The Department

1.3 Interests in the Americas and Europe

Table 10: Resources Summary for Sub-program 1.3

Figure 21: Interests in the Americas and Europe Program and Organisational Structure as at 30 June 1998

Sub-program Objectives

In 1997-98, the objectives of sub-program 1.3 were to:

  • maintain the momentum for strengthening the relationship with the United States across the board, including the implementation of a comprehensive strategy for advancing the trade and investment relationship with the United States
  • seek a shared understanding with the United States on Asia-Pacific issues and to support continued United States engagement in the region
  • strengthen Australia’s long-standing links with Europe and expand Australia’s relations with the European Union, including through the conclusion of new mechanisms to strengthen and formalise the bilateral relationship
  • exploit new economic and political opportunities in Latin America, Russia and Central Europe, particularly through effective coordination with Austrade in trade and investment promotion.

Description

The Americas and Europe Division administers the sub-program. AED comprises two branches: Americas Branch and Europe Branch. AED directs the activities of 28 Australian overseas posts, including those responsible for four of the five permanent members of the UN Security Council, six of the major industrialised economic powers, and some of the world’s most dynamic developing countries.

The sub-program pursues strategies designed to help achieve three of the Department’s corporate goals: to enhance Australia’s security; to promote Australia’s economic growth, jobs and standard of living; and to strengthen global cooperation in ways which advance Australia’s interests. These strategies include advising the Government on the development and implementation of Australia’s foreign and trade policy: consulting widely, most notably with relevant commonwealth agencies and business sector representatives; and implementing Australia’s treaty obligations with the 100 individual countries and regional groupings within the geographic area the sub-program covers.

These countries account for 70 per cent of global gross domestic product, and encompass 22 per cent of Australia’s exports and 50 per cent of Australia’s imports. They also provide the major source of direct foreign investment in Australia and are the primary destinations for Australian foreign investment. In the review period, Australian exports increased by 41 per cent to the United States, 31 per cent to Europe and 22 per cent to the European Union.

Table 11: Australia's Merchandise Trade with the Americas and Europe

Figure 22: Commodity Composition of Merchandise Exports to the Americas and Europe

Performance Information

In 1997-98, the Department indicated that it would evaluate its performance using:

  • further progress in strengthening the bilateral relationship with the United States on the basis of a review prepared for the Prime Minister’s visit
  • enhanced bilateral dialogue with the United States on Asia Pacific issues, encouraging constructive US engagement in the region
  • extent to which the trade agenda with the United States is advanced
  • implementation, with input from business and as a basis for future action, of a report on Australian-US trade and investment relations
  • release of a major study of Australia’s trade and investment relations with South America
  • agreement with MERCOSUR on future directions in the CER-MERCOSUR dialogue and progress on the work program
  • extent to which the bilateral trade agenda with Canada is advanced
  • advances in Australia’s commercial and foreign policy interests in Russia, while minimising risks and threats to Australia as a result of continuing uncertainties in Russia
  • enhanced relations with the European Union (including through the conclusion of new mechanisms to formalise the bilateral relationship), its member states and the European Commission
  • effective monitoring of developments in European integration and following up of implications for global security and economic growth
  • extent to which Australia is positioned to exploit commercial opportunities in Central Europe, Russia, and the Newly Independent States of the former Soviet Union and pursue further steps to develop Australia’s economic relations with these countries through consolidating institutional arrangements and facilitating private sector activities
  • development and implementation of strategies to strengthen bilateral commercial and political relations with: the United Kingdom (in the context of the election of a new government in May 1997); France (building on positive developments in the bilateral relationship following the cessation of French nuclear testing); Germany (building on the outcomes of recent highlevel visits and the Partnership 2000 Action Plan); and Italy (implementing initiatives announced in the January 1997 Joint Declaration with the Italian Government).

Performance Outcomes

1.3.1 Interests in the Americas

United States

Australia’s long-standing and important relationship with the United States is characterised by close defence, strategic, trade and investment, and people-to-people links, including a strong, shared commitment to democracy, international and regional security and an open world trading system.

The Department, with the Department of Defence, managed Australia’s participation in Australia United States Ministerial Consultations (AUSMIN) in October in Washington DC, which was important in maintaining and strengthening the relationship with the United States. In a challenging regional environment, the Department supported the Government in developing an improved shared understanding with the United States on a broad range of Asia Pacific issues, including a strategic focus on key bilateral relationships in the region and the importance of developing regional institutions. The Department also provided strong support and policy advice to both Ministers who encouraged sustained US commitment to the Asia Pacific region and reaffirmed Australia’s commitment to work cooperatively with the United States in the context of the alliance to further develop productive relationships with regional countries.

