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Department of Trade - Report - Year - 1985-86


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DEPARTMENT OF TRADE

A nnual Report 1985-1986

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DEPARTMENT OF TRADE

A nnual Report 1985-1986

Australian Government Publishing Service 1986

© C om m onw ealth of Australia 1986

ISSN 0811-6229

Printed in Australia by Sands & McDougall (Printing) Pty. Ltd. 91-97 Boundary Road, North Melbourne, 3051.

Department of Trade CANBERRA, ACT 2600

The Minister I submit the Annual Report of the Department of Trade for the period 1 July 1985 to 30 June 1986.

V. W. FitzGerald Secretary

The H on. J. S. D aw kins, MP M in iste r fo r Trade Parliam ent H ouse Canberra, ACT 2600

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Contents

Highlights of the year vi

Overview 1

The Department - its objectives and priorities 6 The trading environment in 1985-86 7

Agricultural trade 10

Minerals and energy trade 16

Manufactures and services trade 20

Multilateral trade policy 24

Bilateral trade relations 29

Domestic policy support and facilitation 38 Corporate services 41

Appendixes I Australia’s trade statistics 44

II Staffing information 48

III Trade representative posts 48

IV Functions and membership of councils and committees 49

V Acts administered by the Minister 51

VI Financial statements 52

VII Freedom of Information requests 56

VIII Departmental publications 57

IX National Export Award winners 58

X Defence of America's Cup 59

XI Addresses of Department's offices overseas 60

Highlights of the year

• First formal ministerial meeting under the Australia-New Zealand Closer Economic Relations Trade Agreement held on 15-16 August 1985.

• Ministerial visit to China in August-September 1985, and visits to Australia by members of the Chinese Government, to discuss initiatives for

improving economic co-operation between the two countries.

• Reorganisation of the Trade portfolio established the Australian Trade Commission (Austrade) on 6 January 1986.

• Visit to Washington and representations to the USA by the Minister for Trade, Mr Dawkins, in February 1986 to emphasise Australia’s concern over the deleterious impact of US agricultural export subsidy programs.

• Representations to European governments, both bilaterally and in multilateral fora, seeking improved access for Australian products, particularly agricultural products.

• Dr V W FitzGerald was appointed as Secretary of the Department of Trade on 3 March 1986, following the appointment of the former Secretary, Mr J. L. Menadue, as Chief Executive of Qantas.

• Appointment of Mr L. R Duthie as Special Trade Representative in Europe, in March 1986.

• Informal meeting of Trade Ministers in Seoul in May 1986 to discuss developments in the multilateral trading system.

• Agreement reached at the Seoul meeting to commence regular ministerial consultations between Australia and the USA on trade issues.

• Preparatory work, including regional consul­ tations, for the launching of the new round of Multilateral Trade Negotiations under the auspices of the General Agreement on Tariffs and Trade.

• Development of the export potential of

Australia’s service industries, particularly education.

• Review of export control policies for Australia’s major mineral and energy exports, including bauxite and alumina and coal.

• Establishment of management processes necessary for the implementation of effective corporate planning and a move to program budgeting.

• Completion and lodgment with the Public Service Board of the Department’s Industrial Democracy Plan and Equal Employment Opportunity Plan.

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Overview

Introduction The Department of Trade is responsible for advice on the formulation of the Government’s policies as they

relate to international trade, and the administration of those policies.

The Department develops trade and related policy proposals for the Government with the objective of realising the full trade potential of Australian industries and maximising their contribution to economic growth. The Department also negotiates and monitors multi­ lateral and bilateral trade agreements and commodity agreements in pursuit of these policies.

The international trading environment worsened dramatically for Australia in 1985-86; its terms of trade declined sharply and its current account deficit widened significantly. A number of important initiatives were taken during the year, including a major adminis­ trative rearrangement of the Trade portfolio which resulted in a reorganisation of the Department and the establishment of the Australian Trade Commission

(Austrade).

Against this background, the theme of this year’s Annual Report is “Trade: facing the challenge”.

The trading environment During 1985-86 there was slow growth in many major economies and in the volume of world trade overall, weakness in primary commodity prices and tensions

in the international trading environment.

These developments underlined the serious challenge to Australia’s trading situation and outlook. Their impact was brought sharply into focus by a continued deterioration in Australia’s current account

deficit, a sharp decline in its terms of trade and down­ ward pressure on the currency. These developments also served to highlight the significant structural problems confronting the Australian economy which, to be overcome, will require substantial and sustained

effort in the immediate future and over the longer term.

Trade: facing the challenge The Government’s response to these challenges has recognised the strong linkages that exist between Australia’s trading performance and the structure

and condition of the economy generally.

A combination of policy instruments has been employed by the Government. Moves to contain wages, to reduce the budget deficit and to reduce public-sector borrowings have been complemented

by the freeing-up of financial markets, the floating of the Australian dollar and by specific sectoral industry policies generally designed to increase Australia’s

competitiveness. These policies were aimed at alleviating balance-of-payments difficulties and, in the longerterm, providing the encouragement necessary

for sustained non-inf lationary growth.

Trade policy initiatives were taken across a wide front. In many fora, but especially the General Agree­ ment on Tariffs and Trade (GATT), Australia concen­ trated on efforts to develop effective solutions to the

major obstacles that restrict and distort world trade, particularly for agricultural commodities. Australia actively supported the initiatives for a new round of Multilateral Trade Negotiations (MTNs), but stressed that the commitment it could give to a round would

be conditional upon whether it seriously addressed the major present deficiencies of the world trading system, most particularly in respect of agriculture.

The Department continued to place particular emphasis on developing, and working to maintain, strong and close ties with individual trading partners, particularly those that are located in the Western

Pacific Region. This is already the destination for over half of Australia’s exports and the region where economic and trade growth is expected to remain

most buoyant. The focus varied for different countries, ranging from ministerial and official consultations under existing agreements aimed at the further liberalisation of trading arrangements (New Zealand

[NZ]), to those designed to achieve co-operative arrangements for trade expansion (ASEAN, China, Republic of Korea [ROK], Middle East, Eastern Europe), to taking advantage of econpmic changes

and emerging structural adjustment measures (Japan), and those designed to improve market access or limit measures which would adversely affect Australia’s trade (USA, Canada, Western

Europe).

Manufactures and sen/ices, as the fastest growing areas of world trade, continued to receive specific attention. A key element of the approach pursued by the Department was·to encourage and facilitate the

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adoption of more open and outward looking industry policies designed to improve the competitiveness of both exporting and import competing industries. In the services sector, the Department focused its efforts on education services and on two major reviews into transport - costs of which, both domestic and international, are a major factor affecting the competitiveness of Australian exports and the landed costs of imports.

The worsening crisis in world agricultural markets ensured that agricultural trade issues became a matter of the highest priority in 1985-86. Particular focus was given to the agricultural subsidy policies of the European Communities (EC) and the USA (especially following passage of the latter’s 1985

Farm Bill), which contributed greatly to surplus world production, depressed commodity prices and the disruption of international markets. The Government responded in strong terms with numerous ministerial and official representations and visits as necessary. These were aimed at securing amelioration of the immediate impact of their policies and programs and, for the longer term, to encourage the major world-trading countries to address the structural problems confronting world agricultural trade.

In the minerals and energy sectors, the

Department’s activities were directed towards the expansion and diversification of markets for Australia’s exports and the enhancement of the domestic and international environment for the further development of Australia’s industries. In this latter area, particular attention was given to the ongoing review of export control policy guidelines.

To complement and underpin policy development work taking place in the Department, economic analysis and reporting focused on Australia’s current account problems. The Department prepared major background papers on Australia’s external situation to facilitate policy discussions. Increased resources were also committed to longer-term research related to trade development and other financial and commercial issues which have major trade impli­ cations for Australia.

The management task In recognition of the need to marshal its necessarily limited resources to assist industry in the export endeavour more effectively, the Government moved to reorganise the Trade portfolio. This reorganisation was designed to enable the Department to focus its attention on trade and economic policy issues, and at the same time to draw together in one statutory authority all the Government's existing export market assistance organisations and their programs so as to improve the delivery of services to the Australian exporting community. On 6 January 1986 the Australian Trade Commission (Austrade) was estab­

lished incorporating the Australian Overseas Projects Corporation (AOPC), the Export Development Grants

Board, the Export Finance and Insurance Corpo­ ration (EFIC), the Trade Commissioner Service and the marketing and trade promotion functions of the former Department of Trade.

Following the reorganisation, a major management priority of the Executive has been the formulation and articulation of clear objectives and directions for the Department. This exercise coincided with the require­ ment to commence preparations to move towards program budgeting for the 1987-88 financial year.

The Department has therefore established ( processes which it regards as the key to effective corporate planning and progam budgeting. A steering committee was established, chaired by a Deputy Secretary, and comprising senior executives, clerical/administrative officers from all Groups within the Department and a union representative. An l extensive program of consultation and discussion j was embarked upon involving all staff. This process of establishing objectives and strategies, costing resources employed and developing evaluation criteria will be part of the Department’s ongoing management style.

As the Department moves on to program budgeting with its objectives well understood and appreciated by all staff, it is also intended that increasing responsibility for staff and financial resources will be devolved at all levels of manage­ ment. This will bring a sharper focus on output and results and increased job satisfaction. Such a devolution will be facilitated and complemented by improvements in management information systems. An internal resource planning and management approach designed around the principles of program budgeting was introduced in the Department in 1985.

Initial progress has been encouraging and the system provided the basis for developing the 1985-86 and 1986-87 budgets.

Co-ordination and review A Co-ordination and Review Office has been established in the Department to ensure adequate co-ordination of the operations of the portfolio under its new configuration-within the Department, be­ tween it and Austrade and in relation to other depart­ ments - and for co-ordination and review of advice on trade policy issues. The Office is also responsible for

reviewing the overall deployment of effort and re­ sources within the Department including oversight of the corporate planning and program budgeting pro­ cess. In liasion with Austrade, the Office also is responsible for portfolio resource matters.

The report in outline The Department’s aim in this report is to provide a complete, but succinct, picture of its work during the year.

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The following chapter provides an overview of the Department including a statement of the corporate objective, and an outline of departmental functions and priorities. Thereafter the report explores in more detail the trading environment in 1985-86. Then it outlines the major policy objectives, issues and

initiatives pursued in the major export sectors - agriculture minerals and energy, and manufactures and services.

The next three chapters focus on activities which underpin Australia’s trade efforts - multilateral trade policy, bilateral trade relations and domestic policy support and facilitation - and the final chapter des­ cribes the corporate services provided within the

Department.

Appendixes are included to cover statistical and other information.

The Department - its objectives and priorities

Corporate objective The Department’s corporate objective is to help foster the best possible conditions, both inter­ national and domestic, in which to expand Australia’s trade through the development and implementation of trade and economic policy proposals designed to facilitate the realisation of the full economic potential of Australian industries.

Functions In pursuit of its corporate objective, the Department performed the following functions:

• provided advice to the Minister on the develop­ ment and implementation of trade and trade- related policies and programs based on - co-operation and a mutually supportive

relationship with all sectors of industry, unions and other agencies of Government - co-operation and a mutually supportive relationship with trading partners - analysis of the domestic and international

factors impinging on Australia’s trading environment - monitoring of Australia's trade performance; • provided input into the development of domestic

policies and legislation relevant to Australia's trade policy interests; • negotiated and implemented multilateral, bilateral and other trade and trade-related agreements

designed to advance Australia’s trading and commercial interests; • administered Regulations 9 and 11 of the Customs (Prohibited Exports) Regulations relating to the

export of certain minerals and metals, hydro­ carbons and nuclear-sensitive materials; and • managed and co-ordinated the human, financial and technical resources of the Department in the

most efficient and effective manner, maintaining an internal working environment which will attract skilled and motivated staff in accordance with

modern business practices and consultative processes.

Priorities The principal priorities of the Department were:

• vigorous pursuit of Australia’s national interests in seeking an international trading environment more conducive to the sound development of Australia’s trade, including preparation for a new round of MTNs; • support of the commitment to more open and

outward-looking industry policies designed to improve the competitiveness of both exporting and import-competing industries; • achievment of greater co-ordination in the imple­

mentation and operation of all government policies which bear on Australia’s trade performance (both as exporter and importer); • improvement of co-ordination and management

of bilateral trade relations (consistent with a continued commitment to an open multilateral system) with trading partners, particularly those in the Western Pacific Region; • close co-operation with Austrade in the creation

of a more effective and co-ordinated trade promotion and facilitation framework; and • implementation of processes to achieve a more result-oriented, participative management style in

the Department.

Structure of the Department The Department comprises six Groups, a Co­ ordination and Review Office and the Trade Develop­ ment Council Secretariat. It employs some 507 people, 67 of whom are located overseas in a small network of Trade Representative posts. The Groups are concerned with multilateral trade policy, bilateral trade relations, agriculture, minerals and energy domestic policy support including manufactures and services trade policy, and corporate services. An organisation chart for the Department appears on pp. 4-5.

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The trading environment in 1985-86

International setting Economic growth in the industrial countries was less than 3 per cent in 1985, considerably below the

4.8 per cent growth recorded in 1984. The expansion of world trade (in volume terms) slowed to about 3 per cent in 1985, equivalent to the average for the past decade but significantly below the 9 per cent

growth of 1984. This slow-down reflected slower economic growth in the industrialised countries and a moderation in imports by most of the developing countries.

The volume of world exports of agricultural and mining products declined in 1985, by 2.5 per cent and 3 per cent respectively, making the 5 per cent increase in the volume of exports of manufactured goods the only source of strength in world trade. The decline in agricultural trade occurred despite an estimated 2 per cent increase in world production. According to a recent study of the international trade situation by the GATT Secretariat, the slow-down in world trade in 1985 was only a growth pause and

is likely to be followed by a renewed acceleration of world trade. The Secretariat is forecasting a moderate increase in the rate of economic growth in the industrial countries and on this basis expects

the volume of world trade to increase by 4-5 per cent in 1986. The latest economic outlook by the Organization for Economic Co-operation and Development (OECD) is not quite as optimistic,

expecting the volume of world trade to grow at 3.5-4 percent in 1986 and 1987, with trade in manufactured goods expanding at somewhat faster rates. Major influences on world trade are expected to be an

expansion of trade among OECD countries, the acceleration in the fall of imports of the oil producing countries andan increase in energy trade.

The weakness in world commodity markets that has been in evidence in recent years continued and became more pronounced in 1985 with non-oil commodity prices falling to post-war lows by the end of 1985. From a peak in mid-1984, the International Monetary Fund (IMF) index of non-fuel commodity prices (expressed in US dollars) had fallen 12 per cent between 1984 and 1985. Although commodity prices recovered slightly in the early months of 1986,

largely as a result of higher coffee prices, they have since weakened further. In June 1986, the IMF index

was 6.5 per cent below its level in December 1985. Weakening food prices largely explained this fall although declining metal prices also contributed to this movement. By June 1986 prices were 7.2 per cent below their level of a year earlier.

The outlook for non-oil commodity prices remains depressed. Although the most recent indicators from the New York and London commodities markets show encouraging upward trends in $US prices for

lead and zinc (albeit from a very low base level), other commodity prices remain depressed. A substantial increase in real commodity prices is unlikely in the absence of significantly faster global economic

growth or major supply disruptions. Accordingly, the OECD has forecast that, relative to manufactured export prices, commodity prices by the end of 1987 might be no higher than their post-war lows recorded at the end of 1985.

During most of 1985, prices of crude oil were an exception to the general fall in world commodity prices. Since late November, however, spot prices have fallen from $US30 to around SUS13 a barrel in June 1986. As world demand for oil is expected to

rise only moderately in the next few years, the level of oil prices will be mainly determined by supply factors, in the event that some form of concerted production restraint is re-established, a partial reversal

of the sharp fall in oil prices could occur. Very few market analysts however are predicting a spot price above $US20 a barrel in the near future.

Falling oil prices, in particular, and the weakness in commodity prices, in general, have contributed to renewed optimism about the world economy. Lower oil prices are expected to provide a substantial stim­ ulus to the economic growth prospects of most

industrialised countries and many of the non-oil- producing developing countries are also expected to benefit.

Australia’s trade Australia’s current account deficit continued to deteriorate in 1985-86, increasing to $13.7b com­ pared with a deficit of $10.8b in 1984-85. This

deterioration reflected a widening in both the deficit on merchandise trade, as well as an increase in the net income and transfers deficit. The deficit on mer­

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chandise trade in 1985-86 was $3362m, more than three times the $888m deficit recorded in 1984-85. The net services deficit of $3859m was a modest improvement on the $3950m deficit in 1984-85. The net income and transfers deficit was $6492m in

1985-86 compared with $5981 m in 1984-85. An increase of $992m in the net income deficit, largely reflecting higher interest payable abroad, was partly offset by a $481 m rise in the net unrequited transfers surplus.

On provisional estimates, Australia's gross external debt increased from $68.7b, or 33 per cent of GDP (Gross Domestic Product), at end-June 1985 to around $86b, or 37 per cent of GDP at end-June

1986. Over the same period Australia’s net external debt is estimated to have risen from $51.4b or 25 per cent of GDP to around $66b or 28 per cent of GDP

Merchandise exports Australia’s exports in 1985-86 were $32 254m, 10 per cent higher than in 1984-85 when exports increased by 23 per cent. Notwithstanding the depreciation of the Australian dollar in 1985-86, average export prices in domestic currency terms increased by only about 4 per cent in 1985-86. The growth rate of export volumes slowed to 7.4 per cent in 1985-86, around half the rate experienced in

1984-85. Rural exports increased by 13 per cent to $12 273m in 1985-86, with volumes increasing by 8 per cent and prices by 6 per cent in Australian dollar terms. Cereal exports were up 1.2 per cent to $3900m in 1985-86. Wheat export volumes were little different from that recorded in 1984-85. Whilst wheat prices (in US dollar terms) were weaker than in 1984­ 85, this was more than offset by gains from the depreciation of the Australian dollar, so that Australian dollar export prices improved slightly in 1985-86.

Exports of wool and sheepskins increased by 19 per cent to $3069m in 1985-86, reflecting very strong volume growth and higher prices as a result of the depreciation. Following a number of years of decline in meat exports, the value of meat exports increased by 24 per cent to $1700m in 1985-86, with both volume and price gains contributing to this large increase. It is worth noting that wool and meat exports alone contributed nearly 60 per cent of the increase in rural exports in 1985-86.

Australia’s non-rural exports increased by almost 9 percent to $19 981m in 1985-86. Within this broad group, exports of coal, coke and briquettes increased by 12.6 per cent to $5253m. Coking coal export volumes have been constrained in recent years by the generally subdued levels of world steel production while non-coking coal volumes have increased more rapidly reflecting strong demand growth. Exports of petroleum and petroleum products grew strongly in the first half of 1985-86 and in to the first two months

of 1986, continuing the rapid increase of the last quarter of 1984-85. Thereafter, exports weakened dramatically reflecting the fall in oil prices and crude oil exports virtually ceased towards the end of the first quarter of 1986. As a result gas petroleum, crude oil and petroleum products exports were down 2 per cent to $2303m in 1985-86, compared with a 64 per cent increase in 1984-85.

Reflecting depressed world metals markets, exports of metal ores and minerals rose only 6 per cent to $5000m in 1985-86. Exports of metals and metal manufactures were up 8 per cent to $2717m in 1985-86. with exports of aluminium contributing significantly to the growth. Exports of machinery and transport equipment were down 2 per cent to $1620m in 1985-86 after a 20 per cent increase in 1984-85.

In recent years, however, movement in this series has been heavily influenced by exports of second­ hand transport equipment.

Other non-rural exports increased by 26 per cent in 1985-86, in part reflecting buoyant gold exports.

