Howard Interview (Lamb)

8 July 1999

TRANSCRIPT OF THE PRIME MINISTER

THE HON JOHN HOWARD MP

PRESS CONFERENCE

NEW OTANI HOTEL, TOKYO, JAPAN

Ladies and gentlemen, needless to say the Australian Government is quite appalled at the decision of the American administration, of the President, to impose punitive and totally unjustifiable restrictions on Australian lamb imports into the United States.

What we are witnessing here is the punishment of a successful Australian exporter who has made its own luck, has won a market, has created a demand that previously didnÆt exist, has operated without any Government assistance at all. We are not here witnessing a situation where you are talking about an inefficient Australian producer, you are talking here about a highly efficient Australian producer. It makes no sense the decision. It will increase the price of lamb for the American consumer. It is hypocritical in terms of the American trade rhetoric. It sends an appalling signal to those around the world who want to backslide away from more open trade.

I canÆt think of a more appalling piece of timing as far as the cause of freer world trade is concerned and I feel very sympathetic as does the Government for the plight of the Australian lamb producers. They have done nothing wrong. They have been punished for succeeding. They have operated without any government subsidies or any government help. In anticipation that the decision might go against us we did give some thought to what we might do and as a result, as I have indicated in my statement, the Government is going to pay for up to two years the equivalent of half the transaction levy applying to the sale of all lambs in Australia. And that will effectively cut the cost, as I understand it, of Australian lamb producers of 75 cents of lamb and that will make a significant contribution towards compensating the efficient successful Australian producer for the penalty that has been imposed on them.

I mean, what is particularly outrageous about this decision is not only the imposition of a punitive 40 per cent above existing quota tariff but the imposition of a nine per cent within quota tariff. I mean, that is particularly galling and completely unjustified by the Americans. I mean, I canÆtàI am almost lost for words to find the right description for what has been done. It makes no sense in terms of world trade, it is devoid of any kind of justice as far as fair trading behaviour is concerned and it will increase the price to the American consumer. And you are doing it against a very efficient producer that has started from scratch and won a market. So on every score itÆs deserving of total condemnation which it receives from the Australian Government. But we have got to do more than just condemn it, we have got to try and help the Australian producer. And I think itÆs totally justified to say to an efficient without subsidy Australian producer, we will compensate you for an unfair penalty imposed by the United States. And that is what we are doing, we are compensating an efficient without subsidy Australian producer. We are not only going to pay half the cost of the transaction levy but we are also going to enter into immediate discussions with the processes to ensure that they also are protected against the consequences of this unfair American action. Needless to say I will be expressing my views on this issue when I see the President in Washington next Monday.

JOURNALIST:

Prime Minister, is the effect of your compensation to fight fire with fire aà..

PRIME MINISTER:

Well, I donÆtàI mean you can call it anything you like. But itÆs just a matter of ordinary decent Australian justice that these people who have operated without a subsidyàI mean, they are not an inefficient industry. These people have won a market according to the ordinary rules of the game and they have been belted around for doing it. Well, they are entitled to a bit of help from the Australian Government and they are going to get it.

JOURNALIST:

Prime Minister, is there now any real prospect of getting the decision reversed or is ità.

PRIME MINISTER:

I would be extremely pessimistic about our prospects of getting it reversed. I mean, this is a very serious decision as far as the United States Government is concerned. Not only for our trade interest but it does send an appalling signal. I mean, here we are wanting to encourage a lot of countries around the world who really frankly want to backslide from more open trade. And not only have the Americans imposed this penalty on our exporters but they are also going to, as I understand it, put something like $130 million Australian dollars into adjustment assistance. I mean, it also, as I understand it, points up the complete disequilibrium of the world trading rules. I mean, you remember what happened to Howe leather where they played every rule in the book against Australia but because that was a manufacturing industry and this is a primary industry and because of the let outs the Americans have in terms of primary produce they are able to do this. Now, we are going to take them to the World Trade Organisation but those processes take a long period of time and it could be 18 months before we get a final result. And thatÆs one of the reasons why we are taking immediate action to provide compensation. And I want to send a very strong message to the lamb producers of Australia. We are totally sympathetic to your plight, you have won a market against great odds, you have done it without any government subsidy, you are entitled to help, you are entitled to more than sympathy, you are entitled to a bit of help and you are going to get it.

