1.1.7 Bilateral, regional and multilateral trade negotiations
Our highest trade priority over the last year was working towards a successful conclusion to the World Trade Organization (WTO) Doha Round of multilateral trade negotiations. The department supported the efforts of the then Minister for Trade, Mr Crean, to work with other WTO trade ministers to build the necessary political will and flexibility to conclude the Round. The December 2009 WTO Ministerial Conference achieved the key objectives of reinforcing the importance of the multilateral trading system and setting a strong platform for progressing the Doha Round. It also addressed the longer-term issue of WTO reform. Cairns Group ministers (in April 2010), APEC Ministers Responsible for Trade (in June 2010), and G20 Leaders (in June 2010), all confirmed their support for reaching a balanced and ambitious conclusion to the Round as soon as possible.
The then Minister for Trade, Mr Crean with the Indonesian Minister for Trade, Dr Mari Pangestu at the WTO Ministerial Conference in Geneva.
Photo: Denis Balibouse / Reuters / Picture Media
The entry into force on 1 January 2010 of the Agreement Establishing the ASEAN–Australia–New Zealand Free Trade Area (AANZFTA) was a historic milestone in strengthening Australia’s economic ties with the South-East Asian region. The Agreement covers a population of over 600 million people with a combined GDP of $3.3 trillion and 19 per cent of Australia’s two-way trade, worth $97 billion in 2009. AANZFTA will eliminate tariffs on 96 per cent of Australia’s current exports to ASEAN countries by 2020; currently only 67 per cent of Australia’s exports to the region are tariff-free. Australia’s trade with ASEAN countries has grown by an annual average of nine per cent over the last decade.
The department engaged very closely with the Republic of Korea, making steady progress in the negotiations with both sides committed to concluding a high-quality FTA as soon as possible. We also managed an active agenda of bilateral and regional FTA negotiations with a number of major trading partners, including China, Japan and the Trans-Pacific Partnership (TPP) parties (Brunei, Chile, New Zealand, Peru, Singapore, the US and Vietnam), and took the lead in guiding the future of the Pacific Agreement on Closer Economic Relations (PACER) Plus negotiations. We finalised a joint FTA feasibility study with India in May 2010.
We made a detailed submission to the Productivity Commission’s review of the impact of bilateral and regional trade agreements on trade and investment barriers, and on Australia’s trade and economic performance. Our submission provided information on the significant reductions to tariff and other trade and investment barriers that have flowed from Australia’s FTAs.
The department played a leading role in attempts to conclude the Doha Round. It became clear in 2010, however, that the G20’s aim of doing so by the end of the year would be unattainable. Differences among key players remained considerable, and a stocktake conducted by senior officials in Geneva in March confirmed that what was on the table would not be sufficient to conclude the Round. As calls for greater ambition on one side were countered by an insistence on balance on the other—particularly in relation to market access for industrial products into the major emerging economies—the Round remained at an impasse. Nevertheless, at the informal gathering of trade ministers which Mr Crean convened in Paris in May 2010, ministers accepted our proposals to move forward by exploring new thinking in key areas and through stronger engagement across the negotiating agenda.
(a) Goods data on a recorded trade basis, services data on a balance of payments basis.
Based on DFAT STARS database and ABS catalogue 5368.0.55.004.
Joined by special guests from Egypt, the European Union, Japan, Mexico and the United States, Cairns Group ministers met in Punta del Este, Uruguay in April 2010. Supported by the department, Mr Crean chaired the ministerial meeting, which injected momentum to the WTO Doha Round at a time of fragile global economic recovery.
It also provided a launch pad for subsequent high-level meetings within the Organisation for Economic Co-operation and Development (OECD), Asia-Pacific Economic Cooperation (APEC) and the G20. In addition to the 19 members of the Cairns Group, both Japan and the United States supported the call in the Punta del Este communiqué to bridge the gaps and move the negotiations forward.
The then Minister for Trade, Mr Crean, and the President of Uruguay, Mr José Mujica, at the opening session of the Cairns Group Ministerial Meeting in Punta del Este, Uruguay on 19–20 April 2010. The meeting was hosted by Uruguay and chaired by Australia.
