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Trade strategies - Australia as an export manufacturing base - how do we compare?



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SPEECH BY THE HON NEAL BLEWETT

MINISTER FOR TRADE & OVERSEAS DEVELOPMENT

TO THE MTIA CONFERENCE

ON

TRADE STRATEGIES -

AUSTRALIA AS AN EXPORT MANUFACTURING BASE -

HOW DO WE COMPARE?

CANBERRA, 20 FEBRUARY 1991

LADIES AND GENTLEMEN

I WELCOME THE OPPORTUNITY TO SPEAK TO YOU TODAY ON TRADE POLICY ISSUES BEARING ON THE EXPORT OF MANUFACTURED GOODS. FROM THE OUTSET LET ME STATE MY MESSAGE CLEARLY AND SUCCINCTLY.

FIRST, TRADE IS THE ONLY ROUTE TO LONG TERM ECONOMIC RECOVERY. EXPORTS AND IMPORT SUBSTITUTION IN THE MANUFACTURING SECTOR ARE CRITICAL TO THAT TRADE BASED RECOVERY. SECOND, THERE IS NO INSTANT SOLUTION WHICH WILL TRANSFORM THE AUSTRALIAN ECONOMY OVERNIGHT; ADJUSTMENT WILL BE A CONTINUING AND LASTING PROCESS

REQUIRING INGENUITY AND HARD WORK; AND THIRD, THE FUTURE OF AUSTRALIAN MANUFACTURING HAS LITTLE ROOM FOR INDUSTRIES PROTECTED BY GOVERNMENT AGAINST THE WINDS OF INTERNATIONAL COMPETITION.

LET US LOOK FOR A MOMENT AT HOW WE HAVE BEEN MANAGING AS AN EXPORTER OF MANUFACTURES. ON THE POSITIVE SIDE MANUFACTURING EXPORTS HAVE GROWN STRONGLY SINCE 1985-86. OVER THE LAST FOUR FINANCIAL YEARS THE AVERAGE GROWTH IN MANUFACTURING EXPORTS HAS BEEN 12 PERCENT PER ANNUM. THIS COMPARES FAVOURABLY WITH THE 4 PERCENT GROWTH FOR THE PREVIOUS SEVEN YEARS FROM 1978-79 TO

1985-86. INDEED, THE MANUFACTURING SHARE OF TOTAL AUSTRALIAN EXPORTS HAS INCREASED FROM 18.7 PERCENT IN 1985-86 TO 25.7 PERCENT IN 1989-90.

2.

NEVERTHELESS, WE MUST PUT THESE FIGURES INTO AN INTERNATIONAL PERSPECTIVE. IN 1988, AUSTRALIA WAS RANKED TWENTIETH AMONG THE WORLD'S EXPORTING NATIONS. BUT IN MANUFACTURED EXPORTS WE DID NOT RANK IN THE TOP THIRTY NATIONS. WE WERE OUTDONE BY COUNTRIES LIKE BULGARIA, IRELAND AND NORWAY THAT ARE WELL BELOW US IN THE TOTAL TRADE STAKES.

WE ARE WELL BELOW THE AVERAGE PERFORMANCE OF OECD COUNTRIES AS A WHOLE, WHERE MANUFACTURING HAS INCREASED ITS SHARE, BY VALUE, IN EXPORTS FROM UNDER 50 PERCENT IN 1970 TO ALMOST 75 PERCENT IN 1987. FURTHERMORE, OUR MAJOR MARKETS ARE PRIMARILY THE COUNTRIES OF THE PACIFIC RIM, AND OUR EXPORTS TO THIS REGION ARE OVERWHELMINGLY IN SIMPLY TRANSFORMED MANUFACTURES, RATHER THAN ELABORATELY TRANSFORMED MANUFACTURES.

THE FACT IS THAT MOST AUSTRALIAN MANUFACTURING FIRMS DO NOT EXPORT. THEIR HORIZONS ARE LIMITED TO THE DOMESTIC MARKET. TO USE THE JARGON, AUSTRALIAN MANUFACTURING IS NOT IMBUED WITH AN "EXPORT CULTURE". NOW, I DON'T PROPOSE TO EMBARK ON THE USUAL CRITIQUE OF THE SHORTCOMINGS, REAL OR IMAGINARY, OF AUSTRALIAN MANUFACTURING. INSTEAD, I BELIEVE THAT WE SHOULD BE LOOKING AHEAD AT OBJECTIVES AND SOLUTIONS.

