The Hon. John Murphy MP
The Hon John Murphy MP
Former Parliamentary Secretary for Trade

Address to the Australia-Indonesia Business Council

Trade between Australia and Indonesia

Brisbane, 3 April 2008

Introduction

Thank you David Harland, Treasurer of the Australia - Indonesia Business Council and Ray Wilson, Executive General Manager Thiess Pty Ltd; ladies and gentlemen.

I’m very pleased that the Australia Indonesia Business Council has invited me to speak today.

It's great to have the chance to talk about trade and investment links with Indonesia.  The AIBC and its members have contributed strongly to these links.  The Australian and Indonesian governments and the business communities of our two countries have the opportunity to work together to strengthen these links.

I want to tell you today why I believe the future is bright and I also want to tell you how Australia’s trade policy will contribute to better trade and investment outcomes.

Our bilateral trade and investment relationship

There are several key factors which will contribute to strong trade and investment between our two countries in the years to come.

First and foremost is that trade is already strong.

Second, the bilateral investment relationship is also substantial:

Third, the prospects for growth in trade and investment are improving.

Fourth, there are strong people to people ties between our two communities, both in business and more broadly.

As well, the government-to-government relationship is very strong

Finally, the Government’s trade policy will help strengthen Australia’s trade performance, both with Indonesia and the rest of the world

Government trade policy

The twin pillars of the Government’s trade policy are to open up new markets through international trade negotiations

Over the past decades, multilateral liberalisation has delivered dramatic benefits to the global economy.

A successful conclusion of the WTO’s Doha Round would offer the biggest potential trade and economic gains not just to Australia, but to the region and the world.

That’s why the Doha Round is the Government’s top trade negotiations priority.

The World Bank estimates that by freeing all merchandise trade and eliminating subsidies we could boost global income levels by up to $US 287 billion by 2015

But if these projections have a hope of being realised, we need to move now to firm up commitments in the three key sectors of the negotiations: agriculture, industrials and services

Through our leadership of the Cairns Group of fair agriculture trading nations, we will work hard to secure an ambitious outcome for Australian farmers in the WTO

The Government will seek to complement WTO outcomes with liberalisation at the regional level via APEC and the ASEAN Australia New Zealand Free Trade Agreement

At the bilateral level, Australia’s interests are best served by networks of FTAs, both ours and others, that deliver comprehensive, genuinely liberalising outcomes.

Trade Policy Review

In the past five years, world trade has grown at twice the rate of world output

Yet while world trade volumes have been growing at this pace, and while Australia has been experiencing its longest-ever commodities boom, the nation has experienced declining export growth

Net exports - the difference between exports and imports - are currently subtracting a full percentage point from Australia's economic growth

We are determined to address those constraints, to invest in the drivers of growth.

Reform is vital if the Australian business environment is to remain internationally competitive

The Government has given a high priority to addressing a range of infrastructure bottlenecks – including in our ports, railways, roads and information technology

We are also determined to support the diversification of our export base beyond agriculture and commodities.

And we will need to drive more export activity from our dynamic services industries, from education to financial services to project management to biotechnology to fashion design.

This is the reasoning behind the comprehensive, whole-of-government review of Australia's export policies and programs which Mr Crean announced in February.

The Review is headed by Mr David Mortimer, Chairman of Leighton Holdings and Australia Post.

The Review’s mandate is to identify future trade policy priorities and to develop effective trade and investment development strategies.

It will do this by analysing the factors that have affected Australia’s recent export performance, both internal and external, and making recommendations on what action can be taken to address impediments to exports..

The review will include a detailed examination of the Export Market Development Grants Scheme (EMDG), given its important role in Australia’s export policies and programs.

The review will also examine Australia’s approach to the negotiation of  FTAs.

We are a trading nation and increased competition at home and abroad is a fact of life in the contemporary global economy.

Looking to the future

Looking to the future, Australian and Indonesian Trade Ministers will be building on an already productive working relationship

Australia expects to host the 9th Australia Indonesia Ministerial Forum later this year

I believe now is the time for Australian and Indonesian business to get on with the important work of building a strong commercial and economic relationship.

There is much that governments can do in assisting this process

 I look forward to the governments and businesses of Australia and Indonesia working together to expand the bilateral trade and economic relationship to the mutual benefit of both of our countries.

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