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Trade & Market Access

The Australian sugar industry works closely with both the Department of Foreign Affairs and Trade and the Department of Agriculture and Forestry and Fisheries and is devoting significant resources to the goal of securing an improved trade environment for sugar as a means of improving the long-term sustainability of the industry.

With a relatively small domestic market, the export market is critically important to the industry’s operating environment and policies affecting trade impact significantly on the industry’s export revenues.

The focal points of our work are:

  1. Multilateral – the WTO
  2. Bilateral – Free Trade Agreements

Sugar Industry Trade Policy Position at a Glance

Multilateral Trade Negotiations (WTO)

The WTO process and the successful conclusion of the long drawn out Doha round must remain the primary focus for Australia. The Doha Round should deliver a “substantial improvement in market access” as promised in the July 2004 Framework Agreement; this includes narrowing the scope for exclusions and tightening the time frames under which the agreements are implemented. The world’s richest economies are seeking real increases in access to developing country markets for non-agricultural products. They must deliver worthwhile increases in commercial access to their agricultural markets. For Developed Countries, this will require meaningful tariff reductions, reductions exceeding 75 per cent in the highest tariffs and, for the so-called ‘sensitive’ products, substantial increases in TRQ access by 10.5 per cent of domestic consumption for products that would otherwise face the highest tariff cuts.  A number of other specific key reforms we seek from the Doha round include:

  • Eliminate the in-quota tariff
  • Require administration of TRQs in a fashion that provides opportunities for imports to occur, including the timely reallocation of quota
  • The “Special Safeguard Mechanism” should be supported for only a limited number of products and only by developing nations. The abuse of this mechanism by developed nations to restrict real market access for some of their sensitive agricultural products needs to be abolished
  • Elimination of export subsidies
  • Reductions in domestic support including the capping of indirectly trade distorting ‘blue box and ‘green box’ payments

Regional and Bilateral Trade Negotiation

Although both regional and bilateral trade agreements are recognised generally as being a poor alternative to multilateral trade liberalisation, pragmatically it must be recognized that Australia is undertaking further FTA negotiations, including with our major raw sugar trading partners.  A risk of bilateral trade agreements is their exclusive nature.  Australia continues to pursue bilateral FTAs and regional trade agreements to avoid  the risk of being left behind in negotiations and the subsequent trade disadvantages created when a trading partner enters into such an agreement with a third party nation. Given the competitive nature of these agreements and the slow pace of WTO negotiations, it is important that Australia actively pursues trade agreements with key trading partners, current and potential.

Regional FTAs have an advantage in offering a level playing field to all countries involved in the FTA and is, as a rule, supported by the industry over bilateral FTAs. Rhetoric aside, bilateral FTAs ensure that Australia maintains current favourable trading relationships with our trade partners. The industry supports FTAs where:

  • They are comprehensive
  • The term ‘substantially all trade’ is taken to encompass all products and not just all products currently traded
  • There is increased market access for ‘sensitive’ products, specifically agriculture, is a key element in the final FTA
  • The FTA reinforces Australia’s commitment to the WTO process
    • the FTA is WTO compliant
    • a bilateral agreement has scope to easily include third parties, thereby setting it up as a preliminary to a regional trade agreement
    • the FTA does not detract or distract from Australia’s focus on a positive outcome in the WTO process
  • Pragmatic outcomes are genuinely pursued which allow real gains in market access, even when they fall short of genuine ‘free trade’ (where raw sugar market access does not deteriorate and where “a least bad” policy must be adopted).
    • including new TRQs where little or no market access existed previously
    • increased access under existing TRQs
    • preferred supplier arrangements which offset some of Australia’s freight disadvantages and maintain or increase market share