FROM A NATIONAL PERSPECTIVE, OUR OBJECTIVES CLEARLY MUST BE TO REDUCE THE CURRENT ACCOUNT DEFICIT TO SUSTAINABLE LEVELS, WITH THE AIM OF STABILISING FOREIGN DEBT AS A PROPORTION OF GROSS DOMESTIC PRODUCT. THE TASK OF REDUCING THE CURRENT ACCOUNT DEFICIT LEVEL WILL REQUIRE MUCH STRONGER EXPORT GROWTH AND/OR

IMPORT REPLACEMENT THAN IN THE 1980S. FOR EXAMPLE, IF IMPORT

3.

VOLUMES WERE TO GROW AT THE 1980s AVERAGE OF 6 PERCENT PER YEAR AND OUR TERMS OF TRADE WERE TO REMAIN CONSTANT, AUSTRALIA'S EXPORTS WOULD NEED TO GROW AT ALMOST 10 PERCENT ANNUALLY TO STABILISE OUR OVERSEAS DEBT LEVELS BY THE MIDDLE OF THE DECADE. THIS IS WELL ABOVE THE ACTUAL ANNUAL GROWTH IN EXPORTS DURING THE 1980s OF 6 PERCENT. THAT IS, FRANKLY, A MASSIVE TASK.

WITHIN THAT OVERALL GOAL, THE OBJECTIVES FOR AUSTRALIAN MANUFACTURING FIRMS SHOULD BE TO VIEW EXPORTING AS A NORMAL PART OF THEIR OPERATION. AS A COROLLARY, MANUFACTURERS NEED TO ACCEPT THAT THE AUSTRALIAN MARKET IS AN INTEGRAL PART OF THE

WORLD MARKET.

IN LOOKING AT THE WAY FORWARD, THE GOVERNMENT, AND INDEED THE COMMUNITY, HAS BEEN WELL SERVED BY SOME VERY THOUGHTFUL REPORTS BY: PROFESSOR HUGHES; DR GARNAUT; PAPPAS, CARTER, EVANS AND KOOP; AND MOST RECENTLY FROM THE INDUSTRY COMMITTEE OF THE ACTU. THESE REPORTS SHARE COMMON GROUND ON KEY FUNDAMENTAL

ISSUES

- THE NEED FOR FURTHER REDUCTIONS IN INDUSTRY PROTECTION

- THE NEED TO ACCELERATE MICRO-ECONOMIC REFORM

- AND THE NEED TO DEVELOP RAPIDLY NEW ATTITUDES, BY BOTH MANAGERS AND WORKERS, IN THE WORKPLACE.

4.

I BELIEVE THAT THE MTIA IS ALSO ABLE TO ENDORSE THESE OBJECTIVES ALTHOUGH I SUSPECT YOU WOULD TIE REDUCTIONS IN INDUSTRY PROTECTION MORE EXPLICITLY TO THE PACE OF MICRO-ECONOMIC CHANGE, AND DEMAND MORE SPECIFIC MACRO-ECONOMIC SETTINGS. IN THIS REGARD, I WOULD LIKE TO COMMEND THE MTIA FOR ITS CONSTRUCTIVE APPROACH TO THE DISCUSSION OF THESE IMPORTANT

ISSUES, INCLUDING THE CONTRIBUTION IT HAS MADE BY ORGANISING THIS CONFERENCE.

IT WOULD BE TOO MUCH TO EXPECT UNANIMITY ON EVERYTHING. THE FACT IS THERE IS A PARTICULARLY VIGOROUS DEBATE ABOUT THE VALUE OF "POSITIVE ASSISTANCE" MEASURES - BY WHICH I MEAN SPECIFIC GOVERNMENT ACTIONS TO ASSIST PARTICULAR INDUSTRIES.

AS YOU WILL BE WELL AWARE, THE PRIME MINISTER WILL BE MAKING A MAJOR STATEMENT ON ECONOMIC AND INDUSTRY POLICY ON 12 MARCH.

