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ABARES Outlook 2019 Conference

News, speeches and media

'Prospects for global trade – Australia's perspective'


Speaker: Secretary of the Department of Foreign Affairs and Trade, Frances Adamson

National Convention Centre, Canberra

Thank you Nikolai [Beiharz, ABC] for that kind introduction.

I too acknowledge the traditional custodians of the land on which we meet – the Ngunnawal people – and pay my respects to elders past and present.

It's a great pleasure to be here, and I thank Steve [Hatfield-Dodds, ABARES Executive Director] for inviting me to participate.

I acknowledge the value of ABARES' work, and of this valuable annual gathering.

ABARES' Outlook conference is a time-honoured affair – and for good reason.

It is the perfect encapsulation of ABARES' mission to deliver its high-quality insight and analysis of Australia's primary industries to both government and business.

This work underpins the wellbeing and prosperity of Australia's regions and industries, and positions us to better adapt to emerging challenges and opportunities.

I am struck at how ABARES' history is intertwined with Australia's evolution as a trading nation.

ABARES was established in 1945 as the Bureau of Agricultural Economics.

Its focus at that time was to understand the economic structure and performance of Australia's primary industries.

In 1946, Prime Minister Chifley said that "the agricultural prosperity of Australia depends upon the widening of world trade".

In 1967, the Australian Government equipped itself to better understand the implications of that insight, when Cabinet expanded the Bureau's role to include policy analysis and forecasting.

Agricultural economics played a leading part in the policy revolution of the 1980s, when our nation achieved a lasting consensus that to prosper we must embrace international markets, not protect ourselves from them.

Fast-forwarding to today, Australia's effective use of trade policy has been essential to our economic growth and competitiveness, in primary industries and across the board.

I am delighted to be here this morning because this is a group that continues to lead thinking on trade and investment for Australia's ongoing prosperity.

And we need that kind of thinking today.

Challenges to the international trading system

The international trading arrangements that have served us well are under pressure.

Under the Trump Administration, the United States is seeking to change the nature of some of its trading relationships.

The Foreign Minister recently noted in Washington that we have publically and privately acknowledged the concerns of the US and others about some trade and investment practices, including concerns about the protection of intellectual property and the rules governing the involvement of government entities in markets.

These issues need to be resolved, but it is our view that no one wins from a trade war.

The outlook for Australian and global growth has been downgraded slightly due in part to the current trade tensions.

Our agricultural exporters are watching closely as new trade policies are affecting major markets – in the United States, Europe, China, and Japan.

Trade policy is becoming more complex and contested than it has been in decades.

We need to work together, pooling expertise across government and business, to stay ahead of the game.

We have an enormous advantage: a consensus that open trade and investment settings – with effective safety nets – has led to prosperity. This is also the formula for our future prosperity.

Having completed 27 consecutive years of economic growth, we stand tall as the 13th largest global economy despite having only the 53rd largest population.

Australian goods and services are in high demand around the world, supported by confidence in our strong economic and trading reputation, and high-quality products.

We remain an attractive investment destination.

Today there is more than $3 trillion of foreign investment in Australia, and foreign-owned companies employ around one million Australians.

The Government noted in the 2017 Foreign Policy White Paper that the dynamic changes underway in our region will continue to drive our economy and offer Australia significant opportunities.

Asia overall stands to deliver nearly two-thirds of global growth to 2030.

By that time, the region will produce more than half of the world's economic output, and consume more than half the world's food and 40 percent of its energy.

Australia's economy will continue to complement those of a growing Asia.

Demand from Asia for our premium agricultural products will be strong.

Over the next decade, well over a billion more Asians will join the middle class, creating a consumer market larger in number and spending power than the rest of world combined.

Their choices will reshape global markets.

Australia's reputation as a provider of clean, green, safe and high-quality produce stands our exporters in good stead to capitalise on this phenomenon.

We want to stay well-positioned in an Indo-Pacific region that remains open to international trade.

So the vital question is: how do we exert maximum influence towards openness and growth?

Supporting a liberal and inclusive international trading system

The World Trade Organization has underpinned sustained global economic growth through its framework of trade rules.

And it provides a systemic process to settle disputes if our trading partners breach those rules.

I have established in DFAT a new branch in the Office of Trade Negotiations – in part to strengthen our capacity to support Australian industry to take disputes to the WTO, and deliver practical commercial outcomes.

