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Australia and world trade - a matter of survival. Speech at the Conservative Club breakfast, Park Royal Hotel, Brisbane, 5 August 1999



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Australia and World Trade - A Matter of Survival

Speech by Minister for Trade The Hon Mark Vaile MP at the Conservative Club Breakfast

Park Royal Hotel, Brisbane, 5 August 1999

(Check Against Delivery)

 

Introduction

Thank you, Stan Collard.

It's a great pleasure to be here this morning, not only to address this breakfast, but also to attend the first official day of the Ekka.

Today is the start of the beef cattle judging - at Australia's largest annual stud beef show. So I look forward to seeing many of you over there later on. 

I know all of us appreciate Stan and his team's efforts in organising this annual Ekka, city meets country breakfast. I'll keep my address short. First I'd like to give you a bit of my background, then talk about key trade issues and then field some questions from the floor.

The Ekka provides Queensland's best venue for the city and the country to meet. It is important for the residents of this great city to maintain close links with rural Queensland. The city and the country are linked together in a seamless chain servicing our export markets around the world. The country generates the great bulk of Queensland's and Australia's exports.

Our great agricultural and mining industries are based throughout rural Australia. But the products of these industries need the services of the city so that they can be delivered to markets throughout the world.

Queensland's export trade performance is outstanding. From the Port of Brisbane you can see the see the ships sailing away loaded with grain, cotton, beef and many other export goods.

From Brisbane international airport we see a key gateway for the sale of tourism services to the world. We also see fresh produce - fruit and vegetables, seafood loaded onto planes for our international customers ... city and country working together to earn us valuable export dollars.

This link, this vital link, between country and city, can not be overstated.

Without trade, without vital export dollars, the Australia as we know it, as we enjoy it would not exist.

Without trade our lifestyles would be very much poorer, unemployment would soar, and the ills that would come with that would undoubtedly bring down our current social fabric.

In recent times there's unfortunately been a resurgence in talk of protectionism.

There have been suggestions from a number of quarters, and from some people who should know better, that Australia would be better off reducing its reliance on exports to concentrate more on its domestic market.

All of us know that such arguments are wrong. They are baseless, and while their simplicity may appeal to some, they would be a recipe for disaster if adopted. 

For a moment, imagine the outcome for this State, if we turned our backs on exporting, turned our back on the $16.25 billion worth of exports generated by Queensland last year … up 80 per cent over the last decade. How many jobs would be lost, how many of you would be here this morning listening to me.

How many farmers, how many foresters, how many commercial fishermen, how many miners, how many manufacturers would be lost?

How many regional towns and cities would be destroyed? You could wipe Bundaberg, Gladstone, Rockhampton, Mackay just for starters.

This State, a powerhouse of export earnings for this nation, would be in ruins.

There's been some talk from certain political quarters and from some academics questioning the value of our export trade and its overall importance to our economy.

Let me set the record straight.

If we turned out back on our export markets for agricultural produce, and particularly for minerals, we would not survive.

The Federal government, my predecessor, Tim Fischer, and now myself, have come under fire for allegedly overstating the importance of exports. 

There's been some furphies spread that we've deliberately mislead the farm sector on the percentage of their product that is exported … by comparing farmgate values, raw product values if you like, with export processed values.

Around one quarter of farmgate produce goes directly to overseas markets … this is in the form of live cattle and sheep, greasy wool and many grains.

However, most farm produce is processed further before exporting.

We export beef and lamb out of abattoirs, sugar from mills and refineries and cheese and butter out of dairy factories. We do not export the cane or raw milk to overseas customers.

The true story is that we export 98 per cent of the raw wool we produce - either as greasy wool, or much more commonly nowadays as tops from scourers. 

In cotton, 89 per cent of the product is exported, all as ginned, baled product, and for sugar, 80 per cent, wheat 79 per cent, and for beef it's half.

The bottom line is we can not survive without our export markets for our major agricultural commodities.

One other thing I'd like to put on the record, I'm very happy, Indeed I'm proud to be Australia's Trade Minister.

Before entering politics I was a farm machinery salesman and a stock and station agent at Taree on the NSW mid-north coast. I survived on my ability to sell. I see my role now as no different, expect that it's now on a global scale.

My job now is to get out and sell the vast range of quality products and services that we produce.

To make sure that we can compete in the international marketplace we can't have any unnecessary burdens on our exporters. 

We must have our house in order. To this effect the Federal government has got the budget under control.

We inherited nearly $100 billion of government debt, and we are going to wipe that out in the near future.

