Protection and advancement of Australia’s political, strategic and economic interests with the United States and the Americas, with Western and Central Europe and the New Independent States of the former Soviet Union;
facilitation of the development of Australian trade and commerce with the countries covered;
ensuring an appropriate pattern of treaties and commitments for the conduct of relations, and encouragement of involvement of these countries in Australia’s economic development; and
ensuring a continued constructive involvement of the United States in promoting the security of the Asia-Pacific region.
Australian foreign policy and trade interests in the countries of Europe and the Americas remain substantial and wide-ranging. This is particularly the case with North America and Western Europe where the bilateral relationships are mature and multifaceted, embracing political, strategic, economic and cultural elements.
While the growth in trade with the Americas and Europe has not matched the patterns that characterise Australia’s trade relations with Asia, the overall importance of these countries as economic partners is significant and likely to remain so into the future, particularly as information technology industries become major factors in world trade.
Vigorous investment and technology flows are a feature of Australian bilateral economic relations with the Americas and Europe. North America and the EU account for about a half of investment levels into and out of Australia and are the destination for over a third of Australian exports of services.
The departmental resources assigned to this sub-program are the three branches of the Americas and Europe Division-Americas Branch, West Europe Branch, and Central, East Europe, Russia and Central Asia Branch. Thirty overseas missions contribute to the sub-program.
High-level visits and exchanges, and officials’ consultations showed a range of positive outcomes in political, strategic, and economic relationships with the Americas and Europe;
Market access for Australian exports was a major ongoing activity pursued successfully in the regions covered by this sub-program;
Activity under this sub-program had significant impact in reaffirming at high levels Australia’s traditional ties with the United States Government on security as well as economic issues;
Investment, technology and cultural links were re-emphasised with EU countries.
The United States
High level visits to and from the US during the year served to further reinforce positive Australian relations with the Administration and ensured that Australian interests were prominent in US policy formulation across a diverse range of issues. The Prime Minister’s visit to Washington in September 1993, when he met with President Clinton and other senior members of the US Administration and Congress, was instrumental in reaffirming the health and relevance of the Australia-US relationship and emphasised the value both sides place on maintaining a constructive partnership of policy dialogue and cooperation.
The Australia-United States Ministerial Talks (AUSMIN), which were held in Canberra in March 1994, continued this trend of high-level engagement on matters of mutual interest and concern at the bilateral and regional levels. This was reflected in the seniority of the US delegation, which was headed by Secretary of State Warren Christopher and included Undersecretary for Defence Frank Wisner, the Commander-in-Chief Pacific (CINCPAC) Admiral Larson and Assistant Secretaries of State Winston Lord and Robert Gallucci.
In the light of the Clinton Administration’s preoccupation with congressional relations during the year and the President’s focus on the domestic agenda (in particular health care reform and law and order issues), it was encouraging that Australia was able to maintain and reinforce US awareness of Australian objectives and interests, particularly the long-term importance to the US of the Asia-Pacific region, including the value and potential of the APEC process.
A number of Australian Ministers visited the United States over the year, including Senator Evans, Senator Cook, Mr Brereton and Mr Bilney. Good access was obtained to key members of the Clinton Administration and to key congressional figures. The development of close relations with the Administration and Congress continues to be a central component of Australian efforts to influence decision-makers in the US system.
An important outcome from these efforts was a recognition of Australia’s interests and credentials as a source of innovation on a range of policy issues, including trade, health care, education, environmental issues, human rights and labour practices.
Australia actively pursued its trade interests with the Administration. This remained a priority activity given the large and widening deficit in Australia’s bilateral trade with the US. While the Government welcomed the successful conclusion of the Uruguay Round of GATT trade negotiations in December 1993, it also recognised that this would not alleviate all of our trade concerns with the US, notably in relation to US agricultural policies where the Government is continuing an active and concerted program of representations to press Australian concerns. This included hosting the fifth round of bilateral agricultural trade consultations in Canberra in April 1994, and a meeting between Senator McMullan and US Agriculture Secretary Mr Espy in Buenos Aires in May.
Although he is yet to visit the US officially, the Minister for Trade, Senator McMullan, has met his counterpart US Trade Representative Mr Mickey Kantor on several occasions, as well as meeting other Administration figures. The trade-related exchanges conducted by Senator McMullan at the AUSMIN talks, together with these meetings, presented valuable opportunities for the Government to raise a range of key bilateral, regional and multilateral issues with the Administration .
The Department was again active in rebutting US claims of perceived barriers to access for its exports and investment to the Australian market. Strong representations by the Department were successful in Australia being dropped from the ‘priority watch list’ to a lesser category in this year’s Special 301 listing issued by the US Administration. Special 301 refers to US legislation authorising retaliatory US action against countries deemed to have inadequate intellectual property protection measures.