Merchandise imports In 1985-86, total imports were up 18 per cent to $35 616m. Import prices in Australian dollar terms were boosted by the depreciation of the Australian dollar but import volumes also continued to grow strongly, particularly in the first half of the year, reflecting the strength of domestic economic activity. Slower growth in domestic demand in the second half of 1985-86 and the expenditure switching effects of the depreciation, caused import values to fall by 3.8 per cent in seasonally adjusted terms in the six months to June 1986, compared to the six months to December 1985. For the year as a whole import volumes were up only 0.6 per cent compared with a 15 percent increase in 1984-85.

Australia’s imports are dominated by capital goods and industrial supplies, and demand for these pro­ ducts is strongly correlated with the strength of domestic economic activity.

In recent years growth in total imports has been largely due to increases in imports of capital goods, and their share in 1985-86 was in excess of 40 per cent of total imports compared to 38.4 per cent in

1984-85. Much of the growth is in new technology goods for which there are relatively few domestic substitutes. As a result imports of manufactured goods have been increasing faster than domestic manufacturing sector activities.

In 1985-86 imports of machinery and transport equipment increased by 26 per cent to $16 185m, and they accounted for more than 60 per cent of the total increase in imports. Nevertheless, other import categories also increased strongly, with food bever­ ages and tobacco up 15 per cent, basic materials up 5 per cent, textiles up 15 per cent and metals and metal manufactures up 16 per cent. The only category

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to fall was fuel imports which were down 18 per cent to $1907m.

Trade in services Australia’s exports of services were $5870m in 1985­ 86, up 19 per cent on 1984-85. Imports of services were up 9 per cent to $9729m, resulting in a fall in the

net services deficit to $3859m. In 1985-86 the net services deficit fell by 2.3 per cent compared with an increase of 35 per cent in 1984-85. The net services deficit is responding more quickly to the depreciation than the other major aggregates in the current

account. The main reason for the decline in the net services deficit is the 25 per cent fall in the net tourism deficit with tourism credits, (largely comprising expenditure by foreign tourists in Australia and I revenue earned for resident airlines from ticket sales

overseas), increasing by 35 per cent to $2653m in 1985-86, and tourism debits increasing by only 6 per centto$4059m.

Australia’s terms of trade Australia’s terms of trade (the ratio of the price index of exports of goods and services to the price index of imports of goods and services) declined sharply over the past two years. Between the middle of 1984

(the last peak in world commodity prices) and the end of 1985-86 Australia’s terms of trade fell by 16 per cent, their lowest level since the 1930s. In comparison, the average terms of trade index for all industrial countries improved by about 1 per cent between mid-

1984 and the end of 1985, with indications that it continued to improve in early 1986.

Australia’s terms of trade have been on a long­ term downward decline. Over the past three decades or so they have fallen on average by 1 per cent a year. The long-term decline can be attributed primarily to

the relative weakness in export prices for primary products which continue to dominate Australia’s export mix. In 1985-86 primary products accounted for around 80 per cent of Australia’s exports, little different from the share they held in the early 1950s.

The importance of commodity prices to Australia’s terms of trade was highlighted in the past two years when most world commodity markets weakened. For all of Australia’s five major non-oil commodity

exports international prices (in US dollar terms) have moved downwards since mid-1984. International wheat prices have fallen by 7 per cent, coal prices by 11 per cent and wool prices by 7 per cent. Inter­

national prices for iron ore and beef have held up better, falling by only 5 per cent and 6 per cent respectively.

To some extent, Australian rural and mining industries have been cushioned from these falling commodity prices by the depreciation of the Aust­ ralian dollar. On a trade-weighted basis the Australian dollar fell by 23 per cent between mid-1984 and the

end of 1985, and a further 7 per cent by June 1986.

The decline in Australia’s terms of trade, combined with the rapid pace of economic growth and the as­ sociated surge in imports, has been instrumental in widening the current account deficit above traditional

levels. In 1985-86 the current account deficit of $13.7b represented about 6 percent of GDP.

The decline in Australia’s terms of trade has meant that although real GDP has grown by 3.7 per cent in 1985-86 the real purchasing power of that output increased by only 1.9 per cent over the year.

Agricultural trade

Objectives and functions To seek improved and more predictable con­ ditions for the conduct of international trade in agricultural commodities, especially increased

and assured access to markets and improved prices for Australian agricultural exports through:

• the provision of policy advice on the impli­ cations of the support policies and assistance programs adopted by the EC and USA; • negotiations, consultations and discussions

with other governments in bilateral and multi­ lateral fora; • negotiation, administration and review of inter­ national agricultural commodity agreements

and arrangements; and • the provision of support and assistance for Australian industry in the negotiation and maintenance of long-term commodity and

commercial arrangements.

Policy issues Overview The year proved to be one of the most difficult for

agriculture, with a series of crises affecting the trading environment in which Australian commodities had to compete. The general malaise in world agricultural trade can be attributed to three main factors. Firstly, continuing developments to improve technical efficiency of production increased supplies of agricultural products leading, on the one hand, to increased export availability and, on the other hand, to reduced import demand. Secondly, production subsidies induced even higher levels of production in major Northern Hemisphere developed regions such as the USA and the EC, and in developing countries which traditionally import (where there was also a desire to conserve foreign exchange reserves). Thirdly, the predatory export subsidy practices of both the EC and the USA markedly disrupted markets in the major temperate commodities (e.g. wheat, dairy and beef). The US subsidy program also impacted on the cotton and rice markets.

The Government responded to the agricultural trade crisis on a number of fronts including special representations by the Prime Minister, Minister for

Trade, and Minister for Primary Industry, in both Washington and Brussels. These representations sought, in the short term, to ameliorate the impact of US and EC programs and to maintain access to traditional markets by bilateral negotiations. The representations also stressed the need to give the highest priority to agriculture in the MTNs with the aim of changing the world agricultural trading system so as to revive real prices for Australia’s non- subsidised agricultural export commodities.

The EC’s Common Agriculture Policy On 15 July 1985 the Commission for the EC released a discussion (Green) paper on reform of the Common Agricultural Policy (CAP). During the visit of the EC Vice-President, Mr Andriessen (who is also EC Commissioner for Agriculture) to Australia in September 1985, Australia submitted its written views on options to reform the CAR

In December 1985, following consultations on its earlier Green Paper the Commission published guide-lines on the future of EC agriculture. These guide-lines resulted in a piecemeal approach with separate Commission proposals on beef, cereals, sugar and dairy products involving a number of measures which in no way represented a redirection of the CAR This reflects the extent of the opposition by the EC farm sector generally and a number of Member States to basic reforms proposed by the Commision, such as a more market-oriented pricing policy to reduce the gap between EC and world free- market prices.

The EC’s 1986-87 farm package represents a further watering down of the EC Commission's modest “reform” proposals by postponing a decision on reducing support for beef, delaying by one year a proposed 3 per cent reduction in dairy quotas, and agreeing to agri-monetary (green rate) adjustments which will provide increases in support prices in national currencies despite a supposed freeze of prices expressed in European Currency Unit (ECU) terms for most commodities.

The most disquieting aspect of EC agricultural policy development during the year was the decision to establish and fund to the tune of ECU 3000m over three years, a stock disposal program. Australia has

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made repeated representations seeking restraint by the EC so as to not further disrupt world agricultural trade. Australia has argued that a trade war between the EC and the USA is a most damaging alternative to negotiations to resolve the trade crisis.

The enlargement of the EC from 10 to 12 members with the accession of Spain and Portugal on 1 January 1986 has also heightened agricultural trade tensions between the EC and USA. The USA

claimed a significant loss of exports of feed grains and oil-seeds without prior negotiation for compen­ sation. Towards the end of June 1986, both parties had agreed to halt proposed actions and counter actions and hold negotiations.

US Farm Bill During the past five years the US agricultural sector has suffered as a result of the deteriorating world market for major farm products and a loss of price competitiveness following sharp rises in the value of the US dollar. The provisions of the previous farm

legislation, the Farm Bill 1981, which were predicated on continuing inflation and buoyant world commodity prices, proved inflexible over this period and

prevented the US agricultural sector from making necessary adjustments to the changed market cir­ cumstances. In 1981, US farm exports were a record 162 million tonnes, valued at $US44b, but by 1985 farm exports had fallen to an estimated 137 million tonnes valued at $US34b.

Against this background, in 1985 the US

Administration proposed farm legislation that adopted a more market-oriented approach to agriculture through a system of support prices based on actual market returns. This was designed to expose US farmers to price signals from world markets in order

to help restore US agriculture to a more price- competitive position on world commodity markets. The Administration’s proposals would have reduced the cost of agriculture to the US Budget from an aver­

age of $US12b in fiscal years 1982 to 1985 to an estimated $US5b-7b by 1991. This was a key factor in consideration of the legislation.

Despite expenditure concerns, however, both the US House of Representatives and the Senate pro­ posed alternative legislation which, apart from the introduction of market-oriented price support, largely aimed for the maintenance of the status quo in the commodities covered (in the form of unchanged commodity titles) and provided for mandatory export

assistance measures. By maintaining high target prices for field crops, while reducing loan rates, these proposals potentially increased budget exposure. The Conference of both Houses convened to reconcile these proposals resulted in the Food

Security Act 1985 (the Farm Bill 1985). At the time, this legislation was estimated by the US Department of Agriculture to cost the US Budget $US50b-55b over the period 1986-88.

When signing the Farm Bill into law on 23

December 1985, President Reagan declared an intention to work with Congress to rectify “problem" areas of the legislation, particularly the mandated export subsidy programs and the maintenance of costly price support for sugar and dairy products.

Australia made a number of representations (by the Prime Minister, the Minister for Trade and the Minister for Primary Industry) concerning the mandatory aspects of the Bill and the operation of the Export

Enhancement Program (EEP) and the Targeted Export Assistance Program (TEAP).

The EEP was announced in May 1985 by the US Secretary of Agriculture, Mr J. Block. It involved subsidies in the form of bonus quantities of products held by the Commodity Credit Corporation (CCC) being provided to exporters of agricultural com­ modities, to apply until 30 September 1988.

Expenditure under this program was at the discretion of the Secretary of Agriculture. The objectives of the program were stated to be:

• to increase US agricultural exports; and • to regain markets unfairly taken by subsidised competition.

The subsequent 1985 Farm Bill, however, made mandatory expenditure of not less than $US2b on the provision of CCC-owned commodities under the EEP over the period 1986-88. This legislation

provided that the expenditure should be used in equal amounts over the three-year period to the maximum extent possible. Representations by Australia and other countries contributed to the US decision to amend the program via the enactment of the Food

Security Improvement Act 1986, signed into law on 20 March 1986. This Act reduced the mandatory $US2b to be spent under the EEP to $US1 b, but with a further discretionary $US500m. The program was directed towards EC exports with public assurances from the US Administration that the program would be targeted and that exports from non-subsidising exporters such as Australia would be protected to the extent possible.

Grains The Department has focused its activities on modification of non-market-oriented policies adopted by the USA and the EC. These have been largely

responsible for the chronic oversupply and depressed prices which are currently a feature of the world agricultural market.

Of the programs under the Food Security Act the EEP is potentially the most damaging to Australian grain exports. It provides for the use of substantial subsidies to increase US agricultural exports. The

Department has made a series of representations to US authorities pointing out the considerable down­ ward pressure on prices resulting from EEP initiatives. Also of great concern were the new initiatives in

respect of medium-term credit marketing loan arrangements for cotton and rice which also represent

11

substantial subsidies and have already resulted in severe downward pressure on prices.

The Minister, and subsequently the Prime Minister obtained assurances from the USA that recipient countries under the EBP would maintain their usual level of commercial imports from non-subsidising suppliers and that every effort would be made to avoid damaging Australian interests. The Department has followed-up on these assurances in respect of markets of particular interest to us (for example, Saudi Arabia - barley and Yemen Arab Republic - wheat).

Similarly, discussions have been held with EC officials to express Australia’s concerns at EC export subsidisation programs and to suggest ways of man­ aging these programs so as to minimise disruption to world markets.

The Department led the Australian delegation in the negotiations which resulted in a new International Wheat Agreement (IWA). The IWA, which consists of the Wheat Trade and Food Aid Conventions, contains improved consultative provisions but no economic provisions. Australia has acceded to the Wheat Trade Convention while the question of Australian accession to the Food Aid Convention is still under consideration.

The Department continued to monitor food-aid pro­ grams for compliance with the Food and Agriculture Organisation (FAO) Principles of Surplus Disposal.

Wool and cotton The Department negotiated improved access for Australian exports by obtaining the removal of a tariff on fine-wool imports into Brazil and modifying

Philippine certification requirements for cotton imports.

In conjunction with the Australian cotton industry the Department hosted the 44th Plenary Meeting of the International Cotton Advisory Committee (ICAC) in October 1985. This is the first ICAC meeting to have been hosted by Australia, a member since 1947. The meeting was widely acknowledged as one of the best held for many years and provided participants with a valuable opportunity to address the problems facing the world cotton industry. Fifty-three countries and six international organisations participated in the meeting.

Meat and livestock While the situation facing the meat and livestock industry in 1985-86 was generally better than for many other commodities, world markets continued to be distorted by the subsidisation and protection policies pursued by some countries, particularly Member States of the EC.

With the overly generous support provided by the CAR the EC’s beef exports remained at around

800 000 tonnes. In addition, intervention stocks of some 750 000 tonnes continued to overhang the market, further depressing prices, particularly in those countries which permit the importation of beef from suppliers which are not free from foot-and- mouth disease.

During the Prime Minister’s visit to Europe in April 1986, the 'Andriessen Agreement" of February 1985 was reaffirmed. Under this agreement the EC has undertaken not to export subsidised beef to five of the countries in the Asian/Pacific region to which Australia attaches particular importance - Japan, ROK, Singapore, Malaysia and Papua New Guinea (PNG) - together with the Province of Taiwan.

There was also agreement that discussions should be held between the EC and Australia later in 1986 to try to find an alternative basis for dealing with the so called “beef balance sheet” (manufacturing-beef quota) arrangements. This follows repeated concerns expressed by Australia about the level at which the beef balance-sheet quotas have been set in the past and about certain aspects of the administration of these quotas. For 1986, the EC decided unilaterally to set the balance sheet quotas at only 25 000 tonnes carcass weight equivalent(cwe) but as a trade-off, to make an additional quota allocation for high-quality beef (HQB) of 6000 tonnes. Australia’s share of this HQB quota was set at 680 tonnes.

The EC Council of Ministers decided in December 1985 to prohibit the use of hormonal growth stimulants in the EC from 1 January 1988, although one Member State, Britain, is challenging the validity of this decision. The use of stimulants is widespread in the Australian meat and livestock industry for both therapeutic and growth promotion purposes, consequently the Australian Government and the industry are concerned about any possible effects on Australia’s meat trade with the EC. While no scientific evidence supports such a ban, equally no evidence exists that the EC ban was intended as a trade barrier. This matter was raised during the Prime Minister's visit to

Europe in April 1986 and it was agreed that there would be early consultations on certification procedures.

The USA added a new dimension to the problems facing the world beef trade with the passage of the Food Security Improvement Act 1985. The Act requires the US Commodity Credit Corporation to purchase 400 million lb of red meat (181 000 tonnes) over two years as an offset to the Whole Herd Dairy Buy Out Program. Of the 400 million lb, half is to be distributed domestically (under commodity distribution and nutrition programs) and half is to be made available for export to commissaries on US defence establishments and in any other way. Australia was concerned that a substantial proportion of this meat might have been exported to commercial markets causing harm to traditional beef exporters. The Australian Government made urgent representations

12

about this matter. The Minister for Trade took this up with US officials in February 1986. The Prime Minister also made representations during his visit to

Washington in April 1986 and was assured by President Reagan that the USA would take account of Australia's interests to the extent that it could. Subsequently the USA sold 90,000 tonnes of beef to

Brazil, thereby minimising damage to Australia’s interests.

The higher-than-expected subscription rate under the US Buy Out Program caused a sharp drop in US beef prices in April 1986 resulting in pressure in the US Congress to act to alleviate the situation, including calls for restrictions on beef imports. The Prime

Minister also took this matter up during his visit to Washington in April 1986 and was assured by President Reagan that Australia would continue to

have access to the US beef market at least at the levels consistent with the operation of the US Meat Import Law. In the event, access to the US market remained unrestricted throughout 1985-86.

The Canadian beef market has been destabilised in recent years by the export policies of the EC. As a result, quantitative restrictions were imposed on imports in 1985 under the Canadian Meat Import Act. The Canadian Government again invoked this Act for

1986 but quotas were immediately suspended. This followed a complaint lodged by the Canadian Cattlemen’s Association with the Canadian Govern­

ment alleging that injury or threat of injury was being caused by the entry of subsidised EC beef into the Canadian market. The Canadian Government and EC Commission attempted to resolve the dispute by

negotiating a government-to-government voluntary restraint agreement, but this was rejected by the Cattlemen's Association and a formal countervailing duty investigation commenced. Revenue Canada

issued a “final determination of subsidising” on 12 June 1986 and the Canadian Import Tribunal is due to announce its findings in mid-July 1986 on whether subsidised EC beef imports into Canada have caused

or are likely to cause injury to the domestic industry.

In Japan, access for beef has been consistent with the levels stipulated in the bilateral beef agreement negotiated in 1984. The Japanese have refused, however, to increase quotas beyond this level to

satisfy the growing demand for beef, or to pass on to consumers the benefits of the yen appreciation. Some measures have been implemented but these are of a marginal nature. The present strong demand

for beef in Japan is highlighted by increased imports of live cattle for fattening/slaughter, the majority of which is supplied from Australia. Imports of other beef outside of quota have also increased.

During his visit to Tokyo in May 1986, the Prime Minister pressed Japan for an early commencement of negotiations on a successor bilateral beef agree­ ment to replace the present agreement which expires on 31 March 1988. The Japanese Government indi­

cated that it would commence negotiations during Japanese fiscal year 1987.

The ROK beef market has remained closed since late 1984. The Australian Government has made numerous representations for the market to be re­ opened, the latest during the Australia-Korea Joint

Ministerial Trade Committee meeting in May 1986.

Supply availability of sheep meat in Australia in­ creased during 1985-86, particularly of mutton, as a consequence of increases in sheep numbers en­ couraged by the higher prices for wool. World markets for mutton remained depressed - in particular in the

Middle East, due largely to EC policies on beef ex­ ports. The return of Iran as a market for Australian mutton had a significant effect during the year.

Sugar The Australian sugar industry relies on export markets for disposal of about 80 per cent of its production. In 1984-85 3.4 million tonnes were

produced of which 2.8 million tonnes were for export. Production in 1984-85 was up by 12 per cent on the previous year while tonnages for export were up by 14 per cent. The price of sugar has made some gains since the 30 year low of US3 cents a lb in mid-1985; by April 1986 it had reached US8 cents a lb but sub­ sequently slipped back to about US7 cents a lb in June 1986.

The tripartite Sugar Industry Working Party, established by the Federal and Queensland Govern­ ments and industry to examine problems of the industry, submitted its report in August 1985. The

report listed 34 recommendations relating to the restructuring and deregulation of the sugar industry. The Department contributed to the deliberations of the Working Party in relation to marketing issues

aimed at improving the viability of the industry.

During late 1985 and early 1986 the Commonwealth put various proposals to the Queensland and New South Wales Governments and the industry relating to funding of the recommendations. The proposal of 21 April 1986 for $100m assistance from the

Commonwealth was accepted by Queensland growers on 20 May 1986, The package is designed to support the industry in the short term whilst en­ couraging deregulation and restructuring. The

assistance package has yet to be finalised between the Commonwealth and State Governments.

Government support programs in both the EC and the USA have contributed to world sugar surpluses and associated low market prices. In September 1985 and January 1986 the Department initiated a formal submission to the EC concerning

reform of its sugar regime, which the EC has sub­ sequently decided will be left essentially unchanged.

