August 28, 2006

 

Australia ties AWB wheat monopoly to WTO trade talks

 

 

Australia would not make any major changes to a wheat export monopoly operated by AWB Ltd while growers in the US or Europe enjoy significant production or export subsidies, Trade Minister Mark Vaile said Friday (Aug 25).

 

The government also will only consider the future of the monopoly after it receives a report on the Iraqi kickbacks scandal from the Cole inquiry, now due by Sep 29.

 

Former judge Terence Cole is investigating whether AWB or its staff breached Australian law in paying kickbacks of US$221.7 million to Saddam Hussein's regime in Iraq to secure wheat sales under a UN oil-for-food programme.

 

The report might contain commentary on the structure of wheat marketing, he said.

 

"Obviously there's a very strong and intense focus on this at the moment as we move towards the conclusion of the process," Vaile told reporters by telephone from Kuala Lumpur, where he was attending trade talks.

 

"We don't want to be making any knee-jerk reactions given that the current global trading circumstances remain the same, given that the WTO negotiations that might give us an opportunity of removing some of these impediments from the market place... are stalled," he added.

 

A week ago, Agriculture Secretary Mike Johanns called for Australia's wheat export monopoly to be included in negotiations to liberalise world trade.

 

Johanns said Australia had to play a role in helping to resurrect stalled world trade talks, must "belly up to the bar" and be prepared to end the market-distorting monopoly.

 

Vaile said "we do confront a distorted global market" and while this has forced Australia to adopt the export monopoly in order to compete, where that goes in the future remains to be seen.

 

"We want to remove those impediments from the market place," he said.

 

Asked whether the severity of the Cole report will determine the government's response, Vaile said it will feed into what is already a healthy debate among industry groups about any future structure for wheat exports.

 

AWB and grower lobby the Grains Council of Australia insist a clear majority of growers support the export monopoly and the company's operation of it.

 

But a sizable minority of growers and a host of other industry participants, including global agricultural trading concerns, want the monopoly liberalized and get a share of wheat exports from Australia that can exceed A$5 billion a year.