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Annual Report 1999-00

Annual Report Series

The Annual Report 1999-2000 was released on 5 December 2000. The report forms part of the Commission's annual report series.

The 20th Century has seen historically unparalleled advances in global living standards and reductions in poverty. Greater economic integration among nations has played a role in underpinning increased prosperity. The benefits of liberalised trade and investment, as well as increased domestic competition, have been apparent in Australia’s improved economic performance.

Yet there are concerns and misconceptions evident in Australia and many other developed countries about aspects of ‘globalisation’, and particularly the rules governing the world trade system. These concerns threaten to erode community support for the policies and institutions needed for further improvements in living standards and reductions in poverty. This annual report contains an examinination of a range of globalisation issues which have led to a continuing, often heated, debate about globalisation and the World Trade Organization.

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  • Contents
  • Media release
  • Preliminaries

    Cover, Copyright, Letter of Transmission, Acknowledgment, G A Rattigan 1911-2000, Contents, Abbreviations

  • Theme chapter

    1 Australia in the global economy (PDF - 99 Kb)

    Globalisation: myths and realities
    Australia’s stake in the WTO system

  • 2 Commission activities

    Year in review
    Transparent and consultative processes
    Feedback on the Commission’s work
    Associated reporting

  • A Corporate review
  • B Program performance
  • C Commissioned projects
  • D Competitive neutrality complaints
  • E Supporting research and related activities
  • F Publications
  • G Financial statements
  • Compliance index
  • References
  • Index

In its latest annual report, which was tabled in Parliament today, the Productivity Commission responds to current misconceptions about globalisation and the World Trade Organization (WTO).

'The latest fashion in some circles is to decry globalisation as a malevolent process pitting worker against worker, driving down wages and living standards in a race to the bottom' said Gary Banks, Commission chairman. 'In fact, the increased integration of world trade and investment have been important factors in unprecedented growth in living standards worldwide.'

The Commission notes that, among other trends, there has been a five-fold increase in average per capita income over the 20th Century. And, contrary to a widespread perception about growing inequality, the ratio of the average income of people living in the richest fifth and poorest fifth of the world narrowed over the 1990s.

The Commission acknowledges that the adjustment pressures of globalisation and rapid change are important issues for governments. However, the clear policy lesson of the past century is that those countries that shut themselves off from the rest of the world have done so at the expense of their peoples. The world's poorest nations are not in that state because of globalisation. Rather, the problem lies with factors internal to these countries - such as civil unrest and weak property rights - which are inimical to growth and development.

While the GATT/WTO system of trade rules has played a key role in the post-war expansion, the WTO has recently come under fire for allegedly being undemocratic, imposing its will on governments and being driven by the interests of corporations. ‘Such attacks misunderstand the WTO's role and contribution' said Mr Banks. 'But ,govemments need to do more to shore up domestic support for the international trading system and the rules which underpin it.’

The Commission notes that small to medium-sized nations with limited bargaining power, such as Australia, have the most to gain from a rules-based trading system. Recent criticism of the WTO dispute settlement mechanism - relating to salmon and automotive leather products - has obscured the real benefits that it delivers to Australian exporters.

The Commission argues against proposals to use the WTO to enforce labour and environmental standards. Trade sanctions are likely to be ineffective and there are superior ways of achieving legitimate labour and environmental objectives. Mr Banks said: ‘Sanctions would limit the ability of developing countries to trade their way to higher incomes. And attempting to embed these standards in the WTO would divert it from its core function of reducing trade distortions.’

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