IT WOULD BE RECKLESS, INDEED POSITIVELY DANGEROUS, OF ME TO FORESHADOW IN ANY WAY THAT STATEMENT. BUT I WOULD LIKE TO MAKE SOME COMMENTS ON ASPECTS OF THE INDUSTRY ASSISTANCE DEBATE FROM A TRADE POLICY PERSPECTIVE.

IN THE CURRENT DEBATE ABOUT INDUSTRY ASSISTANCE, MANY OF THE PROPONENTS OF "POSITIVE ASSISTANCE" MEASURES HAVE AGREED THAT ASSISTANCE IS NECESSARY BECAUSE OTHER COUNTRIES PROVIDE BENEFITS TO THEIR EXPORTERS WHICH TILT THE PLAYING FIELD IN THEIR FAVOUR.

5.

THE ARGUMENT HAS STRONG INTUITIVE ATTRACTION, BUT LIKE SO MANY EMOTIONAL APPEALS, IT OVERSIMPLIFIES AND CAN LEAD TO COUNTER PRODUCTIVE PRESCRIPTIONS. WE HAVE TO LOOK AT THE POLICY OF A LEVEL PLAYING FIELD DISPASSIONATELY.

OF COURSE, IN THIS IMPERFECT WORLD WE DO NOT HAVE A COMPLETELY LEVEL PLAYING FIELD. BUT THAT RECOGNITION DOES NOT DEMAND THAT WE ABANDON PURSUIT OF THE LEVEL PLAYING FIELD:

1) THE IMPERFECTIONS ARE OFTEN EXAGGERATED AND, IN THIS REGARD, I WOULD NOTE THAT THE AVERAGE TARIFF ON INDUSTRIAL PRODUCTS APPLIED BY DEVELOPED COUNTRIES HAS FALLEN FROM MO PERCENT IN 19M7 TO UNDER 5 PERCENT IN 1986. FROM AN AUSTRALIAN PERSPECTIVE THE GREAT DISTORTIONS LIE IN THE AGRICULTURAL NOT THE MANUFACTURING SPHERE.

2) THE PURSUIT OF A LEVEL INTERNATIONAL PLAYING FIELD THROUGH INTERNATIONAL RULES IS TO THE ADVANTAGE OF AUSTRALIA AND MIDDLE LEVEL PLAYERS. WE NEED SOME MEANS TO DISCIPLINE THE CAPACITY OF THE BIG ECONOMIC

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POWERS TO INTRODUCE TRADE DISTORTING MEASURES. A WORLD WITHOUT RULES, OR FEWER RULES, WOULD BE SOMETHING LIKE A JUNGLE WHERE ADVANTAGE PERMANENTLY RESTS WITH THE LARGER ANIMALS.

3) THE TRADE CONCESSIONS THAT WE GIVE TO DEVELOPING COUNTRIES ARE SOMETIMES POINTED TO AS AN ELEMENT IN THE UNLEVEL PLAYING FIELD. BUT THESE CONCESSIONS MUST BE VIEWED IN THE CORRECT PERSPECTIVE. THEY ARE IN

FACT ONE OF THE MOST CONSTRUCTIVE WAYS OF ASSISTING DEVELOPING COUNTRIES TO IMPROVE THEIR SITUATION, AN OBJECTIVE WHICH WOULD HAVE TO BE ACCOMMODATED BY ANY INTERNATIONAL SYSTEM.

THE AIM OF THE GOVERNMENT'S INDUSTRY POLICY IS TO CREATE A GREATER SENSE OF SELF-RELIANCE. WE NEED TO BUILD INDUSTRIES WHICH OVER THE LONGER TERM OPERATE WITH MINIMAL LEVELS OF GOVERNMENT ASSISTANCE. THE PROTECTIVE APPROACH OF THE PAST

ENCOURAGED A MENTALITY OF TROOPING TO CANBERRA WHEN PROBLEMS AROSE. TODAY'S INDUSTRY OPERATES IN AN ENVIRONMENT OF PHASED CUTS IN PROTECTION WITH ACCESS TO INCENTIVES TO STIMULATE R & D, INNOVATION, INVESTMENT AND EXPORT.

