those which still have troubles which are still going through de
leveraging in the case of Japan. and -the problems -of. integration. in the
case of Germany that is the integration with East Germany, the GDR.
Those things have been real inhibitions for those economies taking off,
but this is just such an obviously good outcome world wide that it must
be a tremendous bull point in markets.
J: What does this deal mean in terms of future government policy. Do
you see it taking away from protectionism accelerated in the next few
years?
PM;-I don't think so because we have already had it when I say the trend
away it will be a maintenance of the trend towards lower levels of
protection which we have in place on a trend basis, a trend decline in
protection. We removed all quotas from our markets in the late 1 980s
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and now with tariffication, tariffs in this country being the only effective
protective devices those travelling down to 5 per cent by 1996-97 and
in some cases a little higher. I think what this means is tat all of this
has proven to us that we were correct in the. first place in following
through on a strategy of multi lateral trade, support for an open multi
lateral trading system and every effort even though it has been
laborious that we put into the GATT Round is worth it in the end not
to see the world break up into trading blocs and I think that now won't
happen. And the Europeans will make a choice when they look at the
Asia-Pacific and the growth of the Asia-Pacific and the lift in incomes
and employment in the Asia-Pacific now that the world is not going into
three blocs, but there is a general GATT back drop, but two trading
areas Europe and the Asia-Pacific the Europeans will have to
decide whether they want to be at the cutting edge of all this or
whether they want to try and hide behind protective barriers or do
trade distorting things, because, in the end it catches up with you and
it will catch up with them.
So, there is great competition in Europe going to come from the Asia-
Pacific and they can be in the competition by having open product
markets or they can try to resist it.
J: Does this mean the outcome then that you can increase the pace of
APEC's development. Do you now have any specific initiatives that
you would like to see APEC.
PM: I have always talked of APEC as a GATT plus outfit that is, it did
GATT plus things. These things become part of the back~ drop, the
GATT becomes part of the back drop, but in the things which the
GAIT is not doing and can't do, that is in trade facilitating type things,
this is going to be one of the strengths of APEC. rhat is, in things like
investment agreements, in things like company law, in things like
consumer product standards, all of these kinds of things are things an
organisation like APEC can do, but the GATT can't do. So, that is why
I think if we make a choice in this part of the world for faster growth
and a higher velocity of -trade and investment we -could facilitate it
through APEC. So too can the Europeans, through the European
community, but they have got to want to do the same things and I don't
know whether they will. Before APEC we didn't have such a structure.
With APEC we do have now such a structure and happily it will build
upon the GATT and there will be no question of it replacing the GAIT
or doing something with APEC that might have needed to be done in
the event the GAIT Round failed.
So, it will be basically GAIT plus things, things will enhance the
outcome and make it better for all of us.
J: that you like the senior officials to adopt..
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PM: The last lot was a very large speech I gave in California which outlined
some of the directions we think APEC should go and we articulated
some of those at the ministerial meeting in Seattle.
J: One of the things which was one of our highest priorities in the Round
was to ask our Asian friends to reduce their tariff barriers to
manufactured products from Australia they had tariff escalation of
low tariffs on raw materials, high tariffs on finished products, Are you
happy with the success we have..
PM: It is 53 per cent across the board of the countries we deal with on the
weighting of the products we handle, so that one has to say is a
spectacular change from any multi lateral trade round. There is no
doubt whatever people do with this, looking at it and turning up this
leave and having a look at that point, it is by far and away the most
spectacular outcome from a multi lateral trading round that we have
ever had. I wouldn't be surprised to say likely to have, but certainly
that we have ever had it to this point. Thank you..
ends