The US Food Security Improvement Act 1985 will maintain the levels of support of the previous US sugar regime but with a provision for 'no net cost’ to

13

the government. This will increase the likelihood of further reductions in the US total import quota for sugar Other emerging problems with US sugar policy are proposals for subsidised exports and the dis­ criminatory allocation of sugar quotas to certain developing countries, at Australia’s expense. The

Department has made representations to the US authorities pointing out the adverse impact of US policies on world sugar trade and Australia’s sugar exports and seeking modifications to those policies. Ministerial representations on US sugar policy were made by the Minister for Trade in February, the Prime Minister in April and the Minister for Primary Industry in June 1986.

The International Sugar Agreement (ISA) 1984 entered into force on 1 January 1985. The objectives of the ISA, of which Australia is a member, are to advance international co-operation in sugar matters and to provide the framework for negotiation of an

ISA with economic provisions.

Discussions are continuing between major sugar exporters, Australia, Brazil, Cuba and the EC (the ABCE meetings) exploring a Brazilian proposal for a possible new ISA. Meetings have been held in November 1985, and February and May 1986. The discussions are still exploratory and there remain formidable barriers to progress including the question of special arrangements between Cuba and the Soviet bloc, the level of EC export allowance and Australia’s need for a minimum export entitlement or an equivalent provision.

Dairy and horticultural products The International Dairy Arrangement (IDA), whose aim is to stabilise the world dairy market by setting minimum prices, has been under pressure since late

1984 when the EC breached the minimum price for butter in a large sale to the USSR. Following the EC breach, on 31 May 1985 the IDA agreed to a dero­ gation (in effect usable only by the EC) for the period to 31 December 1986 for sales of large quantities of old butter/butter oil at prices below the IDA minimum. The derogation included provisions to protect the trade of other exporters including Australia.

The existence of the derogation impeded sales to the USSR. It was not until 1986 that the EC was able to make a sale of 100 000 tonnes of old butter to the USSR for delivery in December 1986. That sale

included an option for an additional 50 000 tonnes. In the continuing difficult dairy supply situation with EC butter stocks of over 1.2 million tonnes and growing NZ butter stocks, there will need to be further discussions in the IDA in 1986-87 on how to deal with problems facing the world butter market.

This and other dairy trade questions were dis­ cussed at a meeting in Wellington of the Australia- New Zealand Joint Dairy Industry Consultative

Committee (JICC) in June 1986. The JICC which meets at six monthly intervals was established under a Memorandum of Understanding attached to the

Australia New Zealand Closer Economic Relations - Trade Agreement (ANZCERTA). While it is a meeting of the dairy industries of the two countries, govern­

ment officials participate in an observer capacity. The principal objectives of the J ICC include improving co-operation between the two industries in trans- Tasman trade in dairy products.

In February 1986 the EC introduced a new, more aggressive system of unpublished export subsidies on milk powders, butter and butter-oil (awarded on the so-called a la carte basis). This represented another attempt by the EC to reduce its almost un­

manageable stocks, especially of butter and skimmed milk powder. Skimmed milk-powder prices have fallen considerably as a result of the EC initiative.

In May 1986 the EC made substantial increases in the level of export subsidies on a number of cheeses exported to Australia. Given the strong concerns expressed by the Australian industry about the implications of the increases, the Ministers for Trade and Primary Industry had discussions with EC Commissioners on the potential problems. It was agreed that formal consultations between Australia and the EC as provided for in the EC’s Counter­ vailing Duty (CVD) Price Undertaking, which covers export subsidies on cheese should be held in July

1986.

The Department has been involved in efforts to improve access to world markets for horticultural products. For example, since 1980 repeated representations have been made to the Italian authorities to lift the ban on the entry of Australian pome fruit which had been put in place on

phytosanitary grounds. The Minister raised the issue during his meeting in Rome in October 1985 with the Italian Minister for Foreign Trade and subsequently during the meeting of the Joint Australia-ltaly Working Group on Trade in Canberra in November

1985.

In March 1986 the Italian Government announced an amendment of its phytosanitary regulations to permit the entry of Australian pome fruit into Italy during the period 1 March to 15 May of each year.

Entry of other Australian fruit, including table grapes, for specific periods was also announced.

Rubber Australia is an importing member of the International Natural Rubber Agreement (INRA) 1979, which is due to expire on 30 September 1987. The agree­ ment is based on the accumulation and release of buffer stocks of natural rubber when the indicator price moves through defined trigger points. At the end of June 1986 Australia’s investment in the 360 000 tonne buffer stock was $2.9m.

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A United Nations (UN) conference to renegotiate the INRA, in which Australia participated, was convened in Geneva during 5-23 May 1986. Since producers and consumers were unable to reach a

consensus on the major issues of price range, degree of automatic price adjustment and the extent of liability of governments, it was not possible to reach consensus on the text of a new agreement.

Although a further session is expected to be convened towards the end of 1986, progress is expected to be slow given the lack of agreement at the May session.

Coffee Australia is an importing member of the International Coffee Agreement (ICA) 1983 which is due to expire on 30 September 1989 unless extended. The

economic provisions of the Agreement impose quotas on exports by producer members and limits on imports from non-member countries by consumer members. These quotas may be suspended or reintroduced as the composite

indicator price reaches pre-determined levels in the price range.

Due mainly to a drought in Brazil, prices reached an eight-year high in January 1986. Consequent to the ICA composite indicator price remaining at or above the crucial US150 cents a lb level for 45 consecutive days all quotas were suspended on 18

February as provided for under the provision of the ICA. This allows free trade in coffee between all countries including non-members. Should the average price fall to US134.55 cents a lb or below, quotas will be automatically reintroduced unless an International Coffee Organisation decision to the contrary is taken.

Cocoa Although Australia is not a member of the current International Cocoa Agreement (ICCA) 1980 which is due to expire on 30 September 1986 (after two

extensions), the Department has continued to participate in UN Conferences attempting to renegotiate the agreement.

The most recent Conference was concluded in Geneva in February 1986 without consensus on a new agreement. The major difficulties with re­ negotiation relate to the structure and level of prices and the nature of supplementary price defence

mechanisms. Should a new agreement eventuate, Australian membership will depend largely on the likely effectiveness of its economic mechanisms

and membership coverage.

Tropical timber The International Tropical Timber Agreement (ITTA) entered into force provisionally on 1 April 1985 with

the objectives of promoting trade, fostering inter­ national co-operation on tropical timber issues and financing and facilitating research and development projects of benefit to the tropical timber economy. The agreement does not contain substantive price

stabilisation provisions.

The International Tropical Timber Organisation (ITTO) which administers the ITTA is not yet fully operational. Consequently the Council of the ITTO has been unable to effectively address the question of a work program for the Organisation to carry out the objectives of the agreement. Australian

membership of the ITTA is under consideration.

15

Minerals and energy trade

Objectives and functions To maintain and develop Australia’s exports of minerals and energy through: • formulation of policy advice and proposals to

expand and diversify mineral export markets; • enhancement of the domestic and international environment for Australia’s mineral export industries, including participation in inter­

national organisations; • administration of the Government’s export control policies.

Introduction Minerals and energy exports account for 37 per cent of Australia’s total merchandise exports in 1985-86. Many Australian mineral industries are either totally or predominantly dedicated to export.

The goal of the Minerals and Energy Group is to develop and administer policies which maintain and develop Australia’s position as an exporter of these commodities, although activities and strategies vary widely from item to item, depending on industry characteristics and the nature of the trade.

Notwithstanding this variety, the group’s activities have the following three elements in common: Market development • Resources are directed towards the expansion

and diversification of markets for Australia’s mineral exports.

Export environment development • Activities focus on the enhancement of the domestic and international environment for the development of Australia’s mineral exports and

include participation in international organisations, and bilateral trade discussions with major trading partners such as the Australia/Korea Joint Committee for Mineral Resource Development.

Administration of export controls • Regulations 9 and 11 of the Customs

(Prohibited Exports) Regulations prohibit the export of certain minerals and metals, hydro­ carbons and nuclear-sensitive materials, unless

permission is granted by the Minister for Trade or an authorised person.

• The purposes for which export controls are exer­ cised differ for individual mineral commodities. The main objectives are to ensure that pricing and other contractual conditions are fair in relation to the market, consistent with maximising the trade for Australia; that exports are in

compliance with Australia's international obligations and bilateral agreements where applicable; that supplies are adequate for domestic requirements and that environmental and other conditions are satisfied.

• The regulations cover export of alumina, bauxite, coal, iron ore, petroleum, petroleum products, uranium, monazite and other materials of nuclear significance, copper, lead, zinc, tungsten, salt, manganese and, until recently, tin. The degree and form of administration varies widely from commodity to commodity.

Bauxite/Alumina/Aluminium In 1985, Australia accounted for an estimated 42 per cent of world bauxite production, 35 per cent of alumina production and 7 per cent of primary aluminium production.

Australia’s bauxite/alumina/aluminium industry is largely export oriented, with a trend towards increasing exports of further processed products. Australia remains an important bauxite exporter and by far the major supplier of alumina into world markets (commanding about 50 per cent of world trade), and is assuming a growing importance as an aluminium exporter, now ranking third behind Canada and Norway in the Western world. Exports of the three commodities in 1985-86 were valued at more than $2400m.

In 1985-86, reduction of alumina refining capacity in a number of countries, together with changes in the bauxite export arrangements of some of Australia's competitors, led to severe downward pressure on bauxite prices and volumes. Australia’s bauxite prices are mainly denominated in Australian dollars and. hence, the level of returns to Australian producers was generally unaffected by the depreciation of the Australian dollar.

Due to sustained overcapacity in the alumina

16

sector, the world alumina market experienced possibly its most difficult period during 1985-86, with prices falling to extremely low levels in late 1985. The situation moderated in 1986, following some rationalisation of refining capacity, though

prices remained at unsatisfactory levels. Returns to Australian exporters were assisted by the de­ preciation of the Australian dollar against the US

dollar, the currency in which most alumina contract prices are denominated.

The world primary aluminium industry experienced moderate growth in consumption and declines in inventories, resulting in a better supply/demand balance for aluminium metal than has prevailed in recent years but prices remained weak. Australia has become the largest supplier of aluminium metal to Japan.

Consultations with other bauxite and alumina- producing countries were conducted mainly through participation in meetings of the International Bauxite Association (IBA).

Prominent amongst matters discussed was the pressure being exerted by major aluminium com­ panies on certain member countries, (most notably Guinea, Jamaica and Surinam) aimed at price re­ ductions for bauxite and alumina through a lowering or removal of current taxes and/or levies.

The Government announced in October 1985 that, arising from its business deregulation initiatives, consultations would be held with Australian producers on proposals for the relaxation of the export control guide-lines which had applied to bauxite and alumina since 1978. Under these proposals, companies would

no longer require prior approval before entering into negotiations but would still be required to provide details of export transactions and related market information. Export approval would, however, be

readily forthcoming where export prices are fair and reasonable in relation to the market situation, and provided longer term contracts included adequate price escalation and review provisions. Consultations on this matter are still proceeding.

On 8 April 1986, the Minister for Trade announced that the Government had decided to establish a special investigation to examine and report on various aspects of pricing arrangements for bauxite

and alumina exports from Gove. The report is to include recommendations for consideration by the Government, including arrangements for long-term contracts.

Coal During 1985-86 Australia retained its position as the world’s leading coal exporter and coal continued to be Australia’s single most valuable export commodity, with record exports of 90.5 million tonnes valued at

$5212m (compared with 86.0 million tonnes valued at $4654m in 1984-85) - notwithstanding an export

climate which remained highly competitive. There is a substantial oversupply in the international market with reduced coking coal demand and changing quality requirements in some major Australian

markets as well as lower growth in steaming coal demand.

Although many Australian exporters derived some benefit from devaluation of the Australian dollar during 1985-86, this was constrained by a range of commercial, contractual and economic factors.

The difficulties of the general international market situation for coal were reflected in, and exacerbated by, international political pressures to address bi­ lateral trade imbalances by purchasing decisions

based on criteria other than competitive factors.

The Department maintained close liaison with the industry’s representative body, the Australian Coal Association (ACA).

Departmental support was provided for the Australian Coal Consultative Council (ACCC) through participation in meetings of the Council’s Advisory Committee, National Research Group and Working

Parties. The Department undertook a survey in major coal markets on the short-term impact of low oil prices on coal demand and will participate in further work on estimation of coal demand to 1995.

Administration of export controls on coal was again a major activity during the year. More than 1250 individual export proposals were analysed as a basis either for advice to the Minister or for decision in accordance with delegated authority. Advice was also provided to the Minister on a consolidated basis for major coal negotiations.

The world market and, in consequence, the as­ sessment of market prices are becoming increasingly complex. Both export control policy and its adminis­ tration were subject to review during the year in the

light of a wide range of views expressed to the Government as to whether the controls should be retained, strengthened, relaxed or removed.

Iron ore Australia is the world’s second largest iron-ore ex­ porter (after Brazil) supplying around 23 per cent of total world exports. In 1985-86, exports totalled 82

million tonnes valued at $1938m. A weakening of the market resulted in an 8 per cent reduction in export volumes compared with 1984-85 although, due mainly to the depreciation of the Australian dollar, the value

of exports increased by 3.6 per cent. Against this background, the annual negotiations on prices to apply from 1 April 1986 in Australia’s major markets resulted in a 4 per cent cut in US dollar prices.

Monthly statistical reports on the world iron-ore industry and the steel industry market it serves were provided to Australian producers as part of the infor­ mation exchange and regular consultation with the

17

companies on export policy objectives and the market outlook.

Efforts to improve the export environment were directed mainly at Japan, China and the ROK, although liaison was also maintained with iron-ore consumers in Europe and elsewhere. Discussions in Japan in October 1985 and later in Australia focused on Australian iron-ore competitiveness, market outlook, market share and the improvement which had occurred in Australian supply reliability.

The discussions with China concerned its possible future investment in, and purchases from, Australian iron-ore projects, whilst those with the ROK were concerned with additional supplies for the ROK's expanding steel production. More generally, the

Department participated in the work of the Association of Iron Ore Exporting Countries (APEF) regarding market developments and outlook.

Export-related matters were also pursued through the work of the Western Australian Iron Ore Industry Consultative Council (WAIOICC). The Department participated in the WAIOICC-sponsored Australian

Iron Ore Mission to Brazil in July 1985, which sought a better appreciation of the Brazilian iron-ore industry as a competitor in the international iron-ore market.

Petroleum In 1985-86 petroleum exports were valued at $2265m, of which crude oil accounted for $1153m, a reduction of 5.7 per cent and 8.5 per cent res­ pectively, on the value of these exports in 1984-85.

Following a decision by the Organisation of Petroleum Exporting Countries to concentrate on market share rather than to protect prices, there were dramatic changes in the world oil market.

Prices fell rapidly during the early months of 1986 in the face of oversupply and intense international competition. On the grounds of lack of adequate pro­ fitability, Australian producers elected to cease exporting after March 1986 (except for a single ship­ ment in May). In May the Government sought to stimulate exports by increasing the excise rebate on free market sales from 35 per cent to 87 per cent.

During the year the Government simplified the export control arrangements for refined products (such as motor spirit), liquefied petroleum gas (LPG) and condensate, exports of which are now made under term approvals subject to the exporters com­ plying with the Government's domestic petroleum policies and other policies including a prohibition on exports to South Africa.

Uranium During 1985-86, approval was given, on a shipment- by-shipment basis, for 38 shipments of uranium totalling 3195 tonnes U3 0 8 for customers in the Federal Republic of Germany (FRG), Japan, ROK,

Sweden, USA, Belgium and Finland. The value of these exports was $296m.

The Government’s uranium export policy permits the export of uranium mined from Ranger, Nabarlek and Olympic Dam subject to the most stringent nuclear non-proliferation conditions. Mining operations at Olympic Dam are planned to begin in June 1988 with initial annual production of 2200 tonnes of uranium, as well as copper (55 000 tonnes) and gold (90 000 oz).

Australia signed a Nuclear Safeguards Agreement with Switzerland on 28 January 1986. Its broad scope, covering nuclear material, non-nuclear material, equipment and technology transferred between the two countries, incorporates strict non­ proliferation and nuclear safeguards arrangements.

Copper, lead and zinc The market for copper and lead remained weak but there was some improvement in the market for zinc as a result of rising metal consumption.

At Australia’s initiative, the International Lead and Zinc Study Group (ILZSG) considered a special study on the world lead industry at its annual session in October 1985. The conclusion was that the industry faced a number of long-term structural problems and that, unless these and the matter of surplus capacity were eliminated, then in the face of static demand,

low prices would continue. A similar study on zinc is being prepared for consideration at the October 1986 session.

Nickel The market for nickel remained weak with low prices, despite reductions in mine output by some Canadian and Australian producers.

Australia participated in meetings of a UN Negotiating Conference which, at its April-May 1986 session, agreed on terms of reference for an Inter­ national Nickel Study Group (INSG). This body, which is to be a producer/consumer forum, is intended to provide greater market transparency through the collection and analysis of statistical and other data and discussion of the market situation. The question of Australian membership is under consideration.

Tin The cessation of buffer stock operations under the International Tin Agreement (ITA) in October 1985 led to the suspension of tin trading on the London Metal Exchange and the Kuala Lumpur Tin Market, although the latter resumed trading in February 1986. Prices fell sharply and the low prices led to significant mine closures and a reduction in production. A pro­ posal to resolve the international tin crisis failed in March 1986.

18

With the ending of ITA export controls on 31 March 1986, Australia’s tin quota system was terminated and action initiated to remove tin from the Customs (Prohibited Exports) Regulations.

Australia hosted and chaired the Conference of Ministers of the Association of Tin Producing Countries (ATPC) on 17-18 September 1985. The ATPC resolved that its research and development activities would be carried out by a reorganised

International Tin Research Institute. Following an ITC resolution to recommend to its members that it was not necessary or appropriate to negotiate a further ITA, in June 1986 the ATPC initiated action for consultations, under UNCTAD auspices, among

interested countries, regarding the establishment of an international Tin Study Group. Its purpose would be to provide a forum for discussions about the tin

market.

19

Manufactures and services trade

Objectives and functions To promote a more internationally competitive manufacturing base in Australia and develop the export potential of Australia’s service industries through:

e provision of policy advice on issues affecting the structure of, and assistance to, manu­ facturing and service industries; • analysis and provision of policy advice on

matters inhibiting the realisation of manu­ facturing and services export opportunities.

Trade in manufactures Overview The Government's industry policy objectives are to promote the development of a manufacturing sector which is:

• more internationally competitive and export oriented:

e better able to adapt to changing conditions: and » better equipped to take advantage of opportunities presented by technological developments.

In particular the Government believes it is necessary to implement positive measures to improve the structure, efficiency and competitiveness of Australian industry, to ensure that the benefits of restructuring are realised and that any social costs are not borne disproportionately by particular sections of the community or particular regions.

In addition the Government recognises the need for policies and programs of assistance to specific industries of particular economic and social sig­ nificance. In this regard special sectoral programs are in place to assist the textile, clothing and foot­ wear. passenger motor vehicle, steel and heavy engineering industries.

The Department seeks to encourage and facilitate the development of trade in manufactures in such a way as to enhance significantly the contribution of the manufacturing sector to the Australian economy. In this regard it focuses on providing advice and devel­ oping proposals to enhance the environment for an expansion of trade in manufactures, as distinct from providing marketing assistance.

Policy advice was provided and proposals made on issues affecting the development of and assistance to manufacturing industry, with particular regard to the implications for trade in manufactures and the need to develop an internationally competitive and export-oriented manufacturing base. Such issues in­ cluded matters arising from Industries Assistance Commission (IAC) reports, government purchasing, offsets and the Australian System of Tariff Preferences

(ASTP) for developing countries (DCs), as well as factors affecting export competitiveness, the inter­ national trading environment, export infrastructure and business education.

Of particular interest during the past year has been the assistance package for the heavy engineering industry and the strategy for development of the communications equipment industry, both of which

incorporate programs to facilitate and encourage enhanced export performance. The Department has also taken a close interest in the review of the sectoral plan for the textiles, clothing and footwear industries, particularly the examination of export prospects for particular segments of those industries.