Australia had been on the priority watch list since 1991. Removal from the list reflected a recognition by the US of the substantial moves taken by the Government in the area of intellectual property protection and that a number of the issues raised by the US did not constitute a barrier to US trade and investment with Australia.
The Department was again involved in addressing claims made by the US in its 1994 Foreign Trade Barriers Report of alleged Australian trade barriers. Significantly, the US was unable to identify damage to the interests of US companies caused by these alleged barriers. In May 1994, the Department issued a revision of its own report, US Trade Barriers Affecting Australian Exports, with the aim of demonstrating the serious restrictions to trade applied by the US. The report lists a range of market access difficulties in areas such as agriculture, banking and shipping and maritime services.
Australia and the US signed a civil aviation agreement in December 1993 which brought to an end a dispute over the conditions applying to Northwest Airlines’ New York-Osaka-Sydney route. The agreement resolved satisfactorily a series of related civil aviation issues which had been the source of governmental and commercial disagreement for some time.
Bilateral trade links are complemented by the wide-ranging political, military and security relationship between Australia and the US. The countries have been linked by a formal alliance for over 40 years and share a joint commitment to encouraging a stable international environment. These links and mutual cooperation remain an important part of the overall relationship, and with the end of the Cold War and the growing importance to both countries of the Asia-Pacific region there is active consultation on the security relationship to ensure that it remains relevant.
The Government maintained a valuable dialogue with the US Administration on recent US defence and foreign policy reviews which have resulted in changes to its international posture and force structure flowing from reductions in its defence spending. However, the US has maintained its force structure and level of engagement with the Asia-Pacific region. These issues were also canvassed at the AUSMIN Talks.
Other visitors from the United States have included Mr Jack Watson (formerly Chief of Staff to President Carter), as personal representative of the President, for Australia-America Friendship Week, April 1994; Mr Craig Smith, Director of the Democratic National Committee, February 1994; former Secretary of Defence, Mr Dick Cheney, February 1994; and Senator John Chafee, senior member of the Senate Committee on Finance in December 1993. The Department also hosted a useful round table meeting with visiting US congressional staff in August 1993.
Canada
The Liberal Party led by Mr Jean Chrétien scored a comprehensive win in the federal elections in Canada in October 1993 securing a sizeable electoral mandate to implement its platform of economic and social change. The election result saw a significant redrawing of the Canadian political map, with strong performances by the two main regionally-based parties, the Reform Party of the western provinces and the Bloc Québécois.
In a House of Commons where two of three members are new, Chrétien’s government has moved cautiously in its first sitting, which ended in June 1994. The success of the Bloc Québécois, which now forms the official Opposition, has meant that Quebec’s sovereignty remains a hotly debated issue.
However, the change in the Canadian Government has not seen any substantial progress towards resolving bilateral trade disputes which continued to mar the tone and substance of the bilateral relationship. The extension into 1994 of a tariff rate quota on imports of boneless beef from sources other than the US and the lack of any agreement on beef access in the Uruguay Round of GATT negotiations frustrated Australia’s aim of satisfactorily resolving this access issue.
The long-running bilateral dispute over canned fruit, although eventually settled in the Uruguay Round, was not a satisfactory outcome.
Bilateral relations across the political spectrum have continued to be characterised by regular and generally constructive dialogue in relation to multilateral forums such as the UN, APEC and the Commonwealth and in like-minded coalitions such as the Cairns Group in the GATT setting.
Senior officials’ consultations on the range of international and bilateral issues, including developments in the region, new trade issues, co-location of overseas missions and information exchanges, took place in May 1994 in Canberra and produced some valuable agreement.
Senator McMullan’s visit to Chile, Argentina, Uruguay, Brazil and Mexico in May 1994 and Chilean President Aylwin’s visit to Australia in October 1993 were instrumental in increasing understanding in Latin America of Australian capabilities and performance and in setting the scene for a deepening in Australia’s relations with Latin America.
Given the liberalisation of Latin American economies and the movement towards regional economic integration, a trend likely to be given further stimulus at President Clinton’s hemispheric summit later this year, Senator McMullan’s visit provided a valuable and timely opportunity for detailed insights into the intentions of Latin American countries, including on the question of the possible expansion of the North America Free Trade Agreement (NAFTA) and the creation of the Southern Cone common market, MERCOSUR.
The visits also provided an opportunity for Australia to press specific matters in relation to improved access to Latin American import and investment markets.
A highlight of the visit was the 34-company delegation from the Australian mining industry, led by Senator McMullan, which participated in Latin America’s largest mining trade fair, EXPOMIN, in Santiago. This initiative was timely support for major Australian mining companies which have established a presence or are considering investment in Latin America.
