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Goff: Cairns Group Farm Leaders lunch

Hon Phil Goff
Minister of Trade


19 September 2006

Speech Notes

Goff addresses 20th anniversary of the Cairns Group.
Address to Cairns Group Farm Leaders lunch
Cairns
Australia

Thank you for the opportunity to join you here on the occasion of the 20th anniversary of the Cairns Group.

Since 1998 the Farm Leaders' meetings have been part of the formal Cairns Group process, and I want to thank you for adding considerable value to the process.

The Cairns Group itself was set up in 1986 initially with 14 members and now has 18 members.

Its formation was a response to entrenched international discrimination against agricultural exports.

Previous trade rounds had not addressed the barriers that prevented us from being able to sell our products into key markets.

Nor had they addressed the issue of subsidies that drive down world prices. This makes efficient, but unsubsidised, farmers in our own countries uncompetitive. By excluding developing countries from access to wealthy markets and undermining their competitiveness in third markets, subsidies are also a key barrier to development.

Our problems were being largely ignored within the GATT organisation charged with addressing trade issues.

A simple but important principle bought us together: fair trade for farmers.

This rationale was reflected in the words of the vision statement we adopted before Seattle:

“The Cairns Group is united in its resolve to ensure that the next WTO negotiations achieve fundamental reform, which will put world trade in agricultural goods on the same basis as trade in other goods”.

Negotiating fair access for agricultural exports and reform of subsidies has not been easy.

The Uruguay Round was a critical first step.

We fought for, and secured the undertaking that agriculture should be bought within the umbrella of multilateral trading rules. We took the critical first steps on subsidy and market access reform.

Without the Cairns Group I doubt we would have got that far.

We have seen some flow-through into farmers’ balance sheets since the implementation of the Uruguay Round – though not for all products or markets.

From there we moved on to work together in preparing for the launch of the Doha Round. This was instrumental in giving us a mandate on agriculture much more ambitious than anything previously achieved.

The challenge since then has been to translate the intention of the mandate into reality. We are still up against countries that take a fundamentally different view from us on how agricultural trade should be treated.

Doha has been going nearly five years. It has been hard work and the events of the last few months have shown how difficult and frustrating it can be.

We have, however, continued to make progress. The efforts of the Cairns Group - working with coalitions such as the G20 – have finally forced the big subsidisers to accept that their programmes are fundamentally unfair.

- In Geneva in July 2004 we tied down the principle of eliminating export subsidies altogether.

- We are now negotiating for meaningful cuts in trade distorting domestic support. In the process we have secured an implicit acceptance that domestic support will in time have to be phased out altogether, though that will remain a challenge for a future round.

- We have won the public debate on farm subsidies and development. The argument that that any country should be left free to ruin markets for developing country farmers by dumping subsidised agricultural products has been discredited.

There is complete solidarity within the group on early and complete elimination of export subsidies.

There is also a strong and united view that we have to see deep, and real, cuts in trade distorting domestic support. What is on the table right now is a good start. But it does not go far enough.

More work is also needed on trade rules.

Market access has always been a harder issue within the Cairns Group. We have all accepted that we are not going to be able to break down tariff and quota walls in this round in the way we had originally hoped.

In 2004 we accepted the need for special treatment for “sensitive products” – even if many of us found the idea of special and differential treatment for rich farmers hard to swallow.

We also accepted the principle of designating “Special Products” for developing countries – to take account of food security, livelihood security and rural development needs.

Right now, however, we face a crisis. The Doha WTO negotiations – the main vehicle for agricultural trade reform – have been suspended since July.

We cannot tackle agriculture subsidies on a global basis anywhere else. And without subsidy reform we will not make progress on market access.

The Cairns Group needs to continue to work together to address this challenge.

In terms of a resumption of the Round, it is easy enough to see what is necessary.

The Europeans and Japanese are going to have to do more on market access – especially on sensitive products. The Americans are going to have to improve their offer on cuts in domestic support. But none of this will happen without tighter definition of the developing country flexibilities, especially for Special Products.

Earlier in the process we all focused on the headline numbers – especially the formula cuts in tariffs and subsidies. As we enter the end game the focus is now shifting to the flexibilities.

Just as we need from the Americans details that would give us an assurance of real cuts in their farm spending, they insist that they can’t cut a deal on market access without more certainty around sensitive and special products. That is a fair point.

While acknowledging the real political difficulties around agricultural reform in the key G-6 markets, each knows it is in their interests to undertake further agricultural reform.

The Cairns Group, working with the G20 and other coalitions, need to keep the pressure on.

This campaign is not run solely at government level. The results we achieve also depend critically on the positions taken by industry leaders – not just in Cairns Group capitals but also in Europe and the United States and elsewhere.

The negotiating messages you give your counterparts in other countries are important.

Ultimately this is about more than dollars.

The heart of the Cairns Group ethos has always been a search for fairness. The idea that a farmer should be able to grow the right crop for his land, and for the market – and then get a fair market price for it.

We have a lot of work to do in the short term to complete the Doha Round. Success is far from certain but failure is unacceptable.

Pascal Lamy has stated we are all losers if we cannot complete this round. The costs will be not only in foregone trade but also in damage to the rules-based multilateral system itself.

This 20th anniversary should also be an occasion to think about our longer-term goals.

Over time we will succeed in delivering on our reform agenda. Working with other coalitions we will eventually clean up the current distortions in farm trade.

But we can expect new challenges and new demands. We will need to work together in heading off the new-generation non-tariff barriers we face.

The latest one of these to come across my desk is "food miles" – a concept as flawed in science, as it is attractive to some as a protectionist marketing strategy.

European primary producers and some NGOs would have consumers believe that distance from the market is a key indicator of a product’s impact on the environment through carbon dioxide emissions. Products from countries as distant from their markets as New Zealand are branded as environmentally undesirable.

The truth, as demonstrated by objective and scientific studies, is that energy used in production and transport of products such as lamb and dairy is per unit several times higher for goods produced in Europe than it is for New Zealand produced goods shipped there, notwithstanding the transport involved.

“Food miles” is simply another thinly disguised protectionist mechanism.

We do need to think about how we can best respond to demands for better quality food and niche consumer interests.

We also need to be asking ourselves as a group what we can do to develop food production systems with a lighter footprint on the environment. Environmental sustainability is important.

We can be proud of the achievements of the Group over the past twenty years.

The partnership between governments and the industry leaders represented here today has played a key role in the progress made.

It will continue to play a vital role as we strive to try to re-launch the Doha Round negotiations in coming weeks.

While we celebrate the 20th anniversary of the forming of the Cairns Group, we need to re-commit ourselves to confronting the challenges ahead if we are to make the concept of free and fair trade in agricultural products a reality.

ENDS

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