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Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Australian Government - Department of Foreign Affairs and Trade

Advancing the interests of Australia and Australians internationally

Department of Foreign Affairs and Trade :: 2001-2002 Annual Report
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Output 1.1:

Protection and advocacy of Australia's international interests through the provision of policy advice to ministers and overseas diplomatic activity

1.1.3 Americas and Europe

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The department vigorously pursued Australia's substantial and diverse interests in the Americas Click to view related information - opens in new window and Europe Click to view related information - opens in new window during the year. Our political and security dialogues, particularly with the United States, the European Union (EU) and major European countries, had a sharpened focus after the 11 September 2001 terrorist attacks.

Australia affirmed the strength of its alliance with the United States after the terrorist attacks by invoking Article IV of the ANZUS Treaty. A central aspect of the department's work was to engage in a continuing and intense pattern of close cooperation and dialogue with the United States on the range of matters emerging as a consequence of the attacks, including Australia's contribution to the war on terrorism. We had earlier played a leading role in organising and providing policy support for Mr Downer's involvement in the successful Australia-United States Ministerial Consultations (AUSMIN). These consultations underlined the strength and breadth of Australia's ties with the United States.

The department supported the Government's high-level dialogue with the European Union through detailed preparation for both the six-monthly ministerial consultations with the EU Presidency and the annual Australia-European Commission Ministerial Consultations. We arranged and conducted a new set of security dialogues with the EU (and NATO), and assisted the Department of Immigration and Multicultural and Indigenous Affairs to begin exchanges with the EU and key European partners on illegal immigration and asylum issues.

The United States and the EU remain among Australia's most important economic partners. In 2001-02, Australia's merchandise exports to EU countries grew to $14.5 billion. Australia's merchandise exports to the United States-our second largest merchandise export market-increased to almost $12 billion. The department placed strong emphasis on advancing Australia's trade and investment interests in the United States and Europe, by advocating our positions on the multilateral trade agenda and by pursuing market access.

Positive outcomes for Australian exporters included substantial exemptions from US steel safeguard measures, the removal of US lamb safeguard measures, and continuing constructive discussions with the United States on the possibility of negotiating a bilateral free trade agreement (FTA). We had less success in lobbying against trade-distorting measures in the US Farm Bill.

We pressed the EU to consider Australia's interests across a range of trade-related issues, including reform of the Common Agricultural Policy and outstanding aspects of the 1994 bilateral wine agreement. As the secretariat for the Council on Australia Latin America Relations, the department helped devise and implement a range of initiatives with a primary focus on promoting trade and investment links with Latin America.

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United States Click to view related information - opens in new window

In response to the events of 11 September 2001, the Prime Minister, Mr Howard, invoked the ANZUS Treaty for the first time in its 50-year history. The department, including through our embassy in Washington, worked across a number of fronts to ensure that Australia's commitment to combating the common danger posed by international terrorism registered clearly both in Washington and more widely.

The department provided strong support for participation by Mr Downer and (then) Defence Minister, Mr Reith, in AUSMIN held in Canberra in July 2001. High-level participation on the US side led by the Secretary of State, Colin Powell, and the Secretary of Defense, Donald Rumsfeld, reflected the importance the United States attaches to the consultations. AUSMIN 2001 was highly successful, both in marking the enduring relevance of Australia's security partnership with the United States, and as the first comprehensive security discussions with key cabinet members of the Bush Administration. Strong reaffirmation of the importance we attach to the alliance and a commitment to practical cooperation in defence and security were important outcomes of the talks.

The department reinforced messages delivered through AUSMIN and other ministerial consultations by emphasising to US interlocutors the importance Australia attaches to US engagement in the Asia-Pacific region, especially with Japan, China, Indonesia, the Philippines and the Republic of Korea, and to working with the United States to strengthen regional stability and growth. For example, through making the case in Washington and New York, and to the US embassy in Canberra, we successfully encouraged the United States to help win UN support for the establishment of a post-independence UN mission in East Timor better to assist East Timor's development (see sub-output 1.1.2 at page 42 and sub-output 1.1.7 at page 84 for further detail on the UN mission in East Timor).

