World Trade talks good for minerals

Mitchell Hooke, the Chief Executive of the Minerals Council of Australia, was a member of the Australian Trade Minister’s WTO Advisory Council and was a member of the Australian delegation to the Hong Kong ministerial meeting. He describes the Hong Kong trade deal as “a platform for tariff cuts on minerals.” He says the World Trade Organisation (WTO) Ministerial Declaration adopted in Hong Kong represents “another progressive if painful step forward in the pursuit of opening global markets, and should make a modest but positive contribution to market conditions for Australia’s $70 billion minerals export trade {and the trade of other mineral producing countries].”

The deal reinforces the underlying fundamentals to global growth which are essential to sustaining buoyant global commodity prices. It also sets a platform and a timetable for agreeing cuts to industrial tariffs that will reduce transaction costs for minerals exporters.

“This agreement puts to bed the ghosts of Cancun,” he said, “where failure to reach agreement put the Doha Development Round at risk and compromised the standing of the WTO. Although falling short on ambition, the Hong Kong Ministerial has been able to recover lost ground and establishes a real and tangible platform on which to conclude the Doha Round of multilateral trade negotiations by 2006.

“Even though the tariff rates that apply to trade in minerals and primary metals are comparatively low, the sheer quantum of exports from Australia means that even modest reductions can be worth real dollars to the trade. In terms of the minerals industry’s direct interests, the key outcomes and reservations are:

• Adoption of the called ‘Swiss’ tariff reduction formula for industrial goods, which cuts higher tariffs more than lower tariffs, is a positive step forward. But the critical coefficients to the formula have yet to be agreed and the text unfortunately leaves ‘wiggle room’ that could blunt any real tariff reductions. The next four months in establishing the details of the modalities by April 30 will be critical
• Provision for complementary sectoral initiatives for industrial goods, which enable Members to enter into voluntary agreements for ‘zero-for-zero’ tariffs in specific sub-sectors, is also welcome. In particular, the MCA is supportive, in principle, of a proposal originally put forward by the UAE that seeks to eliminate tariffs for raw materials, including minerals
• Conditionality link between enhanced market access in agriculture and industrial goods, while an understandable political imperative in the context of the negotiations, risks a progressive ratcheting down of ambition
• Text on non-tariff barriers has some positive elements, but needs strengthening
• Text on improving market access for services, including mining services, does not go beyond the request-and-offer process already in train which has provided to be unambitious and non-prescriptive.”

He concluded that to have reached an outcome at all was “quite remarkable, even more so when the trigger to the deal was progress in the highly sensitive areas of agriculture reform, trade in services, and reductions in barriers to trade in industrial goods, which includes minerals.”