Australian System of Tariff Preferences The implementation of the new ASTP scheme on 1 July 1986 was the culmination of more than three years of consideration of the issues of DC

preferences. The original decision to review the system was made by the previous Government late in 1982 in response to mounting pressure from Australian industry and from various DCs.

The Government retained the services of an in­ dependent consultant, Professor Helen Hughes, to conduct an inquiry into the Australian DC preferences system. This inquiry included consultations with Australian industry organisations, DC officials and representatives of various international bodies.

The principal recommendations of the inquiry were that:

• a five percentage point margin be available to all (dutiable) imports from DCs; • the present exceptions list be eliminated, as would the product exclusions for specific countries:

• the DC preferential margin operate within future industry assistance arrangements;

20

• there be no injury appeals specifically against DC preference margin;

• all currently eligible DCs continue to be eligible under the new ASTP; there would be no

mechanism for graduating countries or products out of the scheme; and

• all products removed from preferential eligibility during the three years prior to the introduction of the new ASTP not be eligible for preferences for another two years.

The Government accepted these recommenda­ tions in taking its decision to introduce an across- the-board five percentage point margin of preference with no provision for exceptions or graduation. The Government was conscious that this would introduce new preferences where none existed under the current scheme. On the other hand, reduced margins of preference will now apply to over 790 items. The revised ASTP is a package which takes into account the conflicting interests of Australian importers and producers and DC exporters. It establishes important new principles such as predictability, permanence, simplicity and broad coverage.

Prime Minister’s address to the nation The Prime Minister in his “Address to the Nation on the Economic Situation” announced four major initiatives impacting on manufacturing industry and on improving its export performance.

Buy Australian campaign: a campaign to educate Australians, both corporate and individual, to purchase Australian products where these are competitive in terms of price and quality.

Export drive: aimed at increasing the practical commitment of both the shopfloor and manage­ ment to export.

Assistance for small exporters and high technology exporters: grants to exporters of high technology products and other export assis­ tance for new small exporters to assist them to develop export markets.

Export management education: liaising with tertiary and secondary educational institutions, industry organisations and specialist manage­ ment-training bodies with a view to developing

initiatives in this area including industry-specific training courses and influencing curriculum content.

Offsets In January 1986 the Government announced a strengthened Australian Offsets Policy with the aim of bringing to Australian industry advanced technologies, skills and capabilities to establish internationally competitive activities within Australia and support defence industry capability objectives. Offsets are an

important mechanism for development of export-

oriented activities in Australia and as a market development tool for innovative products and new technology. The Department, in conjunction with Austrade, will be seeking to ensure that the trade

development potential of offsets opportunities are fully realised.

Trade in services

Overview Continued efforts were made in the course of the year to develop expertise in the area of services trade, and towards ensuring wider recognition of the

important role services can play in generating export earnings. There has been a rapid increase in the number of conceptual studies and analyses of issues in tradeable services in response to the increasing

attention being paid to the sector by our major trading partners and in multilateral fora.

The Department has contributed to this work in the Australian context and directed efforts towards establishing a firm foundation for development of detailed policies and the realisation of Australia’s

potential in tradeable services. This has initially focused on raising the public and private sector awareness of the issues.

A Working Group of Departments with responsi­ bilities for overseeing individual services sectors has begun systematically to identify the domestic and foreign barriers affecting Australia’s services trade.

From this work, a comprehensive data base comp­ arable to those developed by the USA, Britain and EC is being constructed in preparation for the antici­

pated negotiations on services as part of the new MTN round.

In March 1986, a seminar involving high-level executives and representatives from the services sector in Australia, NZ and Britain was held in Adelaide to discuss the prospects for increased services trade within the Asian-Pacific Region. The

seminar was co-hosted by the South Australian Government and the South Australian Chamber of Commerce. The Department provided administrative and logistical support and produced two publications for the occasion, Australian Services Trade and Information Technology.

Education The education sector in Australia Was identified during the formulation of the Department’s (now Austrade’s) Global Marketing Strategy as a service

area offering significant potential for export development.

Following the Government’s review of its overseas student policy in March 1985, and its decision to allow Australian education institutions to market courses at full cost to overseas students, the Depart-

21

merit organised a government Education Mission to South-East Asia and Hong Kong in July 1985. The purpose of the mission was to assess potential demand for education services in the region, and to acquaint education authorities and other interested parties in the countries visited of Australia’s capacity to meet that demand. The mission confirmed that a significant demand existed but that the absence of

information in the countries visited on Australian education and training capabilities was a consid­ erable barrier to Australian education marketing efforts. It therefore recommended the establishment of Australian Education Units in selected countries to

provide information on courses available in Australia and to co-ordinate the management of the Australian Government’s full-fee, sponsored and subsidised student programs.

In September 1985, the Government adopted a marketing strategy for education services, based in large part on the recommendations of the Education Mission to South-East Asia and Hong Kong.

Implementation of the marketing strategy now rests with Austrade in concert with the Overseas Student Office of the Department of Education. The Depart­ ment of Trade maintains an interest in policy matters impacting on the strategy.

The strategy also recognises that less formal training courses offer potential for marketing in the region and beyond, and Austrade is actively pursuing this prospect.

Transport Transportation costs, both domestic and international, are a major factor in the competitiveness of Australian exports on international markets and in the landed cost of imports. In 1984-85 Australia's total exports and imports freight bill amounted to $6.7b, repre­ senting 11.4 per cent of the total value of Australia’s exports and imports in that year. Freight on exports amounted to $3.7b or 12.6 per cent of the value of exports in 1984-85. Air-freighted exports in that year were around 9 per cent in value terms of exports and freight charges for this sector accounted for almost 9 per cent of the total freight bill.

The Department made submissions to two major transport reviews during the period. The Review of Australia’s Overseas Liner Shipping Legislation by an Industry Task Force, chaired by a Department of Transport representative, looked at structural changes in the scheduled general cargo industry over the past decade and dealt with shippers’ concerns regarding the adequacy of existing legislation. The Department’s submission stressed the need for establishing a revised legislative framework that would provide maximum scope for competitive changes to the industry to flow to shippers by way of price and service benefits.

The International Air Freight Policy Review, chaired

by Mr J. Scully, sought to identify impediments to international air-freight services for primary produce and to recommend measures to liberalise the operation of these services through easier access by exporters to charter operations. The recommen­ dations included allowing primary produce charter flights access to inbound consolidated cargo, to carry the produce of more than one consignor to any number of consignees, and to uplift at more than one so-called “secondary gateway".

The Department’s submission, based upon extensive consultation with exporters, strongly emphasised the trade constraints evident in earlier policy and the need for greater flexibility in the operation of policy guide-lines. Most of the Review's recommendations were subsequently embodied in new policy guide-lines announced by the Minister for Aviation, Mr Morris, on 8 November 1985. A further review is to be conducted to determine whether the needs of Australian primary produce exporters are being adequately met by the guide-lines.

Australian investment overseas Australian companies have a long history of investing overseas, particularly in the traditional markets and financial centres of Europe and Britain, and the near

markets of the South Pacific region. In recent years Australian overseas investment has grown more rapidly than overseas investment in Australia. Australian direct investment has diversified signifi­ cantly towards the services sector, particularly into transport and distribution channels. Australian Bureau of Statistics figures for 1985-86 indicate that the flow of Australian overseas investment increased by 40 per cent over the previous year to almost $7b (of which almost $2b was direct investment).

These developments reflect the growing inter­ national orientation and maturity of Australian companies. Investment overseas is widely recognised as an important vehicle for Australian business in establishing, maintaining or expanding export markets.

The investment climate for Australian overseas investors has recently undergone extensive changes through such measures as the progressive removal of exchange control restrictions and the forthcoming introduction of a foreign tax credit system. The Department was actively involved in interdepart­ mental discussions on the framing of the legislation on the foreign tax credit system.

In the past year there has been a growing interest by governments world-wide in the promotion of international joint ventures to penetrate third-country markets. In Australia’s case the Minister for Trade has, following meetings during the year with his Canadian counterpart, expressed interest in exploring practical ways in which joint ventures could be encouraged with Canada, particularly in terms of a government-to-government approach as a comple­ ment to private-sector ventures. Discussions have

22

occurred in the past year on the possibility of joint venture projects with Singapore with a view to securing access for Australian products and sen/ices to third-country markets such as China.

Discussions of the opportunities for joint ventures between Australian and Italian firms are also continuing.

As a consequence of moves initiated by the USA, trade-related investment issues are likely to be discussed in the new round MTNs. To ensure that Australia is fully prepared to participate in and secure real benefits from these negotiations, a

broad-ranging examination of these issues is currently underway.

Trade law In the area of trade law the focus of attention has been upon the international trade-related effects of the rights of inventors, designers and authors to exploit their creations or works exclusively. These

intellectual property rights are protected under Australian patent, trade mark, design and copyright laws and are extended, under international

agreements, to the owners of foreign rights. Likewise Australians enjoy broadly comparable rights under the legislation of many other countries.

Of common concern to all countries has been the recent growth in international trade in counterfeit and pirated goods incorporating material protected under intellectual property laws. Other issues, such as the nature and scope of the rights themselves, in terms of their effects on competition, market

preservation and investment controls, have been highlighted by rapidly changing technology and the need to protect the rights of owners while ensuring

wider access to the benefits of new technology. The Department, in co-operation with other departments and authorities, is reviewing the trade impact of domestic provisions in light of changing circumstances and is developing its approach to negotiations on

new international rules.

23

Multilateral trade policy

Objectives and functions To promote Australia’s trading interests and objectives by seeking the liberalisation and ex­ pansion of world trade under more transparent and equitable conditions through:

• provision of policy advice on issues arising from preparations for the new round of MTNs; • encouragement of regional economic co-operation;

• involvement in multilateral and regional international fora.

New round of MTNs The Annual Session of GATT members held in Geneva on 25-28 November 1985, agreed to the establishment of a Preparatory Committee for a new round of MTNs. The Preparatory Committee was to prepare a report by mid-July 1986 containing recom­ mendations for the program of negotiations for adoption at a ministerial meeting in September 1986 in Punta del Este, Uruguay to launch a new round of MTNs.

In view of the problems facing the world trading system and the influence of the major trading nations, especially the USA and the EC, on the agenda for the negotiations, it can be expected that the next round will focus on:

• re-commitment to and improvement of GATT rules in areas such as agriculture, emergency action against imports (“safeguards"), subsidies, dispute settlement, quantitative restrictions and other non-tariff measures; • trade liberalisation on a negotiated request/offer

basis through further tariff reductions and liberal­ isation of non-tariff measures; • trade liberalisation and/or the negotiation of multi­ lateral principles in “new” areas such as services

and high technology goods.

Australia’ s focus in the new round of MTNs will be on issues such as:

• Agriculture GATT rules have never been effectively applied to agriculture and new arrangements are required to bring trade in agriculture more

fully into the GATT system. A major objective is to strengthen and make more operationally effective GATT rules (existing and prospective) on agricultural trade.

• Subsidies Australia will seek changes in GATT obligations to restrict and rollback the use of subsidies, particularly export subsidies on agricultural products.

• Non-tariff measures Australia’s principal aims are the elimination of illegal non-tariff measures; the imposition of tighter restrictions on these measures currently sanctioned; the establishment of a surveillance system which incorporates Con­ tracting Parties’ responsibility for assessing the external trade effects of support measures.

• Dispute settlement The GATT dispute settlement process has largely broken down. Australia seeks to restore it, particularly by requiring panels to make clear recommendations which are enforceable.

• Services Australia will take a positive approach on services, though not to the extent of having services dominate the negotiating agenda. This approach reflects Australia’s objectives

in relation to trade in goods.

Pressure for a new round of trade negotiations takes place against the background of a decade of unsatisfactory world economic growth. Many countries, particularly developing nations, have debt problems and face poor terms of trade and rising protectionist pressures. The GATT system has not prevented flagrant trade distortions and is itself at risk. A new round at this time is necessary to restore the viability of the multilateral trading system.

The major proponents of a new round are the USA and Japan. The USA's pressure for a new round is heightened by its large and widening trade deficit and increasing concern at the mounting trade barriers facing US export of goods (including agriculture) and services.

Other developed and DCs such as the EC (with qualifications as to agriculture), Australia, Canada, NZ, ASEAN and the ROK have given general support

24

to a new round. Underlying the approach of such countries, all heavily involved in trade, is the per­ ception that they derive major benefits from open multilateral trading rules and could lose substantially if these break down further and come to be largely supplanted by bilateral arrangements.

The Department has made substantial contri­ butions to the new round preparatory process by providing assistance in drafting the ministerial declaration, especially in the area of agriculture.

It isactively representing Australian interests in various fora, including a series of regional meetings which aims to promote a co-operative, mutually supportive approach to multilateral trade issues. This approach will be built on at a ministerial meeting of non-subsi­ dising agricultural exporters at Cairns in Queensland, just prior to the expected launch of the new round.

Preparations for the bilateral negotiating com­ ponent of the new round have begun, consistent with the Government’s policies on improving the export orientation and international competitiveness of Australian industry. Projects are in hand to deter­ mine Australian interests and priorities in the new

round and to develop close consultation with Australian industries to ensure a comprehensive and integrated approach to new round negotiations designed to achieve maximum benefit for Australia.

Regional and international consultations The process of regional consultations in new round issues was consolidated during the year. A third meeting of officials was held in Seoul in September

1985. A continuing dialogue has developed between regional countries’ representatives in Geneva, and a further meeting of officials will be held in Manila in August 1986. Consideration is being given to

increased involvement by Trade Ministers.

During the year, the Department participated in or assisted with a number of meetings which discussed developments in the multilateral trading system. These included an informal meeting of Trade Ministers

in Seoul in May 1986 and the annual European Management Forum (EMF) Symposium in Davos, Switzerland. Opportunities were taken wherever possible at such meetings to raise Australia’s interests and priorities with key participants.

The Department has sought to encourage economic co-operation in the Pacific region, in par­ ticular through its involvement in the Pacific Economic Co-operation Conference (PECC). Departmental officers participated in the work of PECC Consultative

Groups on Trade Policy, Minerals and Energy, and Livestock and Feedgrains. The Secretary of the Department is a member of the National Pacific Co-operation Committee (NPCC), which is co­ ordinating Australian preparations for the 5th PECC

meeting due to be held in Vancouver in November 1986.

GATT The Department's primary objectives in the GATT during 1985-86 were to support the launching of a new round of MTNs and to promote and protect

Australia’s interests in other matters considered under the GATT.

Interest in GATT membership remained high during a year in which Mexico made a formal application for accession (in November 1985) and China indicated its intention to apply. Hong Kong became a member

in its own right on 23 April 1986 following agreement between Britain and China concerning Hong Kong’s future independence with respect to trade matters.

Progress on the work program established by the 1982 Ministerial Meeting of GATT Contracting Parties slowed considerably as the attention of countries became increasingly focused on pre­ parations for the new round and the negotiations for a new arrangement covering trade in textiles to

succeed the 1981 Multifibre Arrangement. Nonethe­ less, the 41st Session of the Contracting Parties initiated a program of review with respect to quanti­ tative restrictions and other non-tariff barriers with the first major review session to be held in October

1986. The committee examining trade in services also continued to conduct an exchange of information which included a presentation by Australia of a study of its services sector in September 1985.

Australia’s policies with respect to trade with DCs were examined in October 1985 as part of the work of the Committee on Trade and Development. The Australian presentation was favourably received by

DCs. In 1986, the Government decided to withdraw Australia’s reservation on the implementation of Part IV (Trade and Development) of the GATT. The

reservation had never been invoked and, therefore, its removal is symbolic of Australia’s intention to enter a new round without any constraints on its negotiating position.

In 1986, examinations were commenced on the GATT conformity of the arrangements for the acces­ sion of Spain and Portugal to the EC and the USA/ Israel Free Trade Arrangement. In addition, Canada applied for a waiver from the most-favoured-nation provisions of the GATT in order to introduce duty-free treatment for a wide range of goods from Common­ wealth Caribbean countries. The examinations of these matters are continuing.

Two trade disputes which had been examined by GATT panels were resolved during 1985-86. The EC and the USA reached a settlement with respect to US concerns about EC production aids granted on canned peaches, pears and fruit cocktails. Japan terminated its import quotas on semi-processed and finished leather and introduced either tariff only or tariff quota arrangements. Under pressure from the

USA, Japan also introduced tariff quota arrange­ ments on leather footwear.

25

As a result of the leather settlement, Japan announced that tariffs imposed on aluminium ingots and products will be reduced from 9 per cent to 1 per cent to take effect from 1 August 1988. Australia’s exports to Japan of aluminium and aluminium alloys were valued at $507m in 1985-86.

One disturbing aspect of the year was the heightened level of trade tension between the USA and the EC, particularly over agricultural trade issues. To the concern of other Contracting Parties there was a tendency for both parties to press their con­ cerns and seek resolution of problems outside GATT mechanisms.

During 1985-86 the Department has been involved in preparations for Australia’s intended im­ plementation of the Convention on the Harmonised Commodity Description and Coding System, in­ cluding international meetings to discuss the implications of the Convention for GATT tariff concessions.

Organization for Economic Co-operation and Development (OECD) The Department has continued to pursue actively Australia’s trade policy objectives through partici­ pation in the activities of the OECD. The most impor­ tant of the OECD’s work programs in terms of the

Department’s interests are those concerned with trade liberalisation, increasing the transparency of trade policy measures, international trade in agricul­ tural products, commodity market developments, the financing of export credits and the interaction bet­ ween trade and commercial policy. In addition, a new element in the OECD's trade work program is the analysis of the so-called “new issues” likely to arise in the course of the new round of MTNs. These issues include trade in services, intellectual property, trade- related investment measures and trade in high tech­ nology products. This work is aimed at assisting member countries in their preparations for the new round.

Australia attaches particular significance to the Agricultural Trade Work Program (ATWP) com­ menced in 1982 under a ministerial mandate. All three parts of the ATWP were substantively completed during the year leaving the way clear for the drafting of a report which will bring the conclusions from this comprehensive analytical study together into a single document for consideration by Ministers at the April

1987 Ministerial Council Meeting (MCM). The final section of work to be completed was the examination of the domestic agricultural policies and their effects on international trade for Australia, Japan, NZ, USA, EC, Canada and Austria. These reviews included quantification in each case of the levels of assistance given to the agricultural sector. Significantly, and in contrast to the case for the major economies, the studies confirmed the low level of assistance given

to Australian agriculture and the negligible trade dis­ torting effects of our agricultural policies. Ministers at the 1986 MCM recognised the broad spectrum of

effects resulting from agricultural protectionism and the use of subsidies. They called on the OECD to intensify its work on macro-economic and social effects. The OECD’s work in the agricultural area was given further impetus following endorsement at the Tokyo Economic Summit. Building upon this high-

level political support, the Department is assisting efforts to have the OECD’s agricultural work extended into the economic policy area through a major exam­ ination of the broader macro-economic and inter­ sectoral effects of agricultural support policies.

During the year, the work of the Trade Committee was to a significant extent directed towards achieving a meaningful outcome from the standstill/roll-back initiative relating to export subsidies which was en­ dorsed by Ministers at the 1984 MCM. Unfortunately results were disappointing. The first phase of the roll­ back proposal (accelerated Tokyo Round tariff cuts), was eventually implemented by all members except for the USA and Canada. Little substantive progress was made, however, in phasing out non-tariff barriers or grey area measures. Further efforts on the roll-back initiative have now been effectively subsumed into the new round process. Despite the standstill proposal, a number of countries introduced new restrictive measures over the period of the initiative. Ministers at the 1986 MCM, however, agreed that they were prepared to negotiate an effective standstill agreement, including a surveillance mechanism, with other GATT Contracting Parties as part of the new round process. By virtue of the industry restructuring plans (textiles, clothing, foot­ wear, steel, motor vehicles) and other measures implemented over the past few years, Australia’s achievements during the initiative compare favour­ ably with those of other member countries.