We continued our active involvement in the WTO Committee on Sanitary and Phytosanitary (SPS) Measures to benefit our agricultural industries and ensure that Australian interests are considered in the application of SPS measures by our trading partners. The department also worked closely with other government agencies within Australia to ensure our domestic biosecurity and food safety policies continued to be consistent with our international treaty obligations. On 1 March 2010, a new Bovine Spongiform Encephalopathy (BSE) food safety policy was implemented for imported beef and beef products. We coordinated closely with the Department of Health and Ageing, and the Department of Agriculture, Fisheries and Forestry, to ensure this new policy was consistent with our international obligations.
We played a key role in the WTO Doha Round agriculture negotiations, providing expert technical leadership on a range of central issues. In addition to pushing for resolution of outstanding issues, we continued to press for significant reductions in domestic support and to resist introduction of new and unrestrained safeguard mechanisms. We were actively engaged in work on export competition and domestic support. We also continued our advocacy for improved market access for Australian farmers, highlighting with foreign governments our commercial concerns over access for Australian exports.
Industrials (non-agricultural market access or NAMA)
Progress in non-agricultural market access (NAMA) remained central to an outcome in the broader Doha Round. The department was been active in the past year in seeking to rebuild momentum in the negotiations, in relation to both non-tariff barriers (NTBs) and sectoral liberalisation initiatives. We worked closely with key players, such as the US, to find solutions to issues blocking the negotiations.
The department played an active role in pursuing new markets for services suppliers. Trade in services is important in its own right for the continuing growth and development of the world economy, but it is also essential for enabling trade in goods. We advocated throughout the year for a higher profile for services in the Doha Round, and highlighted the integral nature of the services sector with other parts of the economy, including the commodity and manufactured goods sectors.
Recognising that services relating to supply chain management are crucial to the smooth flow of goods trade, we built coalitions with other countries to develop a proposal to liberalise services in logistics and supply chain services—including transport, handling and distribution services. Australia’s other specific priorities included reductions in foreign equity caps on investments, greater regulatory transparency and improved business mobility (particularly for fly-in fly-out services contractors and professionals) to enable Australian businesses to pursue opportunities in the region more easily. Our priority sectors for market opening included financial services, telecommunications, professional services, education, mining-related and environmental services.
The department defended Australia’s interests in relation to commercially sensitive intellectual property issues in the WTO and other multilateral and bilateral forums. Australia continued its active opposition to proposals for higher levels of protection for geographical indications which threatened the continued use of common descriptive terms (for example ‘feta’ in relation to cheese) and pre-existing trademarks by Australian agricultural and food producers. The department was involved in intellectual property-related negotiations on genetic resources and traditional knowledge issues in the WTO, the World Intellectual Property Organization and the Convention on Biological Diversity.
We led Australia’s participation in an intensified set of negotiations on an Anti-Counterfeiting Trade Agreement (ACTA). Australia is seeking a practical agreement capable of attracting broad support. The Government will decide whether or not to join any eventual treaty once the negotiations are finalised.
We also represented Australia’s interests in international intellectual property-related negotiations and in discussions on a range of other issues including the further development of the international intellectual property system, development issues and climate change.
WTO rules, including trade facilitation
The department led Australia’s participation in the WTO Rules negotiations. We played an active role to ensure improvements to trade remedy rules would benefit Australian exporters and protect the rights of Australian industry. Australia continued to seek the broadest possible prohibition on harmful fisheries subsidies that lead to overfishing and overcapacity in the fisheries sector. This group developed a joint position on special and differential treatment for developing countries, a key sticking point in the negotiations.
Australia has remained an active player in the WTO Doha negotiations on Trade Facilitation, which concern the improvement of customs and other border procedures. With the support of other ambitious members, Australia has been successful in advancing negotiations to an intensive text-based stage.
WTO development agenda
The department continued to advocate a successful conclusion of the Doha Round as a key measure to support developing countries’ sustainable development by helping them better reap the benefits of international trade. We advocated the need for trade reform in core negotiating areas of the Doha Round, particularly the highly distorted agricultural sector, to fulfil the Doha Round’s development mandate. We encouraged other countries to follow Australia’s lead by providing tariff-free, quota-free access for all products from least-developed countries.