Senator McMullan’s visit also raised awareness of Australia’s expertise in telecommunications, particularly in supplying isolated rural areas with sophisticated communications. Countries such as Argentina, Brazil and Chile are well-suited to Australian technology. Representatives of Australian telecommunications companies who accompanied the visit identified new market opportunities.
Australian trade with Latin America continued to grow steadily and to diversify during the year. Exports of coal, mining equipment and services, telecommunications and agricultural technology and services, dominated Australia’s trade with Latin America and companies in these sectors have drawn in a broader range of industries. Senator McMullan’s visit added new impetus to this trend. He reinforced with government and business leaders in Latin America Australia’s potential as an economic partner, and as a gateway for economic and cultural links with Asia.
Mexico
Australia’s relations with Mexico are set to broaden and deepen following Mexico’s entry into APEC in November 1993 and the OECD in April 1994. Senator McMullan’s visit to Mexico in May 1994 reinforced the growing strength of the bilateral relationship and resulted in agreement to commence negotiations on agreements for bilateral trade and investment, and double taxation.
The entry into force of NAFTA on 1 January 1994 has major implications for Mexico, specifically in advancing its economic integration into North America and bolstering its internal economic reform program. This will present opportunities and challenges for Australia. A major opportunity will arise in the form of potential joint ventures with Mexican interests aimed at securing access to the wider North American market. At the invitation of Senator McMullan, Mexico will send a significant group of business people to the 1994 NTIOC in Melbourne. On the other side of the ledger, beef tariffs and revisions to livestock importation requirements have severely affected Australia’s trade with Mexico in these areas and this is an issue which was flagged by Senator McMullan as one Australia would be continuing to address.
Mexico finalised a trilateral free trade agreement with Colombia and Venezuela, the Group of Three (G3), in May. Mexico also completed a bilateral free trade agreement with Costa Rica and is in the process of negotiating similar agreements with other Central American countries.
An armed uprising in Mexico’s southernmost state of Chiapas in January of 1994 and the assassination of the ruling Institutional Revolutionary Party’s presidential candidate, Mr Luis Donaldo Colosio, in the lead-up to the August 1994 elections, have highlighted the need for continued social and political reform within Mexico. These issues received considerable attention in campaigning in the months prior to the elections.
Chile
On his visit to Australia, President Aylwin was accompanied by a influential business sector and official delegation, including the Minister Secretary-General of the Presidency, Mr Boeninger and the Ministers for Foreign Affairs, Agriculture, the Economy; the Deputy Ministers for Treasury and Mining; and Mr Roberto Mayorga, Head of the Foreign Investment Committee. President Aylwin signed an extradition treaty and a memorandum of understanding (MOU) on Plant Quarantine.
In November 1993, a forest science MOU to increase forest research cooperation was signed. In May 1994 Chilean and Australian industry representatives discussed the possibility of cooperation between Australia, Chile and New Zealand to promote radiata pine in world markets.
A high-profile Chilean delegation led by the Minister Secretary-General to the President participated in NTIOC ’93, in Melbourne in November.
EXPOMIN was a great success for Australia, with companies making around $6 million in sales at the fair. Expectations exist to increase companies sales into the Chilean market by about 50%.
Negotiations on an investment protection agreement and civil aviation agreement were advanced during the year, and discussions were held on the conclusion of a double taxation agreement.
The Chilean Government proposed to Senator McMullan exploration of ‘strategic linkages’ in which both countries could cooperate in Asian markets. Methods to expand this concept are being examined.
Argentina
During his visit to Buenos Aires, Senator McMullan signed an MOU with Argentina on bilateral cooperation and consultation, providing an umbrella framework within which to progress particular bilateral initiatives and activities. The Australian Geological Survey Office signed a letter of intent with its Argentinian counterpart to conduct exploration surveys for minerals over a wide area of Argentina. In March 1994 formal negotiations on an investment promotion and protection agreement commenced. Double taxation agreement negotiations were to begin later in 1994. Senator McMullan opened a new chancery building for the Australian Embassy in Buenos Aires on 17 May 1994.
The Argentinian Government devoted much energy during the year to securing constitutional reform which would allow for presidential re-election by the 1995 elections. The reforms are to be the subject of future consideration by the Constituent Assembly, narrowly won by the Peronists in April 1994.
Brazil
Senator McMullan’s visit was a valuable opportunity to raise Australia’s profile and to increase Brazilian understanding of the potential for increased trade and investment with Australia. While in Brazil, Senator McMullan registered Australia’s interest in the multi-million dollar Bolivian-Brazilian pipeline project, in which BHP has a major interest, and explored possibilities for Australian participation in the telecommunications market.