JOURNALIST:

Prime Minister, are you absolutely confident that the compensation you are offering the Australian lamb producers is WTO consistent and also can you say how much approximatelyà.

PRIME MINISTER:

Well, I have no reason to doubt itÆs WTO consistency but if anybody disagrees with it well let them take us to the WTO.

JOURNALIST:

[Inaudible]àfive cents per lamb that you are offering, how will that compare to offset something like a nine per centà.

PRIME MINISTER:

Well, it will make a very significant contribution, it could go close to offsetting half of it. But I am not absolutely certain of that but I think itÆs in the order of half.

JOURNALIST:

Mr Howard, you are clearly angry but the decision was no surprise really was it?

PRIME MINISTER:

Well, you can be both angry and unsurprised. I mean, it doesnÆt alter the anger you feel. You feel anger about the unworthiness of a decision even though you might expect it. Sometimes when you expect a bad decision you hope that in the end it mightnÆt be taken but that doesnÆt alter the anger you feel. And I do feel anger because this is so palpably unfair. I mean, there is no possible justification for this. You are talking here about a market that has been carved out by some hardworking Australian producers with no government assistance. I mean, I repeat, this group of Australians have got no government assistance. And they have won this market and they have had their legs cut off. I think itÆs terrible.

JOURNALIST:

Prime Minister, you say the Australian assistance is worth about halfà

PRIME MINISTER:

Well that is my broad understanding butà

JOURNALIST:

About $70 million, is that what you are saying?

PRIME MINISTER:

No, I am not saying $70 million, I am talking about half the additional cost as a result of the imposition of the nine per cent within quota tariff.

JOURNALIST:

So what would the cost of it be?

PRIME MINISTER:

Oh, I think it is in the order of $5 to $10 million. I think closer to $5 than $10 but that is a rough approximation. Michael.

JOURNALIST:

After taking more than a month to make this decision is it somewhat galling that it should be announced three days before you get the chance to put the case face to face to the President?

PRIME MINISTER:

Well, youÆll have to direct that to the Americans. I mean, look, the decision has angered the Australian Government and it would have angered the Australian Government whether it had been taken a week ago or been taken in a weekÆs time. I mean, it really is just a totally unjustifiable decision and we are particularly disappointed that it has been taken in relation to such a close ally and friend. I made it very plain to President Clinton when I spoke to him that this had aroused particular sensitivity and anger in the Australian community and that it would send an appalling signal. And I am, you know, obdurate in those views on both counts. Michelle.

JOURNALIST:

How do you read the Americans motives in this decision given that, as you say,à.

PRIME MINISTER:

I am imagine they have succumbed to domestic political pressure. But that doesnÆt make it any more excusable and it doesnÆt absolve them from the responsibility of their world leadership role. And the Americans have a role as world leaders and it is particularly annoying at a time when the American economy is booming. I mean, it is, if you take a decision like this when your domestic economy is fragile and staggering it is, even though itÆs not palatable to those affected, it is still more understandable. But the American economy has never been so good and the President said to me when I spoke to him that he was disturbed that at time of great economic strength there were such strong protectionist sentiments in the United States.

JOURNALIST:

Well, that makes him a hypocrite doesnÆt it?

PRIME MINISTER:

Well, if you give in to protectionist sentiments you will only encourage more of them to arise.

JOURNALIST:

ItÆs hardly a level playing field. DoesnÆt it suggest that the WTO process is a farce?

PRIME MINISTER:

Well, Matt, I take a deep breath before just writing off, purporting to write off an entire process. I donÆt think there is anything to be gained by that. But I have never thought it was a total level playing field and as my about to retire well loved Deputy Prime Minister, Mr Fischer, frequently says there is no such thing as a level playing field. But I thought the goal of American policy was to achieve more open and more liberal world trade including in agriculture. Now, I thought that was the goal of American policy. And you have got to remember that the, as I understand it, all but one per cent of lamb imports into the United States come from Australia and New Zealand. So this is a decision that strikes very deeply at the heart of those, of the trading behaviour of those two countries. And it really does, I am afraid, give others an excuse because if you are a reluctant, dare I say, recalcitrant person when it comes to the subject of freer trade and you are presented with an example from the most powerful country in the world enjoying the strongest economic conditions it has enjoyed since World War II well you have a ready made excuse for your own backsliding. And that is the most disturbing thing about this from a long-term perspective.

