NATIONAL AFFAIRS: Fishy business: WTOs salmon ruling
NATIONAL AFFAIRS: Fishy business: WTOs salmon ruling
by Colin Teese
News Weekly, April 8, 2000
Attempts to force fresh Canadian salmon on an unwilling Tasmania - which fears its lucrative aquaculture industry could be decimated by imported diseases - should worry beef producers and others. Colin Teese, former Deputy Secretary of the Department of Trade, explains why.
Attempts to force fresh Canadian salmon on an unwilling Tasmania - which fears its lucrative aquaculture industry could be decimated by imported diseases - should worry beef producers and others. Colin Teese explains why.
The one thing Australia's Trade and Agriculture Ministers know about is loyalty - loyalty, that is, to the World Trade Organisation. So much so, that they preferred to denigrate the Tasmanian Government rather than the WTO when that organisation insisted that diseased Canadian salmon be permitted entry into Tasmania.
The WTO, responding to a Canadian complaint, ruled the restrictions placed upon the entry into Tasmania of Canadian fresh salmon constituted a trade restriction in terms of WTO rules.
Ordinarily, Tasmania could be considered to be acting within the limits of its authority in restricting the entry of Canadian salmon on the grounds that carried disease transmissible to other fish - except for one complicating factor.
It turns out all States, including Tasmania, have signed a Memorandum of Understanding with the Commonwealth which apparently commits them to yield to WTO rules which now, apparently, cover health issues.
The WTO's predecessor, the General Agreement on Tariffs and Trade (GATT) enjoyed no such authority. Its relevant Article allowed its members to enforce or adopt any measures "necessary to protect human animal or plant life or health", providing only that the measures adopted were not disguised trade restrictions.
At first glance, the former GATT rules may not seem not dissimilar to those of the WTO. But whereas GATT could only intervene if health rules were maintained as de facto trade restrictions; the WTO is able to rule upon whether or not the health risk is significant. In the case of Canadian salmon that is the basis of its ruling.
One of Australia's most steadfast defenders of the WTO, Mr Alan Oxley, put it succinctly on television recently. He explained that GATT rules allowed member countries to maintain absolutely safe health standards. By contrast, under WTO rules, we are obliged, in the service of so-called free trade, to absorb a measure of health risk. And to allow the WTO to judge what that measure shall be.
When Australians in general, and its farmers in particular, were being sold the bill of goods which was the WTO package, much was made of the benefits which would flow to our farm sector from the new WTO rules.
As it turned out, those estimates of benefit were wildly exaggerated by the Keating Government, in particular, which had invested so much of its prestige in a favourable outcome to the Uruguay Round of trade negotiations, and to the creation of the WTO.
What we were not told about was that we had given up our right to absolutely protect health standards. Neither Australian farmers nor consumers could unearth the facts for themselves except by a close reading of the text of the new WTO regulations, and the making of the necessary connection with the old GATT rules. As non-experts, they could hardly be expected to do so.
And farm organisations did not do much to help. Either they did not know of these important changes, or, if they did, chose not to make them known to their constituent farmers.
The same, presumably, may be said of the National Party. And what of the then Deputy Prime Minister, Leader of the National Party and Minister for Trade, Mr Tim Fischer? Presumably, he was aware of the changes in the rules and understood the impact they could have on our farm sector.
Information about the new rules would perhaps have resonated most with beef producers and exporters, and, of course, they still are profoundly important to that group. As every Australian knows, we have a hugely significant trade with the United States in beef, exceeding 200,000 tonnes in 1996-97.
This trade is utterly dependent upon the US believing that our herds are absolutely free of foot and mouth disease. If we can't deliver, our entire beef trade is at risk. And don't expect the US to take the slightest notice if the WTO were to rule that the US regulations were unduly onerous.
No doubt there could be other areas of our trade at risk by reason of the need, according to WTO rules, to allow entry of goods into Australia which we would otherwise deny on health grounds, but beef is by far the most important.
Apart from these important considerations, the application of the WTO rules, to Tasmanian salmon has revealed certain interesting curiosities.
Is the Australian Government really concerned that if Tasmania does not comply with the WTO demand that it allow entry for Canadian salmon, then Canada will have the right to retaliate on a significant amount of Australian trade.
Hardly. Consider how much that might be? All States, except Tasmania, are said to be willing to admit the Canadian fish. Thus, the retaliation could only be against Tasmania. Presumably Canada sells no salmon to Tasmania now, and would sell little more if the market were open.
Assuming the WTO worked strictly by the rules, Canada's scope for retaliation would be close to zero. So why does a Coalition Government, occupying no seats in Tasmania, choose to pick fight on an issue touching States Rights rather than invite Canada to retaliate.
Looking elsewhere for motivation, one can only speculate about external pressures on the Government to respond positively to the WTO finding. But this much is fact. Most countries have so far chosen to ignore WTO rulings on disputes, and to face retaliation.
The US is said to be concerned about this trend, both for the reputation of the WTO and for perceptions about its effectiveness in the US. For these reasons, it is understood to be pressing Australia to comply with the WTO finding on Howe Leather rather than compel the US to retaliate.
And yet in the Tasmanian salmon case, where important Australian interests are exposed, and Canada's capacity to retaliate is almost zero, Tasmania is being pressured to accept the WTO finding.
Why, Australian farmers and consumers are entitled to ask!