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FEW CONTRIBUTORS TO THE ASSISTANCE DEBATE WOULD CLAIM THERE WAS NO ROLE FOR GOVERNMENT INTERVENTION. IT WOULD BE DIFFICULT TO FIND ANY SOCIETY IN WHICH THERE WAS NOT SOME FORM OF GOVERNMENT ASSISTANCE TO INDUSTRY. THE ISSUE IS RATHER WHAT ARE THE APPROPRIATE RESPONSES TO PARTICULAR PROBLEMS. LET ME SUGGEST A

FEW CRITERIA FOR DETERMINING APPROPRIATE RESPONSES FROM A TRADE MINISTER'S PERSPECTIVE:

1. ANY MEASURES SHOULD BE CONSISTENT WITH OUR GATT AND OTHER INTERNATIONAL OBLIGATIONS - THERE IS LITTLE PURPOSE IN ASSISTANCE MEASURES FOR WHICH WE ARE HAULED BEFORE GATT TRIBUNALS, CASTIGATED, COMPELLED TO CHANGE OUR WAYS OR COUNTERVAILED.

2. THEY SHOULD NOT INVITE RETALIATION FROM THE MAJOR TRADING POWERS. WE NEED TO RECOGNISE THAT IN AN IMPERFECT WORLD THE GREAT ECONOMIES HAVE THE RESOURCES TO REACT OUTSIDE THE GATT FRAMEWORK, SUCH AS THE UNITED STATES SECTION 301 RETALIATION MECHANISM AND THEIR CAPACITY TO IMPOSE "VOLUNTARY" EXPORT RESTRAINTS.

8.

3. ASSISTANCE WITH AN EXPORT ORIENTATION SHOULD NOT WORK TO THE DISADVANTAGE OF IMPORT REPLACEMENT INDUSTRIES. THIS COULD WELL RESULT IN NO ADVANCE TOWARDS OUR BASIC GOAL OF REDUCING THE CURRENT ACCOUNT DEFICIT.

4. GOVERNMENT CAN PERHAPS PICK SECTORAL WINNERS, ALTHOUGH EVEN HERE WE NEED CAUTION AND A STRONG SENSE OF OUR OWN FALLIBILITY. WE GEMERALLY SHOULD NOT TRY TO PICK PARTICULAR INDUSTRY WINNERS BECAUSE GOVERNMENTS THEN TIE THEMSELVES TO THE CAPACITIES OR INCAPACITIES OF

PARTICULAR MANAGERS, THE EFFICIENCIES OR INEFFICIENCIES OF PARTICULAR FIRMS.

THE GOVERNMENT IS WELL AWARE THAT THE RIGHT MACROECONOMIC POLICY MIX IS FUNDAMENTAL TO AUSTRALIA'S EXPORT PERFORMANCE. A KEY OBJECTIVE OF AUSTRALIA'S MACRO-ECONOMIC POLICY IS TO AIM FOR A MODERATE AND SUSTAINABLE RATE OF GROWTH - ONE WHICH PARTICULARLY AVOIDS PERIODS OF EXCESSIVE DOMESTIC SPENDING RELATIVE TO OUTPUT. ATTAINING SUCH AN OBJECTIVE IN A SMALL ECONOMY EXPOSED TO THE VAGARIES OF INTERNATIONAL COMMODITY PRICES IS PARTICULARLY DIFFICULT. MORE SPECIFICALLY, IN THE CONTEXT OF INDUSTRY POLICY WE WILL NEED TO ADDRESS THE AVAILABILITY OF, AND THE ACCESS OF MANUFACTURERS TO CAPITAL, THE SECURITY OF PRODUCTIVE FIRMS FROM PREDATORY TAKEOVERS, AND THE TAXATION REGIME AS IT IMPACTS ON MANUFACTURING INDUSTRY.

9.

WE HAVE ACHIEVED SOME IMPORTANT MACROECONOMIC GAINS. THERE HAS BEEN PROGRESS TOWARD LOWER INFLATION WITH RECENT FORECASTS PREDICTING AN ANNUAL RATE OF 5 PERCENT LATER THIS YEAR. THAT WILL HELP DECREASE THE LONG-STANDING INFLATION DIFFERENTIAL

BETWEEN AUSTRALIA AND OUR TRADING PARTNERS. CONSTRAINTS ON REAL WAGES OVER THE PAST EIGHT YEARS HAVE INTRODUCED A PERIOD OF WAGE STABILITY UNPARALLELLED IN THE PAST TWO DECADES.

