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Australia and trade: our nation's strength, our nation's future: speech at the launch of the Trade Outcomes and Objectives Statement 2001; National Press Club, Canberra, 3 April 2001 [questions and answers]



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Department of Foreign Affairs and Trade Speech

Australian Minister for Trade, Mark Vaile

National Press Club, Canberra, 3 April 2001 at the launch of the Trade Outcomes and Objectives Statement 2001

Australia and trade: our nation's strength, our nation's future

(Check Against Delivery)

Introduction 

Thank you [name of MC]; Excellencies, other distinguished guests, ladies and gentlemen. 

This annual presentation of Australia's Trade Report Card is a very important event and this year is a particularly important opportunity at a time when quite divergent perceptions exist in our community about trade and its role in the Australian economy.

With a lot of negative commentary around at the current time about global economic circumstances and liberal use of the "r" word, people could be forgiven for having a perception that things have not been going so well on the trade front. It is incumbent upon us all to help shape Australian perceptions about international trade.

A Boom Year for Exports

In 2000, Australian exports grew by 25 per cent to reach a total value of $143 billion. This was the best export growth Australia has had for 21 years. To put that 25 per cent in perspective, the trend growth rate of Australian exports over the past 5 years, was 6 per cent.

If you follow the Australian media you would think Australians only have an appetite for bad news stories but the Olympics demonstrated we do love good news stories, particularly those about sensational wins. And 2000 was a sensational winning performance for Australian exporters. We more than halved our trade deficit from $16.6 billion to $7.3 billion. And the performance was strong across all categories.

I know Leigh Purnell and his members of the Australian Industry Group will be pleased to know that manufactures exports grew by 20 per cent, and were larger than our exports of fuels and minerals or rural products or services. Importantly, rural Australia has become very active in the manufacturing game too, generating 37 per cent of Australia's manufactured exports income. According to Austrade, more and more small and medium size Australian companies in neighbourhoods around the country are taking up the export challenge, growing their businesses and employing more Australians as a result. It is increasingly these local, ultra competitive internationally focused companies becoming the lifeblood of communities across our nation.

We have a whole raft of other gold medal export performances we should be celebrating: our metals, wine and automotive exporters, for example, were particularly strong performers last year. As were export champions like Rose Moore and The Creative Paper Mills, of Burnie Tasmania, one of the case

studies in this year's Trade Outcomes and Objectives Statement. They make paper, jobs and money for Burnie. Or Australia's Exporter of the Year, fast ferry exporter, Austal Ships. Or the Chilli Man, in the Hunter Valley, who exports chillies, chilli sauce and salsa to Mexico. 

Community Awareness

And when these exporters win, they don't just win for themselves, they win for their local communities. In fact one in five jobs in Australia depend on exports. And the figure is more like one in four in regional Australia. So a strong export performance like the one we had last year, translates into jobs and incomes, particularly in rural and regional Australia.

Last year when I launched the 2000 Trade Outcomes and Objectives Statement I announced that my Department would be undertaking a detailed study of the contribution of trade to regional Australia and preparing brochures outlining that contribution for individual regions. 

I am pleased to announce that the full set of 32 of these Exporting to the World brochures has now been launched. They highlight a number of successful exporters in each region and provide information on where to get advice and assistance from government. Building on that, last month I launched a comprehensive report on trade and regional Australia in changing times called "From Sheep's Back to Cyberspace" highlighting innovative and successful exporting companies all over Australia. It's an inspiring read!!

I hope no business owner watching this on television today is thinking it's all too hard, export's only for big businesses. Our Government has been working hard through tax reform, increasing efficiency on the waterfront and breaking open international markets to put in place a business environment that allows our innovative small and medium companies to become export focused.

In terms of assistance to exporters, after a review which helped us better target this valuable scheme, the Government has decided to extend the Export Markets Development Grants scheme for a further 5 years to continue to help the development of new export markets. And last November I announced our intention to create an alliance between the Export Finance and Insurance Corporation's credit insurance business and a private sector insurer. The Government is confident this will result in even more competitive services to exporters. In the first six months of this year, EFIC supported over $3.5 billion of exports from Australia, an increase of 26% over the same period last year. 

