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Papua New Guinea/Australia trade and commercial relations agreement

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Statement by the Hon. John Howard, Minister for Business and

Consumer Affairs and Acting Minister for Overseas Trade



I visited Port Moresby from 6 - 8 November to

sign the PNG/Australia Trade and Commercial Relations

Agreement on behalf of the Government of Australia.

Sir Maori Kiki signed on behalf of the Government of Papua

New Guinea. A joint press statement was issued by Sir

Maori and myself following signature of the Agreement on

6 November. The Agreement will come into force when notes

are exchanged between the Government of Austral, ia and the

Government of Papua New Guinea notifying compliance with

their respective legal requirements.

Trade between Papua New Guinea and Australia has

always been an important feature of the special relationship

which exists between the two countries. Since 1926

Australia has accorded special duty free entry to Papua

New Guinea products. In 1950 Australia obtained waivers

from the GATT to accord extensive duty free treatment to

Papua New Guinea primary and processed primary products.

At the present time 95 percent of Australian imports from

Papua New Guinea enter free of duty. ยท

9 Papua New Guinea is an important market for

Australian exports. In 1975/76 Australian producers exported

approximately $170 million worth of goods to Papua New Guinea

This represented 49 percent of Papua New Guinea's total

imports. Papua New Guinea is Australia’s eleventh largest

market for all exports and the third largest market for

manufactured goods.

2 .

Until the Agreement just signed comes into force

trade relations between Australia and Papua New Guinea

will continue to be governed by the Memorandum of Understanding

relating to imterim trade and commercial arrangements. The

Memorandum, which was signed in December 1973, was intended

to cover trade relations between Australia and Papua New

Guinea in the period between self-government and independence.

It was extended in April 1975 to cover the period between

independence and the conclusion of a more permanent trade

and commercial relations agreement between the two countries.

Objectives of the Agreement

Most of the trade between Papua New Guinea and

Australia has traditionally been free of duties and other

restrictions. It was therefore appropriate that both

countries should enter into a free trade agreement. The

Agreement was drawn up on the basis of the following three

aims :

- To continue and extend the duty free and concessional

conditions of access for Papua New Guinea exports

into Australia.

- To allow the Papua New Guinea Government to develop

new industries and to protect them from import


. - To enable the Papua New Guinea Government to pursue

its social and economic objectives through the

encouragement of capital inflow consistent with

its investment guidelines.

It was recognised by both countries that Australia,

in entering into this Agreement, should retain the right to

protect its industries where it is considered that they

are threatened with serious injury by imports from Papua

3 .

New Guinea. It was also recognised that the Agreement

should accord with Australia's GATT and other international

obligations. ,

Consistent with the aims outlined above the

objectives of the Agreement are -

- to further the development of the area through the

expansion and diversification of trade;

- to further the development and use of the resources

of the area in accordance with the respective social

and economic objectives of the Member States;

- to further the development of the area by the

promotion of direct investment which is consistent

with the foreign investment policies and priorities

of the recipient Member States;

- to promote and facilitate commercial, industrial,

administrative and technical co-operation between

Member States; and

- to contribute to the harmonious development and

expansion of world trade and to the progressive

removal of barriers to it.

Accordingly the Agreement provides that a free

trade area is established consisting of Papua New Guinea

and Australia and that subject to certain exceptions

specified in the Agreement trade between the Member States

should be free of duties and other restrictive regulations

of commerce.

Safeguards for Australian Industry

At present Papua New Guinea's exports to Australia

consist mainly of foodstuffs and raw materials. However,

Papua New Guinea has indicated its intention to establish


new industries. Australia can assist in this development

by allowing the products of Papua New Guinea industries

to enter Australia duty free provided adequate safeguards

are available to protect Australian industry. The

Agreement, therefore, provides that Australia accord duty

free entry to imports from Papua New Guinea on all but

some 270 highly sensitive items. In addition there are

210 items, which are specified in the Agreed Minutes

attached to the Agreement, and in respect of which Australia

may take unilateral protective action if damage is caused

or threatened to an Australian industry producing those

goods. In those items where duties on a wide range of

industrial and other products have been eliminated for

Papua New Guinea, safeguards to protect Australian industry

are included in the Agreement where serious injury is

caused or threatened. There are also special provisions

covering Rules of Origin, deflection of trade, dumping or

subsidized trade and the suspension of obligations in

exceptional or emergency circumstances.

The Australian Position under the Agreement

Whilst the Agreement meets the requirements of

the free trade provisions of the GATT it is not the

intention of the Australian Government to ask the Papua

New Guinea Government to discriminate in favour of Australia

as against third countries. Australia will receive no

better access than any other country. The Agreement provides

no special conditions in relation to Australian investment

in Papua New Guinea. In this respect the Agreement is

similar to the Lome Convention under which the E.E.C. grants

non-reciprocal tariff preferences to a large number of

developing countries and to which Papua New Guinea has

received approval from the Council of the Economic Community

for accession.


At the same time Australia*s most favoured

nation position in Papua New Guinea is protected under the

Agreement by the provision pursuant to which each Government

agrees to accord the other treatment no less favourable than

that accorded to any third country.

Trade with Third Countries

Any diversification of trade affecting third

country suppliers to the Australian market will be gradual

and will take place over a long period of time. Papua New

Guinea is not expected to move in the foreseeable future

to develop industries other than those based on its

traditional exports. With regard to developing countries,

nothing in the Agreement precludes Australia from continuing

the liberal access it has already granted developing

countries through its generalised scheme of preferences,

or from making a positive contribution to the development

of international trade through the GATT.

Other Matters

Other matters covered by the Agreement include

inter alia

- consultation on the contribution of direct

Australian investment to the social and economic

development of Papua New Guinea in accordance with

that Government’s foreign investment policies and


- industrial, technical and administrative co-operation;

the promotion of trade; consultations on the supply

of scarce essential commodities; the encouragement,

and facilitation of commercial contracts; the

association of other States with the Agreement;

and the periodic consultation and review of the

operation of the Agreement.

6 .

I have arranged for copies of the Agreement to

be placed in the Library for the reference of Honourable

Members. I intend to table the Agreement in the House in

the near future and I understand that Legislation will be

introduced in the House as soon as possible to amend the

Customs Act, the Customs Tariff Act and the Sales Tax

(Exemptions and Classifications) Act. Once this Legislation

is passed through both Houses the Australian Government

will be in a position to exchange notes and thereby to

bring the Agreement into force.


10 November 1976