OUTCOME 1: Australia's national interests protected and advanced through contributions to international security, national economic and trade performance and global cooperation
1.1.6 & 1.2.6 TRADE DEVELOPMENT/COORDINATION AND ASIA-PACIFIC ECONOMIC COOPERATION
The departments pursuit of access for Australian business to international markets faced significant challenges during the year. Many governments put market-opening on hold in the lead-up to the World Trade Organization (WTO) ministerial meeting in Seattle in December 1999. Lack of agreement to start a new round of multilateral trade negotiations at that meeting led to continuing international reluctance to open markets. This spirit pervaded many regional and bilateral negotiations in 2000. But against this backdrop, an increase in resources for work on regional economic and trade issues enabled the department to contribute to reform and liberalisation in the Asia-Pacific. This, in turn, will have a continuing effect on Australias access to major markets and its overall trade and economic performance.
In particular, during 1999 in the APEC forum, we played a substantial role in delivering the first collective call from Asia-Pacific economies for the launch of a new comprehensive round of multilateral trade negotiations. Then, in the difficult climate post-Seattle, we laid the groundwork that enabled Mr Vaile, as Chair of the June 2000 Darwin meeting of APEC Ministers Responsible for Trade, to secure strong commitment to practical steps towards a new round of negotiations.
The department also supported Mr Vaile in delivering agreement by the Association of Southeast Asian Nations (ASEAN) and Australia and New Zealand ministers to examine the feasibility of creating a free trade area by 2010. This agreement moved the trade dialogue between ASEAN and Australia and New Zealand to a new phase.
Despite the difficulties in achieving concrete improvements in market access, our coordination and involvement in bilateral and sectoral activities helped maintain or improve market access in a range of areas, such as keeping the Japanese fresh orange juice market open, reducing wool tariffs in India and facilitating Australian firms access to the Singaporean market for education-related information technology and telecommunications products.
Other market access goals, as outlined in the Trade Outcomes and Objectives Statements for 1999 and 2000, will require continued efforts. Our analyses provided valuable input for business to assess areas of market growth and take advantage of new and existing access. They also fed into our coordination of Export Finance and Insurance Corporation (EFIC) National Interest Account support for a range of exports, from wheat sales to marine vessels.
The department worked closely with New Zealand to pave the way for APEC ministers and leaders to reach agreement in Auckland in September 1999 to the first collective call from Asia-Pacific economies for the launch of a new round of multilateral trade negotiations. Of particular interest to Australia was APECs call for the elimination of agricultural export subsidies as part of any new round.
Following the disappointing result at the WTO meeting in Seattle in December 1999, the department laid the groundwork to enable Mr Vaile, as Chair of the APEC Ministers Responsible for Trade meeting in Darwin on 6 and 7 June 2000, to secure strong outcomes aimed at rebuilding momentum. Ministers called for the early launch of a round and avoided backsliding by reaffirming previous APEC positions. Our work enabled Mr Vaile to secure: a call from APEC for preparatory work on industrial tariffs to commence in the WTO; the adoption of a series of confidence-building measures to facilitate the launch of a new round; and a further moratorium on the introduction of customs duties on electronic transmissions.
In addition to pursuing regional support for a new round, the department designed and secured APEC agreement to a more rigorous format for Individual Action Plans, which report annual progress by each member economy in achieving APEC trade and investment liberalisation goals. These improvements will make the action plans considerably more effective as a mechanism to encourage progressive reform and market opening. As a result of the departments efforts, the revamped plans will be incorporated into a new web-based electronic action plan that will enhance access to information on changes, so that business can take advantage of new market access.
ASEAN, Australia and New Zealand (AFTACER)
The department supported Mr Vaile in delivering an agreement in October 1999 between ASEAN and Australian and New Zealand ministers to move the existing ASEAN Free Trade AgreementAustraliaNew Zealand Closer Economic Relations (AFTACER) trade dialogue to a new phase by examining the feasibility of creating a free trade area by 2010. By contributing analytical papers on successful free trade agreements and commissioning Economic Benefits of an AFTACER Free Trade Area: Year 2000 Study, we helped the high-level international task force make substantial progress. We also secured Australian business support for its work.