The Government supported trade-related development assistance to help developing countries engage in the multilateral trading system and regional trade initiatives. Through AusAID, Australia contributed $2 million to the WTO Global Trust Fund for WTO trade-related technical assistance for developing countries and $3 million to the Advisory Centre on WTO Law, a Geneva-based intergovernmental organisation that provides training and subsidised legal services on WTO law to developing countries. We facilitated the participation of trade officials from Asia, the Pacific and Africa in our biannual Trade Policy Course held in Canberra. The course increased participants’ understanding of the WTO system, and better equipped officials to formulate trade policy and advance their countries’ interests in the multilateral trading system.
The department actively pursued Australia’s interests in a range of WTO trade law issues. We continued to lead the whole-of-government task force to defend Australia’s position in the dispute initiated by New Zealand against our quarantine measures regarding imports of their apples.
We remained committed to the WTO dispute settlement system more generally, through constructive engagement in negotiations in Geneva aimed at reforming the WTO Dispute Settlement Understanding, and third party participation in 12 disputes where Australia had commercial or systemic interests. In particular, we provided submissions to, and participated in, the Panel and Appellate Body hearings in the important China—Audiovisual dispute. We also secured enhanced third party rights in a complaint brought by Canada and Mexico against the US in the US—Mandatory Country of Origin Labelling dispute. This status will provide a greater opportunity for us to advocate Australia’s interests in the case.
In January 2010, the department secured Australian access to the EU’s new high-quality beef quota. We worked to ensure that the quota was applied consistently with the EU’s WTO commitments and without discrimination to Australian exporters. Australian industry has already begun exporting under the quota.
We continued to monitor the WTO ruling on EU sugar export subsidies following Australia’s successful WTO challenge with Brazil and Thailand. The EU announced the export of an additional 500 000 tonnes of out-of-quota sugar in January 2010. We have liaised extensively with the Australian sugar industry, as well as Brazil, Thailand and the EU, and have made representations to the EU on the need for it to act consistently with its international obligations.
We provided advice to other agencies and state and territory governments to ensure WTO compliance of a range of government policy initiatives. An example of this was our role in advising on the WTO consistency of the recommendations of the Productivity Commission’s review of Australia’s anti-dumping and countervailing system. Our trade law advice covered a diverse range of issues including environment and climate change, telecommunications, health and intellectual property protection.
The department completed bilateral negotiations in 2009–10 with Yemen on the terms of market access for goods and services. The department supported Mr Crean’s efforts to secure market access into Russia for Australian beef exporters and continued to work closely with Russia on finalising the terms of its entry to the WTO. We also provided technical assistance to Samoa and Vanuatu to advance their ongoing accession negotiations.
The department continued to promote a mutually supportive approach to trade and environmental policies, and to highlight the contribution trade policy can make to addressing environmental challenges. One of the most concrete means was through the promotion of a robust global market for environmental goods and services (EGS). Australia continued to support the WTO negotiations aimed at liberalising EGS trade. In April–May 2010, we conducted a further round of stakeholder consultations to inform Australia’s positioning in these negotiations. In APEC, Australia is co-sponsoring an initiative to produce a series of case studies on developing APEC economies’ EGS markets—aimed at identifying the key EGS policies, market drivers and challenges.
We have also worked closely with other government agencies on the trade aspects of policy areas such as climate change and measures to counter illegal logging. Australia continues to explore the inclusion of trade-focused environment provisions in its free trade agreements on a case-by-case basis, including in the Trans-Pacific Partnership.
The department used its participation in the G20, APEC and the OECD to strengthen international support for trade liberalisation and a successful conclusion to the WTO Doha Round of trade negotiations.
The G20 played a critical role in resisting protectionist responses to the global economic crisis in 2009–10. The department’s efforts underpinned leaders’ agreement at the Toronto Summit (June 2010) to renew their anti-protectionist pledge until 2013 and to withdraw existing trade restrictive measures. We also led Australian efforts to build G20 support for a balanced and ambitious conclusion to the Doha Round of negotiations as soon as possible.
