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Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Department of Foreign Affairs and Trade :: 2001-2002 Annual Report
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Output 1.1:

Protection and advocacy of Australia's international interests through the provision of policy advice to ministers and overseas diplomatic activity

1.1.5 Bilateral, regional and multilateral trade negotiations

Page Contents

Overview

Advancing Australia's trade interests across a challenging multilateral, regional and bilateral agenda was a major focus for the department over the past year.

The successful launch of a round of multilateral trade negotiations at the WTO Click to view related information - opens in new window Ministerial Meeting in Doha in November 2001 was the Government's key trade policy objective and a major achievement. The department provided close support for Mr Vaile's work in building consensus for the launch of the round and in advancing the negotiations at Doha. The new round provides for wide-ranging trade liberalisation of global markets that will advantage Australian farmers, manufacturers, miners and service providers.

The department also undertook extensive work on the Government's policy of pursuing bilateral comprehensive free trade agreements (FTAs) where prospects exist for market access gains in advance of or in addition to the WTO round, and where FTAs would capture strategic advantage for Australia through closer links with particular countries. Substantial progress was made in negotiations with Singapore and negotiations began with Thailand. Commencing negotiations with the United States is an important trade policy objective for the Government given the major economic advantages of closer links with the largest and most productive economy in the world. The department, especially our embassy in Washington, put a major effort into supporting Mr Vaile's work in pursuit of early agreement with the US government to begin FTA negotiations.

At the multilateral level, Australia's position as chair of the Cairns Group Click to view related information - opens in new window of agricultural exporting countries, and the support the department provided to Mr Vaile in this role, were instrumental in preparation for the Doha meeting. The Cairns Group helped to keep attention on the high level of agricultural subsidies in the rich, developed countries as an increasingly important issue for the multilateral trading system and critical to the interests of many countries in a new round. The department and our mission to the WTO in Geneva supported the group strongly through management of coalition activities, ministerial meetings, and preparation of coordinated Cairns Group negotiating positions and papers.

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The start of multilateral negotiations across eight separate negotiating groups-covering agriculture, services, industrial products, the environment, intellectual property issues, the dispute settlement system, special and differential treatment for developing countries, and trade remedy issues-represents a wide and complex agenda, particularly when combined with an active regional and bilateral trade agenda. The establishment of the department's Office of Trade Negotiations in December 2001, with enhanced resource levels, helped support the Government's work in these areas. The office is responsible for the full range of Australia's trade negotiating effort. It includes two new senior level appointments-a Special Negotiator for Agriculture and a Special Negotiator for Free Trade Agreements.

An important priority for the department, and our WTO mission in Geneva, has been managing Australia's interests in the WTO dispute settlement system Click to view related information - opens in new window. Successful advocacy through this system led to the United States removing import safeguard measures against lamb and Korea removing import restrictions against beef. These were important achievements. We were also successful in gaining exclusions for Australia from proposed import restraints by the United States on steel.

A further major development during the year was the conclusion of negotiations on accession to the WTO Click to view related information - opens in new window by China and by Taiwan (as Chinese Taipei). This was an important step for the WTO, bringing two major economies within the ambit of its rules. The department was closely involved in negotiating key market access concessions offered by China and Taiwan. These accessions represent a further important step in the progress of the WTO to universal membership.

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A new round of multilateral trade negotiations

The launch of a new round of WTO trade negotiations Click to view related information - opens in new window at the Doha Ministerial Meeting in November 2001 was a significant achievement. In the lead up to the ministerial meeting, we supported Mr Vaile's work with other trade ministers to help pave the way for a successful outcome. This included his participation in mini-ministerial meetings and chairing Cairns Group meetings. We supported (then) Minister for Finance and Administration, Mr Fahey, who led the Australian delegation at Doha until Mr Vaile's arrival. Our WTO mission in Geneva-and our global network of posts-played significant roles in promoting a successful outcome at the Doha meeting through sustained representations.

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Minister for Trade Mark Vaile with US Trade Representative Robert Zoellick (centre) and Australian Ambassador and Permanent Representative to the WTO David Spencer (left) in Doha at the WTO Ministerial Meeting in November 2001.

