As explained in the earlier document, one process takes place in the international arena and involves negotiations by trade officials aimed at reaching agreement to reduce trade barriers. The other takes place at home, within countries participating in multilateral trade negotiations, and involves decisions about what access to their domestic markets negotiators should take to Geneva. The authority and procedures of the WTO are limited to the first process, while the problem that has stalled progress in the Doha Round has its origin in the second.
In responding to the government’s commitment to the WTO, a commitment heightened by recent global developments, a major challenge for the Mortimer review was to find a way to reduce the scope for conflict between these two processes. While acknowledging that trade liberalisation is a domestic policy issue, Mortimer concluded that domestic reform can be introduced “through existing structures”– diplomacy, negotiations and rules.
The alternative response, proposed by the Trans-Tasman group of Australian and New Zealand industry and business organisations, reflects the approach to trade liberalisation that underpinned reform in Australia. It does not replace any existing international process, but simply adds a domestic one.
It was dismissed by Mortimer on the grounds that it would make demands beyond the Department of Foreign Affairs and Trade’s already stretched capacity. Yet he recommended that those same resources be used to build support for trade liberalisation in other WTO countries. The only argument our trade officials could use that would persuade other countries to liberalise their own markets is that it is in their national interest to do so – which is the reason Australian governments reduced our barriers unilaterally. So the only plausible argument they could use to build support for trade liberalisation in other countries is embedded in Australia’s experience, and that experience provides the model rejected by the Mortimer review.
The logic is bewildering. Yet it has the potential to influence how the government responds to the role of trade liberalisation in overcoming the global economic crisis, and in enhancing our own prosperity.
The strength of the model based on Australia’s experience is that it enables WTO governments, and their domestic constituents, work out for themselves that the economy-wide (public) benefits from opening domestic markets to international competition outweigh the (private) adjustment costs involved for protected domestic producers. In contrast to the Mortimer prescription, it leaves national governments in full control of domestic policy.
The government is committed to an “evidence-based” approach to long-term policy issues. In the case of trade liberalisation the evidence is in. It tells us that continuing to rely solely on international negotiations and diplomacy, as recommended in the Mortimer report, will not deliver the national rewards we expect (and need) from the multilateral (WTO) system. Nor can it provide the support needed to make the G20 commitment more than a gesture.
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See also:
Mortimer Review of Trade Policy: Unfinished Business
Interest groups and the WTO
and more analysis related to the WTO