Annual Report 2004-2005
 

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1. Overviews2. Performance3. Corporate4. Appendixes5. Financials6. Glossaries and Compliance Index

Your location: Performance > Outcome 1 > Output 1.1 > 1.1.5 Bilateral, regional and multilateral trade negotiations

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

1.1.5 Bilateral, regional and multilateral trade negotiations

On this page: Overview :: WTO Doha Round negotiations :: Agriculture :: Industrials :: Services :: WTO rules including trade facilitation :: WTO development agenda :: Supporting the WTO and trade liberalisation in other international trade bodies :: Compliance and dispute settlement :: WTO accessions :: Free trade agreements :: New FTA negotiations

Overview

The department vigorously pursued Australia's trade priorities during 2004–05 through a combination of multilateral, regional and bilateral negotiations.

The World Trade Organization (WTO) Doha Round negotiations represent the greatest opportunity for Australia to increase worldwide market access for our goods and services exporters. A successful conclusion to the Doha Round is the Government's highest trade policy priority and remained a key focus of ministerial and departmental activity during 2004–05.

The department worked hard during the year to ensure the outcomes of the Round will advance Australian economic interests. We supported the involvement of the Minister for Trade in an intense program of informal WTO ministerial meetings designed to advance the Round—at Davos, Switzerland in January 2005, at Mombasa, Kenya in March 2005 and in Paris in May 2005.

Protection and advancement of Australian trade interests through the WTO dispute settlement system also formed an important part of the department's engagement with the WTO during the year. We led Australia's successful challenges to the European Union's sugar regime and its legislation on geographical indications. We managed Australia's response to challenges by the EU and the Philippines to aspects of Australia's quarantine regime and also Australian involvement as a third party in other disputes that raised important legal or systemic issues.

The department pursued an ambitious bilateral and regional trade liberalisation agenda, progressing negotiations with key trading partners to secure new commercial opportunities for Australia. Four new free trade agreement (FTA) negotiations were launched—with New Zealand and the fast-growing countries of ASEAN in November 2004; with the United Arab Emirates—our first such negotiation in the Middle East— in March 2005; with Malaysia, a key regional trading partner, in April 2005; and with China, one of the fastest growing and largest economies in the world, in April 2005.

The department was active in advocacy and outreach on WTO issues. We consulted closely with the states and territories, industry, non-government organisations and community stakeholders to ensure Australia's negotiating objectives were informed by key Australian interests. Broad-based consultative forums serviced by the department, such as Mr Vaile's WTO Advisory Group, also helped to facilitate this interaction. We produced regular bulletins to update the public on the progress of WTO negotiations and on WTO disputes of interest to Australia.

The department also regularly consulted with Australian states and territories, industry, non-governmental organisations and community groups in the course of negotiating FTAs with other countries. During the reporting period the department sought public submissions on the negotiation of such agreements with China, ASEAN, Malaysia and the United Arab Emirates.

WTO Doha Round negotiations

The 1 August 2004 WTO General Council decision known as the 'Framework Package' was a major step forward, delivering key decisions on agriculture, non-agricultural market access, services, WTO rules and development issues—putting the Round back on track after the 2003 setback at Cancún. It also launched new negotiations on trade facilitation, aimed at reducing transaction costs to business in the cross-border movement and clearance of goods. The department has been extremely active during the year—both in its own right and in support of Mr Vaile—in intense negotiations to flesh out all aspects of the Framework Package (see sector specific paragraphs below).

WTO members aim to finalise key elements of the negotiations at the Sixth Ministerial Conference in Hong Kong, China in December 2005, to enable conclusion of the Doha Round in 2006 though securing outcomes across all issues will be a major challenge.

Agriculture

Photo - See caption below for description
Ministers attending the Cairns Group 27th Ministerial Meeting, Cartagena, Colombia, 30 March – 1 April 2005. Minister for Trade Mr Mark Vaile, is third from left, front row.
Enlarge image :: Photo gallery

Australia remained at the forefront of efforts to achieve ambitious Doha Round outcomes in agriculture, maintaining the pressure for the negotiations to deliver substantial reductions in trade-distorting domestic support and fairer export competition, particularly through the elimination of export subsidies. We gave a high priority to securing market access improvements, reflecting World Bank research showing that over 90 per cent of the gains from agriculture reform will derive from greater market access opportunities.

Mr Vaile and departmental officials played a key role in the cross-regional Five Interested Parties group (Australia, India, Brazil, the United States, and the European Commission) on agriculture negotiations. The work of the Five Interested Parties paved the way to securing agreement on agriculture, including an historic commitment to eliminate export subsidies. In May 2005 the Five Interested Parties also resolved the controversial issue of how to convert all tariffs into percentage terms, a matter that had blocked further progress in the market access negotiations.