Significant progress was made during the year towards the objective of liberalisation of trade in services. At the 1986 MCM Ministers endorsed an approach on two fronts. The first aims to liberalise services trade among OECD member countries by expanding and strengthening existing OECD Codes (Invisibles Operations, Capital Movements, National Treatment Instrument, Transborder Data Flows). The second, aims to develop a conceptual framework of rules and principles to cover trade in services with eventual negotiations under GATT auspices in mind. Considerable progress has been made on such a framework and testing of it against specific service sectors is to commence during 1986.

The past year has seen the OECD Arrangement on Guide-lines for Officially Supported Export Credits come under increasing pressure as an effective mechanism to contain credit terms and maintain a degree of order in the use of credit in international trade. There has been a growing use by OECD

26

countries of aid funds to soften financial terms (mixed credits) in support of commercial interests and there are conflicting national perceptions over the extent to which the use of aid funds constitute a legitimate form of trade financing. Australia is taking an active

part in efforts to eliminate trade distortions resulting from trade financing practices. Work is continuing to implement appropriate measures to increase discip­ line on the use of mixed credits and find a workable

arrangement for low interest rate currencies as these issues are fundamental to the continued relevance of th e ‘Arrangement”.

Australia’s effort to secure a sector agreement to contain agricultural credits has stalled pending pro­ gress within the GATT on agricultural subsidies generally.

United Nations Conference on Trade and Development (UNCTAD) Australia’s participation in the trade and related activities of UNCTAD and other UN organisations continued to be guided by the multilateral trade policy objectives of improving the international trading environment. UNCTAD is the major forum for dis­ cussion of trade and development issues between developed and DCs. The Department’s major objec­ tives in this forum were to focus trade and related

activities on issues of interest and concern to Australia; to ensure where possible that proposals, recommendations and decisions on trade matters are compatible with Australian trade policies and

interests; and consistent with Australian interests, to work towards practical solutions to the trade and development problems of DCs.

The Department participated in a variety of UNCTAD and other UN meetings on trade and de­ velopment issues. Key UNCTAD meetings during 1985-86 included the 31st and 32nd Sessions of the Trade and Development Board (TDB), the main

governing body of UNCTAD between Conferences.

The 31st Session of TDB conducted a constructive examination of the world economic situation and trading environment. It addressed in particular the inter-relationships between national macro-economic

policies, international financial and trade policies and development based on UNCTAD’s Trade and Development Report, 1985. The 32nd Session re­ affirmed UNCTAD’s work on protectionism and

structural adjustment issues. Australia and some other agricultural exporting countries sought to ensure that agriculture/agricultural protectionism be given greater prominence in UNCTAD’s future activities on these issues. The Department actively participated

in early preparations for the UNCTAD VII Conference scheduled to be held in 1987.

The UNCTAD Committee on Commodities held its 11th Session in December 1985 and conducted an extensive review of commodity issues. At this

meeting, Australia stressed the need to improve market opportunities for exporters of primary and processed commodities facing trade restrictions. It also emphasised the need for a new focus in

UNCTAD’s work on commodities, based on current market realities. Future UNCTAD activities in this area should include work on issues such as the effects of protectionism in commodities trade.

Negotiations on the major issue in shipping of flags of convenience or open registries were suc­ cessfully concluded in February 1986 with the adoption by consensus of the UN Convention on

Conditions for Registration of Ships. It will help to im­ prove standards of world shipping and increase the accountability of shipowners for the operation of

their ships. Australia was able to play an important negotiating role during the development of this Convention and avoid regulatory measures that could impose a cost burden on Australian exporters who will retain access to competitive international shipping services.

The Special Committee on Preferences held its 14th Session in May-June 1986 to review the oper­ ation of the Generalised System of Preferences. Australia presented full details of its revised Australian System of Tariff Preferences for DCs which was generally well received by beneficiary countries.

Other major UNCTAD activities during the year involving the Department included the mid-term review of the Substantial New Program of Action for the Least-developed Countries in September-October

1985, the Review Conference on Restrictive Business Practices in November 1985 and the Committee on Manufactures in June 1986.

UN Economic and Social Commission for Asia and the Pacific (ESCAP) The Department made a contribution to a number of ESCAP meetings and activities during 1985-86. A meeting of ESCAP Ministers of Trade was held in

Bangkok from 16-18 June 1986 to review prospects for expansion of Trade in the Asia/Pacific region, and consider measures for accelerating the growth of

intra-regional trade.

Australia played an active role in the meeting which resulted in a ministerial declaration which was critical of export subsidies especially in agriculture and em­ phasised the need for subsidies to be brought under strengthened and more operationally effective GATT

rules and disciplines. In addition the declaration gave support for the preparatory work underway in GATT towards the new MTN round to be substantive and lead to a greatly liberalised trading system.

Other UN organisations During 1985-86, trade and related issues together with commodity questions were to the forefront of discussions in a number of other UN organisations,

27

including the 40th Session of the UN General Assembly, FAO, UN International Development Organisation (UNIDO) and the UN Special Session on Africa held in May 1986. In these discussions, the Department pursued Australia’s trade policy and commodity objectives as appropriate.

Resolutions in the 9th Special Session of the Commission for Narcotic Drugs in February 1986 and the First Session of the UN Economic and Social Council (UNESCO) in May 1986 were, among other things, directed against Australia’s licit opiate pro­ duction and sought to restrict production by so-called new entrants to the market to domestic needs. Australia had some success in gaining support to retain the right to export concentrated poppy straw and codeine to meet world demand and will continue to maintain this position.

Commonwealth Regional Consultative Group on Trade (CRCGT) The CRCGT was established in 1978 by

Commonwealth Regional Heads of Government. The Group is formally convened every two years under the chairmanship of a senior official of the

Department of Trade. Reflecting Australia's concern for the continued development of countries in the region, the Department has been actively involved in CRCGT activities. The CRCGT has a broad man­ date which focuses both on increasing the region's trade by identifying opportunities and strengthening the institutional infrastructure for trade as well as contributing to a better understanding of regional and multilateral trade issues and the development of a more cohesive regional outlook. The work program of the group is composed of a mix of practical market- oriented projects complemented by activities with a trade policy focus. To a significant extent funding for Group activities is by way of Australian regional co-operation aid funds.

Trade promotion and training projects completed under the auspices of CRCGT during the 1984-86 period included the preparation of comprehensive trade directories for a number of Pacific CRCGT countries, a market survey aimed at identifying current and future opportunities for export sales of Pacific stamps and coins and a commodities workshop in London focusing on the marketing of commodities of export interest to CRCGT member countries.

The 7th biennial meeting of the CRCGT is scheduled to be held in Tonga in August 1986 to determine the work program of the Group for the next two-year period. In view of the launch of the new round of MTNs in September 1986, a trade policy seminar emphasising the regional perspective on new round issues will be held in conjunction with this meeting.

Other institutions and negotiations

Antarctic Minerals Negotiations and Law of the Sea Commission The Department has actively pursued Australia’s minerals trade interests in the context of negotiations to establish an international regime for future mineral exploration and exploitation in the Antarctic and also under the Law of the Sea (LOS) Convention.

Consistent with its overall approach to trade policy issues the Department is particularly con­ cerned to ensure that any exploitation of minerals from the Antarctic or the deep sea-bed be conducted on a sound non-subsidised commercial basis.

During the year the Department was represented on the Australian delegations to the Special Consultative Meetings on Antarctic Minerals, held in Paris from 23 September to 4 October 1985 and in Hobart 14-25 April 1986. As a result there are now good prospects that Australia will be able to negotiate specific non-subsidy provisions into the Antarctic minerals regime.

The Department continues to monitor progress towards the entry into force of the Law of the Sea Convention. It is contributing to the regulation-making phase of the Preparatory Commission, particularly in discussions concerning the potential problems that may face land-based producers and exporters of minerals found in the deep sea-bed - copper, nickel, manganese and cobalt.

Financial institutions International financial institutions such as the IMF and World Bank have become increasingly concerned at the inefficiencies and misallocation of resources

resulting from trade protectionism and the use of domestic and export subsidies. The World Bank, for example, has devoted its 1986 World Development Report to an analysis of world agriculture and, in par­ ticular, the effect of policies in industrialised countries on agricultural sector development in the developing world. The Department has contributed to the con­ sideration of trade policy issues by these institutions consistent with efforts to encourage the widest possible understanding of the broader macro­ economic effects of restrictions and distortions in international trade. The Department continues to monitor developments in the international monetary and financial fields, for example the implications for trade of DC indebtedness, and also develop­

ments concerning the entry into force of the Common Fund for Commodities. While a sufficient number of countries have now ratified this arrange­ ment, the proportion of Directly Contributed Capital still remains short of that required to bring the fund

into operation.

28

Bilateral trade relations

Objectives and functions To advance Australia’s bilateral trading interests by maintaining and developing the framework and environment within which Australian exporters operate, formulating policies to consolidate and further develop Australia’s exports to individual

markets and pursuing opportunities to maintain a balance of trading opportunities, through:

• review and provision of policy advice on Australia’s bilateral relations with trading partners and regional trade groupings; • government-to-government meetings, dis­

cussions and representations; • initiation, negotiation and administration of bilateral trade agreements, trade under­ standings and other arrangements; • development of policy proposals and initiatives

(in consultation with Austrade) to enhance Australia’s trading interests; • provision for market assistance to DCs and centrally planned economies(CPEs).

In response to the trade challenge facing Australia, the Department intensified its bilateral trade relations activities aimed at improving market access for

Australian products in individual markets. This function is the responsibility of the Bilateral Trade Relations Group. The Group draws heavily on the resources of other groups within the Department and

Austrade, and consults closely with other depart­ ments and overseas posts.

North Asia Australia has made gains in the past in the North Asian region because of proximity and a comple­ mentary endowment of resources. However,

changing market requirements, increased competition, and changing patterns of trade in traditional raw materials, stemming from structural adjustment in the region and protectionism

(especially in agriculture), have led to a new and more challenging trading environment.

China The Department has attached a high priority to sustaining the momentum of the progress in

Australia’s trade relations with China. These relations are co-ordinated under the China Action Plan which has four major elements, namely: to ensure that an appropriate government-to-goverment relationship is in place to facilitate trade; to concentrate resources on those provinces and municipalities considered to have the best prospects for Australia; to develop sectoral

initiatives; and to provide assistance to China's exports to Australia.

With the establishment of Austrade, responsibility for the second and third elements of the China Action Plan has been transferred to that body, while the Department retains responsibility for the conduct of the overall bilateral trade relationship and the

provision of market assistance to China to promote its exports to Australia.

China's economic reforms and modernisation policy have resulted in rapid growth in its

international trade in recent years. In 1985, China’s total imports grew by a massive 105 per cent on 1984's total, whereas exports grew by 40 per cent. The extraordinary growth in imports produced a

record trade deficit of $US15.3b in 1985. In re­ sponse, measures have been taken by the Chinese Government to restore balance to the trade account, including restrictions on non-essential

imports and a devaluation of the yuan. As Australia’s exports to China are primarily raw materials, it is not expected that import restrictions will have a major

effect on Australia. Nevertheless, the climate for doing business in China is becoming more competitive.

In 1985-86, Australia’s exports to China grew by 41 per cent to $1497m, with large increases in exports of wool, iron ore, coal, iron and steel and aluminium products. These are all areas which have

been the subject of bilateral discussions between Australian and Chinese officials.

In 1985-86, Australia’s imports from China grew by 16 per cent to $435m. China's share of Australia’s imports has grown from 1 per cent in 1978-79 to 1.3 per cent in 1985-86. There was an imbalance in bilateral trade of around three to one in Australia's favour during 1985-86. The Chinese authorities have expressed a wish to see a more balanced growth in trade in the future.

29

The bilateral relationship was enhanced by visits of high-ranking members of the Chinese Government to Australia. These visits provided opportunities to display Australian expertise and technical capabilities in areas of particular interest to China. During the year, the Minister for Textile Industry, Wu Wenying and the Vice-Chairman of the State Economic Commission, Zhao Weichen, visited Australia to discuss co-operation in the wool and transport sectors.

The Minister for Trade visited China in

August-September 1985. His discussions focused on sectoral initiatives in the transport, wool, iron and steel and non-ferrous metals sectors. The Prime Minister visited China in May 1986. During the visit, the Prime Minister and Premier Zhao announced the establishment of a Joint Ministerial Committee on trade and economic relations. The Prime Minster and senior Chinese leaders reaffirmed their

common wish that Australia-China economic co-operation become a model for co-operation between countries at different levels of development and with different social systems.

In 1985-86, the Department’s Market Advisory Service provided assistance for displays of products from the provinces of Anhui and Jiangsu and the municipality of Beijing at the International Trade

Development Centre (ITDC) showrooms in Melbourne and Sydney. Under this program, assistance is also provided in the form of seminars for Chinese corporations on marketing in Australia and specialised market research.

Japan The Japanese economy is facing a period of major change. Japan's position as a world economic power, its successful trading performance and the

resultant large global current account surplus, and other international economic factors, have led to a number of significant developments. These include an acceleration of the imple­ mentation of Japan’s three-year action program to open its market to imports, a significant

appreciation of the yen against the US dollar and other international currencies, and moves to restructure the Japanese economy Australia’s trade policy responses have been based on the following objectives:

• to ensure that Japan addresses issues of interest and concern to Australia in the imple­ mentation of its market opening program;

• to explore ways to broaden Australia’s trading interests in the light of structural adjustments taking place in Japan including increased Japanese investment in Australia;

• to improve market access for existing Australian agricultural mineral and energy exports; • through bilateral contacts, to encourage Japan to play a leadership role in the new round of MTNs.

Japan’s market-opening measures In the latter half of 1985, Japan accelerated the implementation of measures announced under a three-year action program to open its market,

particularly in the area of standards and imports procedures.

At Australia’s request, Japan agreed to hold regular technical quarantine talks with Australia to promote a better understanding of Japan’s technical quarantine requirements. The first technical quaran­ tine talks held in October 1985 established a good basis for Australia to formulate a research program on disinfestation treatments, thus enabling Australia to export priority products such as citrus fruit, apples, table grapes and melons to Japan.

Australia lodged a submission in November 1985, expressing concern at the neglect of agricultural trade in the action program and requesting Japan to address the concerns on this and a number of other priority products, including the tariff on aluminium ingots, natural cheese and wheat gluten; access for beef and coal; the excise tax on sugar; the commodity tax on motor vehicles; and standards for food and foodstuffs.

Under new guide-lines for acceptance of foreign test data on food and foodstuffs, Japan will now accept test data from Australian testing laboratories nominated by the Department. This should facilitate access for Australian exporters by avoiding the expensive testing procedures previously required in Japan.

Industrial re-structuring in Japan The large current account surplus and the recent appreciation of the yen have led Japan to examine ways to restructure its economy. This process was

heralded by the release of a report on structural adjustment in Japan, known as the Maekawa Report, which recommends an industrial base which moves away from an export-oriented to a domestic demand-led structure, a rationalisation of non-viable industries (moving them offshore), international macro-economic co-operation, and promotion of an agricultural sector befitting an age of “internationalism”.

This development has been paralleled by two sectoral reviews undertaken in relation to Japan’s agricultural and coal industries.

The Industrial Structural Council also released a report on the proposed structure for the Japanese industry in the 21st century which basically endorsed the principles recommended in the Maekawa Report.

Through the Informal Trade Talks and the High-level Officials Economic Talks (the latter group was established, at the Minister for Trade’s suggestion, at the 1985 Australia/Japan Ministerial

30

Committee Meeting) Australia has registered interest in this process in broadening Australia’s trade through the industrial restructuring process in Japan.

Firstly, Australia is well-placed to replace the production in Japan of certain basic metals and manufactured components that will be the subject of domestic rationalisation in Japan. The Australian Government also wishes to increase the level of industrial and technological co-operation between Australia and Japan and, with the co-operation of the Japanese Government, a consultative mechanism

involving the Australian and Japanese business communities has been established for this purpose.

Secondly, the appreciation of the yen has exerted considerable pressures on Japanese industry to contain costs. Australia, as a competitive and reliable supplier of basic minerals and energy resources could help Japan achieve cost contain­ ment. In this regard, Japan’s coal import regime has

reseived a proportion of the Japanese market for high-cost domestic coal. In the current review of the coal industry. Australia has urged Japan to reduce domestic coal production and allow Australia to compete for increased imports on a fair and competitive basis.

Thirdly, the rigidity of Japan's import policy and marketing arrangements has not allowed the full effect of the appreciation of the yen to flow on to the prices paid by consumers for imported agricultural products. Against the impending launch of a new round of MTNs, the present difficulties in

international trade in agriculture and the restrictive import regimes adopted by a number of countries, Australia has urged Japan to reform its agricultural sector. Such reform would benefit not only

international suppliers but also Japan through reduced cost of foods to Japanese consumers; improved allocation of resources; reduced current account surpluses and hence trade frictions; and increased opportunities for Japan to export its competitive products through improvements in its trading partners’ capacities to import.

When the Australian Prime Minister visited Japan in May 1986, he reiterated Australia’s interest in structural adjustment in Japan particularly in the domestic coal-mining and agricultural sectors. The

Prime Minister secured Japan’s agreement to an exchange of investment missions with a view to broadening the bilateral trading relationship. The Prime Minister also received an undertaking from

Japan that it will enter into bilateral negotiations in 1987 for a post-1987 beef-access arrangement.

R epublic o f Korea A key objective in Australia's trade with the ROK has been to develop the trade and economic relationship further through closer bilateral consultations between the Australian and Korean Trade Ministers and officials. This process of consultation has meant that

market access issues that have arisen in the relationship have been dealt with speedily and in a way which has not detracted from the overall favourable business environment.

Bilateral trade between Australia and the ROK has continued to record strong growth rates and in 1985-86 was valued at $1800m. The ROK is ranked fifth amongst Australia's export markets, with

mineral resources and agricultural commodities dominating this trade.

The potential for further expansion of trade was acknowledged during the 15th Australia-Korea Ministerial Trade Talks in Canberra in May 1986, where the delegations of both countries agreed to

make concerted efforts to double two-way trade by 1991. During this period it is expected that the trade relationship will broaden to cover a wider range of

trade in goods and services. The ROK Minister raised the possibility of exploring a bilateral air-services agreement and it was agreed that a working group of officials from both countries should

meet before the end of 1986 to consider this matter.

Developments in bilateral trade include Australia gaining access to the ROK milling-wheat market in 1985, the commencement of sales of Hyundai motor vehicles in Australia during 1986, and Australian

orders placed with ROK shipyards for seven vessels worth some $300m since 1984.

The 9th meeting of the Joint Trade Committee of Officials was held in May 1986 (in conjunction with the Ministerial Trade Talks). It focused on the bilateral trade imbalance; some anti-dumping cases against products imported from Korea; the continued closure to imports of the ROK beef and livestock

markets; Australia’s share of the ROK’s coking-coal and iron-ore markets; and Australia's interest in broadening the trade into a wider range of

manufactures and services.

In acknowledging the ROK’s concern over the imbalance in trade and agreeing to make joint efforts to assist the ROK’s performance in the Australian market, the Department facilitated a Buyers’

Mission, comprising 11 Australian businessmen, to the ROK during June 1986.

South-East Asia Australia's share of the market in South-East Asia has been disappointingly low and a major objective has

been to establish stronger government-to-government relations to develop trade. Co-operation and support from ASEAN countries for Australia’s initiatives to develop a regional approach on key issues such as agriculture in the lead up to the new round of MTNs, has also been of fundamental importance.

At the ASEAN regional level, a major development was Australia’s attendance for the first time at the meeting of the ASEAN Committee on Trade and Tourism (COTT) held in Manila in November 1985.

31

The invitation to attend the COTT meeting provided the opportunity for dialogue with senior ASEAN trade officials on a range of multilateral and regional issues, including the Australian System of Tariff

Preferences (ASTP), anti-dumping procedures and Australia’s efforts to expand exports to the region.

in addition to the above meetings, other

established regional consultative discussions continued to be held including the tenth

ASEAN/Australia Forum (in Australia in February 1986) and regular meetings of the ASEAN/Australia Consultative Committee and Working Group on Trade, involving officials from Government Depart­ ments and Canberra-based representatives from the ASEAN countries. In all of these discussions, particular attention was given to access and marketing issues of interest to both the ASEAN countries and Australia, with all parties anxious to maximise the level of two-way trade.

