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Turning the corner on trade - the 2000 trade outcomes and objectives statement , National Press Club, 5 April 2000: speech [exports; GST; WTO; APEC; AFTA-CER; bilateral successes; Middle East; Expo 2000; ACL Bearing Company].



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MINISTERIAL SPEECHES

Speech by the Hon Mark Vaile MP at the National Press Club

Turning the Corner on Trade - the 2000 Trade Outcomes and Objectves Statement

5 April 2000

Introduction Ladies and Gentlemen, I trust you enjoyed your main course. Last year it was lamb, this year it is salmon - Tasmanian, of course, in a spirit of patriotism with my friends in the Tassie Government - along with some other fine produce from the Apple Isle on today's menu.

It is a great pleasure to be at the National Press Club to launch the Government's Trade Outcomes and Objectives Statement (or TOOS as it has become known) for the year 2000. TOOS is a very practical demonstration of the Coalition Government's determination to lift our trade performance and to keep the Australian people fully informed of trade developments.

Today, in launching the Government's trade approach in 2000, we are building on the strong performances of our exporters. We do so with confidence backed by the most promising global economic outlook since before the East Asian crisis.

But we also face big challenges:

commercial challenges of ensuring Australia maximises every opportunity from globalisation, from our farms and mines to the world of dot.com;

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policy challenges of ensuring Australia continues to punch above its weight in trade bodies such as the WTO and APEC; ●

and challenges at home, including deepening the level of understanding about why trade is vital to all Australians, not least those in regional Australia. One in five jobs in Australia is linked to exports; in regional Australia it is one in four.

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The last time I spoke at the Press Club, it was late November last year, just prior to the WTO Meeting in Seattle. That was some initiation to the often arcane and exhausting processes of international trade diplomacy. But it was an experience that has made me more determined to fight for a fairer go for Australian exporters.

 

Exports - turning the corner The signs are good that Australian exports have turned the corner. The February 2000 trade figures released last Thursday showed a 10-month trend of rising exports. Exports for February were 15 per cent up on the same month last year.

Australia's exports to East Asia are now growing strongly, and are up 37 per cent on February last year.

One of the things that helped us through a tough trading environment last year was the diversified base of Australian exports. As the TOOS outlines, Australian exports are now divided fairly equally across agriculture, minerals, manufactures and services. And while low commodity prices and a stronger Australian dollar took the edge off our traditional commodity exports, exports of services and manufactures were both up by six per cent in 1999.

There were some stand-out export performances in 1999 that deserve special mention. Automotive exports reached $3.2 billion, an increase of 23 per cent on the previous year. Exports of Australian wine exceeded $1 billion for the first time. And travel services, which make up a large slice of Australia's tourism earnings, grew by 12 per cent to top $8.5 billion.

 

A promising year ahead This year, forecasters expect world trade growth of over six per cent. Australian exporters are reaping the benefits of increasing growth in imports in the East Asian region, caused by a pick-up in domestic demand and a recovery in the region's exports.

Last year, the Government forecast that Australia's export volumes would grow by five per cent in 1999- 2000. We are on track to meet that forecast.

But we also need to look further ahead at the larger forces shaping Australia's trading environment over the next five to ten years and beyond. Today I am announcing a new research project to be undertaken by the Department of Foreign Affairs and Trade which will examine trends in globalisation, the growing role of knowledge-based industries, and the impact of major new technologies, particularly internet commerce, biotechnology, and new materials and energy technologies. I hope to share some of the findings of this research with you in next year's TOOS.

At home, our Government will make a huge contribution towards export competitiveness on 1 July with the introduction of the New Tax System. The abolition of wholesale sales tax and some state taxes, as well as reform of fuel excises, will lighten the burden on exporters to the tune of some $3.5 billion. At a time when the international trade environment demands absolute efficiency,

our tax reforms will remove a massive millstone from the necks of Australian exporters.

Our political opponents still have no policy alternative. For example, they have no alternative to offer the owner of Malibu Boats in Albury who told me in February that, with the implementation of the GST on 1 July 2000, he will be able to sell his boats at 1997 prices.