In February this year, I launched Exporting for the Future, a two-year public awareness strategy to develop a stronger export culture in Australia. My department has also arranged for a study kit on globalisation and open markets to be prepared and distributed to all 3,100 secondary schools in Australia. 

These exercises are designed to use our export success stories to explain what Australia gets out of exports and to encourage others to get into exporting. Research commissioned by Austrade tells us that less than 5 per cent of Australian non-farm businesses are exporting. Now if 5 per cent of businesses are earning Australia $143 billion and contributing 20 per cent of GDP, then it seems to me that encouraging more and more successful exporters is going to be vital for future Australian economic prosperity in our cities and in regional areas.

The economic reform agenda

Government policy is important in setting in place conditions that enable us to foster world competitive exporters. Australia's strong export performance in 2000 reflects the growing international competitiveness of Australia's business, backed by the Government's economic reform agenda. 

Most recently, the New Tax System has replaced a range of inefficient indirect taxes with a single goods and services tax, resulting in a drop in the business costs facing exporters of over $3.5 billion this year and every year. And it builds on wider ranging reforms that include company law, workplace relations, transport and broad market deregulation.  The sort of export performance Australians achieved this year doesn't happen without the right Government policies in place to foster and support competitive firms. It doesn't happen without Australian firms showing the initiative and flexibility to adopt new technologies and respond to changing international conditions. 

We need to continue to assist firms to plan ahead for changing times, yesterday I launched a report on Australia's Trade: Influences into the New Millennium. This report looks ahead into the coming decade and identifies emerging changes in the international marketplace that will shape the environment for Australian exporters. Some of these changes - in e-commerce, biotechnology and new materials and energy - present major opportunities for Australian firms to grasp and profit from in the market of the future.

The year ahead

Today isn't just about the success of last year it is also an opportunity to outline our view of the year ahead and where we'll be focusing our trade policy priorities.

There is no doubt that the economic outlook for the year ahead presents significant challenges. Demand for Australian exports is likely to be affected by a slowing in global economic growth. And securing market access wins will continue to be challenging despite the very strong result in February of a $389 million trade surplus.

A slowing US economy could take the edge off the 30 per cent goods export growth we enjoyed in that market last year. And it could also dampen East Asia's exports to the US which, in turn, would lower the region's demand for input sourced from Australia.  Last year, the recovery in East Asian economies played a significant role in our strong export performance. Goods exports to East Asia grew at 34 per cent, with growth in exports to China, Korea and Singapore all registering growth rates of over 40 per cent.

But the region's reform and floating exchange rates will make it better able to manage external economic shocks. And our excellent export performance in 2000, provides a solid base for meeting new challenges. There are now many more Australian firms operating in many new overseas markets.

We also need to put some of the pessimistic economic growth projections into perspective. In 2000, the Japanese economy struggled to deliver growth of a mere 1.8 per cent. Yet Australian exporters seemed to take advantage of growing pressures on Japanese importers to seek value for money, we enjoyed 31 per cent growth in our goods exports to Japan last year.

And, elsewhere the economic growth outlook is not quite so downbeat. It is important to remember that last year we also had spectacular export growth to some European markets - for example exports to Denmark up 109 per cent and to the Netherlands up 88 per cent.

The Middle East continues to absorb growing amounts of Australian product. Our goods exports to that part of the world grew by 38 per cent last year.

To name just one success, Government representations opened the way for trial shipments of live sheep to Saudi Arabia in 2000. Australia has now received a request to supply half a million sheep to the Middle East in 2002 for the Haj, because of the success of these trials.

As important as this trade is, in two recent visits I have made to the region in support of Australian trade missions, I have been struck by how diversified these exports have become. The region is now our largest market for passenger motor vehicles, taking exports worth $1.3 billion in 2000.

Australian IT exports to the Middle East are also on the rise and will be further promoted by my colleague Senator Alston who will lead a senior industry delegation on a visit to the region at the end of this month, organised by Austrade.