Bilateral trade discussions with Thailand were con­ ducted through a meeting of the Australia/Thailand Joint Trade Committee in Bangkok in February 1986. Emphasis was placed on ways of co-operating to achieve a two-way trade target of $500m, agreed by the Australian Minister for Trade and his Thai counterpart in 1985. Other significant issues on the agenda included the ASTR the Foreign Tax Credit System and the potential to expand Australia’s trade with Thailand through the bilateral aid program.

Another major development in our bilateral relations with countries in the ASEAN region was the holding of the inaugural meeting of the

Australia/Malaysia Joint Trade Committee in Canberra in May 1986. The establishment of this committee resulted from discussions held in 1984 between the Prime Ministers of Australia and Malaysia. The meeting enabled a range of issues to be addressed including trade access (particularly for commodities), investment, export of education sen/ices and exchange of scientific and technical expertise.

Visits to Australia by the Singaporean Prime Minister and the Indonesian Foreign Minister also provided the opportunity for economic and trade issues of mutual concern to be addressed.

In co-operation with the Singapore Trade Development Board, a program is being designed to encourage Australian and Singaporean companies to co-operate in developing trade with China. The

Department also contributed to a study being carried out by the Australia-lndonesia Business Co-operation Committee on prospects for improving trade and investment between Australia and

Indonesia.

Following the change of government in the Philippines, arrangements were made for an early meeting of the Australia/Philippines Joint Trade Commission which was scheduled for July 1986. A meeting of the Joint Business Co-operation

Committee was scheduled for the same week. The objective of both meetings was to establish the basis for more rigorous trade and investment expansion between the two countries.

The extent of interaction between the Department and the ASEAN/Australia Business Council and the Business Co-operation Committees involved with Malaysia, Indonesia and the Philippines has continued to increase. The contribution by these organisations, together with Austrade, to the development of trade and trade relations with ASEAN was much appreciated.

A program of two-way trade development has also been conducted with Vietnam, While trade expansion has been modest the improved level of dialogue has enabled identification and, in some cases, amelio­ ration of barriers to trade. Development of a similar program with Burma is under consideration.

South Asia A concerted effort to establish closer trade links with the South Asia region is under way, particularly with India where favourable economic growth has been

achieved.

India is Australia’s major trading partner in the region and arising from the visit of the Minister for Trade to India in October 1985, discussions are proceeding with the Indian authorities on proposals designed to increase trade and technical co­ operation between Australia and India. These proposals include the formation of an Australia-lndia Working Group on Coal-mining. Consideration is also being given by the Confederation of Australian Industry to the establishment of an Australia-lndia Business Co-operation Council.

Australia’s exports to countries in the region (Bangladesh, India, Pakistan and Sri Lanka) increased by 23 per cent during 1985-86 to reach a value of $644m, compared with $524m in 1984-85.

Prominent in this increase were additional sales of wheat to Sri Lanka and increased sales of coking coal to India. The value of Australia’s imports from these countries increased from $241 m in 1984-85 to $251 m in 1985-86.

P apua N e w Guinea Respective departments responsible for trade and industry met for the 9th Review of the Agreement on Trade and Commercial Relations between Australia and PNG (PATCRA) in April 1986 in Port Moresby.

Discussions covered restrictions and regulations being imposed by PNG which affect the import of certain products of trade interest to Australia, policy changes affecting the import of rice into PNG, activities under the trade promotion and investment assistance program for PNG and the granting of duty-free and unrestricted access from 1 July 1986 to all imports from PNG, other than those goods to which sectoral policies apply. Australia also

32

confirmed that the special PNG apparel quota of 67000 units a year would continue for 1987 and 1988.

v It was also agreed that a major review of the operation of the PATCRA would be carried out next year.

' PNG is a valuable customer for Australian products. Exports to PNG in 1985-86 were valued at $558m (1.7 per cent of total exports) and consisted mainly of elaborately transformed manufactures ($210rm), l refined petroleum products ($113m) and foods f ($106m). Australia’s imports from PNG in 1985-86

were valued at $171 m.

New Zealand Movement towards free trade across the Tasman continued under the ANZCERTA. | Tariffs on most goods have now been reduced by ■ at least 20 percentage points since the Agreement entered into force on 1 January 1983 and.

accordingly, most items are now duty-free. Access continued to increase for products subject to quantitative import restrictions and, under changes to the NZ import licensing procedures, a wide range

of Australian goods became exempt from import licensing from 1 July 1986; the number of licensing ( codes attracting exclusive licence now total 150, down from over 400 at the commencement of the

Agreement. Consultations with NZ officials were held on a range of matters. Liberalisation arrangements were determined for a number of products (tyres, wool-rich carpets, goods for which access is made available in quantity terms) and discussions are continuing on the arrangements to apply to tobacco,

steel and apparel. NZ import licensing procedures for Australian goods have been liberalised in response to representations from Australia. Arrange­ ments were made for regular consultations aimed at

the harmonisation of food standards and industrial property laws (for example, patents). Consultations are continuing in regard to questions relating to bounties, government purchasing, export incentives and other forms of industry assistance.

A Joint Meeting of Australian and NZ Ministers was held in Canberra on 15-16 August 1985. At the meeting, the first formal ministerial meeting held under the agreement, Ministers re-affirmed the commitment of both governments to the Trade

Agreement, to the attainment of a trans-Tasman free , trade area by 1995 at the latest and to the concept of developing closer economic relations between the two countries. Ministers noted that close working

relationships have also been established between the two governments in a wide spectrum of activities both within the framework of the

Agreement and in related fields. Ministers also , agreed that in the lead up to the 1988 Review of the Agreement detailed consultations with private

organisations, interested groups and individuals

would be held in order to identify by the end of 1986 specific ways in which trade is or is likely to be affected by differences in government policies or practices or any other matters which might contribute further to the development of the closer economic relationship.

Since the Trade Agreement entered into force, the value of trans-Tasman trade has increased by 63 per cent from $1850m in 1982-83 to $2963m in 1985-86. Exports to NZ (including re-exports) decreased by 2

per cent to $1509m in 1985-86. Exports of items subject to the liberalisation provisions of the Agree­ ment increased by 38 per cent during the period while exports of items not affected by liberalisation in­ creased by 27 per cent. The main export items in

1985-86 were refined petroleum products ($199m), chemicals and related products (S134m), road vehicles ($110m), iron and steel ($77m), textiles

($58m), electrical machinery, apparatus and appli­ ances ($54m) and non-ferrous metals ($51 m).

After a slow start in 1982-83, imports from NZ expanded considerably in 1984-85 and 1985-86, increasing 110 per cent from $694m in 1982-83 to $1454m in 1985-86. In 1985-86, the main items

imported were textiles ($162m), crude petroleum oils ($118m), paper and paperboard ($94m), chemicals and related products ($81 m), wood, simply worked and railway sleepers ($71 m) and electrical machinery, apparatus and appliances ($66m).

A publication CER News and Monitoring Reports relating to developments under the Agreement were circulated to interested firms and organisations. A document CER Future Progress, which includes

papers relating to the August ministerial meeting, was also produced.

Forum island countries Trade and trade relations with the Forum island countries (FICs) of the South Pacific are largely governed by the South Pacific Regional Trade and

Economic Co-operation Agreement (SPARTECA). The 6th Meeting of the SPARTECA Regional Committee on Trade (RCT) was held in NZ in May 1986. The meeting was attended by representatives from Australia, Cook Islands, Fiji, Kiribati, Nauru, NZ,

Niue, PNG, Solomon Islands, Tonga, Tuvalu, Vanuatu and Western Samoa. The Australian and most other delegations included, for the first time, representatives from the business sector.

Following requests by the FICs at the 1984 and 1985 RCT meetings for improved access to the Australian market for their products, the Prime Minister announced at the South Pacific Forum meeting held

in the Cook Islands in August 1985 that Australia would give the FICs duty-free and unrestricted access for all exports other than for those goods to which

sectoral industry policies apply. The Prime Minister further informed the FICs at the South Pacific Forum that Australia would extend the special 66,000 units

33

a year quota for textiles, clothing and footwear imports from the FICs until the end of 1988.

Australia and New Zealand also agreed to modify the Rules of Origin under SPARTECA to allow, in certain situations, NZ or Australian content to be counted towards the 50 per cent FICs origin require­ ment. This change came into effect in February 1986.

The 6th RCT meeting focused its attention on a review of the operations of SPARTECA, in particular its future directions including possible options for expanding closer economic relations between countries in the region. The FICs have indicated that they intend to place increased emphasis on the industrial and agricultural development provisions of SPARTECA and the needs of the smaller island countries.

USA The rising tide of protectionism in the USA posed a major challenge for the conduct of bilateral trade relations. During 1985-86 several high-level approaches were made by Australian ministers and senior officials to the US Administration and key Congressional leaders. The most significant of these in the context were the visits to Washington by the Minister for Trade in February 1986, the Prime Minister in April 1986 and the Minister for Primary Industry, Mr Kerin, in June 1986. The primary focus of these visits was to emphasise Australia’s concern over the detrimental effect of the export subsidies programs under the US Food Security Act 1985 (the Farm Bill) on Australia’s exports of agricultural products such as wheat, beef, sugar; rice and cotton.

Representations were also made on bilateral access issues affecting our exports of uranium, steel, products containing sugar, textiles and apparel and scientific and telecommunication equipment. The President vetoed the Textile Bill following

representations from Australia and other countries. Australia also encouraged the US Administration to oppose the Omnibus Trade Bill which has a number of protectionist provisions harmful to the trading interests of Australia and other countries.

Following representations by the Department, the US countervailing duty on Australian products containing sugar, which had been in force since 1923, was removed and the US Customs Office reversed a decision to reclassify spectrophotometers in the US Tariff which would have resulted in a much higher duty rate being applied, thereby threatening a market with potential sales of $15m a year.

The second set of consultations under the Australia-USA Restraint Arrangement on Steel were held in April 1986 and several technical issues with the administration of the arrangement were resolved satisfactorily. The five-year arrangement came into force in January 1985, following an interruption of Australia’s steel exports in 1984 caused by US

anti-dumping action. Notwithstanding the restraints applied under the arrangement, Australian exports of steel to the USA are expected to reach a record level in 1986 of $100m.

An important development in Australia-US trade relations was the agreement between the Australian Minister for Trade and US Trade Representative Clayton Yeutter that there be regular ministerial consultations on trade issues commencing in early

1987.

The USA was Australia’s second largest individual export market and our second largest supplier of imports. Exports to the USA were valued at $3.26b in 1985-86 and imports from the USA were worth $7.3b giving a bilateral trade balance of two to one in favour of the USA.

Canada Australia’s major concerns in the Canadian market have been to maintain and improve access for our

major commodity exports such as beef, sugar, canned fruit and lamb. During the year represen­ tations were made to Canadian authorities over sub­ sidised sales of EC beef into the Canadian market, and on the review of Canadian sugar policy, in view of the implications for Australia’s exports to Canada. Australia also held consultations with Canada over the preferential trade agreement between Canada and Commonwealth Caribbean Countries (CARIBCAN) and the proposed Canada/USA Free Trade Agree­ ment and received assurances that Australia’s trading interests would be taken into account.

There were several meetings between Australian and Canadian Ministers and officials during 1985-86 to discuss a range of bilateral and multilateral trade issues. The most important of these was the visit to Australia by the Canadian Minister for International Trade in November 1985. The visit followed an

initiative by the two Prime Ministers for an exchange of trade and industrial co-operation missions between Australia and Canada. The Minister for Trade visited British Colombia in June 1986 for discussions on wheat-marketing matters.

Bilateral discussions were also held in respect of tariff preferences under the Canada Australia Trade Agreement (CANATA).

Australia’s exports to Canada in 1985-86 were valued at $454m, an increase of 52 per cent over exports in 1984-85 ($298m). The major increase was in beef and veal which increased from $35m to $79m.

Imports from Canada into Australia increased during 1985-86 and were valued at $691 m compared with $606m in 1984-85.

Latin America While our trade with Latin America is relatively small, Australia has common interests with several of the

34

countries in the region which are major exporters of commodities faced with similar problems of low prices and instability in world markets. In this context Australia has been consulting with some of the major

non-subsidising agricultural exporters in the region (for example, Argentina, Brazil, Colombia, Uruguay) to co-ordinate approaches on agricultural issues in the lead-up to the new round of MTNs.

Regular informal bilateral discussions were under­ taken with officials of Argentina, Brazil and Venezuela at which bilateral trade matters and world agricultural trade problems were reviewed.

Australian exports to Latin America totalled $308.8m in 1985-86, an increase of 2.5 per cent more than the previous year. Major markets were Brazil, Mexico, Argentina and Columbia. In the same period imports from the region totalled $449.9m.

Major suppliers were Brazil, Mexico and Puerto Rico.

Western Europe Trade between Australia and Western Europe is characterised by a huge trade imbalance which favours Western Europe by a ratio of about two to one. In 1985-86 the deficit amounted to $4911m.

Australia’s ability to redress this imbalance has been severely limited by restrictions on market access for Australia's major exports to the region, unprocessed and semi-processed commodities.

The Government continued to make represen­ tations to European governments, bilaterally and in multilateral fora, seeking to gain improved access for Australian products, particularly those relating to

agriculture. To enhance this thrust Mr L. R Duthie was appointed Special Trade Representative in Europe.

In addition, efforts are being made to broaden the range of exports to the region. The Department’s major concern has been to ensure that the best possible conditions exist for the development of this trade, not only by maintaining pressure on import barriers but also by developing a closer understanding

of each country’s import policies and regulations.

In October 1985, the Minister for Trade visited Italy to discuss the prospect of increasing economic co-operation and trade between Australia and Italy. Agreement was reached that opened the way for

exports of apples and pears to Italy.

The Minister also visited Spain and Portugal in early 1986 to discuss the expansion of trade following the accession of those two countries to the EC. Lower barriers to manufactures imports and the

upgrading of the agricultural sector are expected to provide additional opportunities for Australian exports to Spain and Portugal.

During 1985-86 the Department established new consultative fora with Italy and France. To give effect to the Australia/ltaly Economic and Commercial Co-operation Agreement signed in 1984 and to

progress two-way trade, investment and joint ventures, an Australia/ltaly Joint Working Group on Economic Co-operation was established and held its inaugural meeting in Sydney in November 1985.

The 2nd Meeting was held in Rome in June 1986 and was attended by representatives of 15 Australian companies.

The 1st Meeting of the Australia/France Informal Trade Talks was held in Paris in June 1985. The talks are aimed at providing a forum to discuss bilateral and multilateral trade issues between the two

countries and to explore ways in which the

development of trade and two-way investment flow between Australia and France may be encouraged.

USSR and Eastern Europe Australia’s exports to Eastern Europe are dominated by primary commodities, which account for around 95 per cent of total exports to the region. It is a major

market for Australian grains, wool and coal. The USSR is the largest market in the region, taking about 76 per cent of Australia's exports to the area.

USSR Exports to the USSR have grown rapidly during the past two years, to coincide with the significant in­ crease in bilateral economic contact which has followed the Government’s decision in mid-1983 to

normalise relations with the USSR. In October 1985 the Minister for Trade visited the USSR to open a large Australian trade display in Moscow and to meet with senior USSR Ministers and officials

including the Deputy Prime Minister. Meetings of the Australia/USSR Mixed Commission on Trade and Economic Co-operation and the Working Group on

Trade in Machinery and Equipment were held in Moscow and Canberra respectively.

Each of these events contributed to the

continuing improvement in the trade relationship. The major impediment to the development of this relationship remains the very large trade imbalance in Australia's favour. The USSR is one of the few

remaining growth markets for agricultural commodities and considerable potential exists to expand both the range and the volume of Australia’s commodities trade as markets in other parts of the world decline. The extent to which this potential can be realized will depend on Australia’s ability to increase imports

from the USSR.

The Government has undertaken a number of measures in recent years to assist USSR exports to Australia including the establishment of State Advisory Committees on Australia/USSR Trade in

New South Wales, Victoria, Queensland and Western Australia. The committees were established in conjunction with the State Governments to identify opportunities in the Australian market for

USSR goods, examine the USSR marketing effort in

35

Australia and provide introductions for USSR trade officials to appropriate government and business purchasing authorities. The Committees presented their final reports to the Australia/USSR Mixed

Commission meeting held in Canberra in October. Both sides agreed that the committees had achieved their objectives and should now be wound up.

During the Minister for Trade’s visit to the USSR in October 1985 discussions were held with senior USSR officials about a proposal to sign a

commodities agreement between Australia and the USSR. The agreement would provide an umbrella under which commercial organisations on both sides could sign long-term contracts for the supply of commodities and exchange commodity-related

technology. A draft agreement was sent to the USSR in early 1986 for consideration. Commodities which would be covered by the agreement could include wheat, wool, meat, dairy products, sugar and bauxite/alumina.

The Department is also encouraging the expansion of commercially-related scientific and technical co-operation with the USSR. Whilst Australia does have a Scientific and Technical Co-operation Agreement with the USSR, this has been used solely as a medium for pure science exchanges. The prospect of using this agreement as an umbrella for commercial exchanges is being considered.

E astern Europe As with the USSR, Australia also enjoys significant trade surpluses with most other Eastern European countries and Yugoslavia, although not of the same magnitude as that with the USSR. The trade imbalance is an issue frequently raised by Eastern European officials during formal and informal consultations. Mixed Commission meetings are held on a regular basis with Bulgaria, Czechoslovakia, the German Democratic Republic, Hungary Poland and Romania. The Department has also sponsored an Australian stand at key Eastern European trade displays. Following the establishment of Austrade, the Department will continue to fund participation in these exhibitions because of their importance in

maintaining and developing Australia’s trade relations with the region.

Middle East and North Africa As a result of declining oil revenues on the Middle East region during 1985-86, Australia’s exports to Middle East countries (including North Africa) decreased from $2363m in 1984-85 to $2273m in

1985-86. The area remains, however, an important market for Australia's exports. The high level of government involvement in commerce in most

Middle East countries demands that promotional and marketing strategies undertaken by Austrade

be underpinned by contact at government-to- government level. The Department administers Trade, Economic and Technical Co-operation Agreements with a number of countries in the area and these agreements provide for the establishment of Joint Commissions or Committees to facilitate regular consultations between the Australian Government and the governments of the countries concerned.

The 3rd Meeting of the Australia-lraq Joint Commission was held in Baghdad in October 1985. The Australian delegation was led by the Minister for Trade and prospects for increasing two-way trade and technical co-operation between Australia and

Iraq were explored. The 3rd Meeting of the Australia-Bahrain Joint Committee, established under the Australia-Bahrain Trade, Economic and Technical Co-operation Agreement, was held in

Bahrain in December 1985. Both sides noted that trade between the two countries was proceeding satisfactorily and agreed to examine further areas for closer technical co-operation. Other important contacts at the government-to-government level in

1985-86 included visits to Australia by His Excellency Mr Besharati, Iranian Deputy Minister for Foreign Affairs, and His Excellency Dr N. Shatla, Egyptian Minister of Supply and Home Trade.

In early 1986 the Department participated in a review of Australia’s relations with Libya arising from the Government’s receipt of a message from President Reagan concerning Libya's implication in terrorist incidents. Subsequently the Government decided that the Minister for Trade direct the Australian Trade Commission not to provide finance and insurance facilities for any new Australian business with Libya outside the food and agricultural sector.

Central and Southern Africa (excluding South Africa) Trade with countries in the area remains relatively small and the Department is continuing to work with Austrade on researching opportunities for Australian

involvement in agricultural and other projects funded by international agencies in the region.

In March 1986 the Department held discussions in Canberra with a Mauritius Government delegation on the development of increased trade between the two countries and in May 1986 facilitated the visit of a Mauritius Government delegation to promote Australian investment in Mauritius.

