Trade Talk 14 December 2018
With the curtain soon to close on 2018, this year's 'wrap up' edition looks back over some of the key developments in trade over the past year. We wish all our readers a happy holiday period and hope to see you back on 24 January 2019. Please consider sharing your feedback on Trade Talk with us by emailing firstname.lastname@example.org.
2018 – The year in trade
FTAs soon to enter into force
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11)
- The full text of theTPP-11 was published in February (23 February edition), and signed in Santiago, Chile, on 8 March (8 March edition).
- The TPP-11 was tabled in Parliament along with a National Interest Statement in late March (5 April edition). The Joint Standing Committee on Treaties recommended binding treaty action be taken in August (30 August edition). TPP-11 legislation passed the House of Representatives in September (27 September edition) and both Houses in October (26 October edition).
- Australia became the sixth country to ratify the TPP-11 on 31 October, and the date of entry into force of the TPP-11 for Australia, Canada, Japan, Mexico, New Zealand and Singapore was set for 30 December (8 November edition).
- Modelling showed the TPP-11 would boost Australia's annual GDP by $15.6 billion by 2030, increase exports by $29.9 billion and generate projected additional direct investment worth $7.8 billion (13 September edition).
- We published a blog outlining five reasons the TPP-11 is good for Australia (13 September edition).
FTAs not yet in force
- Prime Minister Scott Morrison and Indonesian President Joko Widodo met in Indonesia, including to discuss the Indonesia-Australia Comprehensive Economic Partnership Agreement (30 August edition). Australia and Indonesia announced the successful conclusion of the negotiations on 31 August (13 September edition).
- Australia and Hong Kong announced the conclusion of negotiations on a Hong Kong – Australia FTA on 15 November (22 November edition).
- During a trip to Fiji in October, Assistant Minister for Trade, Tourism and Investment Mark Coulton conveyed Australia's wish that Fiji join the development-focused free trade agreement known as the Pacific Agreement on Closer Economic Relations (PACER) Plus (11 October edition).
- In November, the Joint Standing Committee on Treaties released its second report into the Peru-Australia FTA, recommending binding treaty action be taken (22 November edition)
FTAs under negotiation
Regional Comprehensive Economic Partnership (RCEP)
- Leaders agreed to boost trade, investment and business links, and expressed strong support for a swift conclusion to the RCEP trade negotiations at the ASEAN-Australia Special Summit in Sydney in March (22 March edition).
- In October, RCEP Ministers welcomed the intensification of market access negotiations, emphasising the need for further improvements, and noted progress in the negotiations of chapters on rules (26 October edition).
- In November, RCEP Leaders issued a Joint Statement saying negotiations had reached the final stage and that they were determined to conclude a modern, comprehensive, high quality and mutually beneficial RCEP in 2019 (10 December edition).
Australia – European Union Free Trade Agreement
- The then Prime Minister Malcolm Turnbull advocated for the Australia – European Union FTA in Berlin in April, saying it would deliver for Australian producers and farmers and represented a huge opportunity for Europe's agri-food sector (3 May edition).
- The EU agreed to commence FTA negotiations with Australia on 23 May (31 May edition) and the first round of negotiations took place in July.
- We outlined Australia's objectives for the FTA on the DFAT website (9 August edition).
- The second round of negotiations took place in November 2018 (10 December edition).
- In a submission on the Australia-EU FTA, BCA Chief Executive Jennifer Westacott said the FTA would help improve competitiveness and protect Australian workers, against a backdrop of growing trade tensions (27 September edition).
Prospective FTA negotiations
- Then Minister for Trade, Tourism and Investment, Steven Ciobo, highlighted Australia's wish to secure a high quality and ambitious post-Brexit bilateral trade agreement with the United Kingdom during a visit to London (5 April edition).
- Discussions in an Australia-UK Trade Working group meeting in July focused on the future bilateral trade and investment relationship, and our shared ambition to start bilateral FTA negotiations (9 August edition).