Photo: Minister for Foreign Affairs, Alexander Downer, and Minister for Defence, Ian McLachlan, with US Secretary of State, Madeline Albright, and Secretary of Defense, William Cohen, address a media conference at AUSMIN in October in Washington DC. (photo: Peter Cutts, Washington DC)

The Department continued to advance Australian positions on issues on the bilateral trade agenda, aiming to maximise pressure to improve access opportunities for Australia in the US market and minimise the impact on Australia of US agricultural export subsidies. Exporters in particular took advantage of the resultant access opportunities created in the strongly growing US market.

Elaborately transformed manufactures, including computer parts, aircraft and parts, and motor vehicle parts, now comprise over 40 per cent of Australian exports to the United States; these contributed to exports to the United States increasing by 27 per cent from $4.97 billion to $6.3 billion, between 1996 and 1997. The improved export performance contributed to the bilateral trade deficit narrowing by 8 per cent, as a proportion of total two-way trade. The Department contributed a major market access outcome: ensuring Australian exports of wheat gluten to the United States could continue at normal levels, following safeguards action against EU imports into the United States. The Department supported government efforts to pursue a strategic approach to the trade relationship with the United States, implementing recommendations from the review of the bilateral trade and investment relationship. In particular, discussions under the Trade and Investment Framework Arrangement resulted in agreement to pursue cooperation in advancing the international trade liberalisation agenda through the WTO and APEC.

Canada, Latin America and Caribbean

Following the release (ahead of schedule in May 1997) of its study into Australia’s trade and investment relations with South America, the Department began to implement the study’s findings, including providing support to establish the bilateral Commission on Trade and Investment with Chile. The Department also contributed to negotiating an expanded air services agreement with Argentina, signed during President Menem’s visit to Australia in March and, also during the visit, to negotiating three other agreements to increase cooperation in agriculture, mining and sport.

During the review period, the Department facilitated the removal of significant impediments to Australian coal and canola exports to Mexico. It made substantial progress towards finalising negotiations for a Double Taxation Agreement with Mexico and drafting a protocol to facilitate the export of live feeder cattle. The Department also took the first steps towards meeting Chilean veterinary requirements to export Australian beef to Chile.

The Department contributed to the completion of the CER-MERCOSUR Dialogue work program agreed at the inaugural ministerial-level meeting of the dialogue in June. As a practical step to encourage CER-MERCOSUR business links, a joint customs compendium was created and included on the Department’s website. It also made progress on other aspects of the program, including a declaration on investment principles and arrangements for a MERCOSUR business meeting next November. The dialogue strengthened the already close cooperation between Australia and a number of Latin American governments on trade policy issues, most notably through their participation in the Cairns Group of countries seeking world agricultural trade reform.

The Department invested considerable effort in encouraging Canada to restore Australia’s full beef quota for 1998 to the 42 000 tonnes agreed at the end of the Uruguay Round. Despite these efforts, Canada decided in January against restoring the full quota. However, Canada undertook to consider, quickly and transparently, supplementary permits for Australian exports in excess of the reduced 35 000 tonnes quota. This fell short of the Department’s original aim but was, nevertheless, a positive step.

1.3.2 Interests in the European Union and European Institutions

The Department advanced the bilateral cooperation agenda established under the June 1997 Joint Declaration on Relations between the European Union and Australia. The most notable outcome was the signing in June of the European Community-Australia Mutual Recognition Agreement on Conformity Assessment. Under this agreement, Australian exporters will be able to have their products assessed as meeting EU standards prior to export. Agreement was also reached on the extension of the Coal Agreement and significant progress was made on extending the scope of the Agreement on Scientific and Technical Cooperation.

The Department contributed to further strengthening of policy exchanges with the European Union, including supporting ministerial consultations between Mr Downer and two incoming EU presidencies, Luxembourg in July and the United Kingdom in January. At the two rounds of the Australia-European Commission Ministerial Consultations in September in Brussels and in June in Canberra, discussions centred on global and regional trade policy developments, particularly agricultural issues and bilateral market access issues, but the Department also sought to broaden exchanges to take in political and economic developments.

