By John W.H. Denton
Partner and Chief Executive, Corrs Chambers Westgarth
Chairman, BCA Trade and International Relations Task Force
As residents of a small, open economy that is not a natural member of any major trading bloc, all Australians have a vital interest in free global trade.
Members of the Business Council of Australia – CEOs of 100 of the country’s top corporations – in particular have a strong interest, given the correlation between the export of Australian goods and services and the growth, job creation and higher standards of living Australia has had in the past two decades.
The BCA believes multilateral negotiations conducted by the World Trade Organisation – which now has 148 members – offer the greatest benefits for global economic growth, and hold the most potential for increased standards of living for both developing and developed countries.
Ever since its inception in 1995, the WTO has been an engine of market liberalisation, helping to provide the security and reliability needed for worldwide economic growth and prosperity.
This does not lessen the importance of bilateral trade agreements for Australia, such as the recent free trade agreement (FTA) with the US and other FTAs being formulated with China and other Asian trading partners.
Provided bilateral agreements complement the overall objective of more liberalised trading arrangements that are in Australia’s long-term interests, they should be pursued.
Unfortunately, despite the significant and potential benefits of world growth, the great hopes for growth and development promised by the current WTO trade round are now at serious risk.
According to World Bank estimates, the income gain for developing countries from a freeing up in the flow of services between economies could be as high as $US900 billion ($A1180 billion) by 2015.
Yet the round of global trade liberalisation talks launched in 2001 is more than two years behind schedule and the January 2005 deadline for concluding the Doha Round has passed without tangible results.
What’s more, WTO members failed to agree in July on a first outline of the Ministerial Declaration for the Hong Kong Conference in December, which was to light the way forward to successfully completing the Doha negotiations this year.
The BCA recently joined forces with five other national business organisations – from the US, Canada, Mexico, Europe and Japan – to call for concerted political action to save the Doha Round.
Chief executives from business organisations around the world are deeply concerned the Doha Development Agenda is on the verge of failure.
The BCA has joined with these groups to call on member nations of the WTO to intensify their efforts to achieve a successful conclusion to the round.
In agriculture, we believe all WTO members, particularly the major players, urgently need to demonstrate the political will to make substantial progress in the negotiations and to make politically difficult decisions on agricultural reform.
Elimination of export subsidies, sharp limits on the use of trade-distorting domestic support, and significant reductions in tariff rates and other barriers in the end will benefit both exporters and consumers.
In industrial goods, WTO members need to commit to substantially reducing or eliminating tariffs on all industrial goods. There is no doubt that agreement on the means to achieve these objectives is long overdue.
Given the increasing importance of services globally, the negotiations must conclude with a significant and commercially valid agreement to liberalise trade in services.
In trade facilitation, bringing down the transaction costs of trade will lead to immediate gains for exporters, domestic producers and consumers around the world.
WTO member governments must make the commitment, and if necessary the concessions required to secure a balanced and ambitious agreement in the rapidly closing window of opportunity.
A failure to come to terms with these issues may have serious consequences for worldwide economic growth and development.
Global growth cannot be sustained at the levels needed for developed and developing countries, nor provide the means for the poorest WTO members to share in that growth, without agreement on further liberalisation of core areas of the international economy.
Pascal Lamy, the new WTO head, has a hugely challenging but vital task ahead of him and time is fast running out.