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PRSIV3E M IN ISTER

FOR PRESS 28 May 1978

ELECTORATE TALK

This year, important decisions will be made concerning the  international economy and world trade. The decisions will  be so important that they could well set the pattern to the  end of this century.

Australia is a great and significant trading nation. Therefore  we have much: at stake.

We have a basic interest in an orderly and reasonable world  trading system that recognises the rights and responsibilities  of all nations.

We recognise the limits of our influence in world economic  affairs, but at the same time it is our obligation to express  views that we hold firmly and to advance Australia's cause  in international forums at every opportunity.

This year is important because the Tokyo round trade negotiations  begun in 1973 are due to conclude in the middle of the year.  America is aiming for an outline package of conclusions by  mid-July.

I am concerned that if there is no positive advance in these  trade discussions that both Europe and the United States might  revert to protectionism.

President Carter has stood out against a protectionist Congress  with great strength. But if what are called the Multi Lateral  Trade Negotiations are not successful it would be harder to  withstand those pressures. Increasing protectionism in Europe  would also be likely.

A reversion to protectionism would lead to beggar-thy-neighbour  policies of the kind the world saw in the 1930's with enormous  damage to many countries. Because Australia is a significant  trading country, we have a greater interest than most in  preventing that from happening.

My talks with the Prime Minister of Japan a few weeks ago  concentrated on these issues. Japan also relies heavily on  trade, upon access to markets in Europe and in America. We  found a remarkable identity of view and agreed to cooperate  and consult closely.

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Australia believes there will be no success at these trade  negotiations unless industrial goods, agriculture and commodities  are all included in the final result.

In the past, when there have been significant world trade '

meetings Europe and America made agreements about industrial  goods but then they put agriculture aside.- in the "too hard"  basket. While there are rules for fair trade in industrial  goods, nations seem to reserve to themselves the right to have

arbitrary restrictions on access to markets in agriculture and  in commodities.

Over the next few months we will be trying to see that rules  for fair trade in agriculture are promoted. Let me explain  why this is so important.

Trading nations.need an expansion of markets. That will lead  to an expansion of trade.

It is only through an expansion of markets that we will be  able to provide for increased output from our factories, from  our farms and from our mines. Increased output, increased  demand will lead to increased employment. It is the same in  many countries.

If world markets do not expand, nations are going to be left  arguing about the cut-up of existing markets and that will  do nothing for unemployment around the world.

Under the guise of calling for a 40% tariff cut the major  industrial nations have put forward a proposal which in fact  is little more on average than a half a percent reduction in  tariffs a year for eight years. In the first five years  those reductions would be mandatory under the formula,

deductions in the last three years would depend upon the  economic circumstances of the time. The programme would start  in 1980.

This proposal of the formula applied to industrial items  would cover less than 20% of world trade. It is not therefore  a proposal of itself which can lead to an expansion of markets  and an increase in world trade.

That just underlines the importance of making sure that  agriculture and commodities are part of the arrangements at  the Multi Lateral Trade Negotiations - to broaden the scope,  the coverage of the agreements. That is important from a  number of points of view.

The application of the formula to industrial goods would cover  about 40% of the exports of Northern America and of Europe  but only about 5% of Australia's exports.

Developing countries need fairer terms of trade - they need  arrangements that will give them commodity and price stability.

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Australia has some experience in that.

For a long time we have been involved in the International  Sugar Agreement, in the International Wheat Agreements, and  we operate a wool marketing proposal which works greatly to  the advantage of consumers and producers. It brings

stability and predictability at a reasonable price into the  trade.

If it is possible for these commodities, it is possible for  others.

Australia has been trying to take a position that would bring  the developed and developing world closer together.

Through the last six months we have had some success, but it  is enormously important to bring in the developing world with  their tens of millions of people in need of more schools,  better hospitals and all the infrastructure of government.

That is not only a need in itself, but economic take-off in  the developing world could well be a significant factor in  providing a boost to markets and an expansion of demand that  could sustain economic recovery through to the end of this  century.

So Australia does not base its plea and argument for a  better deal for the developing world on idealism alone. We' base it on the mutual self interest and economic interÂ­ dependence of all nations, developing and developed alike.

On Wednesday I leave to further the discussions I had with  the Prime Minister of Japan, with the Prime Ministers of  Britain, of France and the Chancellor of Germany. They will  be having an economic Summit meeting in Bonn in July, and

their counsels will be of enormous importance in helping  to come to a realistic and responsible conclusion.

Following these discussions I will be holding further talks  with Mr Lee Kuan Yew, Prime Minister of Singapore. The  Prime Minister and I will then meet with the Prime Minister  of Malaysia in Kuala Lumpur. .

Amongst other things, we will be discussing the general  world trade position as a result of my discussions in Europe,  especially as they relate to the developing worldi

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Australia has the desire to consult closely with countries  in our region on these issues, as they are dependent on access  to the great markets of the major industrialised countries.  Australia today has special international obligations - which

are being met.

We are taking a determined and vigorous part in negotiations.   on world economic issues. We owe this to our own community.   Our meetings over the next three weeks further demonstrate  our desire to continue to act as a responsible member of the

international community.

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