Following the European Commission’s ‘Agenda 2000’ proposals for changes in the Common Agricultural Policy, the Department continued to urge the European Union to adopt more marketoriented reforms in key sectors such as beef, cereals and dairy, and seriously address the longstanding issue of overproduction and subsidised exports which distort global trade flows. This is part of a longer-term process to encourage the European Union to move towards agricultural policies which are less damaging to efficient producers and exporters such as Australia. The Department contributed to maintaining and improving market access for Australian exports to the European Union, particularly animal products and by-products such as gelatine and other materials which are categorised as at risk of carrying transmissible spongiform encephalopathies such as BSE.

The Department supported Mr Downer’s initiation of a high-level dialogue with the European Union on Asian issues. The first of these meetings was held in May and concentrated on the regional economic crisis. The Department continued to monitor closely developments in European integration and provide analysis and policy advice to ministers on the implications for Australian interests of these developments, particularly the introduction of the single European currency and negotiations to further enlarge the European Union. These processes could have important trade and economic implications for Australian exporters.

1.3.3 Interests in Europe and Eurasia

United Kingdom

The Department continued efforts to strengthen the relationship with the United Kingdom, an important priority for the Australian Government. The Department supported a number of highlevel visits, most notably by the Prime Minister (including for the Commonwealth Heads of Government Meeting in Edinburgh), the Deputy Prime Minister and Minister for Trade, the Minister for Foreign Affairs, the Minister for Industry, Science and Tourism, and a parliamentary delegation. The Department’s efforts to continue the extensive policy dialogue between the two governments led to agreement on a bilateral action agenda identifying key areas for systematic cooperation. The Department also supported continued work on implementing the newIMAGES program, which aims to broaden the public image of Australia in Britain.

Germany

The Department supported several high-level visits and consultations with Germany which further strengthened bilateral relations. Particularly notable were the exchanges on developments in East Asia, including Indonesia, which took place during Mr Downer’s visit to Germany and the visit to Australia by German Minister of State for Foreign Affairs, Dr Werner Hoyer. The Department facilitated increased cooperation on international issues through high-level consultations in Canberra on political and military issues in March, and on economic and trade discussions in June.

The Department used the increased exchanges with Germany to place a high priority on expanding the trade and investment relationship. It supported Mr Downer opening in November in Dresden the largest ever bilateral trade and investment conference, which focused on investment in the financial sector, privatisation and minerals and energy. The Department also supported the visit to Germany in January by the Minister for Industry, Science and Tourism, John Moore, to discuss the prospects for expanded investment flows; this was useful in raising awareness among German business leaders of the advantages of Australia as a base for business activities in the Asia Pacific region. The first phase of the Partnership 2000 Action Plan was completed and Mr Downer and his German counterpart, Dr Kinkel, agreed to prepare a revised version which retained a strong focus on expanding the economic relationship. Under the auspices of the Action Plan, investment seminars were conducted in Germany, helping to establish new bilateral business contacts in key investment sectors. In addition, a bilateral cultural agreement was signed in November to further strengthen cooperation in the arts and cultural arenas.

France

The Department was instrumental in negotiating a Travel Facilitation Agreement with France, providing visa-free entry to France for Australian short-term visitors and business people, and extending the Electronic Travel Authority, including pre-clearance, to French short-term visitors to Australia. This important step forward in the relationship provides a basis to expand people-to-people contacts. The agreement is expected to be implemented provisionally on 1 August 1998. The Department supported negotiations on a Mutual Recognition Arrangement on educational qualifications which will provide a basis to increase future educational exports to France. The Department also supported efforts to strengthen the defence relationship between the two countries, including improving the dialogue on strategic defence issues through a proposed bilateral defence arrangement. This arrangement would form an umbrella within which subordinate arrangements, such as a logistics cooperation arrangement, could be established. This would be particularly valuable to Australia.

Through an agreed strategy to deepen bilateral relations by cooperating more in the South Pacific, the Department collaborated in identifying five South Pacific development assistance projects to handle jointly with the French Government. The Department also encouraged and supported efforts to collaborate with France in its provision of drought relief to Papua New Guinea. The Department provided support for the Prime Minister’s representative, the Speaker of the House of Representatives, Ian Sinclair, at the signing of the Noumea Accords on New Caledonia and at the opening by the French Prime Minister of a major cultural centre in Noumea.

Italy

The Department contributed to developing and implementing strategies to strengthen bilateral commercial relations with Italy by providing support to Mr Fischer, who with the Italian Minister for Foreign Affairs, Dr Lamberto Dini, jointly chaired the inaugural meeting of the Australia-Italy Economic and Cultural Council in September in Rome. The Council seeks to strengthen bilateral economic and political links between the two countries. These were given a further boost by exchanges held between Mr Downer and Dr Dini as well as other relevant ministers in June in Rome. The Department also provided support to Mr Fischer, who with his Italian counterpart, Professor Fantozzi, opened the inaugural meeting of the Business Leaders’ Forum in September in Rome. The Business Leaders’ Forum is a mechanism to stimulate further industry-to-industry links between both countries by identifying business opportunities in a number of sectors.