We have interest rates at their lowest level since man walked on he moon. We have reformed our industrial relations systems so that the thuggery of previous system has all-but gone.

Our tax package will remove 4.5 billion dollars of indirect tax burden on our exporters. The fuel tax savings will dramatically help our road and rail transport industries, and therefore the cost structure of so many of agriculture, mining and manufacturing industries.

The Federal government knows that we have to have our house in order for Australia's industries to meet world competition without one hand tied behind our back.

Trade's vital role

Trade's been the key to our economic growth throughout history. Gold, wheat and wool powered our growth because they could be traded for goods we didn't produce, or couldn't produce efficiently.

Our economic situation has become much more complex over time but, as an island continent with only limited population and resources, trade remains crucial for our economic future. In fact it's a matter of survival.

Exports give us the foreign currency we need both for investment and the purchase of important foreign goods - from the heavy equipment in our mines and tractors on the land, to the many consumer products we use every day.

Imports have increased competition domestically, and have spurred many Australian companies to mix it with the wor ld's best both here and globally. They have also increased consumer choice, and have kept costs generally at lower levels.

Trade is a dynamic weapon for enhancing productivity, for making the economy work efficiently, and for expanding wealth for us all.

More and more Australian jobs depend on trade. Exports account for over 20 per cent of Australia's GDP (up from 13.5 per cent in 1967/68).

Nearly 1.7 million Australian jobs (one in five) depend on exports. Around 90 per cent of jobs in the mining and mining services industries depend on exports, while 60 per cent of jobs in agriculture, forestry and fishing are tied to exports.

Boosting market access through the WTO

Apart from my obvious sales role, my greatest challenge is to get workable rules in the trade game that don't work against us.

The greatest gains for Australian exporters over the next few years are likely to come from new multilateral negotiations under the World Trade Organisation, whose membership has grown by 50 per cent in the past 10 yrs to 134 countries - hopefully to be joined by China and Taiwan shortly. Their accession promises large access gains, especially for our rural industries.

Further WTO negotiations on better market access in agriculture, services, and industrial products are a priority for Australia. That is why Australia is strongly supporting the launch of a new round of trade negotiations at the WTO Ministerial meeting I will be attending at the end of this year. By wrapping all of these sectoral negotiations up into one comprehensive WTO round, WTO members can maximise the potential for cross-sector trade-offs. Everyone benefits from this approach.

Some are cynical about the WTO. But the WTO provides the BEST opportunity for Australia. We need to strengthen this RULES-BASED trading system.

Imagine trying to play rugby without a set of rules that all players were obliged to comply with.

A RULES-BASED trading system is in Australia's best interest. When dealing with the US, we need a clear set of rules, and we need an independent umpire. Otherwise it would be the equivalent of wrestling with an elephant.

The key benchmarks in the run up to the Seattle meeting are:

Cairns Group meeting later this month in the Argentine and APEC in early September in New Zealand. We have an extensive process of industry consultation in place as well to make sure that our negotiating position properly reflects industry priorities for better market access/increased export opportunities. 

The results of any new round will be legally binding and subject to dispute settlement. If our trading partners then fail to keep their obligations to open markets, and should bilateral approaches fail to rectify the situation, we would not hesitate to seek WTO dispute settlement, just as we are now undertaking with Lamb, Salmon and Beef into the Korea.

We must remain engaged at the centre of the changing world trading environment.

Ladies and gentlemen, before I close I'd like to talk briefly about the situation in the pork industry where we have an industry changing from inward looking to a dynamic export industry.

Twelve months was under intense pressure to introduce tariffs and quotas to protect and industry we were told was on its knees.

Rather than taking the US-style, short-sighted, approach which does not help the industry in the long-term, we provided the Australian pork industry with a comprehensive package to boost its overall competitiveness.

In Queensland Swickers at Kingaroy and Darling Downs Bacon at Toowoomba have received grants to significantly upgrade their facilities to international standards.

Already we have seen a turnaround in the fortunes of the pork industry. Through good management and a deal of good luck - with the opening up of the Singapore market - we now have a situation where works are short of supply to meet export demand.

Unfortunately there are still some in the pork industry who want to create negative images for their industry. I give as an example the furphy this week of a supposed swamping of our domestic market with subsidised pork from the US. The facts are that there are no applications for pork imports from US into Australia.

We have a job to do in selling Australia. We need industry and government in an active, positive partnership. There is no need, and no benefit for anyone to put us down.

 

 

jy  1999-08-12  12:00