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In conjunction with the Department of Defence and the US embassy, the department promoted the fiftieth anniversary of the signing of the ANZUS Treaty with a wide program of events throughout the year. A central element was a conference held in Sydney in June 2001 on 'The United States-Australia Alliance in an East Asian Context'. The department also marked the anniversary of the treaty with the publication of a collection of historical documents and a folder of current information, which together emphasised the historical roots and the contemporary relevance of the alliance (see sub-output 3.1.3 at page 170 for further detail on these historical documents).

Trade issues remained a major aspect of the department's engagement with the Bush Administration and the Congress. We provided advice and support to Mr Vaile and other ministers in their close work with the US Administration to secure the launch in November 2001 of a new WTO round of multilateral trade negotiations and on issues of mutual interest for the ensuing negotiations.

The department consulted closely with senior US officials on the key government objective of negotiating a bilateral FTA with the United States. In July 2001, our embassy in Washington was instrumental in establishing an American-Australian FTA coalition in the United States. The department also facilitated establishment of an Australian counterpart-the Australia-US FTA Business Group-in September 2001. We helped to ensure that the membership of these groups included some of the most important companies in the United States and Australia as well as peak industry associations (see sub-output 1.1.5 at page 67 for further detail on this proposed FTA).

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Protectionist pressures in the US Congress and the proximity of the mid-term congressional and gubernatorial elections (scheduled for November 2002) complicated the department's efforts on bilateral trade. We took every opportunity to lobby against trade-distorting measures in the 2002 Farm Bill (the Farm Security and Rural Investment Act), and to ensure that the Bill was consistent with US commitments to the WTO. Mr Vaile and the Minister for Agriculture, Fisheries and Forestry, Mr Truss, led a concerted campaign to advocate Australia's interests with respect to the Farm Bill. Despite our efforts, the Bill eventually enacted established higher benchmarks for US government spending on farms and over time will have an adverse impact on Australian and world agriculture.

The department's participation in the US safeguards investigation of steel imports and a concerted lobbying effort by ministers and our Washington embassy were crucial to achieving successful exemption from tariffs of up to 30 per cent for over 85 per cent of Australia's steel exports to the United States. Our efforts in Washington and-using WTO dispute settlements procedures-in Geneva helped to get the United States to remove its lamb meat safeguard in November 2001. We also pressed for increased access to the United States for Australia's rapidly growing beef exports, which filled the 378 214 tonnes a year tariff rate quota for the first time in 2001. We continued to pursue a range of quarantine issues to obtain greater access for Australian products and address US concerns about market access to Australia-although these are difficult and contentious issues which for the most part will take more time to resolve.

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Figure 10. Australia's merchandise trade with the United States

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European Union Click to view related information - opens in new window
The department worked assiduously to strengthen Australia's relations with the EU by supporting ministers in their engagement with EU counterparts and by taking forward new and existing exchanges at officials' level. Important milestones were Mr Downer's consultations with the EU Presidency in July 2001 and February 2002 and the Australia-European Commission Ministerial Consultations in Brussels in April 2002.

Initiatives agreed at the Ministerial Consultations included a review of the 1997 Joint Declaration on Relations between Australia and the European Union that will set future strategic priorities for the relationship, and the establishment of a dialogue on immigration, asylum and visa issues. These initiatives had been carefully prepared during the senior officials' meeting with the European Commission which preceded the ministerial-level exchanges. The department arranged and led an inaugural security dialogue with the EU (and with NATO) in March 2002 which increased our understanding of security developments in Europe and reinforced with senior European policy advisors Australia's security perspectives and interests. We reinforced our credibility as a knowledgeable interlocutor on the Asia-Pacific region at discussions with a number of European countries and the EU in June 2002.

The department supported Mr Vaile in pursuing Australia's agricultural interests with the Commission in Brussels in May 2002, in particular registering our strong views on the need for fundamental reform to the EU's trade-distorting Common Agricultural Policy.

Our network of posts pursued vigorous advocacy with decision-makers in European institutions and EU member states, maintaining pressure on the EU in the WTO, including on agricultural issues and on the bilateral wine agreement. We pressed strongly for the protection of Australia's significant steel exports to Europe after the EU imposed provisional safeguards on steel imports.

In September 2001, Mr Vaile launched a departmental publication titled Export EU: A Guide to the European Union for Australian Business, designed to help exporters understand the technicalities of doing business with the EU. The publication, particularly the online version, drew a strong positive public response (see output 3.1 at page 157 for further detail on trade/economic publications).