We have a strong case, for example, that a range of Canadian measures negatively impact our access to our fourth largest export market for wine, valued at nearly $200 million.

We hope to have these restrictions removed through the independent adjudication of the WTO.

We all recognise that the WTO is not perfect.

There are some substantial weaknesses in the WTO system.

But a system of no rules, no transparency, is no system at all.

Australia will do all we can to sustain the multilateral trading system.

The best way to strengthen the WTO is to use it well.

We believe countries should pursue their trade grievances in ways that strengthen the rules-based character of the world trading system. It is encouraging to see the United States doing this, where just last week a WTO dispute settlement panel found in - in favour of the US - that China provided farm subsidies for wheat and rice well in excess of its WTO commitments. Although subject to appeal, China is now required to bring its subsidies into compliance with WTO rules.

Similarly, last week Australia formally requested WTO dispute consultations with India over the high level of subsidies they pay to their sugar industry. These subsidies have encouraged massive over production in India, contributing to a glut in the global sugar market and badly impacting the world sugar price. We, along with Brazil, believe these subsidies breach India's WTO commitments and have commenced a WTO dispute to prove it.

The point is that the WTO dispute settlement system, although under strain, still functions and we all need to continue to back it.

Which is why we are working with several nations to improve the WTO's ability to handle major challenges.

We are pushing for global agricultural reforms and to address trade distorting agricultural subsidies.

We are helping to drive the ongoing fisheries subsidies negotiations.

We are also leading the move to WTO e-commerce negotiations, which will create new international digital trade rules to make it easier for Australian exporters, including in agriculture, to access new markets and operate across borders.

The Government has pursued a deliberate strategy to build upon WTO rules and continue to open new markets through an ambitious free trade agreement agenda.

Five years ago, Free Trade Agreements covered around one-quarter of Australia's trade [26 per cent].

Once we have concluded negotiations currently underway, nearly 90 per cent will be covered by free trade rules and commitments.

Many of you will have seen the news that Senator Birmingham and his Indonesian counterpart Engar Lukita signed the Indonesia-Australia FTA in Jakarta yesterday.

It is a landmark agreement with a close and important neighbour that will have real benefits for Australia's agricultural producers.

There are big wins for cattle, dairy, grains, and many other areas.

Now the agreement is signed, both sides will work on domestic ratification so we can have it enter into force as soon as possible.

We saw with our three North Asian FTAs, with China, Japan and Korea, that business can boom where tariffs are lowered.

The 11-country Trans-Pacific Partnership will further strengthen access for Australian farmers and agribusiness into markets comprising almost half a billion people.

We are continuing to work to open up new opportunities for Australian business.

We are committed to concluding negotiations this year for a high-quality and mutually beneficial Regional Comprehensive Economic Partnership, which covers 16 Indo-Pacific economies, including 10 of Australia's top trading partners.

We are pursuing an ambitious and comprehensive FTA with the European Union.

The EU as a bloc is Australia's second largest trading partner and an FTA will help to usher in a new era of Australia-EU trade relations.

We are also prepared to negotiate with the UK on a UK-Australia FTA when the time is right.

The UK is second only to the US as an investment partner to Australia and is our seventh largest trading partner.

The potential of our FTAs is evident in the story of Brookfarm, a family-run farm in Byron Bay.

Thirty years ago, Pam and Martin Brook bought an old, run-down dairy farm.

With hard work, some good advice, and a passion for macadamias, they transformed that dairy farm into a thriving food forest.

Brookfarm now not only produces macadamias, but has set up a local factory and bake house.

It's making a difference in the community.

It's also making the most of international opportunities.

Starting off small exporting to New Zealand, Brookfarm has expanded its exports to the United States, then China, and then Japan – with the list going on and on.

As of January this year, under our FTA with China Brookfarm's exports to China are completely tariff free.

Under the TPP-11, Brookfarm can export their goods to new markets, including Canada and Mexico, far more cheaply.

Like many other businesses, Brookfarm sees Europe as its next untapped market.

Looking ahead, my department is increasingly focused on review and implementation of our existing FTAs.

While it may not be as exciting as announcing a new FTA, our aim is to ensure that the agreements Australia has concluded are delivering for Australian business.

Where agreements have been overtaken by more modern rules, we will look to update them.

Where our market access into foreign markets has been overtaken, we will seek to improve it.

Our agreements are not 'set and forget' – they are 'living agreements' that should evolve in light of emerging trends, and to ensure Australia continues to receive the best treatment from our FTA partners.

