WINS FOR AUSTRALIA IN AGRICULTURE
McKinnon, Special Negotiator for Agriculture,
of Foreign Affairs and Trade
November 2001 Ministers from 144 members of the World Trade Organisation (WTO)
meeting in Doha, Qatar agreed to launch a new round of broad-based trade
negotiations. This was a welcome
outcome for Australia – not only because the launch of a new round of trade
negotiations was our highest trade policy priority, but also because the
Ministerial Declaration launching the Round addressed all of Australia’s
Australia this successful outcome involved extensive technical work and
dialogue and negotiations - at home with domestic stakeholders, and abroad
working alongside the WTO-member partners with whom Australia shares common
interests of strengthening to the greatest extent possible the rules of
the most important outcomes for Australia in the Doha Ministerial Declaration
was the inclusion of ambitious language which opens the way for comprehensive
negotiations further to reform global agricultural trade.
The mandate agreed in Doha provides for “substantial improvements in
market access; reductions of, with a view to phasing out, all forms of export
subsidies; and substantial reductions in trade-distorting domestic support.”
negotiating objectives are for agriculture to be fully integrated into the
WTO rules; for agricultural tariffs to be brought down to the level of those
in other goods; to eliminate the billions of dollars spent every year on
export subsidies; and substantially reduce the billions spent every week on
distorting domestic support.
under no illusions about the enormity of this task.
Seven years after the end of the Uruguay Round, world markets for
agricultural products are still characterised by huge subsidies and high
levels of protection. In 2000,
the OECD reported that its members provided US$ 327 billion in subsidies to
agriculture – compared with US$ 43 billion in developed country aid to
depressing statistics for an efficient agricultural producer like Australia,
and also for the developing countries making up the bulk of the Cairns Group,
which rely heavily on their agricultural sectors for growth and development. Confronting this bleak picture, it is sometimes easy to
overlook the importance for Australia (and the Cairns Group) of achieving
agreement in the WTO seven years ago to a legally binding instrument dealing
with trade in agricultural commodities.
But now, as we embark on another round of multilateral negotiations,
it is important to remind ourselves of the fundamental importance and
relevance of the Agreement on Agriculture.
long experience has shown that the problems of agricultural support and
protection cannot be addressed effectively by trade liberalising methods such
as bilateral Free Trade Agreements. This
is partly because of the political dynamic but partly also because it is not
possible to address subsidies which have a global impact in the context of a
purely bilateral FTA. It is
through continuing to negotiate at the multilateral level that we and
coalition partners in the Cairns Group maximise our push for reductions in
trade distorting measures that will translate into meaningful gains in global
inclusion of the Agreement on Agriculture into the body of GATT
law means members have recourse to WTO dispute settlement mechanisms
to resolve agricultural trade disputes.
The dispute settlement system, “a central element in providing
security and predictability to the multilateral trading system”,
provides for a system of both compulsory and binding jurisdiction, with
remedies for the enforcement of rulings.
To date Australia has successfully prosecuted four WTO complaints, all
of which have resulted in improved market access for agricultural
March 1998 India was required to phase out quantitative restrictions on a
range of agricultural and manufactured goods.
July 1997 Hungary was required to cease using agricultural export subsidies
on several items.
July 2000 Korea was required to liberalise its beef import and retail
arrangements as then existing arrangements were found to be a significant
barrier to beef imports.
2001 the United States was required to remove its safeguard arrangements on
the Agreement on Agriculture has conferred some real benefits on Australian
agricultural exporters – market access improvements for Australian
agricultural products being the primary and most visible of these.
This not only includes outcomes negotiated during the Uruguay Round
itself, but also outcomes achieved when countries acceding to the WTO have to
agree to a package of market opening measures and changes in their domestic
regulations as part of that accession process.
In the latter regard China’s recent entry into the WTO and attendant
reforms undertaken by China in its agriculture sector will provide new
opportunities for Australian exporters to secure a much larger share of an
expanding commodities market including in barley, cotton, sugar, wheat and
Market access wins
in access to export markets are rarely defined by a single event or outcome. In the seven years since Uruguay Round Agreements entered
into force, Australian successes in developing or forging new markets for
agricultural exports have been influenced by a range of factors - economic
crisis in East Asia, devaluation of the Australian dollar,
strengthening/weakening of commodity prices in response to supply/demand
factors, the global slowdown post September 11, outbreaks of disease and
climatic events. However,
important in underpinning improvements in market developments for a number of
Australian exports have been the range of market access agreements and
support reduction commitments arrived at during Uruguay Round negotiations.
instance the Uruguay Round access into Japan for certain cheeses has
underpinned a strong export performance by the Australian dairy industry,
with cheese exports to Japan increasing from A$150 million in 1994 to A$340
million in 2000. Globally,
Australian exports of dairy products have doubled, from A$1.3 billion in 1994
to $ 2.6 billion in 2000.
the Uruguay Round many Asian rice markets were closed or highly restricted to
Australian exports of rice. During
the Round, Australia negotiated market openings in a number of Asian
countries. As a result, available markets increased in value from less
than US$250 million in 1990 to more than US$2.5 billion in 1999.