Australia stands to gain considerably from the launch of the Doha Round in terms of further liberalisation of global markets. The successful launch of the negotiations carried special significance because it represented a re-statement of confidence in the multilateral trading system, which had suffered a major setback in 2000 following the failure of the Seattle WTO ministerial meeting.

The department played an important role in helping to engage developing countries on new round issues, including to ensure that these countries are able to participate effectively in the negotiations. With developing countries representing more than 100 of the WTO's 144 members, it is clear the round will not succeed without their full and effective participation, including on issues of significance to them such as agriculture and textiles. The Doha Declaration (also known as the Doha Development Agenda) recognises the growing importance of developing countries in the WTO.

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Australia contributed to the WTO's Doha Development Agenda Global Trust Fund on technical assistance and to the Geneva-based Agency for International Trade Information and Cooperation to assist smaller developing country members without representation in Geneva, especially those in our region. The department also delivered a training program for trade negotiators from 20 African countries in Pretoria in May 2002, in conjunction with the South African Government. This program not only served to improve their understanding of WTO laws and procedures but also reinforced shared perspectives with Australia on trade issues, particularly agricultural trade.

We worked successfully with other countries to ensure the Doha Declaration did not allow increased trade protectionism under the guise of environmental objectives, and to highlight the opportunities for better outcomes for both trade and the environment. We also worked with other agencies to ensure that outcomes in environmental forums on issues with trade implications were consistent with our trade interests.

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Domestic consultation on a new round and on other trade policy issues

The department helped Mr Vaile conduct an extensive program of domestic consultations Click to view related information - opens in new window and outreach on WTO issues and other trade policy matters-including through formal meetings and other contacts; calls for public submissions; extensive use of our website as a channel for disseminating information; and through trade policy training courses and seminars for officials and non-government representatives.

These consultations and outreach activities provided interested parties with information on WTO negotiation processes, helped formulate Australia's negotiating priorities and built understanding of the potential benefits of global trade negotiations. They served a similar purpose with respect to the FTAS on Australia's agenda.

Key elements in the consultative process included the WTO Advisory Group-whose members are drawn from industry, community groups, the trade union movement and academia-and contacts with state ministers at the National Trade Consultations (see sub-output 1.1.6 at page 78 for further detail on the National Trade Consultations process). We complemented this work with contacts with state and territory governments, industry, community groups, non-government organisations and the general public.

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Free Trade Agreements Click to view related information - opens in new window

The department made substantial progress in negotiations on an FTA with Singapore. This agreement will include comprehensive coverage of trade in goods, and liberalise key areas of interest to Australia, namely services trade and investment flows. It will also facilitate trade through provisions on e-commerce, government procurement, competition policy and standards.

The department prepared the ground for negotiations with Thailand. We conducted a joint scoping study with Thailand, which demonstrated that a comprehensive 'FTA plus' (that is, to go beyond a traditional FTA also to cover non-tariff measures and new economy issues) would deliver substantial mutual benefits. This study was instrumental in delivering an agreement to begin negotiations. The Prime Minister, Mr Howard, and Thailand's Prime Minister Thaksin Shinawatra announced on 30 May 2002 that the two countries would begin negotiations.

An FTA with the United States, the largest and most dynamic economy in the world, holds the promise of a major boost to the Australian economy. We supported the Government's efforts to ensure that an FTA with Australia was a negotiating priority for the US Government. In line with Mr Vaile's agreement with the US Trade Representative, Robert Zoellick, the department undertook preliminary consultations with the US Administration to lay the groundwork for the eventual start of negotiations. We consulted the Australian community on the implications of an FTA and commissioned two reports that demonstrated substantial positive outcomes for the Australian economy.

The department also pursued bilateral trade and economic agreements with Japan and China (see sub-output 1.1.1 at pages 31-32 for further detail). We worked through APEC and other mechanisms to advance regional trade and economic cooperation. This is reported in sub-output 1.1.6 at page 72.

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Agricultural trade negotiations Click to view related information - opens in new window

At the WTO Ministerial Meeting in Doha, the Cairns Group spearheaded a coalition to support Australia's reform objectives for the 'three pillars': market access, domestic support and export subsidies. The elimination of export subsidies-the subsidies that most damage and distort world markets-is now on the WTO agriculture agenda for the first time. WTO members also have a mandate for comprehensive negotiations aimed at substantial increases in market access and substantial reductions in domestic support.