Free trade agreements in force
- In March, a PwC study found Australian exporters were embracing the China, Japan and Korean FTAs, with positive influences noted on business activity, expansion planning and international investment (8 March edition).
- We noted that since the China-Australia FTA entered into force in 2015, exports had grown at rapid rate. This included a 22 per cent growth in goods exports in 2017 (28 June edition).
- We highlighted some strong export results for the first three quarters of 2017 under the Japan-Australia Economic Partnership Agreement on the third anniversary of its entry into force in January, including honey exports (up 66.1 per cent) and mandarins (up 65.8 per cent) compared to the same period in 2016 (25 January edition).
- A report issued to mark JAEPA's fifth round of tariff cuts in April showed almost 96 per cent of eligible exports used JAEPA's tariff preferences in 2017 (5 April edition).
- Australian and New Zealand trade ministers met in August to discuss new opportunities for businesses in the trans-Tasman Single Economic Market and work to further enhance trans-Tasman integration, including for SMEs (9 August edition).
- We released the services expansion to the FTA Portal in May (3 May edition).
- We welcomed submissions on FTAs from business people and interested groups including academics in March (22 March edition), and on the Australia-EU FTA in September (13 September edition).
World Trade Organization
- In July, Australia welcomed a resounding victory in the WTO tobacco plain packaging dispute, with a ruling confirming Australia's tobacco plain packaging measures made a meaningful contribution to improving public health (13 July edition).
- Australia received support to join the WTO Agreement on Government Procurement after almost three years of negotiations in June (13 July edition). WTO GPA parties unanimously agreed to Australia's final offer to accede to the agreement in October (26 October edition).
- Australia requested the establishment of a WTO panel to resolve a dispute with Canada on discriminatory measures affecting Australian wine exports in August (30 August edition).
- Australia announced that action would be taken in the WTO on Indian sugar subsidies in November (22 November edition).
- G20 trade ministers endorsed the urgent need for WTO reform (27 September edition), and leaders committed to improving the functioning of the WTO at the G20 Leaders' Summit in Buenos Aires in November (10 December edition).
- Prime Minister Scott Morrison emphasised Australia's support for efforts to improve and strengthen the WTO and outlined that Australia would continue to implement a pragmatic trade agenda pursuing trade liberalisation wherever possible (8 November edition).
- The then Minister for Trade, Tourism and Investment told the National Press Club Australian businesses enjoyed inputs with among the lowest tariffs anywhere in the world and advocated for the benefits of free trade (15 June edition).
- In a speech to the Trans-Tasman Business Circle, DFAT Secretary Frances Adamson encouraged business to work with government in making the case that trade delivers real benefits across the Australian community (27 September edition).
- Forty one developed and developing members of the WTO, including Australia, issued a joint statement expressing concerns over rising trade tensions and risks of escalating protectionism in May (18 May edition).
- The Minister for Trade, Tourism and Investment visited Washington in October to promote the interests of Australian businesses, and to advocate for a WTO-consistent resolution to trade tensions between the United States and China (26 October edition).
- IMF Managing Director Christine Lagarde called for the de-escalation of trade disputes, and for the global trading system to be modernised, to ensure that global trade could be more effective in delivering benefits to all (11 October edition).
- An IMF blog post argued that retreating from international cooperation risked recreating some of the conditions that gave rise to past crises (13 September edition).
Australia's international partners
- Trade, Tourism and Investment Minister Simon Birmingham led Australia's delegation to the Inaugural China International Import Expo in Shanghai in November, where over 200 Australian companies took part making Australia's commercial presence the third-largest (8 November edition).
- In May, RBA Governor Philip Lowe said China was likely to remain Australia's largest export destination for the foreseeable future (31 May edition).
- Australia received confirmation from the United States of an exemption from its steel and aluminium tariffs in May (3 May edition).
