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Trade policy: building on success



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TRADE POLICY: BUILDING ON SUCCESS http://www.dfat.gov.au/pmb/speeches/tr_sp/for_corr.html

S'c\_

Department of Foreign Affairs and Trade

Speech by the Deputy Prime Minister, Leader of the National Party, Minister for Trade, The Hon Tim Fischer MP to the Foreign Correspondent's Association

TRADE POLICY: BUILDING ON SUCCESS

Sydney, 21 January 1997

(Check Against Delivery)

Introduction

I am pleased to be here today and to have this opportunity to speak before such an august group of journalists.

I want to take this opportunity to say a few things about what was achieved in the trade portfolio in 1996, and to give you something of a roadmap of where Australia is heading in 1997 in terms of its trade and investment priorities.

However, before proceeding further it is relevant to observe that 1996 was a pivotal year on the road map of world trade, culminating in the successful inaugural ministerial meeting of the World Trade Oragnisation in Singapore.

1996 saw the world turn away from a pathway to a trade doomsday setting, namely giant discriminatory trade blocks based on Europe then the Americas and Asia.

Australia and New Zealand would be poor cousins looking in, doing battle with the Euro dollar block, the US dollar, the Yen and Yuan and eventually the Rupee.

It was at times a close run thing, especially with the key issue of agriculture, information technology and trade and labour standards.

However, the World Trade Organisation and the world more less, with the exception so far of China and Russia yet to join the WTO, avoided this doomsday scenario and Australia and job creation in Australia will be the beneficiary.

The Australian Government has, over the past 10 months, been working assiduously to create a better environment within which Australia's exporters can reach their full potential.

Many of you will be aware that the Government's trade policy focuses on finding improvements in five distinct areas of activity.

First, we are working to improve Australia's domestic economy. We are lifting the performance of Australian industries so that they may improve their export performance and prospects.

Secondly, we are pursuing better market opening on a bilateral basis. Wherever opportunities exist to open, improve and generally facilitate greater access for Australian exporters in the markets of our bilateral trading partners, the Government is looking to make the most of them.

Thirdly, the Government is committed to expanding trade liberalisation on a regional basis. It is committed to the principle of open regionalism and the exploration of new trade opportunities within that framework.

Fourthly, the Government has been engaged in strengthening the international trading system and keeping the pressure on for further trade liberalisation on a global basis with the members of the World Trade Organisation.

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Fifthly, and finally, the Government is concerned to utilise more effectively its own trade promotion and export assistance resources, especially Austrade.

The Importance of Trade for Australia

The Government's efforts in all these areas reflects the fact that international trade is increasingly important to the overall level of growth in the Australian economy. In the past year, more than half of Australia's economic growth was the result of growth in exports of goods and services.

The export growth we have achieved is in no small part due to trade liberalisation, both global and regional. Over the last five years, Australian exports have risen more than 33 per cent. In that time the liberalisation of markets has occurred quite rapidly, with the completion of the Uruguay Round, the establishment of APEC and increased recognition of the benefits derived from unilateral liberalisation.

Export growth and its contribution to economic growth also means jobs for Australians. This is a fact that, I think, has not been widely enough acknowledged. We tend to focus instead - perhaps naturally enough - on processes of job shrinkage resulting from rapid technological change, structural

adjustment and productivity improvements.

Without export growth, however, there is no doubt that unemployment rates in Australia would be higher during the prolonged period of major economic change that most industrialised countries have been undergoing.

One example illustrates this point well.

Over the past decade, with liberalisation of services trade occurring throughout the world, Australia's exports of services have grown 50 per cent faster than have our imports of services. As a result, in 1996, Australia recorded, for the first time ever, a seasonally adjusted surplus in our services trade with the rest of the world.

And here's the crunch. It's no coincidence that over the same period, the five industries with the strongest growth in employment have all been in the services sector. So, its for reasons like this that the Government devotes so much energy to the trade portfolio.

Let me now turn to review briefly the major developments of 1996, before making some comments about our priority areas in 1997.

1996: A Strong Beginning

Over the past ten months, the Coalition has got off to a very strong start in terms of implementing its policy priorities.

Apart from our comprehensive revitalising of the domestic economy, with which you are no doubt well-acquainted, perhaps the most distinctive aspect of the new Government's approach to trade has been strengthening and refocusing Australia's bilateral approaches to trade.

I'm pleased to say that we have made significant progress in a number of bilateral areas.

We have, for example, signed a fruit market access agreement with the Philippines, achieved access for fresh milk to Hong Kong, and negotiated access for kangaroo meat to the French market.

The progressive increase in the United States' global tariff quota for sugar has allowed Australia to raise sugar exports to the US by almost 33,000 tonnes. Mexico has now eliminated its 10 per cent tariff on scoured wool and wool tops.

Malaysia has reduced to zero its tariff on liquid milk, and Thailand, where Australia is a major supplier of powdered milk, now applies a zero tariff on a quota of 88,000 tonnes.

The Government has also made progress in laying more of the bilateral framework for increased trade

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and investment.

For example, we've negotiated an updated Trade Agreement with Malaysia, signed a double taxation agreement with Chile, signed an Austrade-Exportar bilateral cooperation agreement with Argentina and signed an air services agreement with Indonesia.

This year, the Government also established a Market Development Task Force in order to better coordinate government activity and target realistic, achievable priorities in bilateral market access, trade promotion and trade development.

The Task Force is about taking action and achieving outcomes. It has already reviewed twenty five of Australia's most important export markets in Asia, Europe and the Americas, and it has examined closely some significant emerging markets, such as Vietnam, Chile, the Gulf States and South Africa.