The department assisted Mr Vaile and other Cairns Group ministers in realising the goal of an ambitious negotiating mandate for agriculture through intensive coordination and negotiating efforts. At the twenty-second Cairns Group Ministerial Meeting in Uruguay in September 2001, ministers worked together on increasing cooperation with like-minded countries such as the United States, India, Egypt, Kenya and Pakistan. Senior trade representatives from the United States and Kenya attended the meeting as special guests.

In the lead-up to the Doha meeting, we also hosted a number of roundtable meetings for industry and government representatives, including visiting delegations from China, Egypt, Argentina and Uruguay. Often in conjunction with the Australian Bureau of Agricultural and Resource Economics, we hosted a series of seminars and discussions in China, Egypt, Thailand, India, Botswana, Uganda, Kenya and Tanzania. We also worked with industry to strengthen sectoral coalitions, such as the Global Sugar Alliance, and to build new ones in sectors such as the dairy industry. We supported ministers in briefing Australian peak industry representatives on the WTO agriculture negotiations at the Agricultural Trade Consultative Group meeting in June 2002.

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Food safety Click to view related information - opens in new window

The department continued to promote strongly the role of science in international food safety decision-making and to emphasise the importance of WTO rules with respect to animal, plant and human health. We played a significant role in preventing other countries from inappropriately using food safety and related concerns about issues such as genetically modified food, as the basis for unjustified trade barriers. As a result of Australian representations, Saudi Arabia and Sri Lanka removed aspects of regulations dealing with genetically modified food imports that would have introduced unjustified barriers to trade and imposed onerous requirements on Australian exporters.

We asked the European Union to justify the basis in the WTO for its proposed regulations on labelling and traceability of genetically modified food products and animal feed. Similarly, in multilateral bodies such as the WTO, the OECD and the Codex Alimentarius Commission, we worked to prevent decisions that would allow countries to apply concepts such as 'traceability' and 'precaution' in ways that would undermine existing trade rules without necessarily providing greater safety with respect to food or consumer health.

We also worked closely with domestic agencies to ensure that Australian health and food safety measures were implemented in the least trade-restrictive manner, consistent with Australia's WTO rights and obligations. Major activity in this area dealt with the provisions that enabled the new food regulatory system for Australia and New Zealand to come into force on 1 July 2002.

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Services negotiations Click to view related information - opens in new window

The department coordinated and promoted Australia's services trade interests in the WTO negotiations, which received new impetus with the launch of the Doha Round. Australia tabled five new negotiating proposals in Geneva during 2001-02, bringing the number of proposals lodged by Australia in the negotiations to 12. The proposals covered education, maritime transport, distribution, business services (other than professional services) and environmental services.

Our main priority in the services negotiations was preparing for the market access phase. Australia's initial market access requests cover 33 WTO members and seek removal of market barriers and other impediments facing Australian exporters across 17 service sectors. These include professional services, financial services, telecommunications, education, mining, construction and air, land and sea transport. The requests deal with issues facing Australian exporters such as lack of transparency of domestic regulation, restrictions on commercial presence and temporary business entry.

As part of the domestic consultative process, we supported the launch by the Australian National University of an Australian Services Roundtable in June 2002. In addition, we corrected misinformation about the nature of the General Agreement on Trade and Services including its implications for the Government's ability to regulate the services sector and to administer and fund public services.

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Industrial products

We worked to ensure industrial goods were part of the negotiating mandate agreed in Doha. A good outcome was achieved-the mandate refers to reducing or, as appropriate, eliminating tariffs. The mandate also addresses the reduction or elimination of tariff peaks, high tariffs and tariff escalation, as well as non-tariff barriers. It was decided that the product coverage would be comprehensive and without a priori exclusions. The mandate provides an important opportunity to advance market access for Australia's industrial exports.

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Intellectual property Click to view related information - opens in new window

The department promoted and defended Australia's interests under the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. We played a lead role in resisting the push by the European Union and other WTO members to extend the protection currently afforded to geographical indications for wine and spirits to other products (for example, parmesan and kalamata olives). We established a growing coalition of members through a major international outreach effort. This included representations in key capitals in Asia and Africa and lobbying in the WTO in Geneva.

Specific achievements included convincing the Patent Institute of Turkey to refuse an application by a Turkish producer to register the term 'ANZAC' as a trademark for various food and beverage products.

