Global trade shake-up looms - Brief Article - Statistical Data Included

Business Asia, July, 2000 by Randolph Ramsay

Australian Trade Minister Mark Vaile says our ties with China have never been better -- but he warns that the dynamics of world trade are changing.

THE DYNAMICS of world trade have changed irrevocably and a new approach must be forged to ensure the success of a new round of global trade negotiations, Australian Trade Minister Trade Minister Mark Vaile says.

The Minister's assessment came at the Business Asia magazine Roundtable in Sydney last month, where some of Australia's leading business minds had come to hear the Minister.

Vaile, fresh from an Asia Pacific Economic Cooperation (APEC) Trade Minister's meeting in Darwin, was frank in his assessment of the state of World Trade Organisation multilateral negotiations, saying a new round would have little chance of succeeding unless the concerns of middle and developing economies were adequately addressed.

"We no longer have an organisation (in the WTO) that is dominated by the major powers of the world economically. The bulk of the membership of the WTO is made up of the middle-ranking economies and developing economies, who are going to continue to exercise their rights and their powers in the WTO," he said.

"... We had the dynamic of the world's major economic powers reaching agreement on most of the major issues and then coming to the rest of the WTO organisation and the rest of the membership and saying, here it is, this is what we've agreed on, this is what you've got to agree to go with. That won't work any more."

Vaile, who floated the idea of a separate meeting of middle-sized economies at the Darwin APEC meeting, said the concept had been warmly received by the group's 21 member economies.

He also played down criticism of the meeting's outcomes. Some had argued that not enough was achieved in Darwin, while Labor Trade spokesman Peter Cook said the meeting's failure to resolve differences between APEC members would do nothing to break the WTO deadlock.

"A lot of commentators continue to try and write APEC down, push it down, degrade the importance of APEC. We need to consider now that APEC is now 10 years old, it represents the 21 economies in the Asia-Pacific region, it's almost 60 per cent of global GDP and it represents 70 per cent of our export markets -- it is incredibly important," Vaile said.

Vaile also reaffirmed the Australian government's commitment to furthering AFTA-CER (linking the ASEAN Free Trade Area with the Australia/New Zealand Closer Economic Relations partnership) talks, saying the issue was discussed at length at the Darwin meeting.

"The taskforce we commissioned last year that's conducting an investigation into the benefits and implications of an AFTA-CER free trade agreement is going very well. There's a high level of optimism and a very positive attitude at that working group," he said.

"There has always been historically a view that they (free trade agreements) can undermine or weaken the objectivity of the multilateral system in terms of getting gains.

"The interesting change in this discussion (at Darwin) was that there was a broad view right round the table that, if there's a focus on conducting these types of discussions and pursuing that and within the architecture of things like APEC, then they can be used as building blocks, not stumbling blocks."

Vaile was upbeat about Asia's continuing recovery, citing South Korea and Malaysia as bright spots. However, it is China that draws his greatest optimism.

The Minister, who visited China in May with a business delegation, said Australia's relationship with China had "never been better". "The Chinese government was very impressed with the visit and the commitment our government and our business sector is putting into the relationship," he said.

"They are absolutely focused on being successful. At every point they encouraged us to try and make sure that we facilitate and provide opportunities for investment, and with that investment bring technology and skills to them."

However, Japan's sluggish economic performance remains a source of concern. Vaile sees Japan falling behind the rest of the region, particularly in regard to new technology take-up and much-needed structural reforms.

"The one economy that's probably not up to as much as everybody else (in e-business and new technologies) is the Japanese economy. It was the one country out of the 21 economies in APEC that couldn't electronically generate a photograph of their Minister attending the conference in Darwin, which was quite astounding, given historically the Japanese embracing new technologies," he said.

As for the recently settled trade dispute with the Philippines, Vaile remains adamant that Australia's quarantine process must not be compromised.

The trade spat erupted in late May this year after Australia rejected Philippine demands for an easing on its application process to import bananas and pineapples into Australia.

The Philippines took retaliatory action, restricting Australian live cattle imports by about 20 per cent. The Philippines is Australia's biggest market for live cattle, accounting for $944 million worth of exports in 1999.