WE ALSO RECOGNISE THE NECESSITY FOR MICROECONOMIC REFORM. AS I HAVE ALREADY SAID, IT IS HEARTENING TO NOTE A GENERAL CONSENSUS WITHIN INDUSTRY AND THE UNION MOVEMENT IN FAVOUR OF SUCH EFFORTS. THAT CONSENSUS MAKES IT MUCH EASIER FOR THE

GOVERNMENT TO PUSH AHEAD AT AN EVEN FASTER PACE.

WHILE THERE IS WIDE ACCEPTANCE OF THE BENEFITS OF MICROECONOMIC REFORM, THE NEXT THRESHOLD IS ACCEPTANCE THAT THE PROCESS IS ONE OF CONTINUING EFFORT. IN THIS REGARD, I WOULD NOTE THAT WE CANNOT AFFORD TO MAKE OUR COMPARISONS OF EFFICIENCY AND

PRODUCTIVITY WITH THE MEMBERS OF THE OECD ALONE. IN AN INCREASING NUMBER OF INSTANCES, SUCH AS THE DEVELOPMENT OF MAJOR PROJECTS AND MINERALS PROCESSING, OUR KEY COMPETITORS ARE THE COUNTRIES OF THE ASIA PACIFIC.

IF AUSTRALIA WISHES TO PERFORM SUCCESSFULLY AGAINST INTERNATIONAL COMPETITION, GOVERNMENT, MANAGEMENT AND WORKERS ALIKE NEED TO ACCEPT THE STANDARDS THAT AUSTRALIANS EXPECT OF THEIR SPORTSPERSONS. ANY AUSTRALIAN ATHLETE KNOWS THAT THE

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AUSTRALIAN PUBLIC EXPECTS PERFORMANCES AT, OR CLOSE TO, THE WORLD'S BEST. IT IS AN UNFORTUNATE ASPECT OF OUR NATIONAL CHARACTER THAT WE DO NOT TRANSLATE THIS UNCOMPRISING DEMAND FOR EXCELLENCE INTO THE WORKING ENVIRONMENT.

EXCELLENCE IN THE WORKPLACE IS GOING TO BE INCREASINGLY NECESSARY BECAUSE AUSTRALIA IS LIKELY TO CONFRONT A MORE UNCERTAIN TRADING ENVIRONMENT IN THE 1990S THAN THAT OF THE 1980S. THE VOLUME OF INTERNATIONAL TRADE EXPANDED BY AN AVERAGE 4 Λ % PER ANNUM AS A RESULT OF THE GENERALLY FAVOURABLE

ECONOMIC CLIMATE OF THE 1980S, WHICH SAW EIGHT SUCCESSIVE YEARS OF ECONOMIC EXPANSION IN THE INDUSTRIAL ECONOMIES. THERE ARE, BY CONTRAST, MAJOR UNCERTAINTIES AFFECTING THE OUTLOOK FOR THE GLOBAL ECONOMY IN THE 1990S, INCLUDING

- THE THREAT TO MIDDLE EAST OIL SUPPLIES ARISING FROM , THE GULF CRISIS

- RENEWED CONCERNS ABOUT INFLATION WORLD WIDE

- THE LEVEL OF ECONOMIC GROWTH IN THE UNITED STATES AND THE ABILITY OF THE U.S. TO CONTROL ITS FISCAL IMBALANCES

- THE CONTINUING DEBT CRISIS OF DEVELOPING ECONOMIES

- AND THE EFFECTS OF ECONOMIC DISLOCATION IN THE USSR AND EAST EUROPE.

11.

OVERLAYING THESE UNCERTAINTIES ARE CONCERNS ABOUT THE POSSIBLE DIRECTION OF TRADE POLICY IN THE THREE MAJOR TRADING CENTRES - EUROPE, THE UNITED STATES AND JAPAN - WHICH ARE LIKELY TO BE STRONGLY INFLUENCED BY THE OUTCOME OF THE URUGUAY ROUND. A

SUCCESSFUL OUTCOME FROM THE ROUND WILL ASSIST GROWTH IN WORLD TRADE THROUGH THE REST OF THE 1990S. CONVERSELY, A FAILURE WILL SURELY LEAD TO A MORE HOSTILE TRADING ENVIRONMENT, ADVERSELY AFFECTING THE OPPORTUNITIES OF ALL AUSTRALIAN

EXPORTERS.