All in all, there is a more challenging year ahead, particularly in terms of slower growth in some of our key regional markets, but we are well placed to build on a year of success. The Government forecasts that growth in Australia's goods and services export volumes will be around 9 per cent in 2000-01, slightly lower than export volume growth in 1999-2000. 

The WTO: Improving international access for Australian exports 

With signs of a slowing global economy, the continued push for global trade reform takes on even more importance. When I spoke here a year ago, I stressed the Government's strong support for the launch of a new market access-focused round of WTO trade negotiations at the earliest opportunity. 

Well that opportunity for a WTO round launch is fast approaching. The next WTO Ministerial Conference will be held in Doha, Qatar in November. Australia remains strongly committed to the launch of a round in Doha, recognising the significant benefits increased international access will give Australian exporters, especially agriculture.  But the launch of a new round is by no means guaranteed. A slowing global economy, limited signs of flexibility from important WTO members on key issues and an increasingly complex set of issues facing the diverse WTO membership, means there is a lot of ground to be covered between now and November. 

Australia is actively engaged in the preparatory process for Qatar. In fact I was speaking to my European counterpart, Pascal Lamy only last night discussing with him how best to narrow the gaps which still exist on a number of issues. Preparations for the Qatar meeting will be a key focus of my discussions with USTR Bob Zoellick next week where I will be delivering a similar message on the need for increased engagement and flexibility from the major developed economies if we are to have any chance of launching a round this year. But it is not just for the likes of the US, EU and Japan to prepare the way forward. Developing countries have an equally important role to play. I am in regular contact with developing country Ministers on WTO issues and yesterday wrote to my South African and Egyptian counterparts commending their efforts in calling a meeting of key developing countries in Cairo next week to discuss preparations for Qatar. APEC is another important plank of our WTO strategy and I welcome the positive role of China -APEC chair this year - in pushing strong support for a WTO round launch as a key component of the APEC agenda this year. 

Australia, as chair of the Cairns Group, remains determined to make sure that agriculture remains central to any future negotiating agenda. Meanwhile the mandated WTO work to liberalise trade in agriculture and services has been continuing this year. In both of these negotiations, agreement was reached in "stocktake" sessions last week to move to a more detailed phase of negotiations over coming months. The Cairns Group has already submitted proposals to eliminate export subsidies and domestic subsidies that distort trade and production, and substantially reduce agricultural tariffs.

The WTO's dispute settlement system continues to provide an effective means to protect Australia's trade interests. For example, Australia, with New Zealand, successfully challenged the United States in the WTO when it imposed a tariff quota on lamb meat imports to protect its domestic market. We were also successful in challenging the Republic of Korea over measures restricting Australian beef exports. Aussie beef is now available in 45,000 shops in Korea not the 5,000 it was previously. The Government has recently strengthened its WTO dispute capability in DFAT to ensure that we have the necessary resources to build on these recent successes. 

New WTO consultative procedures

The international focus is only half the story. Equally important for the Government is the need to make sure that the views of all Australians are reflected in the approach we take to WTO. 

That is why I am pleased to announce today the establishment of a new WTO advisory panel drawn from industry and NGOs to provide advice to the Government. This panel will be a small, representative focus group on WTO issues to complement existing consultative mechanisms such as the Trade Policy Advisory Council and the Agriculture Trade Consultative Group. Membership of the new panel will be determined shortly, well in advance of the Qatar meeting.

I have also asked my Department to engage in a wide round of consultations with industry and community NGOs in the lead up to Qatar. DFAT is also launching a new Qatar website today, as well as a regular newsletter on preparations for Qatar to be made available to all interested groups. Our Government is committed to ensuring that all Australians have access to information on the WTO and have an opportunity to make their views known. 

China and the WTO

Following our successful conclusion to the market access negotiations with China last year, we have continued our lobbying efforts to get China in the WTO as soon as possible and I am pleased to announce today that we are creating some new mechanisms to ensure that we use the opportunity of China's WTO accession to strengthen our economic relationship.