The department was central over the past year in driving APEC’s agenda to support Mr Crean’s efforts to combat trade protectionism and to leverage regional political leadership to conclude the Doha Round. In Singapore in September 2009, APEC leaders and ministers reaffirmed G20 commitments to strengthen structural reform as a critical ingredient for increasing and rebalancing regional growth. In June 2010, APEC trade ministers extended APEC’s standstill on protectionism until 2011, and reiterated their determination to bring the Doha Round to a successful conclusion.
We supported Mr Crean as vice-chair of the OECD Ministerial Council Meeting (MCM) in Paris in May 2010. We also coordinated an informal gathering of trade ministers, hosted by Mr Crean in the margins of the MCM to discuss the Doha Round. Mr Crean’s participation in the MCM helped ensure that the MCM endorsed the importance of an ambitious and balanced conclusion to the Doha Round.
Through Australia’s permanent delegation to the OECD in Paris, at regular meetings of the OECD Trade Committee, and by chairing its working party, we encouraged the OECD to continue to undertake work of interest to Australia, including efforts focused on non-tariff measures, regional trade agreements and aspects of trade and environment. We encouraged the OECD Trade Committee to continue its work on the role of trade in economic growth and employment coming out of the crisis, and on generating a better understanding of trade in value-added terms. We also supported continued work on a Services Trade Restrictiveness Index, which aims to measure the degree to which existing regulations restrict the international exchange of services.
Australia seeks to further its trade interests through a strategic network of free trade agreements (FTAs). The department is responsible for advancing Australia’s FTA agenda, including leading whole-of-government negotiating teams and consulting extensively with industry stakeholders and the states and territories.
At 1 July 2009, Australia had bilateral FTAs in place with New Zealand, the United States, Singapore, Thailand and Chile. Together with New Zealand, in 2009–10 we concluded a regional agreement with ASEAN. As at 30 June 2010, our active FTA agenda comprised ongoing negotiations with Korea, China, Malaysia, Japan, the Gulf Cooperation Council (GCC), the Pacific Island Forum countries (PACER Plus) and the Trans-Pacific Partnership parties. Our FTA agenda also covered implementation of existing FTAs and feasibility studies.
Korea Free Trade Agreement
By 30 June 2010, five rounds of FTA negotiations with Korea had been held since Mr Crean opened negotiations in May 2009. In 2009–10, the department took the lead in working towards the conclusion of these negotiations with rounds held in Canberra (in November 2009 and May 2010) and Seoul (in September 2009 and March 2010). Progress was generally quite rapid—by the end of the fifth round (May 2010) more than half of the chapter texts had been effectively concluded, and market access negotiations for goods, services and investment, and government procurement, were all well underway.
China Free Trade Agreement
The department supported the visit to Australia of Chinese Vice-Premier, Mr Li Keqiang, in October 2009, during which Australia and China affirmed their commitment to conclude as rapidly as possible the negotiations for a comprehensive, high-quality, balanced and mutually beneficial agreement. This was further confirmed in statements by both countries during the visit of Chinese Vice-President, Mr Xi Jinping, to Australia in June 2010.
Nadia Krivetz is a director in the North Asia Investment and Services Branch, Free Trade Agreement (FTA) Division. She leads negotiations on a range of services and investment issues in Australia’s FTA negotiations with China, Japan and Korea. She negotiates the text of FTA chapters on trade in services, investment and telecommunications services, as well as services and investment market access commitments.
In this role, Nadia draws on her past experience of working on FTA negotiations with the United States, Singapore and Chile—and of the implementation of Australia’s FTA with Thailand, while on posting in Bangkok from 2004–2007.
“Trade is a vital component of Australia’s strong economy, and China, Japan and Korea are three of Australia’s top trading partners. We’re working hard to conclude FTAs with these countries that promote Australia’s economic interests. Working on the negotiations is both challenging and interesting.”
Based on preparatory work undertaken during two rounds of informal officials’ talks in the second half of 2009, the fourteenth round of negotiations was held in Canberra in February 2010. This was the first formal negotiating round since December 2008. The fifteenth round was held in Beijing in June 2010. Discussions at both rounds were conducted in a positive spirit and some progress was made, although the negotiations remained difficult given the breadth and depth of each side’s commercial interests. We further clarified Australia’s requests for commercially-meaningful outcomes in the core market access areas of agriculture and non-agricultural goods, services and investment.