Although there were disruptions to the Brazilian political scene during 1994, the economy grew in excess of 4%. The prospective October 1994 elections and an announced program of currency reform aimed at countering hyper-inflation gives some grounds for optimism about the medium term which should help to create further commercial opportunities for Australia.
Other Latin American countries
An Australian mining industry delegation visited Peru in May and was received by President Fujimori. Australian accreditation to Peru was moved from the Australian Embassy in Caracas to the embassy in Santiago, facilitating closer and more regular contact. With the same aim, plans were well- advanced for the appointment of an honorary consul in Lima.
A meeting of Australian heads of mission in Latin American countries was held in Caracas in March, providing an opportunity to review progress in Australia’s relationships in the region and to examine ways of improving Australia’s effectiveness in promoting trade and investment with the region. A joint meeting with Austrade representatives in Latin America followed in Cartagena, Colombia.
In October 1993, Nobel Peace Prize winner, Guatemala’s Rigoberta Menchu visited Australia and met Senator Evans and Mr Bilney, as well as a range of non-government organisations. During the visit Mr Bilney announced a grant of $89 000 to Community Aid Abroad to assist in the repatriation of Guatemalan refugees.
Elsewhere in Central America, elections were held in Panama, Honduras, Costa Rica and El Salvador. The United Nations Observer Mission to El Salvador (ONUSAL) assessed the elections in El Salvador as fair and conducted without reports of any serious incidents. The elections signalled an end to the long and bitter civil war.
The Latin American Task Force met during the year to review progress in implementing relevant recommendations in the 1992 Report of the Senate Standing Committee on Foreign Affairs Defence and Trade on Australia’s relations with Latin America. The task force’s two-year mandate expires in late 1994. A final meeting will be held to finalise its report. The task force has been a useful catalyst in energising Australia’s relations with the region. The growth in trade and investment is now creating its own momentum, lessening the requirement for such a body.
Publication of a newsletter, Latin American Links, began in November 1993. This is produced bi-monthly with around 1 000 copies distributed to the business sector, academia, embassies and other interested parties. Response to the newsletter has been overwhelmingly positive and it clearly fills a long-standing gap in Australia in available information on the economic and democratic transformation of the Latin America region.
During 1994, the Department sponsored a one-off grant covering two post-graduate scholarships to study and report on foreign and trade related issues in Latin America. The recipients will be selected, and the scholarships managed, by the Association for Iberian and Latin American Studies in Australia.
The Caribbean
At the 48th UN General Assembly, Australia, for the first time, voted in favour of a Cuban resolution calling for an end to the US-imposed economic embargo of Cuba. Australia has never supported the embargo, which runs counter to Australia’s general commitment to international free trade in the absence of UN trade sanctions. Australia co-sponsored a US resolution condemning Cuba’s human rights record.
The Australian Embassy in Kingston was closed in January 1994. In the first such exercise of its kind, Australia’s representation to the states of the Caribbean was moved to Barbados where it was co-located with the Canadian High Commission in Bridgetown from January 1994. The sharing of premises and a range of facilities has been successful and might serve as a model for representation elsewhere.
Australia voted in support of the UN sanctions against the illegal regime in Haiti in order to increase pressure for a prompt restoration of the democratically elected government.
Developments in Central Europe continued to be overshadowed by the bitter conflict in the former Yugoslavia. The Department provided analysis of the conflict and international peace efforts and worked in collaboration with other Australian agencies in a range of international forums to support efforts to end the conflict.
The Department also responded to a continuing high level of public interest in the Balkan situation. It monitored the arrangements put in place in previous years to ensure full implementation of the mandatory UN sanctions against the Federal Republic of Yugoslavia (Serbia and Montenegro), the United Nations Protected Areas in Croatia and parts of Bosnia-Herzegovina under Bosnian Serb control.
Australia recognised as an independent state the Former Yugoslav Republic of Macedonia (FYROM), the temporary name used for that State in the United Nations and for its membership of some international agencies. Australia maintained its support for international efforts to resolve the dispute between the FYROM and Greece over the future name of the republic and associated issues. These remained highly contentious, including among various immigrant groups in Australia which continued to make their views known to the Government.
The Department closely monitored political and economic developments elsewhere throughout the region. Multiparty elections held in Poland (September 1993) and Hungary (May 1994) saw voters react against the economic and social costs of the reform processes under way by returning socialist (former communist) parties to power. While these new governments are expected to pursue their economic reforms in a more measured way, there is no expectation that they will seek to halt those reforms. Elections are planned in the Former Yugoslav Republic of Macedonia, Bosnia-Herzegovina, Bulgaria, Croatia and Slovakia in the second half of 1994.
The countries of the Central Europe region continue to aspire to closer cooperation with, and eventual membership of, the European Union, NATO, the OECD and other international organisations.