This will involve monitoring issues associated with China's accession and, where appropriate, providing capacity building to assist China with implementation of its WTO commitments. We want to ensure that Australian business is able to enjoy improved access as a result of the accession and that Chinese business is able to act on the new circumstances to foster greater commercial interaction with us. 

As part of a strategy to strengthen the bilateral trade relationship, I will also be taking the opportunity soon to discuss with my Chinese counterpart an Australian Government proposal for Australia and China to jointly host a series of WTO-related sectoral conferences in China, to identify further business opportunities for Australian firms and scope for greater cooperation. The first of these will be held in the agriculture sector.

Taiwan will also accede to the WTO in 2001. On accession, it will introduce trade concessions, including tariff reductions averaging 40 per cent on a wide range of goods of interest to Australia. It will also liberalise access for many services. I remain hopeful of an early announcement of some market access opportunities in advance of WTO accession.

Regional Priorities

APEC remains an important part of our regional focus. It continues to play an important role in helping to deliver freer trade and investment both through building support for the WTO agenda. 

APEC peer pressure also continues to deliver unilateral tariff reductions and commitments. Last year, tariff reductions by member economies included 576 pharmaceutical products by Japan; an across the board applied tariff reduction of 1% by Chile, with a further 3% by 2003; tariffs lowered by Indonesia on 940 items; and reduction of tariffs on 542 items by Thailand.

Australia will continue to pursue progress in APEC's commitment to introduce paperless trading. Currently an average trade transaction involves 40 documents, 200 data elements and the re-keying of 60 to 70 per cent of the data. Paperless trading will allow many of these processes to be eliminated, saving time and money for businesses and governments.  This year APEC also launched BizAPEC.com, a web site designed by Australia highlighting all the 'nuts and bolts' practical APEC initiatives that are already lowering business costs in the region. The site contains a vast range of information on business opportunities, rules and regulations.

Bilateral Priorities 

We are also continuing to strengthen our bilateral trading relationships and pursuing greater economic integration with the region.

Because there has been talk of our interest in pursuing a bilateral Free Trade Agreement with the United States, I wouldn't want a perception to develop that Australia is no longer pursuing closer economic integration with East Asia.

Nothing could be further from the truth. These policy perspectives are not mutually exclusive.

This year we embarked on negotiation of an exciting and comprehensive free trade agreement with Singapore. I have recently had a positive meeting with a special envoy from new Philippines President Arroyo and am hopeful our bilateral relationship will improve strongly this year following the installation of their new government. I am hoping to visit Manila later in the year to strengthen this relationship. We are pursuing a joint initiative with Japan to develop ways to capture the most from new areas emerging in our bilateral trade and economic relationship. At a conference in Sydney later this month, I will launch an important new study aimed at strengthening economic relations between Australia and Japan. The study will outline concrete steps we and Japan can take to further bolster trade in traditional sectors like agriculture and commodities, and to make the most of opportunities in emerging sectors such as information and communications technology, biotechnology and financial and other services sectors. 

We are undertaking similar joint work with Korea.

Last year we did not succeed in getting agreement to start negotiation of an ASEAN/Australia/New

Zealand Free Trade Agreement and that was disappointing. But we did get agreement to pursue a closer economic partnership between ASEAN and CER. I am hopeful the closer economic partnership will result in many practical improvements in the business environment in the region. 

Visit to the United States

Let me move on to the United States. In fact, I am happy to announce that the first thing on my agenda following the launch of this Trade Outcomes and Objectives Statement, is a visit to the United States. We leave Australia tonight on QF-7.

The launch of a new WTO round will be on top of my list of issues to discuss with our American colleagues along with our shared interests in APEC this year and a number of bilateral issues, including lamb.

And yes, my efforts to strengthen our bilateral trade relations, will include exploring options for a free trade agreement with the US.

Make no mistake, this initiative is entirely consistent with the pragmatic, results-focused trade policy of our government. Trade policy is not a binary process. An initiative in one area does not shut off opportunities in other markets. We are pursuing the concept of a Free Trade Agreement with the United States because we see an opportunity to open better market opportunities for Australian exporters in the world's largest and most dynamic economy.

