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OUTCOME 1: Australia's national interests protected and advanced through contributions to international security, national economic and trade performance and global cooperation

Output 1.1:
Protection and advancement of Australia’s international interests through the diplomatic network and Canberra-based activity

Output 1.2:
Provision of policy advice and analysis to portfolio ministers

1.1.3 & 1.2.3 AMERICAS AND EUROPE

EFFECTIVENESS INDICATORS

US policies and practices, particularly on Asia-Pacific issues, encouraged in directions which protect and advance Australia’s foreign and trade interests, including through high-level dialogue.
The United States encouraged through trade consultations to adopt a more purposeful approach to global trade issues and to be more sensitive to bilateral trade concerns.
Australia’s interests in the European Union, including in relation to reform of the Common Agricultural Policy and other market access issues, supported through high-level visits and structured exchanges.
Bilateral trade and investment links encouraged with major European economies, including Germany, the United Kingdom, France and Italy, through high-level visits, major bilateral conferences, seminar programs and other activities.
Bilateral relationship with Canada reviewed, and initiatives developed to intensify constructive political and trade dialogue.
New trade and investment opportunities pursued in major and emerging European economies, and in Latin America.
Australia’s response to developments in the Balkans—and other areas of instability in Europe—managed in ways which take account of Australian humanitarian and community concerns.

Overview

Australia has significant and growing national interests in the Americas and Europe. Australia’s alliance relationship with the United States is at the heart of our foreign and security policy, and the United States is a key economic partner for Australia. Taken as a single entity, the European Union is Australia’s largest trading partner, and our major source of foreign investment. New economic opportunities are opening up in the emerging economies of Europe and the Western Hemisphere.

The department placed strong emphasis on working with other Australian agencies to help Australian businesses expand their market access in the Americas and Europe, and take advantage of new trade and investment opportunities. Highlights included:

progress in protecting and advancing our bilateral trade interests with the United States;
improved market access and better support for Australian businesses in Latin America;
progress on market access issues in the European Union; and
improvements in the operating environment for Australian companies doing business in Europe’s transition economies.

We also devoted substantial effort to enhancing Australia’s political and strategic dialogue with countries in the Americas and Europe, particularly by supporting ministers’ and senior officials’ participation in bilateral and multilateral forums. Highlights included:

highly successful Australia–United States Ministerial Consultations in 1999;
extensive ministerial talks with the European Union in 1999 and 2000; and
enhanced senior-level dialogue with key partners in Western Europe and Canada.

We made a significant contribution to the Government’s ultimately successful efforts to secure the release of the three CARE Australia workers held in the Federal Republic of Yugoslavia (FRY).

Australia’s interests in the Americas and Europe are set to become even more diverse and demanding. With a new US Administration taking office in 2001, and the US Congress likely to remain subject to inward-looking and protectionist pressures, Australia’s relations with the United States will retain the highest priority. We will also need to remain sharply focused on delivering practical market access outcomes in Europe while pressing strongly for further reform of the Common Agricultural Policy (CAP).

The United States

The Australia–United States Ministerial Consultations (AUSMIN) in Washington in November 1999 were the centrepiece of the department’s effort to encourage US policies and practices in directions favourable to Australia’s interests. AUSMIN strengthened the Australia–United States alliance and enabled ministers to underscore Australia’s interest in high-quality US engagement in the Asia-Pacific region—particularly the importance of good US relations with Japan, China, the Republic of Korea and Indonesia, and continued US involvement in East Timor.

The departmental secretary’s policy planning talks in Washington in February 2000 and Mr Downer’s visit to Washington in April 2000 reinforced Australia–United States cooperation on key issues in the Asia-Pacific region, particularly in the lead-up to the important US House of Representatives vote in June 2000 on permanent normal trade relations with China. We organised Australia–United States politico-military discussions in Canberra in June 2000, helping keep Australia’s views on key foreign and security issues before US decision-makers. We also managed a steady flow of official US visitors to Australia.

The difficult US domestic environment, including protectionist pressures in the US Congress and the proximity of the 2000 presidential and congressional elections, complicated the department’s efforts on both global and bilateral trade. In the wake of the disappointing outcome of the World Trade Organization (WTO) ministerial conference in Seattle in December 1999, we took every opportunity to urge the United States to work towards the early launch of a new WTO round of multilateral trade negotiations.

We achieved several practical outcomes in increasing US receptiveness to Australia’s bilateral trade concerns. We conveyed strongly our concerns over continued large US emergency farm assistance payments and US Government-assisted agricultural exports, especially of grains and dairy products. The roll-over of unused US dairy subsidies from previous years was not extended to sensitive Australian markets in South-East Asia. The department and other Australian agencies ensured Australia’s voice was heard clearly in Washington on the impact of US food aid allocations, intellectual property issues (Australia was dropped from the US ‘Special 301 Watch List’ in 2000) and quarantine matters. Following Australia’s urgings, the United States tackled further European Union circumvention of US wheat gluten safeguard arrangements.