The department broadened areas of cooperation with the EU by assisting other Australian agencies in their negotiation of new agreements and arrangements. These included a consumer protection arrangement and establishment of a pilot project for higher education exchanges.

We established a second Europe Branch to increase high-level attention to servicing Australia's relations both with European countries and the institutions of the EU, and to enhance capacity for forward-looking policy advice on Australia's extensive interests in Europe.

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Figure 11. Australia's merchandise trade with the European Union

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Europe-bilateral relationships
Advancing Australia's important bilateral trade and investment relationships with European countries was an important priority for the department. In pursuing this objective, we organised and supported a program of high-level visits to European countries, including by Mr Downer and Mr Vaile. We supported an extensive range of visits to Australia by European ministers and heads of state, including those of the President of Portugal Click to view related information - opens in new window, Jorge Sampaio, and the President of Greece Click to view related information - opens in new window, Constantinos Stephanopoulos, each leading large trade delegations.

The department, through our posts, promoted Australia's coal industry and expertise at a successful EU-Australia Coal Conference in Germany Click to view related information - opens in new window in September 2001. We organised a major promotion of trade and investment opportunities in Poland Click to view related information - opens in new window in Sydney in May 2002 and a promotion of Australia in six Polish cities from September to December 2001, which strengthened Australia's business and cultural profile.

Working through our posts in Europe, we acted at the time of the MV Tampa incident to explain Australia's position to governments and to correct poorly founded criticism of Australia's position in the European Parliament and in some parts of the European media (see sub-output 1.1.7 at page 82 for further detail on people smuggling, and output 3.1 at page 154 on our related public diplomacy efforts).

Australia's strong traditional links with European countries were also an important focus throughout the year. In association with the Department of Veterans' Affairs, we succeeded in gaining approval for the development of an Australian War Memorial at Hyde Park Corner in London. We worked closely with other Australian agencies to establish workable arrangements for the repatriation of indigenous remains from the United Kingdom Click to view related information - opens in new window. We made vigorous and successful representations to ensure Australian war graves in France Click to view related information - opens in new window remain undisturbed by a planned airport development.

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Australia's Ambassador to France, William Fisher (centre), at an ANZAC Day commemoration ceremony in Bullecourt, France, in April 2002, accompanied by local dignitaries and Australian and New Zealand military personnel. Photo by Andrée Lawrey.

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Australia's exchanges with Russia Click to view related information - opens in new window intensified during the year. The events of 11 September 2001 underlined Russia's political and strategic importance in the war against terrorism. This was a central theme of Mr Downer's meeting with the Russian Foreign Minister, Igor Ivanov, in Moscow in February 2002. The department was heavily engaged in negotiations with Russia over its accession to the WTO. We contributed to government efforts to negotiate bilateral agreements with Russia on space industry cooperation in support of commercial plans to establish a space launch facility on Christmas Island.

Trade and investment interests were the focus of Australia's relations with Central and Southern Europe. Improved security in the Balkans provided an opportunity to begin rebuilding trade links with these countries. We achieved trade wins in the reduction of the tariff on high-quality furniture leather and the waiver of the duty on coarse wool exports to Poland. Bulgaria Click to view related information - opens in new window lifted a ban on imports of Australian game meat, while Poland recognised Australia's status as a disease-free reliable supplier of particular animal products.

The department negotiated a number of agreements with countries in the region, including nuclear safeguards agreements with Hungary Click to view related information - opens in new window and the Czech Republic Click to view related information - opens in new window which will enable future exports of uranium.

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Table 7. Australia's regional trade with Europe

  Exports Imports
2000-01 $m 2001-02 $m Trend growth 1996-97 to 2001-02 % 2000-01 $m 2001-02 $m Trend growth 1996-97 to 2001-02 %
UK 4 653 5 197 15.9 6 321 6 219 4.1
Italy 2 099 2 166 8.6 3 257 3 411 7.9
Germany 1 487 1 344 4.7 6 172 6 732 7.1
Belgium-Luxembourg 1 004 865 -2.1 828 875 3.4
France 1 081 1 344 9.7 2 478 2 691 6.3
Total European Union 13 955 14 464 11.5 25 505 27 126 6.2
Total East Europe 587 504 4.2 353 472 15.2
Other Europe 722 691 -10.5 1 549 1 703 7.7
Total 15 264 15 659 9.4 27 407 29 302 6.4

Source: Compiled by DFAT from ABS data.

