European Union, trade, SARS, Iraq

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Presentation to the OECD Forum 2003 – “Corporate Governance – Strengthening Conditions for Investment”
April 29, 2003
Governor General
May 5, 2003
Presentation to the OECD Forum 2003 – “Corporate Governance – Strengthening Conditions for Investment”
April 29, 2003
Governor General
May 5, 2003

European Union, trade, SARS, Iraq



Doorstop Interview


Tuesday, 29 April 2003



SUBJECTS: European Union, trade, SARS, Iraq


Mr Costello, thank you very much for speaking to us. A few words, if you could,

on the interaction between Australia, France and now the EU as it stands, the

plans that you have for working with the EU?


Well, we see the EU as a very important partner for us. In terms of trade,

the EU as a bloc is a major investor, and a major destination for our exports,

and a major source of imports. So this is a very important trading partner for

us. We note that the EU is also going to expand, and will become a bigger economic

entity. And we seek a good, open trading relationship with the EU, which we

consider will bring benefits for both sides.


Your approach to the situation in Iraq, what effect has that had on trade

in the Asia Pacific region, trade with the US, and trade with the EU as well?


Well, as you know, Australia committed forces to the coalition of the willing

in Iraq. We thought that was important, that the democracies shoulder responsibility

in relation to that regime and its potential for weapons of mass destruction.

The war in Iraq probably had a dampening effect on growth generally. It will

mean additional costs for the countries that are involved, and in an economic

sense, it is probably a negative. But the good news is that the action has been

successful. There will be a lot of work rebuilding in Iraq, and we look forward

to assisting in that reconstruction phase, along with other countries involved.


In your negotiations, though, and your talks about agricultural policy, particularly

with the French, do you think our position on the war has influenced – I noticed

you say you’re not having any bilaterals here today with the French – has it

influenced our relationship with the French at all?


I think the French government knows the Australian government’s view, which

is that the common agricultural policy is not, obviously, in Australia’s interests,

but we would argue not in the interests of Europe. What it has done, is, it

has protected many industries which are inefficient. Consumers could get the

benefit of lower prices if the protection were ameliorated and removed. The

money that is currently invested in inefficient production in France and Europe

could be invested in more efficient production elsewhere, and that would produce

an overall economic benefit – not just to Australia, but to the EU generally.

We would also make the point that, from the point of view of the developing

world, access to developed countries in relation to agriculture is very important

for them. And, if you like, there is a humanitarian angle to this as well. That

is our position. We will be arguing that position in the OECD Forum, we will

be arguing that position in the WTO forums, and we will be making that point

to all of our interlocutors.


But will our arguments fall on deaf ears because of our stance on the war?


Oh no, I do not think the war influences these things one way or the other.

I think the trade issues stand and fall on their own merits.


But you don’t think that the split over Iraq could contribute to a negative

climate at the upcoming talks in Cancun?


I do not see why they should. The upcoming talks are about trade issues. They

stand and fall on their own merits, just as the argument in relation to Iraq

stands and falls on its own merits.


You were talking about how the Australian economy is strongly linked to the

rest of Asia. Do you think there will be any negative fallout from SARS, when

you’re talking about risks like terrorism but that seems to be an important

factor affecting tourism and other industries at the moment?


Well, SARS undoubtedly will have an effect on tourist trade in Asia, particularly

in Hong Kong and China. It probably has had an effect on the tourist trade in

Australia with numbers of tourists down. But there has been no death in Australia.

There have been some cases where people have been put under observation. So

far we have managed to quarantine Australia very successfully. Conversely, it

may mean that Australians who would otherwise have travelled to Asia, spend

their tourist dollar at home. But I cannot pretend that SARS is good for anybody.

It is a terrible worry for the countries concerned, it is bad for tourism, and

it will affect the economies of those countries most directly affected, I would



Continuing agricultural questions, do you think that the dialogue is still

possible and really possible between the European and Cairns Group?


Well, we want to continue to engage in that dialogue, and we will argue our

case. And our case is essentially this. It is, of course, it is in the interests

of efficient agricultural producers to have trade liberalisation. But we would

argue it is also in the interests of those countries that currently have protected

or subsidised industries. That they can save themselves a lot of subsidies,

their consumers can get access to cheaper prices, and their economy will benefit

if the money is invested in efficient enterprises, rather than inefficient ones.

That is our case, that is the dialogue that we will be having. We will try and

explain our position to France.


Which part will play Australia in nation building of Iraq?


Well, Australia is going to help in reconstruction with aid, which we have

already announced. We have made personnel available. We, for example, are providing

air services, flight controllers to help re-establish the aviation links. We

still have numbers of military personnel which are helping in relation to security.

And we will be offering assistance in specialised areas where Australia has

international skill.


Which kind of areas?


Well, we have got areas in relation to, areas like agriculture and other areas

where we have international skill.


Have you an idea of the cost of the Australian government of the war, of the

Australian contribution to the war?


Of the military contribution?


And maybe the national rebuilding?


Well, look, I have previously said that the cost of Australia’s engagement

is hundreds of millions of dollars, but I am not going any further and being

any more specific than that.

Okay. Thank you.