Mr BAIRD (4:45 PM) —On behalf of the Joint Standing Committee on Foreign Affairs, Defence and Trade, I present the committee’s report entitled Australia’s trade with Mexico and the region, together with evidence received by the committee.

Ordered that the report be made a parliamentary paper.

Mr BAIRD —by leave—Since the commencement of diplomatic relations in 1966, Australia and Mexico have developed a modest yet important economic relationship. Mexico is Australia’s largest trading partner in Latin America and our 33rd largest trading partner. Australia is Mexico’s 26th largest trading partner.

In examining the state of economic relationships between Australia and the other nations of the region, the committee noted the growth of trade and investment ties, albeit from very small bases. Whilst there was little conclusive data available to the committee, encouraging expansion potential and progress have been identified in areas such as energy, mining, agribusiness, food commodities and the provision of professional services.

Increasing imports and a burgeoning education sector have seen the Australia-Mexico bilateral relationship grow significantly in recent years. The joint experts group established in May 2006 to explore possible directions for economic relations, including the possible negotiation of a free trade agreement, has reinforced the importance of this relationship to both nations.

There are approximately 30 to 40 million members of the ‘middle class’ in Mexico, which provide a significant potential buying power for Australian products. Australia’s main exports to Central America are dairy products, in particular milk, cream, butter and cheese. Whilst still modest, two-way merchandise trade with Central America has increased significantly over recent years.

In summary, the committee has concluded that despite the challenges of distance, poor transport links, language and cultural differences, and unfamiliar business environments, there is significant potential within the Australia-Mexico trade relationship. As such it became clear to the committee that a free trade agreement (FTA) with Mexico is a highly desirable outcome to the Australian and Mexican governments’ quest to progress and strengthen this relationship.

For both countries there are challenges involved in pursuing a free trade agreement. Agriculture, for example, is a sensitive area, and the committee recommends that issues relating to agriculture should be determined at an early stage of any negotiations. The committee also acknowledges that the current political and business conditions in Mexico are not ideal for an FTA and some time may be needed to develop such conditions.

In conclusion, the committee would like to extend sincere thanks to all the officials of the Australian Embassy in Mexico City that assisted the delegation with the visit by the trade committee to Mexico. They did an outstanding job for the delegation. The visit proved very successful in terms of contacts made, opportunities identified and challenges addressed.

The committee would also like to acknowledge and thank the officials and businesspeople in Mexico for their hospitality and input.

In closing, I am grateful to all those who gave evidence. I would also like to thank the other members of the committee, my colleagues and the members of the secretariat, particularly Mr Rob Little.

Mr Speaker, I commend the report to the House.