While the countries of the region experienced another difficult year economically, there were encouraging signs of economic upturn, particularly in Poland, Hungary and the Czech Republic. Slovakia, Romania, Bulgaria and Albania are making steady but less impressive progress in their respective reform processes.
Australia appointed honorary consuls in Prague and Bucharest in April 1994.
The Department continued to encourage Australian trade and investment in the emerging market economies. Australian embassies accredited to countries of the region worked closely with Austrade to identify and pursue opportunities for Australian exports. Recognising the emerging opportunities, a number of prominent Australian companies have already established themselves. The Australian Program of Training for Eurasia (APTEA-see program 6), which has become an effective trade facilitation vehicle between Australia and recipient countries, was reviewed and as a result will continue, with a streamlined structure and greater commercial orientation, until December 1997.
The Department facilitated a number of ministerial visitors from the countries of Central Europe. The Croatian Minister for Agriculture, Mr Ivan Tarnaj, visited in August 1993 and in February 1994 for discussions on possible trading opportunities. Senator Cook, as Minister for Trade, hosted a visit in September 1993 by the Czech Minister for the Economy, Dr Karel Dyba, at which a bilateral investment promotion and protection agreement was signed.
In February 1994, Senator McMullan hosted a visit by Dr Davorin Kracun, Slovenian Deputy Prime Minister and Minister for Economic Relations and Development. Dr Kracun brought with him a delegation of Slovenian officials and business people who participated in the Sydney World Trade Fair and organised trade seminars in Melbourne and Sydney. An official delegation from the Bulgarian National Assembly visited Australia in February 1994 to reciprocate a visit to Bulgaria in 1991 by Australian parliamentarians.
In March 1994, Senator McMullan hosted a visit by Mr Valentin Karabashev, then Bulgarian Deputy Prime Minister and Minister for Trade. While in Sydney, Mr Karabashev, who led a trade delegation of Bulgarian business people, held a seminar on business and investment opportunities in Bulgaria. Senator McMullan also hosted the visit by the Romanian Commerce Minister, Mr Christian Ionescu, who led a significant Romanian trade delegation in April 1994 when a bilateral trade agreement was initialled.
Senator Evans, again in April 1994, was host to the Czech Foreign Minister, Dr Josef Zieleniec, who was accompanied by a large media and business delegation which participated in a business seminar in Sydney. The Department also helped organise a number of visits by high-level officials from Central Europe.
Russia
Upheavals in late 1993 threatened economic and political reform in Russia. President Yeltsin faced defiant regional leaders and a hostile Soviet-era parliament until he stormed the White House (parliament building) in October 1993. Reformers fared badly in the December elections; centrists and the ultranationalist Zhirinovsky polled well. Political reform was advanced, however, through the adoption in December of a new constitution, which delineated more clearly the powers of the executive, legislature and judiciary, and guaranteed civil liberties. The Chernomyrdin government kept inflation down and resisted pressures to reverse economic reform, but it lacked a coherent economic strategy. Russian foreign policy became more assertive, particularly towards the other former Soviet republics.
The Australian Government continued to support Russia’s political and economic reforms. Funding for a modest program of assistance-under the Australian Program of Training for Eurasia, APTEA-to help Russia and the other NIS to shift to a market economy was extended to 1997. In 1994, a group of 44 middle level managers from the new independent states (NIS) of the former Soviet Union, including 23 from Russia, began training in Australia in modern management techniques, including a work attachment with an Australian company. The program, initially designed to deliver technical assistance, has also evolved into an effective trade facilitation tool.
Australia provides support through the IMF, World Bank, European Bank for Reconstruction and Development and the OECD, all of which assist Russia and the other NIS. As a member of the Paris Club of official creditor countries, Australia agreed to defer repayment of virtually all the approximately $438 million (US$320 million) Russia owes Australia.
Australia’s exports to Russia began to recover after the collapse of the Soviet Union almost wiped out bilateral trade. In 1993-94, bilateral trade was worth $269 million, up by more than 57% compared to 1992-93. Many Australian companies continue to explore trade and investment opportunities in Russia, including in telecommunications, services, commodities, consumer goods, and minerals exploration and extraction. The Government attaches high priority to the conclusion of an investment promotion and protection agreement with Russia. A double taxation agreement is also a priority.
The Government has encouraged Australian firms to exploit their competitive edge in Pacific Russia and Siberia, the economies of which are gradually becoming more integrated with the Asia-Pacific region. Australian involvement in Pacific Russia and Siberia has grown. In early 1994, the governors of Primorsky Krai and Sakhalin visited Australia. An ‘Australia week’ was held in Vladivostok in May 1994, raising Australia’s profile and promoting Australia as a regional source of quality goods and services.
Ukraine
The political and economic situation in Ukraine continued to decline in 1993-94, with both the government and parliament failing to introduce market reforms. Crimea remained a potential flashpoint following the election of an ethnic Russian president in that province who called for closer links between Crimea and Russia.