The department liaised with a wide range of interested parties in defining Australia's intellectual property interests. We conducted seminars in state capitals to raise awareness of the TRIPS Agreement and the opportunities it provides for improving exporter confidence. Particular aspects of intellectual property were discussed with non-government bodies, industry, academics and intellectual property practitioners. We also produced a regular electronic newsletter on progress in the TRIPS Council and other international intellectual property forums.

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WTO compliance and dispute settlement Click to view related information - opens in new window

The department was successful in using the WTO dispute settlement system to deliver two significant outcomes for Australia: Korea's elimination of a number of WTO-inconsistent measures applying to imported beef; and the United States' removal of its safeguard measures on lamb meat. These were significant outcomes in terms of improving access to major markets for Australian farmers and demonstrating how the WTO dispute process can be employed to Australia's advantage.

The department worked with Australian exporters in settling disputes bilaterally-outside the formal WTO dispute settlement processes-to achieve faster solutions. A successful example of this work was the winning of agreement from the United States to exclude most types of Australian steel from US safeguard action. Another example was obtaining agreement from Korea to permit the freezing of chilled beef.

We defended Australian companies facing anti-dumping action. We advised other government agencies, state and territory governments and domestic industry on WTO compliance issues relating to investment incentives and industry assistance programs. We also identified trade remedy options for Australian industry interests in the light of other countries' subsidy practices.

Our overseas network successfully made representations for the appointment of the Hon. John Lockhart, AO, QC to the WTO Appellate Body. The body is established under the WTO dispute settlement arrangements to hear appeals arising from panel cases.

During the year, Australia was a third party in 13 complaints, including disputes involving telecommunications services, agriculture tariffs, subsidies and safeguards, widely available export subsidies delivered through the tax system, and export credits. Australia is currently involved in a joint complaint against United States dumping and subsidy-offsets legislation.

The department produced a monthly disputes newsletter to: alert exporters to disputes whose outcomes may have implications for their access interests; raise awareness of the services we provide in identifying WTO legal leverage and strategies to resolve issues at the bilateral level; and circulate discussion papers on legal issues of interest to the wider community.

As part of Australia's WTO dispute settlement assistance to Indonesia, we conducted a seminar in Jakarta in April 2002 on 'The WTO legal system-making it work for Indonesia' and held discussions with Indonesian officials and academics on facilitating Indonesia's participation in the WTO dispute settlement system. Four Indonesian officials subsequently visited Australia for discussions on WTO dispute settlement and related issues.

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WTO accession negotiations Click to view related information - opens in new window

The department continued efforts to make sure that the terms of accession for new WTO members were based on improved market access and more secure conditions for trade and investment by Australian firms. High-priority negotiations during the year were with China, Taiwan, Russia, Ukraine and Vietnam.

Negotiations on the membership of China and Taiwan were concluded, with China becoming a WTO member on 11 December 2001 and Taiwan (designated in the WTO as Chinese Taipei) on 1 January 2002. This will have important implications for the way that trade issues with these WTO members are handled in the future. We monitored implementation of the liberalisation commitments undertaken by China and Taiwan to ensure Australian exporters are able to reap the full value of liberalised market access and reforms to trade policies that have been promised.

Negotiations with Russia were a major focus of our efforts, given Russia's significance to the global trading system and its desire heavily to protect its agriculture sector. Some advances were made, but the negotiations appear some way from resolution.

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Supporting the WTO and trade liberalisation in other international trade bodies Click to view related information - opens in new window

The department assisted the Prime Minister, Mr Howard, in ensuring that the Shanghai Accord issued by APEC leaders in October 2001 made a commitment to launch the Doha Round of multilateral trade negotiations. We were also able to build coalitions of support in APEC on particular WTO issues (see sub-output 1.1.6 at page 72 for further detail on the department's work with respect to APEC).

We supported Mr Vaile in advancing Australia's multilateral trade interests at the annual OECD Ministerial Council Meeting. The 2002 meeting communiqué included a strong commitment of support from OECD member countries for the Doha Round. We successfully promoted analytical work on multilateral trade issues in the OECD Trade Committee, particularly on services, regionalism, tariffs, and trade and development issues.

Reporting against quality and quantity indicators and administered items begins on page 96.

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