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Your location: Performance > Outcome 1 > Output 1.1 > 1.1.6 Trade development/policy coordination and Asia-Pacific Economic Cooperation

OUTPUT 1.1: Protection and advocacy of Australia’s international interests through the provision of policy advice to ministers and overseas diplomatic activity

1.1.6 Trade development/policy coordination and Asia-Pacific Economic Cooperation

On this page: Overview :: APEC :: ASEAN, Australia and New Zealand :: Indian Ocean Rim Association for Regional Cooperation (IOR–ARC) :: Export credit policy :: Market Development Group :: Trade policy coordination and business liaison :: Direct Aid Program


The department continued to drive regional and bilateral trade and investment cooperation. These efforts resulted in improved access to international markets for Australian exporters and an enhanced business environment for trade and investment.

We advanced Australian engagement in the region through active participation in the Asia-Pacific Economic Cooperation (APEC) forum. These efforts were reflected in positive outcomes from the APEC Leaders' Meeting in Los Cabos, Mexico in October 2002 where we supported the Prime Minister in securing leaders' agreement to:

We also secured agreement for Australia to host APEC in 2007, which will provide opportunities to promote Australia's economic, social and cultural environment to regional leaders and key business decision-makers from most of our major trading partners.

At the June 2003 APEC Trade Ministers' meeting in Khon Kaen, Thailand, we helped Mr Vaile garner consensus for a strong APEC message of support for WTO negotiations in the lead up to the WTO Ministerial Conference in Cancun, Mexico in September 2003.

The department supported Mr Vaile in negotiations with New Zealand and ASEAN for the Joint Ministerial Declaration on the ASEAN Free Trade Area—Australia New Zealand Closer Economic Relations (AFTA–CER) Closer Economic Partnership (CEP). The CEP, signed in September 2002, enhanced regional efforts toward economic integration. With an agreed target to double trade and investment by 2010, officials and business are working on activities to lower business costs and reduce impediments to Australia's trade and investment with ASEAN.

The department closely monitored the operation of the alliance established in 2001 between a private insurer and the Export Finance and Insurance Corporation (EFIC). The alliance provides a broader range of export credit services to Australian exporters, strengthening their ability to compete internationally. We also worked with other Paris Club creditor nations to define a work program for a new approach to debt relief for non-heavily indebted poor countries. This new approach will ensure effective debt relief while protecting Australian sovereign exposure.


Trade and investment liberalisation and facilitation

The department led APEC's efforts to advance its trade and investment liberalisation agenda in 2002–03, with important outcomes secured in the 2002 APEC Leaders' Statement, including explicit political support for the WTO Doha Round.

We also lobbied effectively to ensure that the June 2003 Statement of APEC Ministers Responsible for Trade advocated progress in the Doha Round. The statement established clear principles on trade and environment, noted the importance of the Cancun WTO Ministerial Conference in September 2003 to the Doha Round, and acknowledged the role played by free trade agreements in contributing to liberalisation in the region. Each of these outcomes effectively supports Australia's broader objectives in the WTO Doha Round negotiations.

APEC’s response to SARS

The outbreak of the Severe Acute Respiratory Syndrome (SARS) virus in southern China spread quickly to Hong Kong, Canada, Singapore and Taiwan, affecting nearly 8500 people, killing 812 and severely disrupting trade, people movement and business confidence in the region.

While Australia did not record any cases of local transmission, we were not immune to the economic impact of SARS. Australian services exports fell $156 million in March–April 2003 (seasonally adjusted), a 6.5 per cent decline from April 2002. The most severely affected sectors were the tourism, hospitality and airline industries, while business travel to and from the region also suffered.

The department played an active role in developing a quick and effective APEC response to SARS. APEC Ministers agreed to an APEC Action Plan on SARS that aims to contain SARS and restore public confidence through:

APEC’s quick response to SARS demonstrated how clear and unified regional action can minimise the impact of a sudden loss of business confidence, and help lay the foundations for an early recovery. In the wake of this SARS experience, APEC is in a position to respond proactively to the threats posed by SARS and any other serious infectious diseases that may arise in the region.

APEC's peer review of Australia's Individual Action Plan (IAP)—which records our progress towards APEC's goals of free and open trade and investment—was conducted in February 2003. The peer review commended Australia for its impressive economic results over the past decade. Australia's success in opening its markets and implementing structural reforms and sound macroeconomic policies was viewed as an important factor in our sustained economic growth and export performance. The department coordinated Australia's IAP.

