Trade Talk, 14 December 2017
With the curtain soon to close on 2017, this special 'wrap up' edition of Trade Talk looks back over some of the key developments in trade over the past year.
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2017 – Major developments of the year in trade
The WTO Agreement on Trade Facilitation targeting trade-related red tape and administrative costs, and which could add $1 trillion to the world economy, entered into force in March (2 March edition).
An upgrade to the Singapore-Australia Free Trade Agreement entered into force on 1 December creating significant new opportunities for Australian business, particularly professional services exporters (7 December edition).
Australia and New Zealand, along with eight Pacific island countries signed the Pacific Agreement on Closer Economic Relations (PACER) Plus agreement on 14 June. Pacer Plus is unique in that it covers both trade and development (22 June edition).
Bilateral negotiations on the Peru-Australia FTA concluded on 10 November. Peru is one of the fastest growing economies in the world (23 November edition). FTA negotiations between Australia and the Pacific Alliance of Mexico, Chile, Peru and Colombia commenced on 1 July (6 July edition).
The launch of negotiations on a Hong-Kong Australia FTA was announced on 16 May. Hong Kong is Australia's leading business base in East Asia with more than 600 Australian companies (25 May edition).
Leaders issued an outline of the Regional Comprehensive Economic Partnership (RCEP) in November, together with a joint statement underscoring their commitment to RCEP delivering an open and enabling trade and investment environment among the 16 participating countries (23 November edition).
Ministers from 11 Trans-Pacific Partnership (TPP) countries agreed on the value of realising the TPP's benefits and agreed to launch a process to assess options to bring it into force expeditiously (25 May edition).
In September, Indonesia agreed to implement tariff reductions on certain Australian exports, opening the way for increased trade (28 September edition).
The successful conclusion of a joint scoping exercise on a future European Union-Australia FTA was announced on 7 April (13 April edition).
On our North Asia FTAs, in April, tariffs under the Japan-Australia Economic Partnership were cut for a fourth time (6 April edition). In October, Australia and China commenced reviews of the services and investment elements of the China-Australia FTA, as agreed by Ministers (30 March edition), with a view to creating a 'second generation' of the agreement. Marking its three year anniversary in December, Minister for Trade, Tourism and Investment Steven Ciobo noted that tariffs continued to fall as exports continued to grow under the Korea-Australia FTA (new).
In November, ASEAN-Australia-New Zealand FTA (AANZFTA) parties released a public version of a report on their General Review of AANZFTA. Recommendations for improvement will go to Ministers in August 2018 (7 December edition).
Preparations for the ASEAN-Australia Business Summit CEO Forum and SME Conference in Sydney in March 2018 are well underway (7 December edition), and a new DFAT and Austrade report, ASEAN Now, on commercial opportunities, is setting the scene for Australian business (new).
On agriculture, Members of the Cairns Group and the European Union issued a Joint Statement reflecting on the failure of existing rules to discipline trade-distorting subsidies, with a view to the 11th WTO Ministerial Conference (MC11) in Buenos Aires in December (12 October edition). As MC11 began, on 11 December, the Cairns Group again called for new disciplines on the overall level of trade-distorting domestic support (new). Australia was the first WTO member with export subsidies entitlements to eliminate them from its WTO schedule of commitments in June, delivering on an agreement made in 2015 (8 June edition).
Australia, Japan and Singapore gained the support of 70 WTO members at MC11 in December to kick start an initiative towards future negotiations on electronic commerce to ensure international trade rules keep pace with technological change (new).
After six years of disappointing global growth, the IMF announced a cyclical recovery held the promise of more jobs, higher incomes and prosperity going forward (20 April edition). In December, the OECD announced the global economy was strengthening, with annual growth of 3.7 per cent predicted in 2018 (7 December edition). In November, the WTO's World Trade Outlook Indicator pointed to a moderation in trade growth in the final quarter of the year (23 November edition).
After a number of entries reflecting record exports (see for example 17 August edition), and 11 consecutive monthly trade surpluses (9 November edition), our final entry for the year reported the value of Australian exports had reached $373 billion in 2016-17 (7 December edition).
The level of foreign investment in Australia increased five per cent to $3,192.4 billion at 31 December 2016, and the United States remained our largest investor country and largest destination for Australian overseas investors (11 May edition).
Minister Ciobo highlighted the spin-off benefits of foreign investment including hearing new perspectives and ways of doing things, new intellectual property and innovation at the second Northern Australia Investment Forum in Cairns (23 November edition). The Minister delivered his annual Investment Statement to the Parliament on 6 December, highlighting Australia's continued strength as an investment destination and the tangible benefits foreign investment delivers for Australians (new).
Services account for almost 50 per cent of world trade today, greater than manufacturing or agriculture, the WTO pointed out at a Global Services Summit (26 October edition). Booming tourism and international education were major contributors to a new $71.2 billion record in services exports in 2016, DFAT's Trade in Services publication released in August showed (17 August edition).
International visitors spent more in every Australian state and territory in the year to June, with overall visitor spend increasing by 7 per cent to $40.6 billion (14 September edition). Regional Australia saw a boom with a 29 per cent increase in both visitors and spending over the last three years (8 June edition).
Minister Ciobo spoke about more employment opportunities and export growth from more Chinese tourists during a visit to China for the launch of the China-Australia Year of Tourism (23 February edition). Australia has welcomed record numbers of Chinese visitors who are setting new spending records, the Minister said at the conclusion of the Year in December (new).
The award-winning FTA Portal (ftaportal.dfat.gov.au) was expanded in July to provide information on exporting and importing with 16 countries with which we have FTAs (3 August edition). By that time, the Portal had amassed more than 80,000 unique users since its launch just under a year earlier. DFAT launched a series of videos for Australian businesses, particularly SMEs, explaining the benefits and how to use Australia's FTAs with China, Japan and Korea (17 August edition).
More than half of the 1200 Australian SME exporters surveyed expected their overseas sales to increase, and two in five expected to employ more staff, in the next 12 months, an exporter sentiment index published in March showed (16 March edition).
The Foreign Policy White Paper set out the Australian Government's commitment to extend our network of FTAs to cover more partners, and to implement a strategy to better identify barriers to trade and develop a national brand (23 November edition).
The Australian Government released a report reviewing the last 30 years of trade liberalisation by the Centre for International Economics which concluded that trade supports one in every five Australian jobs (9 November edition). Peak Australian business organisations launched a joint fact sheet on how trade has made Australia more prosperous, including that the average Australian family is up to $3,900 better off every year as a result of trade (27 April edition). Research by the IMF indicated that greater trade openness delivers higher real incomes and reduces overall income inequality (23 November edition).
The President of the Business Council of Australia Grant King asked where Australia would be if we were unable to export key commodities and services in exchange for items like pharmaceuticals and computer equipment, in a blog titled "Australia cannot turn its back on trade" (8 June edition). Export Council of Australia CEO Lisa McAuley highlighted the many benefits of exporting including increased sales revenue and profit, lower risk to local business cycle fluctuations and greater innovation inspired by international competition (14 September edition).
The Reserve Bank considered the possible 'next chapter' in Australia's economic story, with our strong institutional and policy framework, flexible economy and links to the fastest growing part of the global economy, Asia, as some reasons for confidence in the future (28 September edition).