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Canada Click to view related information - opens in new window

The department maintained close working relations with Canada across a wide range of issues including international security, multilateral trade and the environment. We strengthened coordination with Canada on anti-terrorism issues after the 11 September 2001 terrorist attacks. We maintained an active dialogue in the WTO, APEC and the Cairns Group of agricultural exporting countries. We also organised extensive government-to-government discussion of public policy issues, including health and indigenous issues.

The first meeting under the auspices of the proposed Canada-Australia Dialogue-a new arrangement for bilateral talks on global issues of mutual interest to Australia and Canada-had to be postponed due to a wider deferral of international meetings after the 11 September 2001 terrorist attacks. The dialogue has been rescheduled for later in 2002.

Our post in Ottawa was a driving force behind the establishment of the Canadian, Australian and New Zealand Parliamentary Friendship Group, which will promote further exchanges between the two parliaments and provide Australia with a channel for influence into the Canadian Parliament.

Merchandise exports to Canada grew 7 per cent in 2001-02, with Australian wine exports performing strongly, increasing 34 per cent. We worked with industry and the Canadian Government to maintain access arrangements for our beef exports to Canada, which rose by 48 per cent in 2001-02.

The department actively promoted the capabilities of Australian biotechnology companies at the BIO-2002 Show in Toronto in June 2002, attended by over 300 representatives from Australian companies and organisations. We also played a key role in convincing Canada to increase by 50 per cent its quota for young Australians taking working holidays in Canada.

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Latin America Click to view related information - opens in new window

As part of our focus on improving Australia's trade and investment with Latin America, the department was successful in efforts to improve market access to Chile Click to view related information - opens in new window for Australian aquaculture and dairy products and to Brazil Click to view related information - opens in new window for Australian dairy exports. In May 2002 we supported Mr Vaile in securing Mexico's agreement to remove a 3 per cent tariff on a range of products, including coal, wool and live cattle from Australia. The department arranged for a delegation of Australian energy companies to travel to Mexico Click to view related information - opens in new window with Mr Vaile in order to promote Australian energy products and technology.

We continued to expand bilateral arrangements to promote sectoral links with Latin America. We assisted in the successful negotiation of a bilateral air services agreement with Chile in September 2001; signed a nuclear cooperation and safeguards agreement with Argentina Click to view related information - opens in new window; and signed an investment promotion and protection agreement with Uruguay Click to view related information - opens in new window. We coordinated a second meeting of the Australia-Chile Bilateral Trade and Investment Commission in Santiago in September 2001, which set out a two-year work program for further cooperation in areas such as education and environmental technology.

We provided advice, funding and administrative support to the Council on Australia Latin America Relations, which began work in September 2001 on its task of promoting Australian trade and investment with Latin America, as well as educational and cultural links. In cooperation with the Department of Education, Science and Technology, we arranged a meeting of the education, science and technology working group established under the Forum for East Asia-Latin America Cooperation to promote sectoral links between the two regions.

The department's Economic Analytical Unit produced a well-received report on Latin America titled Investing in Latin American Growth: Unlocking Opportunities in Brazil, Mexico, Argentina and Chile which analysed economic developments and highlighted prospects in these major Latin American economies. Mr Downer launched the report in August 2001.

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Table 8. Australia's regional trade with the Americas

  Exports Imports
2000-01 $m 2001-02 $m Trend growth 1996-97 to 2001-02 % 2000-01 $m 2001-02 $m Trend growth 1996-97 to 2001-02 %
USA 11 652 11 992 16.2 22 351 21 497 4.2
Canada 1 769 1 892 9.8 1 869 1 607 6.4
Mexico 370 479 26.5 582 521 24.9
Total NAFTA 13 812 14 426 15.6 24 924 23 807 4.6
Total Caribbean 156 207 32.0 142 210 -4.6
Brazil 543 462 7.5 647 470 10.4
Chile 133 154 -5.6 79 97 0.7
Argentina 106 65 -8.7 130 159 11.0
Total South America 919 875 2.6 964 834 10.2
Total 14 913 15 495 14.7 25 939 24 692 4.7

Source: Compiled by DFAT from ABS data.

Reporting against quality and quantity indicators and administered items begins on page 96.

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