meta-creation_date: April 10, 2003 The following is the text of an Op-ed article by Peter Gallagher that appeared in the Australian Financial Review on 10 April The European Union’s complaint to WTO against the whole of our Quarantine regulations is a tactical move in the current round of WTO agricultural negotiations. But don’t dismiss the claim altogether: it points to something that is badly wrong with our quarantine protection. And it has nothing to do with WTO. Pascal Lamy, the EU’s trade Commissioner, left no doubt that he was launching the dispute to ‘pay out’ Australia for it’s criticism of EU agricultural policies.
We believe [Australia’s quarantine] system flagrantly breaches WTO rules, despite Australia ‘s constant claims to be the only beacon of free agricultural trade. The EU will use WTO procedures to ensure that Australia practises what it preaches on agricultural market access..
It’s a tactic the Commission has used before; a smokescreen to confuse the issues in the agriculture reform negotiations and to disguise their responsibility for dragging the reform talks to a halt. It’s an abuse of the WTO disputes system to use it for contentious purposes. But the complaint seems unlikely to have much legal merit, in any case. There’s little likelihood that Australian quarantine procedures — which have been poured over in lengthy internal reviews and in recent WTO cases — are in general breech of the WTO rules. That’s not to say the complaint is not plausible. Lamy’s barbs will resonate with many of our trading partners and even with many Australian industries. The rest of the world does not believe that the disease and pest risks for Australian producers can be so serious that they justify banning imports from the most successful producing and exporting countries in the world. We have banned, or severely restricted, imports of bananas from the world’s fourth biggest banana producer (Philippines); imports of chicken meat from the world’s largest exporter (Thailand); fresh salmon imports from the number two exporter world-wide (Canada), and; table grapes from the world’s third biggest exporter (USA). If the disease risks are as high as we say, how is it that these countries are such successful producers and exporters? How is it that competitive producers in other countries manage to control diseases and pests without loosing their world-leading export position? The real problem with our quarantine barriers is not a WTO issue: it’s much closer to home. High levels of quarantine import barriers are creating a benefit for some agricultural industries by lowering disease control costs and incidentally reducing import price competition. But, as import barriers, they could also be costing consumers billions of dollars each year. We just don’t know whether our quarantine barriers are good for the economy as a whole because our quarantine procedures consider only the benefits to the ‘threatened’ domestic industry and take no account of the costs that a quarantine import barrier imposes on the rest of the economy. Unlike every other form of import protection in Australia, quarantine protection is a ‘free kick’ for the protected industry. Although the government minutely examines the costs and benefits of import restrictions such as textile tariffs, motor-vehicle tariffs and anti-dumping measures, there is no attempt to assess the costs of a quarantine barrier. At best, this is unfair to consumers and other Australian industries who bear the costs of the quarantine barrier. At worst, it’s a reckless way to manage our agribusiness resources. What sort of costs are involved? The threat of retaliation by our trading partners is often the first cost that springs to mind. It’s certainly a significant threat and a reality in Asian markets as the beef and dairy export industries can testify. But losses due to retaliation and the damage to commercial relations — although crucial for exporters — are likely to be dwarfed by the costs in our own market. Typically, consumers and other industries pay higher prices due to loss of access to competitive import supply which, in turn, means reduced domestic demand and a ‘lock-in’ of domestic resources in lower-value industries. We don’t need the EU to tell us that we have a quarantine problem — and its nothing to do with the WTO.