Harnessing trade and investment opportunities in a changing Indo-Pacific

The economic dynamism in the Indo-Pacific is creating new trade and investment opportunities for Australian agriculture beyond our traditional trading partners.

India remains the world's largest democracy and is now the world's fastest growing major economy.

Today, India is Australia's fifth largest trading partner.

But India still represents less than four per cent of our global trade.

As Senator Birmingham said in Sydney last November, India's burgeoning middle class is transforming its economy.

India offers Australian business more potential growth opportunities over the next two decades than any other single market.

Central to that growth being realised is the continued opening and reform of India's economy, which we are encouraging including through the Regional Comprehensive Economic Partnership.

There is a great deal that we can do to increase economic relations with India, outside of formal trade negotiations.

Recognising this, the Australian Government commissioned the India Economic Strategy, authored by my predecessor Peter Varghese.

The report identifies opportunities across 10 sectors and 10 Indian states.

To take one example, on agribusiness India's food demand is set to outpace supply.

The Strategy sets out a vision for an agribusiness partnership in which Australia has expanded our commodity exports, and become a leading provider of professional agricultural services to India.

Moving closer to home, the Government is committed to taking our partnership with the Pacific to a new level.

The Pacific is our part of the world.

As the Prime Minister said, "We are connected as members of a Pacific family."

Our stability and prosperity are interlinked.

Under the new Pacific Labour Scheme, the Government has expanded opportunities for Pacific workers to help meet demand in rural and regional Australia.

It will help fill labour gaps in Australia's towns and on our farms, boosting economic activity and competitiveness through a ready pool of workers.

Although the scheme is only seven months old, there are already indications that Australian companies are benefitting.

The number of approved employers under the Scheme is growing each month, creating increased demand.

One of our first employers under the Pacific Labour Scheme, Mulpha Australia, had high staff turnover in excess of 160 per cent at its remote Hayman Island resort in Queensland.

But the Scheme has given Mulpha Australia a reliable stream of suitable workers, and helped the company reduce its human resources costs.

Mulpha Australia's experience has been so positive that it is our biggest employer under the Scheme, and now employs nearly one-third of its workers through the program.

Positioning Australia for the future

There are exciting new opportunities to pursue over the next five to 10 years.

New and emerging forms of trade and economic activity will continue to evolve and develop in the years to come.

Technology is relentless.

Technology is revolutionising economic development in areas such as farming, health, communications, and finance.

On the upside, technology is helping to connect populations to the global economy.

Australia can position itself to make the most of these opportunities.

The digital economy provides great opportunities for not just the big players, but also for smaller businesses to connect with their export markets.

Digital platforms will make it easier to do business across borders, providing businesses with global reach to a huge potential customer base.

New technologies and increased connectivity can help release untapped potential in the agricultural sector.

Technologies can help boost farm productivity – such as through smarter irrigation systems that can improve yields, wearable technology to better monitor livestock health and performance, and renewable energy gains helping lower the costs of farming.

But we also need to be clear-eyed about the fact that technological change will bring challenges.

Global production chains may shift, automation will affect how we work, and digital platforms can change who we trade with.

So the Government is working to position ourselves to be at the forefront of developing rules and norms around the emerging digital economy.

And while technology will connect people to the global economy, fears about the impacts of technology on society and jobs may feed resistance to technological advances, and intensify misgivings about trade and globalisation.

Governments in our region will need to consider policies that strengthen economic resilience and competitiveness to enable communities and businesses to harness innovation and embrace technology as a driver of growth.

That's why the Australian Government is working to help communities both at home and overseas adapt to the future of work by supporting an open digital framework, building digital capabilities of small businesses, and bridging the gender digital divide.


Let me conclude with the observation that we need to embrace the future head on.

To do this, we must be strategic, and coordinated, both at home and internationally.

DFAT is ramping up our support for Australian companies doing business overseas to promote investment, address non-tariff barriers to trade, and support businesses seeking new commercial opportunities.

But business also has an important role to play.

Australia's diplomacy is most effective when government and business partner together to support our international economic and commercial interests.

We need your ideas about how we can best prosecute Australia's interests internationally.

As protectionist sentiment rises around the world, government and business need to work together to make the case to the public for trade and investment.

We in government need your support.

The stakes are high, and small steps, taken in the right spirit, can make a difference.

So thank you for the opportunity to talk to you today, and I wish you a productive and enjoyable conference.

Last Updated: 5 March 2019
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