- The Australian Government endorsed the India Economic Strategy and agreed to implement a series of initial measures in November (22 November edition).
- The then Assistant Minister for Trade, Tourism and Investment travelled to Hanoi following the signing of a Strategic Partnership with Vietnam in March (5 April edition).
- Australia and Sri Lanka held inaugural talks under the Trade and Investment Framework Arrangement, signed in November 2017, in April in Canberra (3 May edition).
Australia's trade and investment statistics
- The Australian Bureau of Statistics announced total goods and services exports reached a record $401 billion for the first time in 2017-18 (9 August edition).
- Forecasts suggested the mining industry would earn Australia a record quarter-trillion dollars in exports in 2018 (11 October edition).
- On tourism, in February 2018 China overtook New Zealand to become Australia's largest inbound visitor market for the first time (19 April edition). A landmark 'open capacity' aviation arrangement with China and the recent China-Australia Year of Tourism supported this growth (18 May edition).
- The annual Investment Statement to the Australian Parliament in August pointed to data showing foreign direct investment in Australia supported 1 in 10 jobs in 2014-15 (30 August edition).
- Australia remained in the top ten global destinations for foreign direct investment according to the United Nations Conference on Trade and Development's World Investment Report 2018 (28 June edition).
- Australia's inward FDI stock reached $849 billion in 2017, an increase of 7 per cent on the previous year and more than 50 per cent above 2011 (18 May edition).
- The Foreign Investment Review Board's 2016–17 Annual Report showed Chinese investors were the largest source of investment approvals by both value ($38.9 billion) and number (9,714) (28 June edition).
New policies and Working with Business
- In November, the Australian government launched a new Economic and Commercial Diplomacy Agenda to help Australian businesses identify commercial opportunities and navigate the challenges of operating in overseas markets (10 December edition).
- Minister Birmingham also announced an Action Plan to help Australian farmers and businesses tackle trade barriers, including a dedicated non-tariff barriers website (10 December edition).
- Australia released its first Defence Export Strategy to become a top ten global defence exporter within the decade in February (8 February edition).
- The Australian Defence Export Office and Austrade signed a Memorandum of Understanding to engage dedicated local industry experts in key export markets in June (15 June edition).
- We highlighted the release of a number of reports over the year. These included a report on Australia's shipbuilding industry's strengths (23 February edition), a Data61 report identifying seven 'sunrise industries' in ASEAN (22 March edition), and a 'farm gate-to-overseas market' guide for Australian fruit and vegetable exporters in May (3 May edition).
- Other reports and guides published by our portfolio agencies included Austrade's report on Online Exporting: A Guide for Australian Business (15 June edition), Tourism Australia and Austrade's marketing tools to drive investment opportunities regional tourism destinations (18 May edition).
- We published our annual Trade and Investment at a Glance in February (8 March edition).
- Australia's first federal government-funded business events bid fund was launched (22 March edition), which helped secure events in Melbourne (31 May edition) and Brisbane (27 September edition).
The global economy
- In September, the OECD reported that after two years of consecutive growth, goods trade in G20 countries contracted by 0.6 per cent in the second quarter of 2018 (13 September edition).
- In October, the IMF downgraded its forecasts for global growth published in April and world trade volume growth from its earlier predictions (11 October edition).
- The RBA said the possibility of an escalation in global trade tensions added layer of uncertainty, but was not expected to dampen the expansion in global economic growth (30August edition).
The Australian economy and business sentiment
- The IMF delivered a generally favourable preliminary assessment of the Australian economy in November (22 November edition).
- The Reserve Bank of Australia revised up its forecasts for the Australian economy for 2018 and 2019 in November (8 November edition).
- Business sentiment among Australian exporters remained positive according to EFIC's February and August Indexes (30 August edition).
- The Australian International Business Survey released in October showed that over the next two years, 45 per cent of Australian businesses expected to move into at least four new international markets (11 October edition).