But it is by no means a done deal and there are a number of complex issues to be worked through. We have commissioned an analysis to look more closely at how a possible US FTA would affect the Australian economy as well as our wider trade policy settings. We are determined that there be genuine economic benefits. Industry views will be of vital importance and I have been speaking to a range of business leaders to keep them abreast of what the Government is doing. Clearly, we will need to move to a more detailed industry consultation process once we have a better idea of the level of US interest.

Bilateral market access gains

There is a perception in the Australian community that in the absence of a new WTO round we are not gaining any ground in terms of new market access. It's simply not true. The gains we make are not as significant in terms of market or product coverage as those we can get from a multilateral round, but we are getting lots of runs on the board. For example, perceptions of the trade relationship with the US are heavily coloured by US lamb import policy. But few in the audience would know that last year Congress passed legislation that reduced, and in some cases removed, tariffs on imported wool and lifted an embargo on shrimp imports from areas of South Australia and Queensland.

Sydney Olympics

In 2000, Australian exports were given a boost by the Olympic and Paralympic Games. The Government sought actively to maximise gains to exports through Austrade's Australia Open for Business, a series of programs to facilitate export deals during the games, in fact 92 events attended by 16,000 visitors were conducted at the Business Club at Darling Harbour. 

Already, the value of deals from these programs has reached $900 million.  I am pleased Pavan Shivnani could join us today. His firm, Australian Foods Company, won several

million dollars worth of produce exports as a result of connections he made through Business Club Australia's Virtual Club. 

The Government will continue efforts to make the most of the positive publicity from the Sydney 2000 games through follow-up activities. Austrade is producing a multimedia promotional pack showcasing the Australian innovation, technology and capability that created "the best Olympic Games ever" which we will use to further leverage our exposure from the Games.

So to sum up what we will do in 2001:

· We will work to build support for the launch of a WTO round, so we have the best possible chance of success when WTO Ministers meet in Qatar in November 

· We will create new mechanisms to ensure that Australia uses the opportunity of China's WTO accession to strengthen our economic relationship We will continue to make it easier for exporters to do business in the APEC region, particularly in areas beyond tariffs that focus on e-commerce, competition policy and strong and effective legal

regimes

●

We will continue to pursue a closer economic partnership between ASEAN and CER aiming for practical improvements in the trade and investment environment ●

We aim to conclude our negotiations on a free trade agreement with Singapore ● We will explore the possibility of a free trade agreement with the United States  ● We will work to diversify and strengthen our economic relationships with Japan and Korea ● Through Austrade, we will continue to target specific business opportunities in markets around the

world ●

And we will continue to work bilaterally to remove market access barriers Australian exporters face and promote Australian goods and services in all markets.

As you can see, we have a busy and challenging year ahead of us. We can take heart however, from the considerable progress our Government has made in opening markets in 2000 and from the strong results Australian exporters have achieved.

As I said at the beginning of this speech, there is currently a lot of negative commentary about global economic circumstances. I also know from my home town of Taree and the many other towns and suburbs I visit in my role as Trade Minister there are many people feeling threatened by the challenges internationalisation brings.

Thomas Friedman wrote in his 1999 book The Lexus and the Olive Tree "I feel about globalisation as I feel about the dawn. Generally speaking, I think it's a good thing that the sun comes up every morning. It does more good than harm, especially if you wear sunscreen and sunglasses. But even if I didn't much care for the dawn there isn't much I could do about it. I didn't start globalisation, I can't stop it - except at a huge cost to human development . . ."

The opening of markets and the establishment of international rules to overcome a free for all, provide so many exciting opportunities for our generation of Australians as well as for our children and their children.

Our Government will continue to do what it can to protect those feeling threatened while at the same time to prepare Australia for the opportunities opening up around the world. As this Trade Outcomes and Objectives Statement shows Australian companies are already leading the way. I encourage more businesses to grasp export opportunities in the year ahead, in the knowledge that the Government stands with you, committed to helping you reach your export potential.

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