The Cairns Group of 17 agricultural exporting countries, led by Australia, continued to play a prominent role in all aspects of the agriculture negotiations. The department supported Mr Vaile, as the Group's Chair, in leading a successful 27th Cairns Group Ministerial Meeting in Cartagena, Colombia in March 2005. The meeting drew senior ministerial attendance from the United States and the European Union and reaffirmed Cairns Group members' commitment to agricultural reform through the Doha Round.

It advanced key linkages between the Group and other important players in the agriculture negotiations, including the G20 (a developing country coalition led by Brazil and India). During the year the department also facilitated visits to Australia by senior negotiators from a number of Cairns Group and G20 countries to build stronger linkages with industry and government.

We also worked to enhance the contribution of domestic consultative arrangements to sharpening Australian positions and negotiating strategies. In September 2004 we established a Technical Working Group on agriculture, comprising trade policy experts from peak Australian agriculture industry bodies.

The department made significant efforts to enhance cooperation with like-minded WTO members on key approaches to the negotiations and to build support for agricultural trade liberalisation. In October 2004 the department, with the Department of Agriculture, Fisheries and Forestry and the Australian Bureau of Agricultural Resource Economics, convened a two-day technical symposium in Canberra for trade negotiators, agricultural economists, and key officials from a number of WTO member countries. Our senior agriculture negotiator conducted agricultural trade policy seminars in key regional countries to enhance commitment to an ambitious result in the negotiations.

Industrials

A strong outcome in the Doha Round negotiations to further liberalise industrial products would enhance Australia's goods export opportunities. Trade in nonagricultural products (which include minerals, energy, forestry and fisheries products, and manufactures) accounts for nearly 90 per cent of global trade in goods and 76 per cent of Australia's merchandise exports.

The department worked hard to try to maintain a high level of ambition in the negotiations, including in several informal ministerial meetings held during the year and in APEC (see below). Stalled since the Cancún Ministerial, these negotiations only effectively resumed following agreement on the Framework Package. However, progress has been slow, with some WTO members taking a cautious approach pending further progress in other areas of the Round, particularly on agricultural market access. As an active participant in the informal 'Friends of Ambition' grouping in Geneva, we have pushed for across-the-board tariff reductions, including on 'unbound tariffs' (those tariffs for which individual members have not previously made commitments).

Services

Services exports now represent 71 per cent of Australia's GDP. More than four out of every five Australians are employed in service industries, many of which have an export focus.

The Framework Package called for members that had not already done so to lodge initial services offers as soon as possible, and set a new May 2005 deadline for revised offers. As with industrials, the negotiations have been complicated by some members' linkage of the issue to greater progress elsewhere in the Round, such as agriculture. The department has continued to vigorously pursue all opportunities during the year—in the services negotiations and also bilaterally—to encourage more and better offers, particularly from our key services trading partners.

The department ensured that Australia led by example by making one of the most comprehensive and high quality revised services offers. The offer proposed commitments, subject to satisfactory offers from other WTO members, for liberalisation of Australian legal services, telecommunications, temporary entry of business people, freight logistics and other business services. We conducted extensive consultations within government and with the states and territories, industry and other stakeholders in developing the offer.

The department has also been active in coordinating and leading Australia's involvement in informal services negotiating coalitions such as the 'Friends of GATS' (General Agreement on Trade in Services) and various sectoral 'friends' groups. We led efforts in such groups to secure ambitious outcomes in sectors of interest to Australian services exporters, including freight logistics, professional services and computing services.

WTO rules including trade facilitation

Negotiations on WTO rules on trade remedies (anti-dumping, subsidies and countervailing measures) moved into a more intensive phase in 2004–05. Members are now working through more than 150 proposals for clarification and improvement of WTO rules and procedures. The department coordinated and produced Australian contributions on prohibited subsidies and how they should be removed. We also worked to build coalitions with like-minded WTO Members to advance the negotiations.

The department worked closely with others in the negotiations to promote efforts to strengthen disciplines on fisheries subsidies. This has the potential to deliver a positive outcome for trade, development and the environment, consistent with Australian policy and interests in these areas.

We took a leading role in managing Australia's approach to negotiations on WTO rules for regional trade agreements (free trade agreements). These negotiations aim to ensure that all such agreements negotiated by WTO members are subject to meaningful review and effective disciplines in the WTO. The department's two detailed submissions for enhancing these disciplines helped move the negotiations forward.

The new negotiations on trade facilitation have the potential to benefit all business by reducing the costs and time associated with the import, export and transit of goods across borders. In the negotiations the department worked to focus attention on practical improvements to relevant WTO rules and tangible benefits to business. We worked to build confidence among developing country WTO members which have concerns about their capacity to implement any new rules in this area. In March 2005, with AusAID funding, we organised a successful joint workshop with Malaysia in Kuala Lumpur for APEC officials and business people, to draw on APEC's successful experience of trade facilitation.