 

WTO - still the main game The case for tax reform is all the more compelling given the challenges we face in breaking down barriers for Australian exports. The late British journalist Malcolm Muggeridge once referred to the art of politics as "slow boring through hard boards". He might well have been talking about the stuff of international trade negotiations.

Today I want to reaffirm our Government's unflinching support for launching a new market access-focused round of WTO trade negotiations at the earliest opportunity. Not because it is easy, or because it will deliver the mythical "level-playing-field". But because a stronger WTO should provide greater stability, predictability and transparency in the international trading system. The WTO provides the most effective means for a country like Australia, with its medium-sized economy and broadly based and geographically diverse interests, to secure greater market access for its exports.

Since Seattle, I've been in regular contact with key WTO players searching for the common ground needed to launch a new round. The point I make consistently in conversations with Charlene Barshefsky, Pascal Lamy and my Cairns Group colleagues is that all members - especially the major players - will have to display greater flexibility. This means tempering their ambitions and demonstrating a willingness to accommodate the concerns of others.

I remain totally committed to the market access-focused agenda Australia took to Seattle. It is vital that the WTO agenda is not over-burdened with "non-trade" issues that will only serve to make consensus more difficult.

I don't want to dwell on Seattle except to say, to those who cheered on the protesters smashing the Starbucks, Nike and McDonald's stores, that the biggest losers from Seattle were the most economically vulnerable developing countries. As President Zedillo of Mexico said at Davos in January, we have this peculiar alliance now. And I quote: "Forces from the extreme left, the extreme right, environmental groups, trade unions of developed countries and some self-appointed representatives of civil society, are gathering around a common endeavor: to save the people of the developing countries from … development".

In Australia's view, a trade round securing the liberalisation of agriculture, manufactures and services offers the best opportunity to rectify imbalances in the international trading system. And I am proud to stand shoulder-to-shoulder with Ministers from developing countries in the Cairns Group as we battle for a fairer deal for agriculture.

The good news, ladies and gentlemen, is that while efforts to launch a round continue, members are getting back to business in the WTO. The mandated negotiations on agriculture and services have begun.

Australia is working closely with its Cairns Group partners on detailed proposals for the agriculture negotiations. We are also working closely with like-minded countries on the services negotiations. But we recognise that significant progress in these areas will be difficult in the absence of a broader round.

Our WTO agenda also involves improvement in our capacity to utilise the dispute settlement process and our negotiations on bringing new members into the WTO.

In recent times, significant attention has focused on our vigorous defence of actions involving automotive leather and salmon. But we need to remember that the dispute settlement process cuts both ways.

Our Government is committed to ensuring that Australian companies with legitimate complaints can pursue their claims at the WTO. Working closely with industry, the Government took action under the WTO dispute settlement process on two occasions in 1999 - against the unfair US restrictions on Australian lamb exports and against Korean restrictions on our beef.

Those actions continue to be actively prosecuted. We now have a WTO panel established in the lamb case, and next month we will receive the panel report on the Korea beef case.

We have also had good wins as a third-party through the WTO - for example, allowing Spencer Gulf prawns to enter the lucrative US market, and validating Australia's intellectual property regime for pharmaceuticals.

But we can and must do more to use the full leverage of the WTO to improve market access for Australian exporters. Last September, I announced a new WTO Disputes Investigation and Enforcement Mechanism in my Department. I have asked officials from this unit to travel around Australia next month to talk to business about WTO dispute processes and to work with them to develop cases where we believe they have strong grounds to launch a WTO action.

We intend to pursue vigorously in the national interest all avenues available to us should we believe that the provisions of the WTO have been breached. The Government is committed to building alliances between government and business as a way of strengthening our capacity to win trade disputes at the

WTO. For example, we are working closely with the Australian sugar industry to look at some of the US Government's protectionist policies on sugar. I also want to congratulate the sugar industry for its efforts in launching the Global Sugar Alliance in Seattle last year, a group of sugar producing countries committed to highlighting the gross distortions and inequity in the international sugar market.

Australia also stands to reap big gains from the expanded membership of the WTO. In 2000, we are conducting accession negotiations with a large number of countries. Late last week, Australia reached an in-principle agreement on market access for Saudi Arabia's joining the WTO. The deal provides the basis for export growth beyond the $1 billion per year mark, achieved for the first time in 1999.