The Australian Government reiterated its support for Ukraine’s territorial integrity and praised the moderation demonstrated by the governments in both Moscow and Kiev to the Crimea problem. Ukraine’s economic disarray hampered the expansion of bilateral trade and commercial relations.
The Australian Government welcomed Ukraine’s ratification of START I in February 1994 and its undertaking to accede as soon as possible to the Nuclear Non-Proliferation Treaty as a non-nuclear weapon state.
Baltic states
The Baltic states of Latvia, Lithuania and Estonia consolidated their development as liberal democracies. Relations with Russia continued to be their main foreign policy preoccupation, with the withdrawal of Russian troops a priority. All Russian troops left Lithuania in August 1993 and Russia has agreed to withdraw its troops from Latvia and Estonia by August 1994. Russian concerns over the rights of the large Russian-speaking minorities in Estonia and Latvia impeded negotiations on troop withdrawals. Missions sent to these countries by the UN, the CSCE and other organisations found no evidence of gross violations of human rights.
After several years of sharp decline, the economies of the three nations began to grow in late 1993 and early 1994. Inflation fell, though unemployment rose. Dependence on trade with the countries of the former Soviet Union lessened; trade links expanded with Western Europe, especially Scandinavia and Germany.
The Baltic states pursued economic and security integration with Western Europe. All three signed the Partnership for Peace agreement and were admitted as associate members of the Western European Union. Latvia and Lithuania initialled free trade agreements with the European Union (EU) in June 1994 and negotiations for a similar arrangement with Estonia were almost finalised.
Australia has supported the development of the Baltic states through multilateral organisations such as the World Bank, OECD and EBRD, and bilaterally through APTEA. Trade and economic agreements were signed with Latvia and Lithuania in late 1993 and negotiations with Estonia were finalised in June 1994. Trade with the Baltic states has increased from a low base; Australian wool exports to Latvia and Lithuania showed strong potential.
In 1994, Lithuania appointed three new honorary consuls in Melbourne, Sydney and Adelaide to replace a consul-general in Canberra. Latvia has an honorary consul-general in Melbourne and honorary consuls in Sydney and Adelaide. Estonia has an honorary consul-general in Sydney.
The major priorities for the states of Central Asia were the consolidation of nationhood and preservation of stability. Elections held in Kazakhstan, Turkmenistan and Kyrgyzstan returned the established governments to power. Economic reform continued; new privatisation and investment programs were announced in Kazakhstan and Uzbekistan. With the exception of Tajikistan, all the Central Asian states introduced their own currencies.
Violent conflict continued in Tajikistan, despite UN-sponsored talks between the government and Islamic opposition which resulted in agreement to seek national reconciliation through political dialogue alone.
Australia’s relations with Central Asia have been growing, particularly commercial ties with Kazakhstan. During a visit to Australia in July 1993, Kazakhstan’s Prime Minister, Mr Sergei Tereshchenko, initialled bilateral agreements on investment protection and economic and commercial cooperation. The Governor- General, Mr Bill Hayden, opened a second Telstra earth station outside Almaty, the capital of Kazakhstan, during his visit in April 1994. The Government of Kazakhstan appointed an Honorary Consul to Australia, and the Australian Government announced in May 1994 that a new Australian Embassy will be opened in Almaty as soon as possible.
Transcaucasus
In Armenia, Azerbaijan and Georgia inter-ethnic strife continued to undermine political stability, economic reform and the expansion of bilateral relations. The Nagorno Karabakh dispute between Armenia and Azerbaijan, in particular, defied resolution.
Australia’s bilateral relations with the countries of Western Europe continued to be a high priority for the Department. Europe remains one of Australia’s most significant economic partners. In 1993-94, trade between Australia and Western Europe (EU and EFTA countries combined) was worth $23.8 billion. Australia’s investment relationship with Europe is also vital. Europe is the largest source of foreign investment in Australia, with the stock of direct investment by European countries standing at $85 billion. At the same time, Australian investment in Europe is worth $27 billion.
Australia and Europe share many political and cultural values. Similar approaches to a range of domestic and international issues ensure a continuing interest in maintaining and building on relations with the region. This continues to be reflected in the number of official visits by Ministers, Members of Parliament and senior officials to Europe.
Australian visitors to Europe included the Governor-General and the Prime Minister. The Prime Minister visited the United Kingdom and Ireland as well as making a brief visit to Villers-Bretonneux in northern France to commemorate the 75th anniversary of the end of World War I. The Governor-General headed the Australian Commemorative Mission to the Western Front. Senator Evans visited Brussels in July 1993 and Athens in January 1994 for consultations with the European Union Presidency. He made a bilateral visit to Switzerland in September 1993.