WTO development agenda

Addressing the development dimension of global trade liberalisation is an important part of the Doha Round agenda. This reflects the major role that trade and trade liberalisation can play to promote economic development and alleviate poverty.

The Government and the department were active during the year in promoting the substantial potential benefits for developing countries of comprehensive trade reform through the WTO, particularly in agriculture. Australia cooperated closely with developing country agricultural exporters through the Cairns Group to press for reform of global agricultural trade in the Doha Round negotiations. More than two-thirds of developing countries' total gains from the Doha Round would come from such reform.

The department helped developing countries enhance their own trade policy and trade negotiation capacity, and to deepen their support for global trade reform. We initiated or supported a number of AusAID-funded regional and bilateral trade-related technical assistance and capacity-building programs. This included comprehensive trade policy and WTO training for trade negotiators and officials from Botswana, Iraq, Sri Lanka, Bangladesh, Samoa, China and Pakistan.

In 2005 Mr Downer and Mr Vaile announced an additional $500 000 contribution to the WTO Global Trust Fund to support developing country participation in the Doha round negotiations. This takes Australia's overall support for the Fund to $1.96 million.

Supporting the WTO and trade liberalisation in other international trade bodies

The department took opportunities in other international forums to promote trade liberalisation and to support a successful and ambitious conclusion to the WTO negotiations.

We worked particularly hard to focus and enhance APEC's support for the Doha Round. We worked closely with other APEC trade and economic ministries in the lead-up to the APEC Ministers and Leaders meetings in Santiago, Chile in November 2004. These meetings delivered timely statements of support for the role of trade liberalisation in economic development and restated commitment by APEC leaders and ministers to maintaining momentum in the Doha Round negotiations.

Further efforts by Mr Vaile and the department also helped to ensure that the APEC Ministers Responsible for Trade meeting in Jeju, Korea in May 2005 delivered another strong message of support for the early and ambitious conclusion to the Round. In a significant breakthrough, trade ministers at Jeju also agreed a common position in favour of a Swiss formula for industrial tariff reductions in the non-agricultural market access negotiations (see sub-output 1.1.6 for more information).

The department worked with other OECD members to ensure OECD work on WTO-related issues facilitated the Doha Round negotiations. We supported Mr Vaile's participation in the annual OECD Council Meeting at Ministerial level in Paris in May 2005. The meeting provided an opportunity to highlight Australia's economic performance, commitment to multilateral trade liberalisation and the importance to global growth and development of a successful and ambitious conclusion to the Doha Round.

Compliance and dispute settlement

The year 2004–05 was one of the busiest ever for Australia in WTO dispute settlement. The department coordinated and led Australia's involvement in two major disputes. We achieved positive outcomes in both the challenge to the EU's sugar regime, in conjunction with Brazil and Thailand, and in Australia and the US's challenge to the EU's legislation on geographical indications (GIs). In the ten years of the WTO's existence, Australia has won all five of the complaints it has initiated and taken to the panel stage.

These successes should have a significant impact on international trade policy, to the benefit of Australian industry. The European Union will now be required to significantly reduce its sugar exports and expenditure on export subsidies. This will increase pressure for comprehensive reform of the EU sugar regime and will deliver better global conditions for Australian sugar growers and exporters. The outcome on GIs underlines to all WTO members the practical and legal difficulties—and commercial implications—of the EU's attempts to expand GI protection through the Doha Round negotiations.

In other disputes, the department worked closely with relevant agencies on the challenges by the EU and the Philippines to aspects of Australia's quarantine regime. Panellists have not yet been appointed to the relevant panels for either of these disputes.

The department was active in monitoring and protecting Australian interests in a range of disputes as a third party, including: the US challenge to the Canadian Wheat Board; the US challenge to Japan's quarantine regime on apples; the EU challenge to continued retaliation by Canada and the US pursuant to the EU Beef Hormones dispute; the EU challenge to US compliance on the Foreign Sales Corporations case; and the recent US challenge to the non-uniformity of the EU's customs laws.

Under the guidance of Australia's Ambassador to the WTO as Chair, the review of the WTO Dispute Settlement understanding also made progress. Given the importance to Australia of WTO dispute settlement, the department has maintained an active role in the review process, to ensure that the outcome maintains the integrity and effectiveness of the WTO dispute settlement mechanism.

WTO accessions

As in previous years, the department worked closely with Australian industry in seeking sound and commercially relevant outcomes from a range of accession negotiations, including Cambodia, Algeria, Kazakhstan, Russia, Samoa, Saudi Arabia, Ukraine and Vietnam, to set the terms under which they would join the WTO. At the same time, we worked with developing and least developed countries in the region to assist their accession negotiations. Cambodia acceded to the WTO in October 2004, bringing the total WTO membership to 148.