We are also ensuring that Australian industry is fully abreast of the new opportunities that WTO accession negotiations bring. That is why Austrade later this year will be taking a series of seminars to various parts of Australia outlining the business prospects arising from the eventual accession of China and Taiwan into the WTO.

 

Strengthening APEC This year, APEC begins its second decade. It has become fashionable in some quarters to decry APEC's achievements. But remembering that the APEC economies continue to take over 70 per cent of our exports, imagine for a moment the risks that Australia, and the region, would have faced in the last decade without APEC. We would have been: without a mechanism for bringing China more deeply into the international trading system prior to WTO membership; without a forum where China and Taiwan can sit at the one table on regional economic cooperation; without a framework promoting cooperation rather than confrontation in trade disputes across the Pacific. And, very importantly, we would have been without a set of long-term goals - the Bogor Goals - that helped anchor APEC economies to open trade and investment during the region's most serious economic crisis since the Great Depression.

Australia has gained much from APEC, including practical trade liberalisation initiatives that have cut costs for our exporters. APEC has:

ensured faster customs clearance; ● committed to uniform standards for food, electrical goods, machinery and rubber products; ●

made business travel easier; and ● helped to bring down costs for traders of electrical and telecommunications equipment. ●

Australia remains a key driver of substantive outcomes in APEC. In June, I will

host the Trade Ministers' Meeting in Darwin. We want to use APEC this year to deliver further improvements in the regional trading environment but also to build confidence, capacity and support for a new WTO round. To facilitate this, I have invited WTO Director-General, Mike Moore, to join APEC Ministers in Darwin.

We also have an opportunity to respond through APEC to public unease about the impact of globalisation. This year, Australia will be producing a report that examines some of the positive linkages between reform and globalisation, and the role of APEC's work in securing economic and social development in the Asia-Pacific region.

 

AFTA-CER - a key initiative The proposal for a free trade area by 2010 between the ASEAN countries and the Closer Economic Relations (CER) partners - Australia and New Zealand - is a key priority this year. ASEAN already takes around 13 per cent of Australia's total merchandise exports, to a value of $11.2 billion in 1999.

My predecessor, Tim Fischer, is doing an excellent job as Australia's representative on the AFTA-CER task force which will report its recommendations in October this year. I also welcome the enthusiastic endorsement this proposal has received from Australian business groups.

Our approach to AFTA-CER is driven by the Government's simple and pragmatic attitude to possible free trade arrangements with other countries and regions. We will look closely at them if we judge that Australia can win gains from such proposals beyond those available through alternative trade negotiations. But I want to make clear that our approach is complementary to, and in no way a substitute for, Australia's larger agenda in the WTO.

This year we are intensifying our trade policy dialogue with key trading partners on the various FTA proposals that are emerging. I am in close contact with ministerial colleagues in Singapore and New Zealand as they look to formalise a free trade deal. Earlier this year, officials from my Department held talks with Japanese counterparts on our governments' respective approaches to FTAs and we hope shortly to begin a similar dialogue with Korea.

 

Building on our bilateral successes The rejuvenation of bilateral trade efforts is a major success story of the Coalition Government, one that helped shore up our export performance during the Asian economic crisis. While we maintained our efforts in Asia, we put additional emphasis on developing new markets and reviving old ones. This has

paid off handsomely since we came to office in 1996.

We've had some big wins over the past year. India has agreed to reduce tariffs on imports of wool tops and raw cotton. Australian companies won railway-related contracts worth $182 million in Hong Kong. And in Singapore, Australian exports of chilled pork grew from virtually nothing to around 1,300 tonnes a month in less than a year, with exports in 1999 reaching over $56 million.

My visit to the Middle East last month highlighted a region of great promise for Australian exporters. Sixty Australian business men and women were part of the high-level business delegation that accompanied me on this visit, which is leading to many new commercial opportunities.

In line with the Government's Asia-Plus trade strategy, DFAT's East Asia Analytical Unit is expanding its work program to keep business abreast of developments in a wider set of markets of potential interest to Australia. In June it will report on the growing trade and investment opportunities in Arabian Peninsular markets and Iran.