The Prime Minister again visited Europe in June 1994 for the commemoration of the 50th anniversary of the D-Day landings. His visit included discussions with his UK, French and Belgian counterparts as well as with the French President, François Mitterrand and the President of the European Commission, Jacques Delors.
A number of important European visitors travelled to Australia in the past year. These included President von Weizsäcker of Germany; Secretary of State for Foreign Affairs Mr Hurd, President of the Board of Trade Mr Heseltine and Foreign Minister Mr Goodlad from the UK; Turkish Foreign Minister Mr Çetin; the Finnish Trade and Industry Minister Mr Kääriäinen; the Italian Undersecretary of State for Foreign Affairs, Mr Fincata; and the President of the European Parliament, Mr Egon Klepsch.
The Australia-United Kingdom relationship had a particularly high profile during the year. In addition to the visits by Foreign Secretary Hurd and Minister Goodlad, the Australia-UK Trade and Investment Conference highlighted the growing importance of changes in the bilateral business environments and the opportunities this provides for growth. Held in Melbourne in January 1994, the conference attracted more than 600 participants including a delegation of more than 100 British business people led by the President of the Board of Trade, Michael Heseltine. It provided, in particular, an opportunity to promote Australia as a base for operations in the Asia-Pacific region and the UK as a base for operations in Europe.
After the resolution last year of the Maralinga issue concerning compensation for environmental damage as a result of British nuclear testing in the area, another positive outcome was achieved on the bilateral front. In March 1994, the UK Government agreed to contribute $12 million to the costs of the compact of settlement with Nauru which was signed in August 1993 by the Prime Minister, Mr Keating, and President Dowiyogo of Nauru.
Germany’s continuing importance to Australia was underlined by the participation of a high-level German delegation to the inaugural National Trade and Investment Outlook Conference (NTIOC) held in Melbourne in November 1993. Australia also hosted the visit by the President of Germany, Dr Richard von Weizsäcker, in July 1993.
Australia’s relationship with Germany will again be a priority in the coming year with a range of high profile activities to be undertaken in 1994-95. These will include Australia’s participation as the partner country in the world’s largest annual information technology fair, CeBIT ’95, in Hannover in March 1995; the Australia Germany Association Business Conference in Melbourne in May 1995; and an Australia Abroad Council promotion in various German cities in mid-1995.
Despite serious differences with France over agricultural reform in the Uruguay Round negotiations, bilateral cooperation on a range of international issues including Cambodia, the South Pacific, arms control and the environment, continued to reflect the breadth of the relationship. The French Government was unstinting in providing assistance to a delegation of First World War veterans accompanied by the Governor-General who returned to the Western Front in September 1993 and to the transfer of the remains of the Unknown Soldier to Australia in November 1993.
Prime Minister Keating’s visit to Paris in June 1994, during which he met with President Mitterrand and other French leaders, provided an occasion to reiterate the value Australia places on the bilateral relationship. It also was a further opportunity to show Australia as a significant and independent economic partner for France and French business, particularly in establishing linkages into the Asia- Pacific region. France will be the European market focus group at the National Trade and Investment Conference in December 1995.
An extensive program of bilateral officials’ talks underpinned high-level ministerial contact with Europe. Constructive political talks were held with Denmark, Sweden, and Turkey and both economic and political talks with Germany and the United Kingdom.
The European Union
The European Union (EU) passed several important milestones during the year.
The Maastricht Treaty on European Union entered into force on 1 November 1993, endowing the European Community with its new name. Under the treaty, the EU acquired new functions in the areas of foreign and security policy, justice and internal affairs. The European Parliament was also given more powers.
The European Economic Area, extending the Single Market to the European Free Trade Association (except Switzerland), came into being on 1 January 1994.
Negotiations on enlargement were successfully concluded with Austria, Sweden, Finland and Norway. All could become members in 1995 subject to the outcome of national referenda.
Closer relations were established with a number of East European countries including Russia and Ukraine. Stage Two of European Economic and Monetary Union began on schedule on 1 January 1994.)
Nevertheless, the year saw a rising tendency to question the direction the EU was taking. The low turnout at elections for the European Parliament in June 1994 and the relatively high number of votes given to parties which opposed the Maastricht Treaty, together with the difficulty some countries had in ratifying the treaty, signalled the need to reconsider the pace and extent of integration. Economic hardship following the worst recession since World War Two added to voter uncertainty.
Economic activity in the EU economies fell by 0.5% and unemployment rose by 1% (to 11.3%) in 1993 while total EU imports fell by more than 5%. The severity of the recession had important implications for the Australian economy due to the EU’s importance as Australia’s second largest trading partner and largest source of foreign investment.
