Speech
International Legal Services Advisory Council Export Strategy Launch
29 June 2009, Sydney
Thanks to Peter O’Byrne, Sir Laurence Street and Robert McClelland.
It is a great pleasure to address such a distinguished legal gathering tonight at the launch of the International Legal Services Advisory Council’s export strategy. Australia’s commercial lawyers and law schools are among the most professional and respected in the world.
Our exporters and investors rely on legal expertise in intellectual property, mergers and acquisitions, trade and foreign investment to navigate the shoals of global trade. As previous speakers have noted tonight, Australia’s legal exports are a growing business.
Between 2004-05 and 2006-07, total income from legal services exports and monies earned by Australian law firms overseas grew by 24 per cent to reach the current level of about $675 million a year. The headquarters of the Australian Trade Commission is therefore a fitting venue to launch the new legal services strategy tonight.
Looking back over the Australian economy’s trajectory these past decades, it is only natural that our legal firms began looking overseas for business. More than a generation ago, policymakers began opening Australia’s economy to the bracing winds of economic competition. This presented challenges, but they were surmounted.
Tariffs were cut, markets were deregulated and a new export culture began to grow. With that came the demand for high level legal advice. Just as exporters of goods look abroad for a bigger market, so too do law firms hope to go beyond a small domestic market by expanding overseas.
Tonight I’d like to talk a bit about how the Australian Government’s approach to trade is helping expand our services exports, including our legal services. From its first days in office, the Government aimed to rejuvenate our trade performance in two ways:
- improving access to overseas markets
- increasing productivity in our domestic economy.
We called this the twin pillars approach to promoting trade in goods and services. Together with a stronger focus on investment promotion and services, the twin pillars approach has renewed Australia’s trade policy.
From this perspective, I’d like to congratulate the International Legal Services Advisory Council for providing a strategic blueprint that will help lift the competitiveness of our legal services and education exporters. The strategy ranges from providing fine detail on the importance of teaching more English law at our universities, to urging greater confidence in the potential of China and India as growth markets.
As a result, Australia’s law firms will now have a clearer idea of their markets and the ways to improve their share of international legal business. More broadly, our support for the liberalisation of legal services is part of a push to increase our services exports, especially financial services, clean energy, education and green urban design.
Almost 80 per cent of Australia’s GDP is based in services; yet services comprise only 22 per cent of our total exports.
The Australian Government wants to lift the share of services as part of our total exports and we are focussing on these specific sectors. Why? Because services are often higher up the value-added chain of production and therefore earn more export income.
The solid earnings of Australia’s legal firms are a success story in this light. The Australian Government is also doing something about the first pillar of securing better market access. Australia is trying to improve access for our exporters and investors at the multilateral, regional and bilateral levels. The barriers to trade in law, as in many other services, are in fact quite significant and there is some way to go in removing them.
They include restrictions on establishing a commercial presence, nationality and residency tests, joint venture bans, foreign equity limits and onerous qualification tests. Some law firms seek to get around these restrictions by setting up a business in a strategically located region or city. This is the so-called “hub and spokes” model.
Others seek market access through strategic alliances with other local firms. But in the long run the best way around these barriers is to remove them through trade agreements, preferably at the multilateral level. Australia has worked long and hard through the General Agreement on Trade in Services to liberalise legal and other service exports.
Australia is a leading supporter of the Doha Round of the World Trade Organization and we have also forged ahead with the pursuit of free trade agreements at the bilateral and regional levels.
In February, for example, Trade Minister Simon Crean signed on Australia’s behalf an historic FTA between the 10 ASEAN nations, Australia and New Zealand. The ASEAN FTA allows foreign lawyers practicing in Singapore, Indonesia and Thailand to extend their working period at a company.
The FTA also committed Indonesia and Vietnam to allow foreign lawyers to work within their law firms. Negotiations are underway for FTAs with China and India, the two main markets recommended by the ILSAC strategy report as offering great opportunities to our law firms.
The difficult task of securing legal business overseas will, in the end, always fall to the efforts of individual firms. But improving market access will make that task a lot easier. These are challenging times for exporters and investors. But there is room for some optimism despite the severe impact of the global recession.
This century, the Asia Pacific region will be the engine room of global growth and China will be at its centre. Australia stands to benefit directly as a result of our increasing interdependence with China’s economy, and in our continuing strategic engagement with India. I note that China and Hong Kong are now the second largest and fastest growing markets for our legal services exports after the US and Canada.
Forward thinking by exporters now will pay dividends down the track when the global economy recovers. Another reason for cautious optimism is that Australia’s economy has fared better than most during the current global downturn. So Australia will be in better shape to face current challenges and take advantage of future opportunities.
Our banking system is sound, interest rates are low and the Government has committed to a major fiscal stimulus package which has, so far, insulated our economy from the downturns our trading partners have experienced. I’d like to thank Austrade for sponsoring tonight’s event. And I congratulate, again, the International Legal Services Advisory Council on their excellent strategy paper to help legal services exporters in the years ahead.
It will be a worthy guidebook for legal services firms and law schools facing the challenges of international competition.
Thank you.