Japan Free Trade Agreement
Leading an inter-agency team, the department continued to make steady progress with Japan on less controversial aspects of our comprehensive negotiating agenda. Three further rounds of negotiations were held (in July 2009, November 2009 and April 2010). Australia hosted two of these rounds.
We made good headway on chapter texts across many areas of the agreement. We also secured agreement from Japan to the inclusion of a telecommunications chapter.
We continued to emphasise to Japan the importance of commercially-meaningful outcomes, especially on legal, financial, education and telecommunications services. These efforts included our continuing insistence on better market access for Australian exports, and our broader advocacy on the benefits of agricultural reform. Negotiations, however, remained difficult.
We supported high-level political engagement, including Mr Crean’s two visits to Japan. These yielded positive messages from Japan’s new government about its commitment to an FTA with Australia.
Malaysia Free Trade Agreement
The department led Australia’s participation in three negotiating rounds (in August 2009, December 2009 and April 2010). Both sides acknowledged that the Malaysia–Australia FTA needed to build on the commitments exchanged between the two countries under the regional ASEAN–Australia–New Zealand FTA (AANZFTA), which entered into force on 1 January 2010. Negotiations progressed steadily, with advances in the draft chapter texts and discussion of Australia and Malaysia’s priority interests for AANZFTA-plus market access outcomes. These include, for Australia, new or improved commitments by Malaysia on a range of goods, and in services and investment, and government procurement.
Gulf Cooperation Council Free Trade Agreement
The department continued to pursue Australia’s interest in securing an FTA with the Gulf Cooperation Council (GCC)—a customs union comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). The negotiations began in mid-2007, and there have been four negotiating rounds since then. It was not possible to hold a further negotiating round since the last round in June 2009, due to an internal review by the GCC of its negotiations with all FTA negotiating partners including Australia. We continued to work closely with the GCC countries to seek early re-engagement in the negotiations. The GCC is an important market for a diverse range of Australian goods and services exports, including for Australia’s automotive sector, taking 82 per cent of total exports of Australian-made passenger motor vehicles in 2009.
Trans-Pacific Partnership Agreement
The department led Australia’s participation in the Trans-Pacific Partnership (TPP) negotiations, including hosting the first round in March 2010 in Melbourne. A second round was held in San Francisco in June 2010. The TPP is a plausible pathway towards the APEC goal of a Free Trade Area of the Asia-Pacific (FTAAP).
We made solid progress on developing architecture for the FTA, and had productive discussions on a range of topics to be covered in the agreement in preparation for producing draft texts. The public consultation process, initiated before Australia’s decision to join the TPP negotiations, continued to assist in further developing our negotiating mandate.
Pacific Agreement on Closer Economic Relations (PACER) Plus
At the 40th Pacific Islands Forum Leaders’ meeting, held in August 2009, leaders agreed to begin negotiations for a new regional trade and economic agreement—known as the Pacific Agreement on Closer Economic Relations (PACER) Plus. In close consultation with other agencies, the department led Australian efforts to advance the PACER Plus negotiations, including developing detailed Australian positions on the priority issues and supporting Forum trade ministers’ decisions on progressing the negotiations.
The entry into force on 1 January 2010 of the Agreement Establishing the Association of Southeast Asian Nations (ASEAN)–Australia–New Zealand Free Trade Area (AANZFTA) was a significant milestone in strengthening Australia’s economic ties with the South-East Asian region. The agreement entered into force for eight countries (Australia, Brunei Darussalam, Burma, Malaysia, New Zealand, the Philippines, Singapore and Vietnam) on 1 January 2010 and for Thailand on 12 March 2010. As at 30 June 2010, the remaining three countries—Cambodia, Indonesia and Laos—had not yet completed their domestic ratification procedures.
To achieve entry into force in 2010, the department provided support for the Government in progressing necessary legislative amendments through Parliament. We also consulted closely with ASEAN countries to transpose AANZFTA tariff schedules from the Harmonised System (HS) 2002 tariff classification format to the more up-to-date HS 2007 format, as this was required to implement the Agreement.