We contributed to efforts to protect royalty rights for Australian musicians, to allow access for Australian prawn exports to the United States from Spencer Gulf, and to facilitate access conditions for Australian lamb under the US safeguards quota, including by securing US acceptance of lamb product in transit at the time the quota was implemented. The department was centrally involved in resolving the long-running dispute on automotive leather (see also sub-output 1.1.5). The outcome successfully avoided retaliation against our other exports to the United States.

Figure 11. Australia’s merchandise trade with the United States

Canada

The department played a key role in resolving the longstanding dispute over access to Australia for Canadian salmon (see also reporting against sub-output 1.1.5). We also worked to protect the access of Australian beef into Canada—beef exports increased in 1999, amounting to nearly 30 per cent above Australia’s ‘country-specific’ quota.

Our initiatives to intensify constructive political and trade dialogue included:

a joint Australia–Canada statement in February 2000 underlining the importance both countries place on e-commerce;
a successful visit in May–June 2000 by a Canadian business delegation led by the International Trade Minister; and
Secretary-to-Secretary consultations in June 2000, which helped deepen the dialogue on regional political issues.

A consular sharing agreement between the two countries was successfully reviewed, and we facilitated a memorandum of understanding on information sharing in telemedicine between the new Canadian Arctic Territory of Nunavut and Queensland Health.

Latin America

The department made significant progress in improving market access for Australian companies in Latin America and supporting those already operating there. Gains included better dairy market access in Peru and Chile and the conclusion of a double taxation agreement with Argentina. An investment promotion and protection agreement with Chile came into force.

We supported Mr Vaile’s visit to Argentina, Brazil, Chile and Uruguay in August and September 1999. The visit not only highlighted Australia’s Cairns Group objectives but promoted bilateral trade and investment opportunities, including through the opening of a new Austrade-managed Consulate-General in Peru.

The department provided information and analysis to the Trade sub-committee of the Joint Standing Committee on Foreign Affairs, Defence and Trade for its inquiry into Australia’s trade and investment relationship with South America.

Table 3. Australia’s regional trade with the Americas

	EXPORTS			IMPORTS
	1998–99 ($M)	1999–00 ($M)	TREND GROWTH1994–95 TO 1999–00	(1998–99 $M)	1999–00 ($M)	TREND GROWTH 1994–95 TO 1999–00
USA	7 984	9 577	17.4	20 893	23 003	7.2
Canada	1 274	1 176	0.6	1 547	1 856	5.8
Mexico	314	254	23.2	365	382	25.3
Total NAFTA	9 579	11 012	14.7	22 930	25 433	7.1
Caribbean	175	154	47.1	146	217	–8.6
Brazil	447	470	8.2	342	441	–2.5
Chile	212	129	1.5	68	61	–1.6
Argentina	123	96	–1.7	86	73	1.6
Total South America	894	797	4.7	549	641	–1.6
Total	10 683	12 000	14.2	23 535	26 127	6.9

Source: Compiled by DFAT from ABS data.

Europe

European Union

The department was closely involved in achieving practical advances in the bilateral cooperation agenda with the European Union, consistent with the Australia–European Union Joint Declaration. These advances included:

agreement to convene a joint government–industry seminar to exchange information and discuss future cooperation in higher and vocational education and training;
progress towards removing impediments to Australian participation in the European Union’s Fifth Framework Program for Research and Technological Development; and
better understanding within the European Union of Australia’s views on major environmental issues.

The department extended the Australia–European Union dialogue on global and regional issues, including East Timor, through two sets of ministerial consultations with the EU Presidency (July 1999 and February 2000). We prepared the ground for discussions in June 2000 between an Australian parliamentary delegation and key members of EU institutions that extended well beyond traditional trade issues. Extensive dialogue between departmental and European Union Troika officials on Asia-Pacific issues encouraged shared perceptions on key regional concerns. The upgrading of Australia’s liaison office in Lisbon into an embassy in the second half of 2000 will keep Australia closely engaged with Portugal, particularly on East Timor.

Mr Downer and Dr Jaime Jose Matos de Gama

Mr Downer and Portuguese Foreign Minister, Dr Jaime Jose Matos de Gama, participate in Australia–EU Presidency ministerial consultations in Lisbon in February 2000.

Against significant counter-pressures in Europe, the department maintained strong pressure on the European Union both directly and indirectly (through Australia’s contribution to Cairns Group positions) to reform the Common Agricultural Policy (CAP) more fundamentally. Pressure from Australia and other Cairns Group members has led to some limited reforms. In particular, a reduction in EU support for oilseeds raised the possibility of increased exports of Australian oilseeds to the European Union and other markets, subject to supply and price considerations.

