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Australia Urges Progress in Stalled World Trade Talks


Australian farmers are eager to see progress in World Trade Organization talks, they think the WTO is the best way to foster greater prosperity and open up overseas markets. Economists say that international trade barriers cost the country's farmers billions of dollars in lost earnings. From Sydney, Phil Mercer reports.

This dry corner of the Outback in New South Wales has been in a severe drought for more than five years. The earth is bare and a strong wind whips up clouds of brown dust.

Even so, farmers like Bill Dunlop are able to earn a living, and they say they could do even better if trade barriers in North America and Europe ended.

"Efficiency certainly is the word for Australian farmers. From clearing land in the first place whether it be in Western Australia or here in the eastern states, the innovation, the ability for practical farming systems with direct drilling, no cultivation, etc, to try and hold our soil structure together and stop it either eroding or blowing away with no subsidies whatsoever other than some assistance from government on tree planting," said Dunlop.

Australia provides almost no subsidies for its farmers and maintains low tariffs on most food imports.

Its farmers want to see other countries end export subsidies on agricultural products, which distort world prices.

They also want other countries to dismantle farm subsidy programs and cut other barriers to agricultural trade.

For the past decade, the World Trade Organization has tried to achieve those goals for its members. But since 2006, talks on overall trade liberalization have stalled, in large part because of disputes over how much the European Union, the United States and other developed countries will reduce agricultural subsidies.

Mick Keogh from the Australian Farm Institute says that despite its problems, the WTO offers the best chance of opening up farm trade.

"Doing it through bilateral or regional negotiations is a very slow and tedious and piecemeal approach and certainly I think the agricultural sector in Australia much prefers the multilateral approach and the rules-based environment that the WTO brings because it's certainly a better forum to resolve some of the trade disputes that occur from time-to-time than trying to sort those out bilaterally in those complicated sort of arrangements," said Keogh.

In the absence of WTO reforms, Australia is forging ahead with bilateral deals.

It has free trade agreements with New Zealand, Singapore, Thailand and most importantly the United States.

Diplomats have started exploring similar treaties with China and Japan.

Sean Turnell, an economist specializing in trade policy at Australia's Macquarie University, says that while bilateral agreements are not ideal, the government should pursue them.

"It's the route the United States is going down and many other countries. Many people have criticized that as leading to this 'spaghetti bowl' of deals, which just diverts rather than expands free trade but at the moment it's the only game in town," added Turnell. "And it does put pressure, I think, generally in favor of free trade and it's probably good but not best."

Australia has enjoyed a decade-and-a-half of economic growth.

But economists think that the lack of progress at the World Trade Organization is costing the country a fortune in lost earnings, especially in farm trade.

"Oh, it certainly runs into the billions of dollars a year, there's no question about that. I mean, is it in the five to ten billion range I suspect it is in terms of the direct and indirect costs as you say," said Richard Gibbs, the chief economist at Macquarie Bank in Sydney.

Under the current round of WTO talks, known as the Doha Round, the United States and the European Union have offered to substantially cut farm trade barriers over several years. However, agricultural powerhouses such as Australia and Brazil say the cuts are not enough.

On the other hand, the U.S. and EU say many emerging economies, such as India and Brazil, have not offered to significantly reduce barriers on trade in manufactured goods and services.

Among Australians, the World Trade Organization provokes both frustration and optimism; many farmers and economists see it as a relevant framework for increasing trade, although they are not holding their breath waiting for rapid improvements.

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