Structural reform

The department has improved opportunities for Australians to do business and invest in the region by helping build a more predictable and transparent regulatory environment in regional economies. To achieve this, we have been driving APEC's structural reform agenda through a number of initiatives such as the report Strengthening economic legal infrastructure in APEC: Supporting trade, investment and economic development, and capacity-building seminars. Through these activities, we have succeeded in raising the profile of structural reform within APEC, with members recognising that continuous reform is essential to maximising the benefits of open markets.


The department maintained a prominent role in defining APEC's response to terrorism, including by working closely with the United States on the 2002 Leaders' Statement on Fighting Terrorism and Promoting Growth. We produced The costs of terrorism and the benefits of cooperating to combat terrorism, a paper that highlighted the impact of terrorist threats on regional economic prosperity, and the mutually reinforcing relationship between trade facilitation and security initiatives.

We played an influential role in shaping development of the newly formed APEC Counter-Terrorism Task Force, charged with overseeing the implementation of APEC's secure trade initiative. We worked closely with other Australian agencies to maximise the benefits from relevant APEC counter-terrorism initiatives and capacity-building projects.

ASEAN, Australia and New Zealand

The signing of the Joint Ministerial Declaration on the AFTA–CER Closer Economic Partnership (CEP) by Mr Vaile and his New Zealand and ASEAN counterparts in September 2002 enhanced regional efforts towards economic integration. The department supported Mr Vaile in the negotiation of the CEP.

With a target to double trade and investment by 2010, the CEP aims to implement practical measures to lower business costs and reduce impediments to Australia's trade and investment with ASEAN. Through the CEP, the department is pursuing priority trade issues identified by the business community, including collaborating on a joint AFTA–CER study to identify non-tariff measures that impede trade.

The CEP work program encompasses cooperation in the areas of standards and conformance, sanitary and phytosanitary issues, customs, investment, intellectual property rights, competition policy, new economy e-commerce and the identification and elimination of trade and investment barriers. The department worked closely with Australia's senior industry representatives on the AFTA–CER Business Council to determine priorities for further developing the CEP.

Indian Ocean Rim Association for Regional Cooperation (IOR–ARC)

The department led efforts to refocus IOR–ARC, a grouping of eighteen Indian Ocean littoral and island states, through the High Level Task Force report to senior officials of member countries on future directions of the association. An Australian-proposed reform agenda package, designed to improve the association's performance in facilitating trade and investment among members, has yet to be adopted because of the postponement of ministerial meetings.

Export credit policy

The department worked with the Export Finance and Insurance Corporation (EFIC) to implement EFIC's alliance with the private insurer Gerling NCM (GN). The alliance relates to EFIC's short-term export credit insurance business. It is intended that the private insurer will purchase this part of EFIC's operations if it meets certain performance benchmarks. The alliance with GN enables EFIC to provide a wider range of services, resulting in increased opportunities for Australian exporters to compete more effectively in international markets. To date GN is meeting the requirements of exporters, a vital precondition of any divestment of the business to GN.

We managed the whole-of-government coordination of National Interest Account (NIA) transactions, which provide support to Australian exports deemed to be in the national interest and where the private market is unable to provide cover. Overall, the NIA supported $139.8 million worth of exports, $12.4 million worth of net income was received from the transactions and $14.8 million was paid in claims. See administered items for Outcome 1 on page 119 for further detail on the NIA.

The department continued to represent Australia in the Paris Club of creditor nations in negotiations with countries seeking debt relief. We worked closely with major creditor countries such as Germany, Japan and the United States to define a work program for a new approach to debt relief for non-heavily indebted poor countries. This initiative seeks to make Paris Club debt relief more effective by being more tailored to the situation of debtor countries. In the initiative, we seek to protect Australian sovereign exposure while providing effective debt relief for clearly identified financing needs.

We worked to advance disciplines on export credit agencies in the Organisation for Economic Co-operation and Development (OECD), including on better environment standards. We also participated in a major redrafting of OECD guidelines related to export credit disciplines to make them clearer to countries not familiar with these guidelines. We worked with other Cairns Group countries to advance disciplines in the WTO on export credits for agriculture.

Market Development Group

Mr Vaile decided to disband the Market Development Group (MDG) at the conclusion of its 2002–03 cycle of meetings. The MDG had generated a number of significant trade outcomes at a time when Australia was not pursuing bilateral free trade agreement (FTA) negotiations or multilateral trade rounds. Achievements in 2002–03 included increased information and communications (ICT) exports to France; commencement of negotiations for memorandums of understanding with a range of other countries on ICT cooperation; an increase in exports of light aircraft; significant biotechnology exports to Taiwan; and the introduction of 26 Australian companies in the environmental goods and services sector to the Latin American market.