At the regional level, the Government has successfully carried forward APEC's free trade and investment agenda agreed by leaders at Bogor in 1994 with the tabling of Individual Action Plans (or IAPs) which set out how each APEC economy will move to achieve the region's free trade goals.

The IAPs are a good beginning and confirm that APEC economies are on a clear path to liberalisation. They also include some significant new initiatives.

China, for example, has announced that it will move to a 15 per cent tariff by 2000. Chile announced a zero tariff goal for most products for 2010. And Hong Kong and Singapore are to bind all tariffs at zero in the World Trade Organisation by the same date.

Access will improve for specific sectors in a number of economies. For example, the Philippines will lift import restrictions on coal, and Japan is expected to introduce new quarantine measures which should expedite Australian exports of fruit and flowers.

And we have other successes at the regional level, with a good AFTA-CER work program and the start of the same between CER and Mercosur. We have established an Australia-Indonesia Development Area to further promote and develop trade between Australia and the Indonesian archipeligo.

At the global level, the WTO Singapore Ministerial Conference delivered on two core issues: practical market access for Australian exporters and a commitment to re-engage on global trade liberalisation negotiations by the end of the decade.

The new WTO work program covers all of Australia's market access and trade priorities, including:

. a start in 1997 of preparatory work for a new round of agriculture negotiations in 1999 and services negotiations in 2000, and

. agreement to negotiate a rules-based Information Technology Agreement (or IT A) by April 1997 which will cover 90 per cent of world information technology trade.

As part of Taiwan's prospective accession to the WTO, the Australian Government negotiated in 1996 a package of improved market access worth more than $30 million. For example, Australia will be able to export 2000 Australian-built cars to Taiwan from this year. And Taiwan has cut its applied tariff on Australian beef by 10 per cent.

All in all, then, it's been a very good year for Australia on the trade policy and market access fronts. The Government has laid the foundations of a vigorous and revitalised approach to trade policy, and we are able show some early rewards for our efforts.

But, of course, its just the beginning, and we will be re-doubling our efforts in 1997 to capitalise on our early successes.

1997: Building on Foundations

In 1997, the Government has set itself a broad range of priorities covering many sectors and markets.

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I will say more about these in my Trade Outcomes and Objectives Statement to Parliament in February.

In terms of the Government's agenda to improve Australia's trade and investment circumstances through bilateral negotiations, we will, for example, be working to improve opportunities for Australian exports of foodstuffs, particularly in Asian markets, by targetting market access problems

and taking advantage of promotional opportunities.

The Government will also be looking to maximise opportunities for Australia to participate in the supply of education and training services, including through making representations to secure licences for Australian universities in markets like Malaysia, and promoting Australian exports in emerging markets like the Arabian Gulf States.

We aim to improve foreign investment access and conditions in a range of markets, including India and Indonesia. And we will continue to encourage the reduction of commodity tariffs on coal, wool and wheat in a number of important markets.

The Government will continue to pursue strongly Australian trading interests in the WTO. Highlights of this year's agenda include using the Dispute Settlement Process more actively to challenge unfair barriers to our exports.

At tomorrow's meeting of the WTO Dispute Settlement Body, we will be taking action on two new fronts.

Australia, along with New Zealand, Argentina and the USA will formally request the establishment of a WTO panel on Hungarian agricultural export subsidies, which are in excess of its Uruguay Round commitments. We have already held consultations with Hungary but, regrettably, it has not been possible to satisfactorily resolve the issue.

We have not taken lightly action to request a WTO panel. It signifies the importance that we place on full implementation of Uruguay Round commitments on agriculture by all WTO members.

At the same meeting, we will reserve "third party rights" in respect of a WTO panel on US import restrictions on prawns sought by Malaysia and Thailand, which will allow us to put our views to the panel.

The US prohibits prawn imports from countries which do not use "turtle excluder" devices. Australia is committed to environmentally responsible fishing methods and supports the US goal of turtle conservation.

However, we consider that the US approach fails to take into account differing circumstances in prawn harvesting regions and could have a significant trade diversion effect in our major markets.

We are already involved in a third WTO panel which is examining US and Canadian complaints about European restrictions on meat produced using hormonal growth promotants. As Australia is the world's largest beef exporter, we have a legitimate interest in investigating trade restrictions on the sale and marketing of livestock products, including on health grounds.

In addition to these specific actions, we will also be using the WTO accessions process to leverage new bilateral access packages to the markets of the twenty-eight aspiring WTO members - particularly China.

These packages are better than win/win because they include no reciprocal payments by Australia.

We will be working hard as well to achieve good outcomes for Australia in WTO negotiations on the IT A and on basic telecommunications. And I will continue to see that the Cairns Group keeps up the pressure for further liberalisation in agricultural trade.

In 1997, the agenda for APEC is large. The biggest task before regional economies will be to improve further the initial 1996 IAPs, drawing on advice and input from the private sector. I will be meeting with my APEC trade minister counterparts for this purpose in May.

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There is also a good deal of work to be done to deliver better outcomes on some of APEC's newer issues. Services is one example. The work on food, population and the environment which were set in train at the 1995 Osaka Leaders Meeting is another.

Conclusion

Let me conclude by stating simply that the Australian Government will not only be vigilant in protecting and defending Australia's economic and trade interests but we will be developing further our integrated trade policy framework to advance Australia's interests in practical ways to create jobs in Australia.

The contours of Australia's trade policy are now firmly established, and we have made a good start on some of the specifics. The task now is to build on this strong start and produce more tangible results. I am confident that we will deliver in full on this commitment in 1997.

Hume P.iije

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