Another key focus for the department in 2009–10 was raising business awareness about the agreement, and working with ASEAN (and New Zealand) to put in place appropriate systems and procedures for effective implementation. The FTA Joint Committee, co-chaired by senior officials from Australia, New Zealand and Brunei Darussalam (as ASEAN coordinator) met twice—informally in December 2009 and formally in May 2010. The Joint Committee approved the first tranche of projects under the agreement’s five-year economic cooperation work program, to which Australia is contributing up to $20 million over five years.
Through the Australia–United States FTA (AUSFTA), the department worked towards improving access to the US market for Australian professional services providers, particularly for the legal profession. These efforts resulted in the endorsement by the US Council of Chief Justices of a draft discipline protocol allowing the exchange of disciplinary information relating to Australian and US legal practitioners offering a possible basis to pursue greater access for Australian lawyers to the US market. In conjunction with the Department of Agriculture, Fisheries and Forestry, we advanced the technical dialogue with the US on specific agricultural market access issues through AUSFTA’s annual Agriculture and Sanitary and Phytosanitary Committees. At ministerial trade talks in October 2009, Mr Crean and US Trade Representative, Ambassador Ron Kirk instructed the department and the Office of the United States Trade Representative to conduct a review, under the Agreement, of the operation and implementation of the government procurement chapter in 2010.
The implementation of the Australia–Chile FTA (ACl–FTA), Australia’s first agreement with a Latin American nation, continued following the entry into force of the agreement on 6 March 2009. Consultations with industry and Chilean authorities were successful in addressing minor implementation issues, including confirming requirements for Certificates of Origin.
The Thailand–Australia FTA (TAFTA) Experts Group on Sanitary and Phytosanitary Measures and Food Standards and the TAFTA Joint Working Group on Agriculture met in September 2009. The department discussed with Thailand the commencement of additional negotiations under TAFTA.
The department worked to ensure the substantive conclusion of the second Ministerial Review of the Singapore–Australia FTA (SAFTA) by trade ministers in July 2009. After that, we worked with Singaporean officials to finalise amendments to the text of the agreement, including in relation to investment and intellectual property, with a view to tabling the revised agreement in 2010–11.
The Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) is the centrepiece of the trans-Tasman economic relationship. The department supported negotiations to add to ANZCERTA an investment protocol which would serve as a framework to further liberalise trans-Tasman investments and enhance investor certainty for these investments, thereby filling a significant gap in an otherwise very comprehensive free trade agreement. These negotiations made good progress in 2009–10. The department also played a major role in a review of the ANZCERTA Rules of Origin, undertaken during 2009 and 2010. Amendments stemming from the review will simplify the rules and make them more consistent with Australia and New Zealand’s other free trade agreements.
Although all WTO Members remain committed to the aim of concluding the Doha Round, differences among some key players have, to date, made that shared objective elusive. New approaches to the negotiations, and concerted political-level attention, will be crucial to making progress in the near future. The department will seek to build on political-level commitment to translate this into concrete results, and will support the Government in advocating the need for negotiating flexibility and focus. A key opportunity will be the G20 Leaders’ Meeting in Seoul in November 2010 at which Leaders have agreed to discuss the status of the negotiations and the way forward. This opportunity will be enhanced by the input of trade ministers to the Leaders’ Meeting, and we will help the Government bring shape to that process and the Leaders’ discussion.
A program of intensive negotiations across the FTA agenda is expected for 2010–11. It may be possible to conclude the Korea–Australia FTA in this period. The department will seek to move forward with negotiations with China and Japan for high-quality agreements and will continue to look for appropriate opportunities to advance FTA negotiations with the GCC. The bilateral FTA negotiations with Malaysia will intensify during 2010–11. TPP parties are seeking to make maximum headway by the time of the APEC Leaders’ meeting in November 2011, with an intensive schedule of meetings planned for 2010–11. PACER Plus negotiations with Pacific Islands Forum members will also intensify.
We will continue discussions with Indonesia on launching a possible bilateral negotiation, and remain engaged on the next steps to starting a negotiation with India.
Following extensive consultation, a scheme is to be introduced in early 2010–11 for the formal accreditation of bodies to issue Certificates of Origin to Australian exporters, under those Australian FTAs which require such certificates.