Indian Ocean Rim Association for Regional Cooperation
The departments work in the senior officials working group on trade and investment and preparatory work for the Oman ministerial meeting in January 2000 helped establish a work program for the Indian Ocean Rim Association for Regional Cooperation (IORARC). The program should benefit Australian exporters in future by improving the transparency of customs, quarantine and investment regimes. We surveyed business concerns on trade and investment barriers in the region with a view to further IORARC progress in opening regional markets.
Market Development Task Force
Coordination of bilateral and sectoral efforts has delivered some early dividends for Australian business. The Market Development Task Force, chaired by the Secretary of the department and including representatives from Austrade, the Department of Industry, Science and Resources and Department of Agriculture, Fisheries and Forestry Australia, was re-shaped to focus on ten high-priority, short-term opportunities in each of two market groupings: Asian markets, and markets of Europe, the Americas, Middle East, Africa and the South Pacific. The task force contributed to important market access gains in 19992000, including:
- two more legal firms being granted licenses to operate in China;
- exports of mining equipment and technology to Indonesia;
- 70 food exporters securing $50 million of new sales to Japan;
- successful conclusion of trial live sheep shipments to Saudi Arabia; and
- a company concluding a $40 million investment in a Korean automotive components manufacturer.
Figure 14. Direction of Australias merchandise exports 19992000
Sectoral market access
Sectoral approaches also delivered improvements in market access. Through the Market Access Facilitation Unit, the department, in close consultation with industry, developed a processed foods strategy that focused WTO agriculture negotiations more on processed food interests, with US and European Union food companies lobbying their governments to reduce protection for their traditional rural lobbies. We led governmentindustry efforts to tackle specific market access problemsone result is that access has been maintained for exports to Japan of high-fat cream cheese and fresh orange juice. We produced a new Food Exporters Guide, which will help Australian producers find the right advice and services for exporting.
The department proposed and chaired the inaugural meeting of the Natural Fibres Trade Facilitation Committee in New Delhi in December 1999. Outcomes from the forum included the promotion of Australian products, identifying allies for a new round, discussion on barriers to the textiles and clothing trade, and the creation of business links through informal networking. Following our representations, Indias tariffs on wool tops, yarn and raw cotton were reduced in March 2000.
The department used meetings of the Australia Singapore Joint Council on Information and Communications Technology to put in place a number of trade missions and set up new joint ventures between Australian and Singaporean companies in areas such as telecommunications and IT in education. The department also proposed a WTO work program focusing on standards and conformance issues which impede Australian IT exports, with a decision expected in October 2000.
The department contributed to the Governments automotive trade strategy, directed at increasing the integration of the Australian automotive sector with the global industry and market. The strategy achieved great success, with automotive exports up 36 per cent to a record $3.8 billion in 19992000, and the proportion of total Australian vehicle production exported exceeding 22 per cent. We established a new APEC governmentindustry forum (the APEC Automotive Dialogue) to encourage regional interaction, and substantially took forward a major policy advocacy project in ASEAN.
The Electric Energy Industry Export Council, chaired by the Minister for Industry, Science and Resources Senator Minchin, Mr Vaile and Dr Michael Sargent (Chairman of AusEnergy), identified market access opportunities with the departments help.
Figure 15. Australias exports by broad category 19992000
Figure 16. Australias top ten export markets 19992000
Economic and trade analysis
Australias economic and trade performance was also supported through analytical advice to ministers on global economic, trade and financial developments, their impact on demand for Australian exports, and appropriate policy responses. Such advice focused particularly on East Asia. We developed a new format for monthly reports on trade trends in key markets and a new weekly global economic developments bulletinboth welcomed by ministers as effective delivery of information and advice. New publications and website material made some of this analytical work available to business and the public.
For further information on material available on the departments website, see sub-output 3.1.1.
Our analysis fed into Australias input to international financial forums, notably the Group of 20 industrialised nations. We worked with the Department of the Treasury and AusAID to formulate policy advice for an Australian response to the International Monetary FundWorld Bank Heavily Indebted Poorest Countries (HIPC) initiative, designed to relieve the unsustainable debt burdens of the worlds poorest countries. Australia contributed $55 million to HIPC trust funds. In April 2000, the Government announced that Australia would forgive bilateral debt owed by HIPCs when they qualify for debt relief under the HIPC initiative.