I plan to help more Australian exporters on trade missions later this year, including to China in May and to Hannover in June where Expo 2000 provides a great opportunity to showcase Australia's trade and investment credentials. And I hope to lead trade delegations to South Africa and Egypt later this year.

Our Government has increased Australia's international trade representation in the past year through the opening of new Austrade offices in Lima and Bucharest and the expansion of posts in Egypt and the United Arab Emirates. This year, we are looking to expand into growing regions in larger markets. We are opening embassies in Copenhagen and Lisbon. In Fukuoka we will expand our trade office to a Consulate-General as Kyushu has developed into the third biggest regional economy of Japan. And later this year we aim to open an Austrade office in Kunming in south western China.

 

Good news for regional Australia One of the most rewarding parts of my job as Trade Minister is the regular contact I have with our exporters. It allows me to share in some of the pride they take in their export efforts. This applies especially to regional Australia which accounts for around one-third of Australia's workforce, while generating over half of our exports. It is the driving force behind rural and mining exports, but is also a growing source of manufactured and services exports, such as wine and tourism.

At my request, DFAT is undertaking a detailed study of the contribution of trade to regional Australia. Part of this exercise involves the publication of

brochures for individual regions across Australia. I am pleased to announce today the launch of four brochures in the series, covering Central Queensland, South West WA, North Central Victoria, and regional Tasmania. Brochures have also been released for other regions, including the Central West area in NSW.

The brochures highlight a number of successful exporters in each region. They illustrate the importance of exporters in local economies and provide information on where companies looking to export from regional areas can get practical advice and assistance from government.

They point to the successes of firms like the ACL Bearing Company in Launceston, which exports engine bearings and automotive components to over 25 countries in four continents and injects over $25 million a year into the local economy. Or technological innovators like Oztrak Systems of Ballarat, which has sold its communications systems to Germany's leading automobile association. I should say that we were able to help Oztrak secure their initial German contract through a finance facility provided by the Government's Export Finance and Insurance Corporation - an integral player on our export team.

Austrade is working to ensure that regional communities are aware of trade opportunities, and of government services available to assist companies win business in markets abroad. The Export Market Development Grants scheme is being utilised by businesses in rural and regional Australia, with 655 regional exporters receiving around $25 million in grants in 1998-99.

Austrade is also assisting exporters outside the capital cities with a series of E-Commerce for Exporters Workshops. Fifty-seven such seminars have been held in regional Australia since September last year. This program aims to liberate businesses in the bush from the shackles of time and distance that have bound them for generations.

In earlier, simpler days, Australians took comfort from the fact that our nation rode on the sheep's back. The wool industry remains important today, but it has been joined by a myriad of other industries on which we all must rely for national prosperity and well being. Exporters in the bush, and our cities, deserve our unreserved support - and our Government is determined that they should have it.

 

Conclusion - strength, ambition and realism Ladies and gentlemen, I am confident that this will be a very good year for Australian trade. Our exports are again on the upswing, and our economy is the strongest it has been for more than three decades.

We are stronger now, in part, because we are more integrated into the world economy. In 1970, Australia's exports stood at just over 10 per cent of GDP. Today, our annual exports of over $114 billion amount to about 20 per cent of GDP.

But we can never rest on our laurels in the search for new markets for Australia's exports. This is a timeless preoccupation for an Australian Trade Minister. In his biography of my illustrious predecessor, Black Jack McEwan, Peter Golding writes, and I quote: "McEwan's preoccupation from the very first day in office was with the question: Where will we sell our surplus produce -our beef, our lamb, our mutton, our butter, our cheese, our sugar, our fruit, our wool, our wheat, our hides - if Britain can't buy it? From his earliest days, therefore, he was looking for other markets."

Fifty years later, our export base is now much broader; our markets are much more diverse. But the challenge remains the same: grasping every export opportunity the world has to offer.

We enter a new century as a key voice looking to build a fairer and more open international trading system. We carry a brief that marries ambition and realism. For the Coalition Government, there is no more important task than expanding our national wealth through a well-focused trade strategy, the strategy contained in the 2000 Trade Outcomes and Objectives Statement. I commend it to you.

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