The department’s representations and negotiations on other market access and subsidy issues in Europe achieved a good measure of practical success. Working closely with the Australian Quarantine Inspection Service, we maintained access to the EU beef market, successfully addressing European concerns about the health and safety of animal and food products. In close collaboration with industry, we made significant headway on gaining improved access to the EU market for Australian prawns. A significant reduction in EU export subsidies on malt raised the prospect of improved returns for Australian suppliers in world markets.

Figure 12. Australia’s merchandise trade with the European Union

Major and emerging European economies

The department encouraged Australia’s bilateral trade and investment links with major European economies in several ways, including:

playing a key role in high-level visits underpinning the reinvigorated Australia–France relationship, including the September 1999 visit to Australia by the Speaker of the French National Assembly, Laurent Fabius, and the Prime Minister’s visit to France in April 2000;
supporting the annual Australia–Europe dialogue in Paris in April 2000, which enabled Australian and French business leaders to explore new trade and investment opportunities on both sides;
working with Australian business and other Australian agencies to develop exports of automotive and aircraft components to France;
contributing to the biennial Australia–Germany Business Conference in Brisbane in October 1999, bringing together 130 Australian and German business leaders to exchange views on banking and finance, minerals and energy, tax reform, communications and the media, and the Australia–Germany Partnership 2000 Action Plan;
working closely with German authorities on Australia’s exhibition at Expo 2000 in Hanover (see also reporting against outcome 3);
managing dialogue on trade and political issues with the United Kingdom, including through visits to London by Mr Downer, a visit to Australia by John Battle, Minister of State for Foreign and Commonwealth Affairs, and extensive preparations for Australia Week in London, including for the visit of Mr Howard in July 2000;
supporting the visit in March 2000 of the Irish Taoiseach Bertie Ahern, which helped deepen trade and investment links with a very successful European economy; and
contributing to the negotiation of new arrangements with Italy covering working holidays, and promoting bilateral trade links with Italy through a visit to Australia in August 1999 by the Italian Treasurer, Giuliano Amato.

Ministerial and other senior-level visits, supported by the department, raised Australian awareness of commercial opportunities in Europe’s transition economies and European awareness of Australian business’s ability to meet their needs. Mr Vaile formally opened Australia’s new (Austrade-managed) Consulate-General in Bucharest during his visit to Romania in October 1999; he also co-chaired a meeting of the Australia–Romania Mixed Commission—the commission has proved useful to Australian business participants looking to establish or expand their presence in Central Europe. Other events that improved the operating environment for Australian companies included the signature with Slovakia of agreements on trade and economic cooperation and double taxation; the initialling of an investment protection and promotion agreement with Slovakia; and the conclusion of a double taxation agreement with Romania. The department helped obtain a renewed waiver of the Polish tariff on coarse wool, and lobbying by the embassy in Budapest contributed to the Hungarian Government’s decision to reduce the tax on gas for road use, thereby assisting Australian efforts to secure contracts in this sector. The Australian business community welcomed a departmental paper about opportunities in Central Europe for Australian envirotech and environmental management.

Table 4. Australia’s regional trade with Europe

	EXPORTS			IMPORTS
	1998–99 ($M)	1999–00 ($M)	TREND GROWTH 1994–95 TO 1999–00	1998–99 ($M)	1999–00 ($M)	TREND GROWTH 1994–95 TO 1999–00
UK	4 473	4 156	14.2	5 545	6 356	6.6
Italy	1 564	1 574	5.9	2 916	3 044	8.8
Germany	1 409	1 246	4.3	6 082	5 792	4.9
Belgium-Luxembourg	1 085	1 090	18.5	662	737	–0.2
France	914	871	3.5	2 202	2 245	5.1
Total European Union	11 629	12 039	10.7	23 327	24 366	6.2
Total East Europe	443	417	3.1	293	345	11.3
Other Europe	978	682	4.5	1 420	1 573	5.6
Total	13 050	13 138	10.0	25 040	26 284	6.2

Source: Compiled by DFAT from ABS data.

The Balkans and Cyprus

In the Balkans, working with Special Envoy Malcolm Fraser, we made a significant contribution to the Government’s effort to secure the release of the three CARE Australia workers—Steve Pratt, Peter Wallace and Branko Jelen. Mr Pratt and Mr Wallace were released in September 1999, and subsequent lobbying led to the release of Mr Jelen in December 1999 (see also reporting against outcome 2).

The Government’s Special Envoy on Cyprus, Ambassador John Spender, consulted closely with the United States, United Kingdom, United Nations and Cypriot communities in Australia on the Cyprus dispute. Australia offered the services of a constitutional expert to the United Nations and the parties to the dispute to help find a resolution.

Reporting against quality and quantity indicators and administered items commences on page 100.