The economic performance of EU members is expected to improve modestly in 1994 (with GDP growth forecast to be 1.6% in 1994 and 2.5% in 1995), in line with the general improvement in the global economy.
The changing nature of Europe’s security needs in the post-Cold War period led to intensive discussion about the right shape for Europe’s future security architecture. The January 1994 NATO summit made several important decisions in this regard, including the decision to offer ‘Partnerships for Peace’ to all former Warsaw Pact countries and selected other countries, the endorsement of an independent European security identity and the sanctioning of more active and prominent role for the West European Union in European security matters.
The West European Union assumed further prominence with the holding of a preparatory conference in Paris on the so-called Balladur Pact on stability (named after the French Prime Minister), a proposal aimed at encouraging the negotiation of bilateral and regional ‘good neighbourly’ agreements in Europe.
In this environment, the Government sought to protect Australian interests, to assist Australian business in exploiting opportunities opened up by the Single Market and to broaden the bilateral relationship with the EU.
The successful conclusion of the Uruguay Round of trade negotiations, in particular the international disciplines imposed on the subsidised production and export of agricultural products, provided positive stimulus for the bilateral relationship and advanced Australia’s trade interests in Europe.
During his visit to Brussels in June 1994, the Prime Minister’s talks with Commission President Delors revealed a strong similarity of views on the need to address the issue of long-term unemployment by ensuring sustainable economic growth and improving economic competitiveness. Both sides agreed there were substantial areas for cooperation between the EU and Australia.
Australia’s trade interests with the European Union were at the centre of the annual ministerial consultations with the European Commission held in Canberra on 23 February. Senator McMullan led the Australian delegation and the European Commission delegation was led by Sir Leon Brittan, EC Commissioner for External Economic Relations. Agricultural Trade and Marketing Experts’ Group talks, involving government and industry representatives, were held at the same time.
The consultations highlighted the strong economic links between the EU and Australia and the opportunity for developing the relationship in the post-Uruguay Round environment. Australia was particularly pleased that the commission reaffirmed its previous commitment not to export subsidised beef to specific Australian markets in Asia and confirmed that it had no intention to dispose of agricultural stocks in a way that would disrupt world markets in the lead-up to implementation of the Uruguay Round disciplines in 1995.
The scope for cooperation was underlined by the signing of a science and technology agreement. This reinforced other earlier positive developments such as the signing of a wine agreement in January and agreement to commence negotiations on a mutual recognition agreement to facilitate bilateral recognition of standards. The latter agreement is the first of its kind to be negotiated by the EU with a non-EU member country.
Other high-level exchanges with the EU included Senator Evans’s consultations with the Belgium and Greece EU Presidencies in Brussels and Athens respectively which provided the opportunity to promote Australia’s positions on issues on the international agenda and, its bilateral interests with Belgium and Greece.
Protecting Australia’s market access to the EU was an ongoing activity throughout the year. Access to EU markets for Australian agricultural goods was maintained through the renewal of a voluntary restraint agreement on sheepmeat-including increased access for chilled sheepmeat-covering exports worth around $60 million, renewal of Australia’s quota (5 000 tonnes, plus an additional 1 032 tonnes under the beef balance sheet conversion) for High Quality Beef exports to EU-also worth around $60 million-and agreement with the French Government to extend for one year authority for Australian wild boar to be marketed in France under that name.
The proposed introduction of new, standardised EU-wide veterinary checking procedures on imports of animal products and animal by-products into the EU threatened to disadvantage Australian exports of these products to the EU. The new measures are considered necessary by the EU following the introduction of the European Single Market which involves removing all internal EU borders. Australia is continuing to press the EU to make progress towards concluding a bilateral veterinary agreement which, it is anticipated, would contribute to resolving this issue.
A new set of EU rules for state aid to the coal industry, which should provide the basis for a substantial reduction in assistance to this sector, came into effect on 1 January 1994 and will apply for the nine-year period to 2002. Australia made extensive representations, including ministerial level, to the Commission and member states on this issue.
In addition, a bilateral coal agreement with the EU was negotiated under the Uruguay Round, committing the EU to an immediate standstill in the level of subsidised coal production, reductions in subsidised production on an annual basis and further negotiations by 1997 with a view to securing more accelerated cuts. These EU commitments should, if adequately policed, add rigour to the new state aid rules for coal.
During the year Australia participated actively in the negotiation of a treaty to give effect to the provisions of the European Energy Charter. Multilateral negotiations on most issues were concluded in June 1994, with a final version of the treaty expected to be available for signature by the end of 1994. The treaty includes strong investment protection and promotion provisions and should bring most of the energy sectors of the countries of the former Soviet Union within the multilateral rules-based system of trade established under the GATT. Throughout the negotiations, Australia has preserved its existing rights under the GATT and other trade agreements.