Australia talks up gains from open world trade

By GREG ANSLEY Canberra bureau

Australian Trade Minister Mark Vaile has unveiled bright new forecasts of gains from open world markets as agricultural trading nations continued their efforts to breathe life back into flagging farm trade talks.

The forecasts, based on OECD modelling, predict that Australasian dairy producers' gross value of production could rise by up to 15 per cent through greater market access and lower export subsidies in competing nations.

The forecasts, produced by the Australian Bureau of Agricultural and Resource Economics (Abare), are intended as a potential bargaining tool in wider tradeoffs during the hoped-for general round of World Trade Organisation negotiations.

They are based on access and subsidy gains considerably smaller than the ambit demands of the Cairns Group of fair trading nations, and for the EU, in particular, are designed to weaken political and producer opposition to further concessions.

But they come as Europe and North America experience a growing political swing against globalisation, and the gains of the Uruguay Round appear more illusory.

The head of the OECD's policies trade and adjustment division, Carmel Cahill, yesterday told Abare's annual Outlook commodity forecasting conference that in the past few years, agricultural support levels had again risen to almost the record peaks of a decade earlier.

As world commodity prices slipped, global support payments soared to more than $A338 million ($413 million) a year and some countries increased tariffs, she said.

Support had risen sharply in the US, Canada, Korea, Norway and Switzerland, and support levels were among the highest ever recorded in the EU.

Australia and New Zealand are the only countries in which governments have held firm.

Australian Dairy Industry Council trade adviser Peter Gallagher said it was hoped Abare's new analysis would help turn the tide by showing that support could be lowered without demolishing domestic industries.