THE URUGUAY ROUND WAS SCHEDULED TO TAKE FOUR YEARS. THAT TIME WAS UP AT THE MEETING I ATTENDED IN BRUSSELS LAST DECEMBER, BUT AS YOU KNOW, THE ROUND WAS NOT CONCLUDED. IN ESSENCE, THE CAUSE OF THAT FAILURE WAS THE OBDURACY OF THE EUROPEAN

COMMUNITY OVER PRESERVING ITS AGRICULTURAL PROTECTION.

FOR THE FIRST TIME IN THE HISTORY OF THE GATT, THE UNITED STATES DID NOT BACK AWAY FROM ITS DEMANDS FOR REAL REFORM, AND THE CAIRNS GROUP, LED BY AUSTRALIA, HELD FIRM TO ITS OWN

PROPOSALS FOR A FAIRER AND MORE MARKET ORIENTED AGRICULTURAL TRADING SYSTEM. BECAUSE AGRICULTURE WAS SO IMPORTANT TO SO MANY COUNTRIES, INCLUDING DEVELOPING COUNTRIES, AND BECAUSE

PROGRESS ON AGRICULTURE WAS LINKED TO SO MANY OTHER ISSUES BEING CONSIDERED, THE TIME FOR ACTION ON AGRICULTURE HAD COME. WHEN THE EC WAS NOT ABLE TO MEET THE CHALLENGE, THE MEETING AS A WHOLE GROUND TO A HALT.

12.

THE IMPASSE DID NOT OF COURSE HERALD THE COLLAPSE OF THE GATT. THE GATT CONTINUES, EVEN IF THIS MOST RECENT ATTEMPT TO MAKE IT MORE EFFECTIVE HAS TEMPORARILY BROKEN DOWN.

BUT IF AGRICULTURE HAS BECOME THE LYNCHPIN, IT IS BUT ONE OF THE MAJOR ASPECTS OF THE URUGUAY ROUND. AN IMPORTANT OBJECTIVE IN THE ROUND FOR THE GOVERNMENT IS TO SECURE IMPROVED AND MORE PREDICTABLE MARKET ACCESS CONDITIONS OF BENEFIT TO OUR MANUFACTURED EXPORTS. IN CLOSE CONSULTATION WITH AUSTRALIAN

INDUSTRY AND AUSTRADE, THE DEPARTMENT OF FOREIGN AFFAIRS AND TRADE HAS IDENTIFIED SEVERAL HUNDRED SIGNIFICANT TRADE BARRIERS IN OVERSEAS MARKETS OF KEY INTEREST TO MANUFACTURING INDUSTRY. THESE BARRIERS FORM PART OF OUR REQUESTS ON OUR TRADING

PARTNERS IN THE MARKET ACCESS NEGOTIATIONS. WHEN NEGOTIATIONS RESUME, WE WILL RENEW INTENSIVE BILATERAL DISCUSSIONS OF THESE BARRIERS IN ORDER TO ACHIEVE A BALANCED PACKAGE OF MUTUAL TRADE CONCESSIONS.

I WOULD NOTE HERE THAT A SUCCESSFUL FINAL OUTCOME WILL TAKE THE FORM OF A PACKAGE WHICH WILL NEED TO ACCOMMODATE THE DIFFERENT PRIORITIES OF THE MANY PARTICIPANTS IN THE ROUND. IT WILL HAVE TO INCLUDE IMPROVED MARKET ACCESS FOR MANUFACTURES, NEW RULES FOR SERVICES, LIBERALISATION FOR AGRICULTURE, GREATER RESPECT FOR INTELLECTUAL PROPERTY RIGHTS AND SO ON.

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IT IS LIKELY TOO THAT, AS PART OF THAT FINAL PACKAGE, THE NEGOTIATIONS ON SUBSIDIES AND TRADE RELATED INVESTMENT MEASURES WILL PLACE SOME CONSTRAINTS ON THE FUTURE CAPACITY OF GOVERNMENTS TO PUT IN PLACE A RANGE OF INDUSTRY ASSISTANCE MEASURES.