Figure 13. Australia's exports by broad category 2002

View text description of above chart

Trade policy coordination and business liaison

Trade 2003 Statement

The department drafted Mr Vaile's annual trade statement, launched in March 2003. Trade 2003: A statement of outcomes and objectives reviews Australia's trade outcomes in 2002 and sets out the Government's trade policy framework. To improve the accessibility of this material, this year's statement was substantially shorter than those of previous years. An information brochure provided key points and highlights from Trade 2003 for quicker and easier dissemination to the public.

We produced a companion online research tool, Trade 2003 online, contributing to the Government's objective of making government information available online. The online document links readers to continuously updated information and advice on the range of services available from the department, Austrade and EFIC.

National trade consultations

The department regularly undertakes consultations to inform the development of trade policy. We facilitated Mr Vaile's consultations with state and territory ministers on the Government's trade policy agenda in August 2002 (Sydney) and April 2003 (Perth). In August 2002, ministers signed a memorandum of understanding for cooperation on doubling the number of Australian exporters nationally. Other issues discussed during the year included the FTA negotiations with the United States and with Thailand, the Singapore–Australia FTA, updates on other prospective trade arrangements, the WTO Doha Round, and Beijing Olympics business opportunities. We conducted three consultations with state and territory officials and peak industry bodies on specific trade issues, and facilitated dialogue between states and territories and other federal agencies on important business-related activities.

Photo - See caption below for description
Director of the South Australian State Office, Trevor Peacock, gave a briefing on the future of exports during UniSA's International Business Week in Adelaide in August 2002.
Enlarge image :: Photo gallery

Trade Policy Advisory Council

The department continued to administer the Trade Policy Advisory Council, a key source of business advice to Mr Vaile. Mr Vaile held three meetings to seek business perspectives on Australian trade policy interests, including the Australia–United States FTA negotiations, trade and investment with the European Union, the export of professional services, the role of China in the global economy, the impact of global events on Australia's trade and investment outlook, and the influence of currency movements on export competitiveness. These meetings ensure that ministers have a better understanding of business community interests in trade policy.

World Economic Forum

The department supported Mr Downer's participation in the World Economic Forum's (WEF) 33rd Annual Meeting in Davos, Switzerland, in January 2003. Mr Downer used the WEF to highlight Australia's strong economic performance and to examine the economic and geopolitical implications of terrorism. He also hosted a round table with US congressional and business representatives to garner support amongst leading US decision-makers for the Australia–United States FTA negotiations. Participation in the WEF provided opportunities to highlight Australia to leading decision-makers and to give Australia a prominent voice in the dialogue on economic, social and strategic issues.

Input to the G8 Process

In the lead-up to the Group of Eight (G8) Summit of major industrial economies and Russia held in Evian, France in June 2003, the department advocated Australia's views on key issues. We made clear that an ambitious, global and comprehensive outcome on agriculture from the WTO Doha Round would be essential to delivering real development gains.

Conflict diamonds

The department coordinated the introduction in Australia of the Kimberley Process Certification Scheme for rough diamonds (or 'conflict' diamonds) on 1 January 2003. We participated in the development of this UN-sanctioned scheme in consultation with the Australian diamond industry and non-government organisations. We also encouraged other governments to join the scheme.

Conflict diamonds—Kimberley Process Certification Scheme

Australia’s $600 million rough diamond export trade is set to benefit from a new secure trading regime—the Kimberley Process Certification Scheme. Introduced on 1 January 2003, this new scheme will involve over 70 countries, including the world’s major producers, distributors and polishers of rough diamonds.

The scheme is an essential step towards preventing the illegal trade in rough diamonds (known as ‘conflict’ diamonds) from financing war and civil conflict in Africa. This arrangement balances the need to prevent trade in conflict diamonds while facilitating the legitimate rough diamond trade.

Under the scheme, trade in rough diamonds with non-participant countries is banned, and rough diamond import and export shipments from participant countries will need to be accompanied by a certificate declaring that the shipment has been handled in accordance with the scheme’s requirements.

The scheme’s introduction followed two years of international negotiation and the combined efforts of the department, the Department of Industry, Tourism and Resources, the Australian Customs Service, non-government organisations, the Australian rough diamond industry, state governments and the Department of the Prime Minister and Cabinet.

Direct Aid Program

The department dispersed $3.3 million in Direct Aid Program (DAP) funds through 44 posts. DAP is a flexible small grants scheme which aims to help alleviate human hardship while supporting the international relations and public diplomacy goals of the Australian Government. Projects this year included:


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Department of Foreign Affairs and Trade Annual Report 2002–2003
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