Photo: First Assistant Secretary, Americas and Europe Division, David Spencer, and the Coordinator, Asia Pacific Affairs, Italian Ministry of Foreign Affairs, Gabriele Menegatti, after the signing of the Arrangement for the Australia-Italy Economic and Cultural Council in July in Canberra. (photo: Michael Jensen)

The Department supported Mr Fischer opening in May in Milan the new International Wool Secretariat’s European Development Centre. Italy is Australia’s largest market for fine wool and Australia’s second largest destination for wool, accounting for total exports of $A1.27 billion. This centre will facilitate joint project initiatives directly with industry, and identify new product and market opportunities for Australian wool.

Spain

The Department negotiated a Travel Facilitation Arrangement with Spain providing visa-free entry to Spain for Australian short-term visitors and business people, and extending the Electronic Travel Authority, including pre-clearance, to Spanish short-term visitors to Australia. This should increase people-to-people contacts and encourage the growth of tourism from Spain.

The Department also actively promoted the commercial relationship with Spain by organising and supporting Mr Fischer’s visit to Spain in September and supporting the visit by Spanish Industry and Energy Minister, Josep Piqué, and a high-level business investment mission to Australia in June. After the visit, Mr Piqué spoke enthusiastically to Spanish business representatives about the opportunities for doing business with Australia.

Russia

The Department facilitated Mr Downer’s visit to Russia in November, the first by a minister of the Howard Government. The visit was part of an ongoing effort to rebuild Australia’s economic relations with Russia, with a particular focus on the potential of the Russian market as a destination for Australian food exports. A major focus of the Department’s efforts over the past year has been developing an improved institutional framework to underpin Australian investments and exports. Significant progress was made towards finalising an Investment Promotion and Protection Agreement, a Double Taxation Agreement and a range of veterinary agreements. These agreements are important factors in managing commercial risk in the Russian market.

Although a planned visit by Mr Fischer to Moscow in May had to be postponed due to political circumstances in Russia at the time, a large delegation of senior business representatives, who had planned to accompany Mr Fischer, proceeded with a visit to Moscow. The Department successfully facilitated a program of appointments with prospective commercial partners and government figures to seek out new commercial opportunities and consolidate existing business arrangements.

Ireland

The Department provided policy advice to Mr Downer who issued statements of support at key junctures in the peace process in Northern Ireland. The Department also facilitated Mr Downer’s visit in February to the Republic of Ireland; this was the first visit by an Australian foreign minister in eight years. During the visit, Mr Downer announced Australia’s latest contribution of $1.5 million to the International Fund for Ireland, a fund the UK Government and the Irish Government established to encourage reconciliation, social advancement and development in Northern Ireland and the six border counties of the Republic of Ireland worst affected by the violence.

Other interests

In the light of the East Asian economic crisis, the Department increased its efforts to develop Australia’s economic relations with the emerging economies of east and central Europe. A significant development in this context was Mr Fischer’s visit to Warsaw in May. This visit stimulated interest on both sides in trade and investment opportunities. Similarly, the Department provided support for the Slovenian Prime Minister’s visit in June to Australia; the visit focused on expanding economic links in anticipation of Slovenia’s planned accession to the European Union. The Department also organised a meeting of the Australia-Turkey Joint Economic Committee for Trade, Economic and Technical Cooperation in October in Sydney. The meeting identified areas and sectors that would further develop the commercial and investment relationship over the next few years.

The Department also worked to build on long-standing links with a number of other countries in the region. It facilitated the upgrading of the bilateral health agreement with Malta and finalised an Investment Promotion and Protection Agreement with Lithuania. The Department continued its efforts to assist Telstra to resolve its commercial problems in Kazakhstan and open the way for ratification of the bilateral Economic and Commerce Cooperation Agreement. The Department provided policy advice to ministers on international efforts to address the worsening situation in Kosovo, including on Australia’s implementation of a UN Security Council resolution imposing an arms embargo against the Federal Republic of Yugoslavia.

Photo: Deputy Prime Minister and Minister for Trade, Tim Fischer, and the President of Lend Lease Central Europe, David Goodrich, at the Lend Lease Wisniowy Business Park property development site in May in Warsaw.

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