Beyond efforts to pursue market access, the department played a role in facilitating business efforts to develop overseas markets. In particular, the department managed whole-of-government coordination of EFICs National Interest Account transactions throughout the year. This involved analysis of risks and benefits, consultations with relevant agencies and provision of advice to ministers. Export transactions that were supported by the National Interest Account included the sale of wheat to various countries, the sale of data processing and telecommunications equipment to Papua New Guinea and the sale of marine vessels to the Philippines.
We continued to manage the application of the Governments competitive neutrality policy to EFIC, which aims to ensure that EFIC has no net advantage over the private sector in contestable areas of its business. During the year we supported work leading to the passage and enactment of the Export Finance and Insurance Corporation Act 1999; consequently EFIC became liable for, and made, a tax-equivalent payment on its short-term credit insurance business.
The department safeguarded Australias interests at the Paris Club group of creditors, including achieving debt rescheduling for $106.5 million of Russian and $106 million of Indonesian debt to Australia, which minimised the costs to Australia while supporting economic recovery for Russia and Indonesia.
We carried forward negotiations with participants in the OECD Arrangement on Guidelines for Officially Supported Export Credits for an agreement regulating the use of long-term export credits for agricultural products. However, prospects for a successful conclusion of these negotiations in the OECD remain uncertain.
In June 2000, the Government announced a review of private market developments in export finance, insurance and guarantee services and the Governments role in the provision of these services through EFIC. We have started work on the review, with the assistance of an inter-departmental steering committee, and have initiated a process of broad consultation and international comparative assessment. The review is to be completed by November 2000. Written submissions have been invited from all interested parties. Further information on the review can be found on the departments website (www.dfat.gov.au/trade/review.html).
The department contributed to coordination of government trade policies and efforts by providing advice, input and comment on a range of domestic policy considerations to ensure consistency with international obligations and compatibility with trade objectives. Senior departmental staff participated in the International Economic Policy Group, a high-level Australian inter-agency policy group, which met six times in 19992000. We made regular reports on trade-related issues, as well as submissions on topical economic issues, including a detailed paper on regional financial developments. Submissions were made to the Productivity Commissions Review of Australias General Tariffs and to the House of Representatives Standing Committee on Industry, Science and Resources inquiry into increasing value-adding to Australian raw materials.
In April 2000, Mr Vaile released the Trade Outcomes and Objectives Statement 2000, the Governments major annual trade statement, setting out trade policy and trade promotion objectives for 2000 based on consultation with other government agencies and business groups (see www.dfat.gov.au/toos). Preparations began for the Trade Outcomes and Objectives Statement 2001, to be released in MarchApril, which will include the findings of a study on Australias medium-term trading environment.
The department strengthened the National Trade Consultation process, providing enhanced dialogue with the States and Territories and industry organisations on key trade issues. We also assisted Mr Vailes restructuring of the Trade Policy Advisory Council to establish a more tightly focused body of 13 high-level business representatives providing direct peak business advice to the Minister for Trade (see also page 104, quality and quantity information).
Business was more closely engaged in the departments regional trade policy work through the convening of the APEC Business Forum, hosted by the then Minister for Trade, Mr Fischer, in Sydney on 15 July 1999. Two hundred business representatives attended the forum, which covered trade facilitation and included focus groups on e-commerce, the food sector and transport and logistics.
The AustraliaChina Trade and Investment Summit, organised by the department in Melbourne on 7 September 1999, was chaired by Mr Vaile and featured a keynote address by President Jiang Zemin. The summit brought together approximately 200 of Australias leading business executives and about 120 high-ranking Chinese officials and business representatives. We worked in partnership with the Victorian Government and in cooperation with Austrade, the AustraliaChina Business Council and the Chinese Ministry of Foreign Trade and Economic Cooperation to stage the Summit (see also sub-outputs 1.1.1 and 1.2.1).
For further information on public information services and public diplomacy in support of trade development and coordination see output 3.1, page 160.
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