THIS IS THE SHORT-TERM PRICE THAT MUST BE BORNE FOR A FREER AND FAIRER INTERNATIONAL MARKET PLACE. BUT IT IS, IN MY VIEW, A PRICE WORTH PAYING TO ENSURE THAT OUR EXPORT OPPORTUNITIES WILL BE DETERMINED BY THE PRICE AND QUALITY OF OUR PRODUCTS MORE AND MORE, AND LESS AND LESS BY ARTIFICIAL TRADE BARRIERS.

CONSEQUENTLY, THE CAPACITY OF AUSTRALIAN FIRMS TO EXPAND AND BROADEN THEIR OPERATIONS WILL BE WITHIN THEIR OWN CONTROL.

IT IS EASY TO BE CYNICAL ABOUT THE SUCCESS WHICH GATT HAS ACHIEVED SINCE 1948 AND ABOUT THE DEGREE TO WHICH CONTRACTING PARTIES HAVE COMPLIED WITH THEIR OBLIGATIONS UNDER THE AGREEMENT. BUT, THE FACT IS THAT THE GATT IS BASED ON THE

PRINCIPLES OF NON-DISCRIMINATION, TRANSPARENCY AND CONSENSUS, AND SO OFFERS A MEASURE OF PROTECTION TO MEDIUM-SIZED TRADING COUNTRIES WITH RELATIVELY LITTLE ECONOMIC CLOUT.

BUT WHILE THE GATT IS OF CENTRAL IMPORTANCE TO AUSTRALIA, THE GOVERNMENT HAS SUPPLEMENTED ITS EFFORTS IN THE URUGUAY ROUND WITH OTHER MULTILATERAL AND BILATERAL POLICY INITIATIVES TO IMPROVE OUR TRADING PERFORMANCE.

14.

IN KEEPING WITH OUR EXHORTATIONS TO INDUSTRY TO LOOK BEYOND THE NEXT ANNUAL GENERAL MEETING, WE ARE DEMONSTRATING A COMMITMENT TO THE ENHANCEMENT OF OUR ECONOMIC AND TRADING RELATIONS IN THE LONGER TERM THROUGH THE ASIA PACIFIC ECONOMIC COOPERATION

INITIATIVE - APEC. THAT INITIATIVE HAS NOW BEEN FIRMLY ESTABLISHED BY MINISTERIAL MEETINGS IN CANBERRA AND SINGAPORE.

THERE IS OF COURSE MORE THAT WE CAN DO. WE AIM TO BUILD ON OUR PAST EXPERIENCES AND PROMOTE MORE JOINT GOVERNMENT-BUSINESS TRADE MISSIONS. IN THIS, WE NEED TO COOPERATE MORE CLOSELY WITH THE STATES.

PERHAPS WE SHOULD ALSO LOOK BEYOND THE CONFINES OF THE MULTILATERAL AND BILATERAL SYSTEM. FOR EXAMPLE, IT HAS BEEN SUGGESTED THAT WE SHOULD BE NEGOTIATING WITH THE LARGE TRANS-NATIONAL CORPORATIONS WITH A VIEW TO ENCOURAGING THEM TO

REDUCE THE PROHIBITIONS ON EXPORTS THEY SOMETIMES PLACE ON THEIR AUSTRALIAN SUBSIDIARIES.

IN CONCLUDING, A MANUFACTURING INDUSTRY THAT IS INTERNATIONALLY COMPETITIVE LIES AT THE HEART OF THE GOVERNMENT'S PLANS FOR OUR ECONOMIC FUTURE. BUT OUR LONG-TERM VISION DOES NOT HAVE ROOM

FOR THE PROTECTED INDUSTRY STRUCTURES OF THE PAST. INDUSTRY MUST LOOK BEYOND THE SHORELINES OF THIS COUNTRY FOR ITS LIVELIHOOD.

15.

THE PROCESS OF ADJUSTMENT TO BECOME A SUCCESSFUL PART OF THE WORLD MARKET IS A CONTINUING ONE AND THERE ARE NO "QUICK FIX" SOLUTIONS. IF WE CONTINUE TO WAIT FOR THE LUCKY BREAK OR THE

HELPING HAND, OUR FUTURE IS ONE OF DECLINING LIVING STANDARDS, BUT IF WE APPLY THE DETERMINATION AND VIGOUR WHICH IS PART OF OUR NATIONAL INHERITANCE, WE CAN GUARANTEE A DYNAMIC NATION WITHIN A DYNAMIC REGION.