JOURNALIST:

Prime Minister, what will be the effect on the broader bilateral relationship?

PRIME MINISTER:

Well, itÆs obviously not going to have any implications for our security relationship, of course it doesnÆt. I mean, I have never seen the two as intertwined, that would be counterproductive. You always, in these things, you always fight for the Australian national interest. That is the thing I am always interested in above everything else. ThatÆs the only thing in the end that really ultimately matters to me and that is the national interest of Australia. And the national interest of Australia is not served by linking these sorts of issues with the security relationship. It never has and in my view it never will.

JOURNALIST:

President Clinton has clearly ignored AustraliaÆs national interest in this case. What can you say to him given that youà.

PRIME MINISTER:

Well, I can repeat, I can tell him how we feel. I can make it very plain how angry we are about it. I mean, in the end America is the most powerful country in the world. And Americaàif America decides itÆs going to do something like this then it does it. But that doesn't absolve me of eitheràit doesnÆt absolve me of the responsibility nor does it deny me the right to spell out what I believe to be the consequences. Now, this decision will hurt some efficient Australian producers who deserved far better treatment because of their trade performance. It will send a very bad signal, it will put back the cause of freer world trade and thatÆs not a good thing. And itÆs contrary to the rhetoric of the American administration and contrary to what most people regard as the long-term interest of the world economy. Now, I can but do that, I can but take action as Prime Minister to help our grievously penalised producers and I want to make it clear to them again that we are totally sympathetic and we are not just muttering words, we are doing something, we are putting dollars on the table to compensate them for this punitive unfair discriminatory treatment. ItÆs not a question of sending money after the protection of failing inefficient industries. What we are doing here is compensating an efficient successful Australian industry for having been so grievously treated by the American administration.

JOURNALIST:

HeÆll just blame the congress wonÆt he?

PRIME MINISTER:

Well, I donÆt know who heÆll blame. He will clearly point to domestic political pressure. But thatÆs for him. I mean, thatÆs his problem. He doesnÆtàno foreign political leader gets understanding from me in relation to his domestic political problems when what heÆs done is to hurt my countryÆs interests any more than I go overseas pleading a domestic political circumstance. ThatÆs something I have got to deal with at home and itÆs something heÆs got to deal with at home. But what angers us is that at a time of such enormous evident palpable prosperity in the United States that a decision of this order should be taken. It is very disappointing and veryà.

JOURNALIST:

Prime Minister, what do you guarantee our lamb producers that your public anger will be mirrored in private with President Clinton?

PRIME MINISTER:

Of course.

JOURNALIST:

Would you expect this to dominate the talks with Presidentà.

PRIME MINISTER:

No, look, I think it will be an important element of those talks. Of course it will be. But can I just say, Glenn, in relation to our lamb producers the best thing we can do for our lamb producers is not thump the table although thatÆs important. ThatÆs not the best thing. The best thing we can do is to compensate them. And they are far more interested in compensation than they are in words. And what we are doing immediately is to compensate them for the unfair treatment they have received at the hands of the Americans.

JOURNALIST:

But doesnÆt that send a bad signal Prime Minister?

PRIME MINISTER:

No, it doesnÆt. It sends a bad signal when you prop up an inefficient failing industry. But this is a successful booming industry and itÆs been unfairly treated. I mean, itÆs an entirely different argument. This is not one that can, sort of, be regarded as a protectionist action by the Australian Government. This is what I call ordinary Australian justice for an efficient producer and itÆs the least the Government can do.

JOURNALIST:

How long will it go on, the compensationà.

PRIME MINISTER:

Well, itÆs for two years, for an initial period of two years. HavenÆt you got the statement?

JOURNALIST:

Australia has a big trade deficit with the US, Mr Howard. Can you see that maybe the farmers might retaliate and not buy American farm machinery or the Governmentà.

PRIME MINISTER:

Well, look anybody can do whatever they like. I mean, thatÆs a matter of individual choice. But see, what we have done is we have expressed our anger and our concern which I will reinforce in my discussions with the President and we haveàbut more importantly than that, we have taken some concrete action in relation to the industry. I mean, it never makes any sense to strike out blindly in unrelated retaliation. Unrelated retaliation ends up hurting you more sometimes than it does the person against whom you are seeking to retaliate.

[ends]

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