Australia’s exports to Central and Southern Africa (excluding South Africa) were valued at $139m in 1985-86 and imports from the region were valued at $49m.

South Africa During 1985-86 the Government implemented a range of economic and other measures designed to

36

bring pressure to bear on the South African Government to end apartheid. These measures included, in the trade areas, closing the Trade Commissioner post in Johannesburg, prohibition of the export of petroleum and petroleum products, computer hardware and other products known to be of use to the South African security forces,

prohibition of the importation of krugerrands and other coins and all arms, ammunition and military vehicles. Other measures implemented in the

overseas trade area include termination of all assistance available through the Export Finance and Insurance Group, the Export Market Develop­ ment Grants (EMDG) scheme and the Overseas

Projects Unit of Austrade for majority-owned South African companies. Government assistance under the EMDG scheme for participation in exhibitions or trade fairs in South Africa or for participation in trade

missions to that country was suspended.

Australia’s exports to South Africa declined from $206m in 1984-85 to $138m in 1985-86. Imports from South Africa increased from $137m to $158m over the same period.

Market Advisory Service The Market Advisory Service (MAS) aims to assist the expansion of trade links with DCs and to make a contribution to their economic development through

measures designed to help eligible countries to compete with existing overseas suppliers in the Australian market. This assistance is also available toCPEs.

These aims are given effect through four major activities which are funded under Australia’s develop­ ment assistance programs. These activities are:

The Market Advisory Assistance Program facility which provides market advice and assis­ tance to a wide range of DCs and CPEs.

The International Trade Development Centre (ITDC) facilities in Sydney and Melbourne which provide display and training facilities for DCs (including CPEs). Financial support is only provided for promotional events at these centres for those countries which are recipients of Australian bilateral aid. In 1985-86 26 major

displays were held at the ITDCs.

The Trade and Investment Promotion Program (TIPP) which provides trade and investment promotion assistance to ASEAN countries under the ASEAN Australia Economic Co-operation

Program (AAECP). Thirty-one projects were undertaken in 1985-86.

Article Vlll(5) of SPARTECA (Australia’s trade agreement with the FICs of the South Pacific) which provides an expanding program of assistance in trade and investment promotion to those countries. Expenditure increased by 50 per

cent to $300 000 in 1985-86 with assistance being provided to every FIC. Co-operation was maintained with the South Pacific Trade Commissioner based in Sydney.

Activities funded by the above programs in 1985-86 included export seminars, training courses, ITDC displays, market reports, selling missions, assistance with participation in specialised fairs and a wide

range of assistance to individual firms.

Countries which have received market assistance in various forms during 1985-86 include Bangladesh, Bulgaria, China, Czechoslovakia, Cook Islands, Egypt, Fiji. India, Indonesia, Kenya, Kiribati, ROK,

Malaysia, Mauritius, Nauru, Nigeria, Niue, Pakistan, PNG, Philippines, Singapore, Solomon Islands, Sri Lanka, Thailand, Tonga, Tuvalu, Vanuatu, Vietnam and Western Samoa.

37

Domestic policy support and facilitation

Objectives and functions To provide advice on economic and financial issues affecting Australia’s trade and commerce, to increase awareness among unions and business of the benefits of exports and to provide effective support for exporters through:

• analysis of domestic trade-related policies and economic developments affecting Australia’s general economic performance; • the conduct of medium-term research on

major domestic and international issues affecting Australia’s trade and the develop­ ment of overall trade strategies and policies; • development of policies on export

assistance, taxation relief and export

finance and insurance.

Economic and research services The sharp fall in Australia’s terms of trade, combined with the cyclical and structural factors evident last year; resulted in continued weakness of the Australian dollar and the deterioration of Australia's balance- of-payments situation. These problems again pro­ vided the focus of the economic reporting and policy advisory functions of the Department during the year and there were a large number of analyses of factors influencing the deterioration itself and of domestic and overseas policies influencing Australia’s trade performance.

To facilitate policy discussion and general under­ standing of the current account problems, the Department prepared a set of background papers on Australia's external situation. These papers drew on earlier analysis of Australia’s foreign debt and current-account performance prepared by the

Department.

Increased resources have been committed to the research function, and a number of major projects were commenced or completed. Research and analysis was undertaken into economic, financial and commercial issues to assess the trade impli­ cations for Australia. These issues included structural adjustment in Japan, Japanese financial deregulation, trans-Tasman trade and investment flows, and non- conventional trade finance developments such as countertrade.

The fourth edition of the Department’s publication Survey of Major Western Pacific Economies was pre­ pared for release later in 1986. It contains a com­ prehensive country-by-country analysis of economic trends, developments in trade and industry policy and economic prospects in the Western Pacific

Region.

With other departments a substantial contribution was made to work concerning longer-term trade and economic growth issues. Research and policy analysis focused particularly on the development of trade and commercial policy.

A series of papers has been commenced as part of the development of enhanced strategic objectives for Australia in relation to selected trading partners. These papers examine strategic issues in Australia's economic and trade relationship with its trading part­ ners and will provide frameworks for future Australian strategies.

Contributions were also made to the analysis of domestic policies which impinge on Australia’s export performance, to identify and remove impediments to export success caused by domestic policies. In addition, research has been undertaken into longer- term structural factors underlying world food and agricultural trade, particularly focusing on the role of investment, technology and aid in agricultural development.

The Department also provided advice to the Foreign Investment Review Board on the trade aspects associated with foreign investment pro­ posals. In this context, particular attention was given to a proposal’s effect on export market development, overseas market-access considerations, the effect of export franchise restrictions and technology-transfer arrangements.

Trade Development Council Secretariat The Trade Development Council (TDC) and its specialist committees develop and implement pro­ posals for increased export awareness and education within Australia, and undertake special studies.

Research material is prepared to support these activities. The TDC Secretariat (TDCS) operates, manages and services the TDC.

The functions of the TDCS are to provide support services to the TDC and related bodies, to arrange

3 8

and undertake educational programs and seminars on trade issues for unions and employers, to advise on the composition of overseas missions mounted by the Department, and provide research assistance to the TDC.

The TDCS disseminates information about government policy initiatives and other educative assistance to business and unions. The TDCS also maintains liaison with related organisations, such as the Australian Manufacturing Council Secretariat and through that body, the industry councils.

The charter of the TDCS provides for a number of activities. These include the Trade Education Program and the Trade Project Groups (TPGs).

The trade education program involves trade union, government and business representatives in national and State three-to-five-day live-in seminars. At these seminars the importance of exports, international

markets and the rationale of the Government’s approach to trade and related issues are fully can­ vassed. The consequences of matters, such as industrial disputation, are dealt with in the context of an overall picture of the need for increased export growth.

Since November 1984, the TDCS has conducted 27 seminars, 21 of which were national seminars. Staff from the TDCS have contributed to a further 12 seminars conducted by other organisations.

The issues dealt with at the national and State seminars have included the full range of factors involved in macro-economic management. These seminars have substantially lifted the awareness of the importance of exports.

As a follow up program to the seminars, TPGs are being established with the objective of providing seminar participants with a greater appreciation of the consequence of inadequate international competitiveness on the domestic market and em­

ployment base, both in the economy generally and with respect to particular industries. The TPGs are designed to be complementary to existing tripartite consultative bodies.

Export incentives The EMDG scheme provides financial incentives, in the form of taxable cash grants, to encourage Australian exporters to seek out and develop over­

seas markets for goods, services, industrial property rights and know-how which are substantially of Australian origin.

On 14 May 1985, the Government announced a number of changes to the EMDG scheme and the objective in 1985-86 was to ensure that the necessary amending legislation and regulations were introduced

in Parliament to give effect to the changes. The amendments to the Export Market Development Grants Act 1974 were introduced in the 1985 Budget Session of Parliament and became law on 16 October

1985. The amending regulations were made by the Governor-General in Executive Council on 19 December 1985.

The Export Development Grants Board, which has administered the EMDG scheme, was incorporated into Austrade on 6 January 1986. Details of the Board’s activities were published in a separate and final report covering the period 1 July 1985 to 5 January 1986.

The Government provided an additional $80m at the end of the 1985-86 financial year to reduce the backlog of outstanding EMDG claims. These funds were additional to the $117m provided for the EMDG

scheme in the 1985-86 Commonwealth Budget. The carry-over of unprocessed EMDG claims has been reduced to a more acceptable figure and takes into account that at the end of the financial year there

are always some outstanding claims due to incom­ plete difficult investigations or where grant determi­ nations are the subject of appeal by claimants.

Taxation relief Relief from Australian income tax on income earned overseas by Australians supplying sen/ices on “approved projects” was provided under Section 23AF of the Income Tax Assessment Act 1936. This form of assistance enables Australians to be more competitive when quoting for contracts overseas.

Some 98 applications were received under the scheme in 1985-86, of which 65 were approved, 23 were rejected and 10 remained under consideration at 30 June 1986. The majority of the successful

applications were in relation to “approved projects” to be undertaken in the Middle East and South-East Asia. As at the end of the financial year, contracts to the value of $114m had been awarded to 41 of the 65

successful applicants.

Export finance and insurance The Department continued to be engaged in a high level of activity on export finance and insurance

matters during the year. National interest cover was provided by the Government on some 15 applications in areas as diverse as insurance cover on wheat sales by the Australian Wheat Board and the provision of

credit for the sale of cane-harvesters. The level of applications reflected both competition in the credit field and the continuing problems being faced by DCs in servicing debts.

Under the National Interest Provisions of the original Export Finance and Insurance Corporation Act 1974 a finance package, raised in Hong Kong dollars and supported by the Government, was instrumental in the winning of a major turnkey tramway construction

project in Hong Kong by an Australian consortium, led by Leighton Constructions and the Metropolitan Transit Authority of Victoria. The $200m project will involve the provision by the consortium of all civil

39

engineering works, the supply of rolling-stock; com­ munications and fare collection systems; and training for both operations and maintenance. The contract will involve exports from Australia valued at some $60m, as well as management and consultancy services.

The Government’s Pre-shipment Finance Guarantee Facility, which was initiated in November 1984, continued to provide substantial support for exporters in such areas as air-traffic control systems, electronic equipment and food-processing equipment. As a result of the experience gained by EFIC with this facility, its operation was transferred from the Government to EFIC (now incorporated within Austrade) in September 1985.

The 180-day Guaranteed Discount Facility for export credit cover on exports to Poland of wool, hides and skins continued to be fully utilised. Following its earlier increase and renewal for two years in May 1985, the Minister approved a further increase in the Facility to $70m in July 1985. The

Facility has operated smoothly and business covered since its inception has been in the order of $400m.

Increased provision of mixed credits by foreign exporters, assisted by their respective governments, and demands for aid-backed financing by potential importers of Australian goods and seivices led to close liaison between the Department and the Australian Development Assistance Bureau on the provision of aid moneys through the Government's Development Import Finance Facility to support Australian bids.

40

Corporate services

Objectives and functions To provide information, financial resources, per­ sonnel and related advice to enable efficient delivery of departmental programs and achieve­

ment of the Government’s trade objective.

Assistance is provided to staff to enable them to achieve their full work potential.

The principal management tasks dealt with by the Department during the year derived from the reor­ ganisation of the portfolio with the establishment of Austrade on 6 January 1986 and the reshaping of the Department to meet its task of providing advice on trade and economic matters.

In the second half of the year major problems were encountered within the Group in part due to loss of experienced staff to Austrade and to the disruption of financial and personnel systems as two organ­ isations were established from the former unitary body. These problems coupled with a lack of auto­

mation led to a build-up in unprocessed claims and heavy overtime.

Action was taken to upgrade and streamline the performance of the Group and to achieve this as quickly as possible assistance was sought and obtained from the Public Service Board (PSB) and the Department of Finance. At the same time strong

internal measures were taken so that in most areas the substantial backlogs have been removed and a marked improvement in quality of service has occurred. Further significant improvements are

anticipated as long overdue automation and improved systems are introduced and selected PSB recom­ mendations are implemented.

Resource management Central resource management and systems development was maintained, however, in keeping with the philosophy developed as a result of the

Australian Public Service (APS) reforms, managers were given responsibility for administering certain aspects of their budgets to achieve greater efficiency. Decisions on resource allocations were taken against

the background of advice from managers’ perceptions of priorities within their areas of responsibility.

Details of the staffing levels and major areas of expenditure are set out in Appendix II and Appendix VI respectively. The information excludes those resources that were appropriated to Austrade when

it was established.

Personnel The formation of Austrade and the reorganisation of the Department drew heavily on the resources of the personnel staff and represented the single major

activity in the personnel area for 1985-86.

Recruitment of staff for the Senior Executive Service (SES) from outside the Department achieved a relatively high rate of success. Of the 10 vacancies filled during 1985-86, six were In this category. On the graduate-recruitment front the Department’s cam­

paign was reoriented in the latter months of 1985-86 to attract a wider range of well-qualified graduates, especially in the field of economics. Officers were

drawn from various groups for short periods to assist in this effort. No significant changes occurred in other areas of recruitment.

Permanent part-time employment was introduced in the Administrative and Clerical Officers Association’s (ACOA) area of classification coverage during the latter part of 1985-86.

Flowing from the creation of Austrade the Trade Representatives Act 1933 became the principal legislative base for the posting of departmental officers overseas. At the end of 1985-86, the

Department maintained 33 Australian-based officers overseas (in Western Europe, North Asia, North America and NZ). These officers represent Australia’s

multilateral, bilateral and commodity trade interests in host countries and at meetings of international organisations. A summary of the Department’s over­ seas representation is shown in Appendix III.

At the end of 1985-86, planning was well advanced to facilitate the introduction of a modern computer- based data system in the personnel and services area of the Department. When implemented, it will

provide a more cost-effective and improved quality of service.

Personnel management review In late February 1986 a Personnel Management Review Team was established to examine a range of

41

personnel management matters in the Department including recruitment, induction, staffing profiles and mobility. A PSB representative headed the team which included one union and two departmental representatives. The review team lodged its report in June and implementation of the majority of the team’s recommendations will proceed during 1986-87.

Personnel development The year was marked by a continuation of the pre­ vious year’s emphasis on management training. Major commitments included management development modules for SES officers, resource management training for line-managers and a series of courses to develop negotiating skills.

Activities also included a comprehensive training program for Assistant Research Officers (AROs) as well as general administrative training for clerical, keyboard and other support staff. Awareness training was also conducted on Equal Employment Oppor­ tunity (EEO) and occupational health and safety

issues. Departmental officers participated in the Executive Development Scheme (1), Senior Executive Management Program (2) and an Australian Administrative Staff College course (1). Five officers from the Department participated in the interchange scheme and three people from the private sector commenced placements in the Department.

Industrial democracy The Department’s Industrial Democracy Plan was lodged with the PSB in October 1985 and the first meeting of the Department’s National Consultative Council was held in March 1986. The following committees were established:

• Working Environment and Technological Standards • Industrial Democracy • EEO.

EEO The Department lodged its EEO plan with the PSB in October 1985. It has introduced a range of training programs directed towards members of designated groups and EEO segments have been included in a range of other departmental training programs.

Occupational health and safety Repetition Strain Injury (RSI) was the major’ occupational health problem addressed during 1985-86. The Department has developed a program aimed at preventing RSI as well as treating and rehabilitating affected personnel.

Twelve courses and seminars were conducted during the year to raise the awareness level and

knowledge of RSI. These included addresses by outside specialists as well as internal RSI aware­ ness workshops for keyboard, clerical and super­ visory staff. Early in the financial year RSI workshops were also conducted in Sydney and Melbourne

Regional Offices. Approximately 200 staff have attended these awareness programs.

In 1985-86 the Department took action on 45 cases of RSI, of which 35 were first notified in the previous year. This is a significant decrease in the incidence of RSI over past years and reflects not only the re­ duction in the Department’s keyboard staffing level, resulting from the formation of Austrade, but more importantly it reflects an increasing awareness of RSI arising from the departmental RSI training and rehabilitation program.

A strategy to minimise the risk of further injury for RSI sufferers returning to work continues to be de­ veloped, and internal RSI awareness workshops will continue with emphasis placed on workshops for supervisors and senior executive staff.

The program for the acquisition of ergonomic furniture continued during the year. Additional purchases will be made in 1986-87.

Internal audit Internal audit evaluates departmental operations and systems of control to assist management to discharge its responsibilities under the Audit Act 1901 and the Public Service Act 1925.

The internal audit function is being re-examined following the reorganisation of the portfolio. A new Internal Audit Committee has been established to oversee the preparation and implementation of a revised Strategic Audit Program.

Information systems and automatic data processing (ADR) Current information systems are predominantly manually-based and the Department is evaluating options to automate both its personnel and finance/ accounting functions. These systems are expected to be implemented during the 1986-87 financial year.

As a result of the restructuring of the portfolio, the mainframe computer is now owned by Austrade which accordingly has absorbed the majority of ADP staff. Currently the Department uses this computer for a number of applications, including trade statistics, for which Austrade is paid a fee. The Department’s other ADP requirements are under review and will be addressed during the development of the 1986-87 ADP Strategic Plan.

Freedom of Information (FOI) Forty-two requests under the Freedom of Information Act 1982 were received during the year, one-third

42

more than the previous year. Although the volume of requests was low by comparison with client-oriented agencies, the nature of many of the requests required a high level of resource commitment, especially at senior levels. Statistical data on requests are given in Appendix VII.

Direct costs incurred in responding to FOI requests, inter-agency consultations and appeals exceeded $80 000 (representing two full-time FOI officers, nearly 300 hours spent by other officers on FOI matters and related legal expenses).

Two of the Department’s responses to requests during the year were the subject of appeal to the Administrative Appeals Tribunal (AAT) but they had not been heard as at June 1986. However, appeals were heard on three requests which had been lodged

in the previous year. In the matter of a request by Swiss Aluminium Australia Ltd, a Department of Trade decision to refuse the request on the grounds that the work involved in processing the request would be an unreasonable diversion of resources was up­

held by the AAT in June 1986. In the appeal on a second request by Swiss Aluminium Australia Ltd, a departmental decision to refuse the request on the

grounds that documents were internal working documents which contained options proposed for consideration by the Minister was upheld by the AAT in December 1985. The third appeal has not yet

been finalised.

The Department prepared a submission for con­ sideration by the Senate Committee on Constitutional and Legal Affairs which is reviewing the operation and administration of the FOI Act. The submission emphasised the need for adequate protection of commercially sensitive material.

Publicity, advertising and public relations More than 200 media releases and speeches were distributed during the year. The Department’s general and specialist mailing lists for media releases, speeches and publications were revised, resulting

in coverage of a wider range of recipients, including ! national, regional and ethnic media organisations, unions, employer groups, academics, professional and business organisations.

43

APPENDIX I

Australia’s trade statistics

Table 1: Direction of exports (Sm)

1981-82 1982-83 1983-84 1984-85 1985-86

Japan 5346 5959 6495 8027 9350

USA 2114 2182 2587 3454 3257

New Zealand 1014 1131 1386 1542 1509

China PR 550 643 609 1064 1497

ROK 681 829 937 1140 1317

UK 714 1118 1102 923 1152

Taiwan Province 445 551 704 854 1064

USSR 666 507 583 878 970

FR Germany 464 540 639 719 888

Singapore 504 517 826 792 726

Hong Kong 423 341 604 839 722

France 399 494 480 672 711

Italy 393 368 480 581 689

PNG 414 500 482 517 558

Indonesia 414 405 376 426 526

Malaysia 436 463 453 604 511

Egypt 336 411 390 497 508

Saudi Arabia 362 353 385 518 494

Canada 361 284 305 298 454

Netherlands 209 297 317 457 432

Other 3049 3562 3874 5107 5460

Total exports 19294 21455 24014 29909 32795

of which: EEC (10) 2340 3048 3238 3695 4333

ASEAN (6) (incl. Brunei) 1684 1763 2019 2223 2137

Western Pacific Region 10556 11717 13235 16206 18155

Developing (a) 6921 7314 8232 10738 11462

NOTE: Figures may be amended by the ABS up to three years after the period to which they relate, (a) all countries specified in Schedule 1 of the Customs Tariff Act 1982 and PNG. Source: compiled from information supplied by ABS.