EU enlargement and WTO obligations

The department remained alert to the impact of EU enlargement on Australian interests in the WTO. In relevant WTO negotiations we sought to maintain market access or receive offsetting benefits for deterioration in market access for Australian goods as a result of changed arrangements in new EU members.

Free trade agreements

To open markets for Australian business and enhance our economic prosperity, the department contributed significantly to unprecedented activity and outcomes in advancing a range of bilateral free trade agreements (FTAs).

Implementation of existing agreements

Two new bilateral FTAs entered into force on 1 January 2005—with the United States, the world's single largest economy, and with Thailand, a key regional trading partner. The department supported the Government's efforts to complete domestic processes to bring these treaties into force.

Entry into force of the Australia–US Free Trade Agreement (AUSFTA) provided substantial benefits for Australian business: elimination of more than 97 per cent of US tariff lines for Australian industrial goods; substantial improved access for Australia's agricultural sector; a more liberal and improved services and investment environment; and equal competition for Australian goods and services exporters with US suppliers for the $200 billion US federal government procurement programs. In addition, Australian firms will have equal access with US suppliers to the lucrative government procurement programs of 29 US states.

The department's active representations contributed importantly to the decision by the US Congress to create a new visa that will allow 10 500 Australians and their families to enter the United States temporarily to work in speciality professional occupations. These arrangements will assist Australians to take advantage of opportunities created through the AUSFTA.

The entry into force of the Thailand–Australia Free Trade Agreement (TAFTA) provided immediate improvement in the trading opportunities for a significant number of Australian goods, with tariffs on virtually all goods imported from Australia to be eliminated by 1 January 2010.

The department committed further resources to assist other agencies in implementing Australia's obligations under existing FTAs (with New Zealand, Singapore, Thailand and the United States) and to monitor implementation by our trading partners.

New FTA negotiations

The department boosted its trade negotiating resources to assist the Government's bilateral and regional agenda. Cross-cutting taskforces led by senior departmental officials were formed to manage the department's and other agencies' input into the four new FTA negotiations (ASEAN and New Zealand, Malaysia, China and the United Arab Emirates).

Ambitious negotiating timetables have been set, with significant, although not uniform, progress achieved already. In between formal negotiating rounds, the department continued discussions with counterparts and engaged in extensive consultations with Australian industry to refine negotiating priorities.

ASEAN–Australia–New Zealand

In November 2004, the Prime Minister and his counterparts from the ten countries of the Association of Southeast Asian Nations (ASEAN) and New Zealand agreed to launch negotiations on an ASEAN–Australia–New Zealand Free Trade Agreement. Leaders agreed that the negotiations would begin in early 2005 and be completed within two years. The department supported Mr Vaile, who opened the first round of negotiations in Melbourne in February 2005. Two subsequent rounds have been completed. The FTA negotiations build on the extensive trade and commercial linkages the department has helped foster between Australia and ASEAN, and will complement Australia's existing FTAs with Singapore and Thailand.

Australia–United Arab Emirates

At the fourth meeting of the Australia–United Arab Emirates (UAE) Joint Ministerial Commission (JMC) in Canberra in March 2005, Mr Vaile and the UAE's Economy and Planning Minister, Sheikha Lubna Al Qasimi, announced the commencement of bilateral FTA negotiations. As an important and growing regional hub for finance, services and transportation, the UAE is a natural choice for FTA negotiations in the Middle East. The department led Australia's participation in two rounds of negotiations in which both sides committed to securing a substantial, comprehensive and liberalising FTA covering goods, services and investment, and intellectual property protection.

Australia–Malaysia

The prime ministers of Australia and Malaysia agreed in April 2005 to launch negotiations for a bilateral FTA following the release of an Australian scoping study. The study, which the department prepared in close consultation with other government agencies, industry, state and territory governments, non-government groups and Malaysian officials, concluded that an FTA would deliver significant benefits to both countries. The department led the Australian delegation to the first round of FTA negotiations, held in Kuala Lumpur in May 2005, where both sides agreed to pursue a high-quality and comprehensive agreement.

Australia–China

Following an 18-month feasibility study (see sub-output 1.1.1 for more information), Australia and China agreed to launch FTA negotiations during the Prime Minister's visit to China in April 2005. The first meeting was held in Sydney in May 2005. This FTA will cement an important and growing trade relationship with a country that has accounted for a quarter of the world's economic growth in the past two years. As foreshadowed by Mr Vaile, the department has prepared for complex negotiations that will focus also on 'behind the border' issues—where Australian exporters face barriers beyond simply tariffs and other border measures.

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Department of Foreign Affairs and Trade Annual Report 2004–2005
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