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Mortimer Review Of Trade Policy


Mortimer Review Of Trade Policy: Unfinished Business

Governments around the world have to date made little effort to explore ways of protecting international trade negotiations against the developments that stalled progress in the Doha Round. The Australian government and the incoming New Zealand government are two possible exceptions.

During the Uruguay Round New Zealand's trade representative in Geneva, Tim Groser, (now a member of the National-led government in New Zealand) championed an approach to future multilateral trade negotiations that recognised the domestic source of the problems threatening progress in the World Trade Organisation (WTO). He re-affirmed his commitment to that approach at a recent conference in Sydney, sponsored by the Lowy Institute for International Policy. For its part, the Australian government recently commissioned a review of trade policy by David Mortimer, before deciding how it should meet its commitment to support the WTO - its highest trade policy priority. So the possibilities (and portends) seem positive.

The Mortimer report is now with the Australian government. What follows is an assessment of whether it provides value for money.

Most people have a limited understanding of trade policy. The clarity of what is at issue - the opportunity to enhance national wealth by engaging in world trade on the basis of what we do best - has been corrupted into the language of trade lawyers and negotiators, unintelligible to the rest of us. Policy bystanders are left to accept, and hope, that trade policy is being conducted in a way that reflects our national interest.

Academic and other professional economists, however, are not so constrained. Their training and experience should have given them a much better understanding of trade policy than is available to the rest of us. They therefore have an opportunity (and responsibility) to help build public understanding of the contribution it can, and should, make to our future prosperity. This is an important domestic policy issue that warrants their close attention if Australia and New Zealand are to enjoy the rewards potentially available from participating in the WTO. Because they are not under pressure to conform to existing policy orthodoxy, they can help ensure the present re-examination of trade policy does not produce the superficial response that too often follows such inquiries.

The purpose of the following notes is to encourage a public contribution from this group, to help reduce the risk that the Australian government's commitment to the multilateral (WTO) system will fall through the policy cracks left by the Mortimer report. A similar contribution by their colleagues in the 1960's helped raise public awareness of the cost to national prosperity of maintaining Australia's extensive trade barriers. It was this public awareness that ended protectionism as the driver of Australia's trade policy.

The recent release of the Mortimer report coincides with an international review by the WTO of the way forward, initiated by Director-General Lamy. Both reviews have occurred at a time when progress in opening world markets through multilateral trade negotiations has stalled, after seven years of intense negotiating effort.

The notes begin with a summary of major developments that have stalled progress in multilateral trade negotiations, followed by:

• a brief statement of the logic supporting an initiative proposed by Australian and New Zealand industry and business organisations, (which involves adding a domestic transparency process to existing WTO processes) ; and

• the response to this proposal, and to its terms of reference, by the Mortimer panel in its final report.

Bill Carmichael
Past Chairman
Industries Assistance Commission

Saul Eslake
Chief Economist
Australia and New Zealand Banking Group Ltd

Charles Finny
Chief Executive
Wellington Regional Chamber of Commerce

Roger Kerr
Executive Director
New Zealand Business Roundtable

11 November 2008

See... Full report (PDF)

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