44

Table 2: Source of imports (Sm)

1981-82 1982-83 1983-84 1984-85 1985-86

Japan 4510 4392 5337 6609 8248

USA 5205 4683 5044 6427 7285

FR Germany 1344 1270 1376 1812 2718

UK 1602 1443 1613 1962 2516

New Zealand 723 689 910 1104 1455

Taiwan Province 632 649 850 1052 1161

Italy 504 536 715 882 1095

France 626 454 506 559 776

Singapore 651 554 462 712 745

Canada 581 433 452 606 691

Hong Kong 499 484 550 657 676

Sweden 321 277 339 483 658

ROK 301 289 382 474 557

Saudi Arabia 1193 977 680 638 471

China PR 284 257 311 375 435

Netherlands 355 263 . 334 351 431

Switzerland 213 196 227 276 429

Malaysia 187 214 257 318 325

Kuwait 261 354 436 339 297

Belgium/Luxembourg 135 124 161 216 287

Other 2642 2810 2608 3199 3411

Total imports 22769 21348 23550 29051 34667

of which: EEC (10) 4737 4283 4925 6090 8193

ASEAN (6) (incl. Brunei) 1514 1519 1232 1659 1603

Western Pacific Region 8533 8349 9649 12045 14306

Developing (a) 5941 5923 5715 6688 6796

NOTE: Figures may be amended by the ABS up to three years after the period to which they relate, (a) all countries specified in Schedule 1 of the Customs Tariff Act 1982 and PNG. Source: compiled from information supplied by ABS.

45

Table 3: Composition (a) of exports (Sm)

1981-82 1982-83 1983-84 1984-85 1985-86

PRIMARY PRODUCTS Rural products Beef and veal, fcf 1024 1285 1114 1076 1319

Dairy products and eggs 301 329 368 420 439

Crustaceans and molluscs, fcf 269 309 352 357 413

Wheat 1720 1440 1814 2867 2939

Barley 241 131 499 750 536

Raw sugar, bulk 752 551 619 572 599

Greasy and fleece-washed wool 1471 1470 1575 1958 2292

Sheep’s or lamb’s wool, nes (excl. wool tops) 292 248 320 385 525

Other 2240 2260 2288 2770 3242

Total rural products 8310 8023 8949 11155 12304

Minerals and fuels Iron ore and concentrates 1252 1487 1619 1870 1938

Alumina 1092 1074 1257 1385 1375

Other metalliferous ores and metal scrap (b) 1032 1192 1227 1349 1537

Coal 2290 3073 3328 4654 5212

Crude petroleum oils - - 203 1260 1153

Refined petroleum products (c) 537 1141 1216 1141 1112

Gas, natural and manufactured 317 343 432 399 461

Other 104 118 142 170 208

Total minerals and fuels (b)(c) 6624 8428 9424 12228 12996

Total primary products (b)(c) 14934 16451 18372 23383 25300

MANUFACTURES Chemicals 402 458 502 543 590

Iron and steel 439 484 417 471 581

Aluminium and aluminium alloys 229 303 553 945 1055

Other non-ferrous metals 765 949 983 924 889

Machinery 669 771 887 944 1149

Transport equipment 359 362 450 540 471

Other 953 1032 1140 1213 1416

Total manufactures 3816 4359 4932 5580 6151

Gold, non-monetary (excluding gold ores and concentrates) 103 209 378 554 771

Other (d) 441 435 331 392 573

Total exports 19294 21455 24014 29909 32795

NOTE: Figures may be amended by the ABS up to three years after the period to which they relate, fcf fresh, chilled and frozen nes not elsewhere specified (a) groups may exclude data which are confidential (b) excludes bauxite, manganese, beneficiated ilmenite, certain other base metal ores and concentrates (c) from 1.7.82 ships' stores were allocated to the correct commodity areas resulting in a large increase in refined petroleum products (d) includes items mentioned under footnote (b) Source: compiled from information supplied by ABS.

46

Table 4: Composition (a) of imports (Sm)

1981-82 1982-83 1983-84 1984-85 1985-86

PRIMARY PRODUCTS Food, beverages and tobacco 905 1019 1211 1472 1716

Crude materials, inedible (excl. fuel) 769 648 762 932 1023

Crude petroleum oil 1815 1892 1067 910 587

Refined petroleum products 1123 1125 1054 1284 1218

Other 145 150 209 218 216

Total primary products 4757 4834 4303 4816 4760

MANUFACTURES Chemical and related products, nes 1827 1776 2155 2551 3025

Paper and paperboard 498 417 530 731 717

Textiles 1095 1011 1302 1444 1678

Iron and steel 578 550 436 547 609

Power generating machinery and equipment 752 680 589 683 991

Machinery specialised for particular industries 1481 1079 1151 1652 2052

General industrial machinery and equipment, nes and parts 1209 1147 1144 1383 1854

ADR machinery 410 487 686 1040 1351

Telecom recording and reproducing equipment 711 808 966 1167 1466

Electrical machinery, apparatus and appliances, nes and parts 996 974 1126 1472 1843

Transport equipment 2714 2426 3053 3654 4352

Clothing and footwear 536 535 586 718 776

Other 4381 4173 4852 6196 7717

Total manufactures 17188 16063 18576 23236 28431

Other 824 451 671 1000 1476

Total imports 22769 21348 23550 29051 34667

NOTE: Figures may be amended by the ABS up to three years after the period to which they relate. nes not elsewhere specified (a) groups may exclude data which are confidential Source: compiled from information supplied by ABS.

47

APPENDIX IV

Trade-related councils, committees and other bodies

Australia/EC Trade Advisory Group Functions: reports to the Minister for Trade on the issues involved in Australia’s trading relationship with

the EC.

Chairman: J. G. Campbell

Membership: D. Asimus, C. E. Condon, T. Eastwood, C. L. N. Harvey, I. McLachlan, M. Nugent,

J. I. Saunders.

EC/Australia Working Party on Raw Materials and Raw Materials Processing Functions: promotes industry co-operation in the field of raw materials and raw materials processing in­ cluding joint ventures and transfer of capital and technology.

Australian representatives: officials of the Depart­ ment of Trade and other Commonwealth Government officials and as appropriate State Government officials and business representatives.

EC representatives: officials of the Directorate- General for Internal Market and Industrial Affairs.

Australia-Korea Joint Committee for Mineral Resources Development Functions: promotes co-operation between Australia and Korea in mineral resources trade and

development.

Australian representatives: officials of the Depart­ ment of Trade, other Commonwealth Government officials, State Government officials, business rep­ resentatives and union officials.

Korean representatives: officials of the Ministry of Energy and Resources, other government officials and business representatives.

High-level Group on Bilateral Agricultural Trade Functions: The Government’s Economic and Rural Policy Statement in April 1986 said “this group will be

required to specify objectives and develop a comprehensive strategy for bilateral agricultural trade policy over the next three years.” Membership: Senior officials of the Departments

of Trade (Chairman), Primary Industry and Foreign Affairs, representatives of key Statutory Marketing Authorities and the rural producing and exporting communities.

National Trade Facilitation Committee Functions: examines and makes recommendations on ways and means of rationalising and simplifying documents and procedures involved in international trade transactions.

Membership: officials of the following Government departments - Department of Trade (Chairman), Australian Bureau of Statistics, Department of Industry, Technology and Commerce, Department of Primary Industry, Department of Transport.

Representatives from the following organisations: Association of Australian Port and Marine Authorities, Austrade, Australian Bankers’ Association, Australian Chamber of Commerce Export Council, Australian Chamber of Shipping, Australian Council of the

International Chamber of Commerce, Australian Institute of Export, Australian Manufacturers’ Export Council, Australian Shippers’ Council, Customs Agents Federation of Australia, Insurance Council of Australia, Metal Trades Industries Association (MTIA) National Export Group, Qantas Airways Limited, Reserve Bank of Australia.

Trade Development Council Functions: advises the Minister on all aspects of the development of Australia’s trade.

Chairman: Dr B. W. Scott, AO: Deputy Chairman: F E. Peterson

Membership: R. G. Ansett, J. G. Campbell, L. Carmichael, I. A. Deveson, T. R. Eastwood, Dr V. W. FitzGerald, C. L. N. Harvey, J. K. Horwood, L. MacAlister, J. Maitland, R G. Pak-Poy, J. Sloan.

Trade Negotiations Advisory Group Functions: advises the Minister on aspects of Australia’s commercial environment which have a bearing on Australia’s participation in MTNs. It also disseminates information on negotiations to the Australian business community.

Chairman: R. G. Ansett Membership: G. Allen, L. Carmichael, R. Deicke, A. C. C. Farran, D. Fleming, R T. Frawley, N. W. Holdsworth, J. K. Horwood, R H. Lavery, R.

McCarthy, J. McLeod, F E. Peterson, Professor C. Phegan, Dr E. W. Shann, G. Slee.

4 9

Western Australia Business Advisory Group (WABAG), Western Australia Trade Union Advisory Group (WATUAG) Functions: both groups were established to provide for direct consultation and exchange of information between the business and trade union sectors in Western Australia and the Commonwealth Government.

Membership: WABAG: The Hon. J. S. Dawkins (Chairman), the Hon. K. Beazley, Senator the Hon. R Walsh (permanent members), Sir Garrick Agnew, CBE, A. Bond, E. Bonney, I. Burston, M. A. J. Cameron, D. Connolly, W Crane, D. Cullity, CMG, D. Farrell, R. S. Forbes, M. R. H. Holmes a Court, J. Horgan, J. K. Horwood, H. Kleyn, T. Matyear, J. A. Minervini, R. Muirhead, N. Read, R. Stowe.

WATUAG: The Hon. J. S. Dawkins (Chairman), the Hon. K. Beazley, Senator the Hon. R Walsh (permanent members), A. R. Beech, C. M. Brown, A. Heine, J. Marks, R. L. Meecham, J. J. O’Conner,

H. Peden, R. R. Reid, K. Reynolds, J. Sharp-Collett, K. Trainer.

Australia-USSR Working Group on Trade in Machinery and Equipment New South Wales State Advisory Committee on Australia/USSR Trade Queensland State Advisory Committee on

Australia/USSR Trade Victoria State Advisory Committee on Australia/USSR Trade Western Australia State Advisory Committee on

Australia/USSR Trade South Pacific Regional Committee on Trade and Economic Relations

Australian Flour Export Promotion Committee

Functions: examines ways and means of promoting Australian flour overseas and prepares recom­ mendations on appropriate methods of promotion.

Membership: Flour Millers Council of Australia, Australian Wheat Board and Department of Trade.

Other trade-related bodies Australia-Bahrain Joint Committee Australia-Brazil Joint Trade Committee Australia-Bulgaria Mixed Commission Australia-China Joint Trade Committee Australia-Czechoslovakia Joint Trade Committee Australia-France Informal Trade Talks Australia-German Democratic Republic Mixed

Commission Australia-Hungary Mixed Commission Australia-lndia Joint Trade Committee Australia-lraq Joint Commission Aust ralia-Italy Joint Working Group on Economic

Co-operation Australia-Japan Informal Trade Talks Australia-Korea Joint Trade Committee Australia-Malaysia Joint Trade Committee Australia-Papua New Guinea Trade Talks Australia-Philippines Joint Commission Australia-Poland Mixed Commission Australia-Romania Mixed Governmental Commission Australia-Saudi Arabia Joint Commission Australia-Thailand Joint Trade Committee Australia-USSR Mixed Commission on Trade and

Economic Co-operation

50

APPENDIX V

Acts administered by the Minister The Department is responsible for advising the Minister on the administration of the following Acts:

Australian Trade Commission Act 1985; Export Expansion Grants Act 1978; Export Market Development Grants Act 1974; International Sugar Agreement Act 1978; and

Trade Representatives Act 1933.

51

APPENDIX VI

Financial statements Expenditure from annual appropriations (Appropriation Bills 1 ,2 ,3 and 4).

Appropriations and expenditures reported for the Department do not include any component for Austrade from 6 January 1986.

1985-86 Appropriated fu n d s ' $

1985-86 Actual expenditure $

1984-85 A ctual expenditure $

DIVISION 640 - ADMINISTRATIVE 1 Salaries and payments in the nature of salary 21 828 200 21 827 318 28 206 336

2 Administrative expenses 4 751 799 4 336 724 5 692 885

3 Other services 01 Charges incurred on behalf of exporters and others (moneys recovered may be credited to this item) - - 4 082

02 International organisations - contributions 13 569 500 2 317 495 6 368 666

03 Trade promotion 5 088 943 5 016 954 11 707 293

04 Export Finance and Insurance Corporation - interest subsidy for export finance facility 13 350 000 12 688 982 26 935 020

05 Argyle Project - Government Diamond Valuer -Commonwealth contribution 151 500 146 420 113 483

06 Compensation and legal expenses 149 500 131 873 146 815

- Payments pursuant to section 34A(1) of the Audit A ct 1901 — — 985

32 309 443 20 301 724 45 276 344

Total Division 640 58 889 442 46 465 766 79 175 565

DIVISION 642 - TRADE COMMISSIONER SERVICE 1 Salaries and payments in the nature of salary 14 383 945 14 379 395 21 136 544

2 Administrative expenses 3 386 376 3 342 767 5 630 822

3 Other services 01 Locally-engaged staff pension scheme 489 732 489 730 702 368

02 Compensation and legal expenses 8 000 7 633 —

497 732 497 363 702 368

Total Division 642 18 268 053 18 219 525 27 469 734

DIVISION 644 - EXPORT DEVELOPMENT GRANTS BOARD 1 Salaries and payments in the nature of salary 1 378 850 1 368 770 2 546 778

2 Administrative expenses 155 520 134 976 281 563

3 Other services 01 For expenditure under the Export Market Development Grants Act 1974 49 834 249 49 817 906 179 000 000

02 For expenditure under the Export Expansion Grants Act 1978 2 012 840 2 012 840 10 569 082

03 Compensation and legal expenses 47 270 46 231 23 221

51 894 359 51 876 977 189 592 303

Total Division 644 53 428 729 53 380 723 192 420 644

DIVISION 964 - OTHER SERVICES 1 Plant and equipment 01 Computer equipment 341 000 338 499 1 143 203

02 Trade Commissioner Service - computer equipment 265 000 265 000 -

- Advances and loans Australian Overseas Projects Corporation - operating capital - - 750 000

Total Division 964 606 000 603 499 1 893 203

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APPENDIX VIII

Departmental publications

Export information Import Requirements for Overseas Markets (issue 48)

Guides to the Market FR Germany

Mission reports Education Services Mission to South-East Asia and Hong Kong Trade Development Council Mission to Malaysia and Brunei Report of the Australian Government Technical Marketing Mission to Chinese Provincial Steel Mills Australian Iron Ore Industry Mission to Brazil Heavy Engineering Joint Industry, Union and

Government Study and Trade Mission.

Australian Trading News editions Agricultural equipment Electronic and scientific instruments Hospital and medical equipment

Food and beverages Food processing and packaging Computers Building materials and hardware Materials handling.

Australia Produces editions Furniture Engineering Agriculture Automotive aftermarket

Security Building hardware Computers Scientific

Economic research and information papers Australia’s Trade in Manufactures: 1971-72 to 1983-84. Internal Research Memorandum No. 12. Australia’s External Situation, Background Papers, June 1986.

Quarterly Review of the International Economy Quarterly Review of the Australian Economy Australian Services Trade Information Technology

Statistical publications Direction of Trade 1984-85, 1985 Composition of Trade 1984-85, 1985 Exports of Primary and Manufactured Products

1984-85, 1985 Tariff Treatment of Import Clearances from Developing Countries 1984-85 Trade with ASEAN 1985

Trade with Centrally Planned Economies 1985 Trade with EEC 101985 Australian Basic Trade Statistics 1984-85 Trade Facts and Figures 1984-85

Exports of Major Commodities 1984-85 Exports of Minerals, Fuels and Metals 1984-85 Per Capita Imports of Textiles, Clothing, Footwear and Manufactures 1984

Monthly Trade Statistics

General publications Annual Report 1984-85 CER - Monitoring Reports CER - Future Progress

Australian Aerospace (reprint) Retail Packaging in Japan Selling to Japan Educational Services in Australia (series)

- Education and Training - Engineering - Agricultural Engineering and Sciences - Financial Management and Business Studies Australian Horizons (update).

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APPENDIX IX

National Export Award winners

The 1985 Annual Awards for Outstanding Export Achievement Fourth-time winners: Hawker De Havilland Limited, New South Wales; Scientific Glass Engineering Pty Ltd, Victoria; Sola Optical Australia Pty Ltd, South Australia.

Third-time winners: Goyen Controls Co. Pty Ltd, New South Wales; A. Strazdins Pty Limited, New South Wales.

Second-time winners: Bendix Mintex Pty Ltd, Victoria; Color Offset (Aust) Pty Ltd, Victoria; Gainsborough Hardware Industries Pty Ltd, Victoria; Versatile Toft Ltd, Queensland.

First-time winners: Aquabike International Pty Ltd, Australian Capital Territory; ATCO Controls Pty Ltd, Victoria; H.B. Brady Co. Pty Ltd, Western Australia; Brimech Industries, Victoria; Comgroup Supplies Pty Ltd, Western Australia; Paulding Product Divisions, South Australia; Hassall and Associates Pty Ltd, Australian Capital Territory; Jet-Pak International Pty Ltd, Victoria; Kel Aerospace Pty Ltd, New South Wales; Kembla Coal & Coke Pty Ltd, New South Wales; New Hope Group, Queensland; UG Manu­ facturing Co. (Aust) Pty Ltd, Victoria; Wyndham

Estate Wines Limited, New South Wales.

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APPENDIX XI

Addresses of Department’s offices overseas

Brussels Senior Trade Representative and Minister (Commercial) Australian Mission to the European Communities Australian Embassy Avenue des Arts 51/52

1040 Brussels Tel: 231 0500 Telex: 21834C Geneva Special Trade Representative, Ambassador

and permanent Representative to GATT Australian Permanent Mission to the UN Rue de Moillebeau 56-58 Petit Saconnex 1211 Geneva Tel: 346200 Telex: 22665 London Special Trade Representative in Europe and

Ambassador; Senior Trade Representative and Minister (Commercial) Australian High Commission Australia House, Strand London WC2B4LA Tel: (01)4388000 Telex: 27565

Ottawa Senior Trade Representative and Counsellor (Commercial) Australian High Commission

13th Floor, National Building 130 Slater Street Ottawa K1P 5H6 Ontario Tel: (613)2362684 Telex: 0533391 Paris (OECD) Principal Trade Relations Officer and Counsellor

(Commercial) The Australian Delegation to the OECD Australian Embassy 4 Rue Jean Rey

Paris Tel: 45756200 Telex: 202313

Rome Trade Representative and Counsellor (Commercial) Australian Embassy Via Alessandria 215 00918 Rome Tel: 841241 Telex: 610165

Seoul Trade Representative and Counsellor (Commercial) Australian Embassy 6th Floor, Salvation Army Building 5 8 ,1-ka, Shinmoon-Ro Chongro-ku, Seoul 110 Tel: 7306491-5 Telex: K23663

Tokyo Special Trade Representative and Minister (Commercial) Australian Embassy 7th Floor, Sankaido Building 9-13, Akasaka 1-Chome Minato-ku Tokyo Tel: 5827231-9 Telex: 2422885 AUSTRA J

Washington Special Trade Representative and Minister (Commercial) Australian Embassy

1601 Massachusetts Ave NW Washington DC 20036 Tel: (202) 7973000 Telex: WU 892621

Wellington Trade Representative and Counsellor (Commercial) Australian High Commission 72-78 Hobson Street Thorndon Wellington 1 Tel: 736411 Telex: 3375

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