Australia’s higher-priced, higher-quality rice has made real inroads
in the Japanese markets. Australia
has just won its first tender for rice to Korea.
exports markets into Japan, US and Korea have also benefited considerably as
a result of Uruguay Round outcomes. The
remainder of this paper is devoted to a brief case study of beef exports into
these three markets.
Australian beef exports
submission to a House of Representatives Standing Committee inquiry into the
benefits to rural Australia of international agricultural trade reform,
Australian meat and livestock industries estimated that liberalisation of
beef markets in 2001 in Japan, Korea, the European Union, United States and
Canada will provide gains up to A$4.93 billion over the period up to 2011.
Modelling for the same submission has indicated that the opening of
the Japanese and Korean markets in particular in 1990-1997 have increased the
gross value of Australian production by around 10 per cent – with prices
rising 3 per cent on average and export sales increasing by 7 per cent.
of Japan’s beef market began in 1989 with the removal of quantitative
restrictions, replaced with tariffs which are declining over time.
In the Uruguay Round, Japan committed itself to further reductions in
tariffs from 50% in 1993 to 38.5% by the end of the implementation period in
2000 with a safeguard clause which permitted the Japanese government to raise
the tariff to 50% for a limited period if imports exceeded a critical level.
The safeguard has been triggered on several occasions.
and associated reductions in prices for Japanese consumers have led to
significant increases in imports over the first half of the 1990s (reflected
in graph 1) ABARE analysis suggests that this growth may have been greater
had the entire price reduction been passed on to consumers.
Relative lack of competition in the Japanese retail market has been
cited as the reason that this did not occur.
The mid-1990s shows a steep dip in exports – a function of decreased
demand with the onset of the East Asia crisis.
From 1997 onwards a period of relative static demand - but starting
from a higher base than in the pre-liberalisation period - has reflected flat
incomes and health and safety concerns about imported beef.
beef markets into the Republic of Korea have doubled in value since the
conclusion of the Uruguay Agreement on Agriculture was finalised.
Korean commitments during the Uruguay Round included a quota increase
from 123,000 tonnes to 225,000 tonnes over the five year implementation
period with complete quota elimination by 2001, when the market moved to a
tariff-only basis. Associated
with this was a tariff quota reduction from 43.6% in 1995 to 40% in 2004.
Removal of restrictions on imported beef is estimated to increase
Australian beef sales to Korea from 70,000 tonnes to 90,000 tonnes by 2002, a
gain of approximately A$200 million per year.
tells the story of Australian beef exports to Korea with a steep dip in
growth over the period of the East Asian crisis with Korea unable to meet its
minimum import requirements in 1998.
Recovery of the Korean economy on the back of strong commodity prices
and a depreciating Australian dollar has prompted an increase in demand for
beef. The successful challenge in the WTO by Australia and the US
against discriminatory measures imposed by Korea for imported beef, ranging
from the imposition of discriminatory border measures through the entire
distribution chain to retail butcher shops is expected further to bolster
commitments on beef during the Uruguay Round included replacement of the Meat
Import Law with tariff-only protection and increased access through tariff
quotas. This led to an immediate
increase of 17% in access in 1995 compared with the level in 1994 and a
global quota of 656,621 tonnes of which Australia had a 57.6% market share.
The out-of-quota tariff rate decreased minimally – from 31.1% to
26.4% from 1995-2000.
reflects the value of beef exports to the US market.
During 1999, 34 per cent of Australia’s beef exports were to the
difficult to measure in terms of market access implications, but no less
significant for beef outcomes was US agreement during the Uruguay Round to
reduce the volume of beef eligible for export subsidies from 22,265 tonnes in
a 1986-1990 base year to 17, 589 tonnes by 2000.
the European Union reduced by 26% its subsidised beef exports.
We consider this to be a major factor accounting for the increase in
exports of chilled and frozen beef to Russia, from 4522 tonnes in 1996-97 to
29,402 tonnes in 1997-98. Reductions
in EU export subsidies also led to Australia being more competitive in
markets such as Bulgaria, Croatia, Hungary and South Africa.
in moving forward Doha agriculture negotiations requires sustained enthusiasm
and commitment. This must be
underscored with a clear sense of the importance and relevance of the
Agreement on Agriculture, and an understanding of the scope for potential
real benefits to Australia’s agriculture sector.
(2001) Agricultural Trade Policies in Japan: The
Need for Reform, “Benefits to
the meat and livestock industry from agricultural trade reform”, Australian
meat and livestock industries’ submission to the House of Representative
Standing Committee inquiry into the benefits to rural Australia of
international agricultural trade reform (1997)
(1994) Uruguay Round Outcomes: Agriculture
(1999) Trade Outcomes and Objectives Statement,
(2000) Composition of Trade Australia
Asia Analytical Unit (DFAT) (1999) Korea Rebuilds: From Crisis to
(2000) Agricultural Policies in OECD Countries: Monitoring and Evaluation,
Secretariat, Doha Ministerial Declaration, WT/MIN (01)/DEC/W/1