Address to Victoria University students
Speech
Melbourne
2 March 2010
Introduction
I was very pleased to be asked to address you today; it’s not often that I get the chance to talk to university students about the great trade policy issues of the day, so I was more than happy to accept.
You are at an exciting moment in your lives, at the dawn of your careers.
Your future is ready to be shaped by your own efforts, your own energies, and abilities.
Today, I’d like to talk about what the Australian Government is doing to enhance the private sector’s capacity to export and invest overseas.
As a good example of that assistance, I am also happy to launch Austrade’s Exporting for the Future’s 2010 Short Film Competition today.
Austrade’s Short Film Competition will offer any budding Martin Scorseses (Shutter Island) or James Camerons (Avatar) among you the opportunity to produce a short, entertaining film about some of the issues Australians face in international business.
This competition is targeting participation by tertiary students Australia-wide who are studying courses such as film production or international business.
These films will, hopefully, play an important educational role for students as well as business people who are contemplating new export markets.
Australia in the Global Context
It is well worth noting Australia is a significant player in the global economy.
We are the 14th largest economy in the world.
By market exchange rates, Australia is the fourth largest economy in Asia — after Japan, China and India, and the fourteenth largest in the world.
We have the second lowest unemployment rate when compared with the Major Advanced Economies.
Most significantly, Australia prides itself as a good place to do business.
In its 2009 survey, IMD rated Australia as one of the four most resilient economies globally, and the strongest in our region.
The World Bank ranked Australia as one of the most business-friendly economies in the world, offering a business environment that is both stable and flexible.
Trade and the Role of Government
As the Parliamentary Secretary for Trade, part of my job is to go out into the community and explain the way in which Australia trades and invests with the world.
Australia is a big trading and investing nation, so it is important that the community understands just how important the international economy is to our prosperity.
Australia exports and imports more than half a trillion dollars in goods and services every year. One in five jobs is dependent on trade-related industries, and exports contribute about 20 per cent to GDP.
Yet successful export industries can also benefit from a framework of support from governments.
Another of our most important messages is the need for cooperation between the public and private sectors, whether in the management of the economy as a whole or in trade.
Australia was the only advanced economy in the world in 2009 not to go into recession during the Global Financial Crisis, and the IMF now forecasts growth of 3 per cent in 2010.
In part, our economic resilience came about because of the Government’s timely fiscal stimulus packages, low interest rates and an established history of market reforms.
Another factor was that our export markets held up well by global standards, especially the demand for our commodities from China and India.
By far and away, the private sector does most of the exporting and investing in Australia.
But the public sector—the Government—also has a critical role in opening up overseas markets and providing a strategic trade architecture for business.
This architecture allows enterprise to thrive, letting loose the “animal spirits” of the private sector, as a great economist (Keynes) once described the forces of innovation and competition.
Australia’s Trade and Investment Strategy
Australia’s architecture of trade and investment is based on some fundamental principles which I want to briefly mention.
Trade and foreign investment are critical to our economy, bringing growth and jobs.
They stimulate the economy and contribute to our national prosperity.
Yet trade works best to deliver jobs and growth when there are limited impediments to the free flow of exports or imports, or investment capital into productive businesses.
This is why the Government is such a strong supporter of an open and liberal international trading system.
Barriers to trade, such as tariffs and non-tariff barriers or capital controls, hinder wealth creation.
Australia’s strong support for the Doha Round of the World Trade Organization reflects our belief in the importance of an open system.
The Doha Round of the WTO, if and when it is finalised, will lower trade barriers between nations and lift global GDP.
Australia has also made great efforts to expand our market access by securing Free Trade Agreements, also known as FTAs, at the bilateral and regional levels.
At present, Australia has six working FTAs: with New Zealand, the United States, Singapore, Thailand, Chile and our latest, the AANZFTA, with the ASEAN nations, such as Vietnam and the Philippines, and also New Zealand.
Asia is emerging as the fastest growing region of the world and is home to eight out of Australia’s top ten export partners and seven out of our top ten importing partners.
About 65 per cent of Australia’s exports are now sold to Asian markets.
Australia has a long-term strategy of economic integration with Asia, one which recognises the region’s importance and our proximity to emerging economic superpowers, such as China and India.
In our case, this has led to Australia beginning negotiations over seven more FTAs, including ones with China, Japan and Korea.
We also have two further FTAs under consideration with India and Indonesia, two important emerging economies.
What can an FTA do?
A good example of how an FTA can work is the case of a small Adelaide-based biotechnology company, Neuro Vision Technology, which sells specialised scanners to the United States’ Department of Veterans Affairs.
The scanners can detect brain damage and vision loss using a unique technology.
They have been particularly important in diagnosing injured US veterans from the Iraq and Afghanistan Wars and helping them use their remaining vision more effectively.
What is significant about the success of Neuro Vision Technology is that Australia’s FTA with the US allows Australian companies to sell to US Government agencies more effectively than before.
Neuro Vision Technology has now opened an office in the US and recently won the Guy Manson Hottest Company Award for their “brain-training software”, which helps people with acquired or traumatic brain injury.
This improvement in market access came about, in part, as a result of Australia’s FTA with the US which, along with support from Austrade, eased the way for the company to enter the US market.
Better market access is also a feature of Australia’s newest FTA with ASEAN and New Zealand, the AANZFTA, which came into effect on January 1st this year.
AANZFTA will create a regional free trade bloc of 600 million people with a combined GDP of A$3.1 trillion.
By 2020, tariffs will be eliminated on about 96 per cent of current Australian exports to the 12 ASEAN nations.
Its immediate effect will be to eliminate tariffs on, for example, cheese and grape exports to Malaysia or wheat and lamb to the Philippines.
It’s early days yet, but over the longer term AANZFTA will improve market access for Australia’s dairy products, live animals, meat, horticulture, metals and automotive parts.
Importantly, the AANZFTA will allow Australian investors to access the critical supply chains which thread their way throughout the region.
This is because the AANZFTA is a comprehensive FTA which covers not just goods and services, but investment, intellectual property, e-commerce, competition policy and capacity building.
Austrade’s Short Film Competition
Australia’s support for the World Trade Organization’s multilateral agenda and the ongoing expansion of our range of FTAs are slowly improving the market access of our exporters and investors.
It is an evolutionary process, one that requires patience and a bit of faith to work.
On the ground, at the microeconomic level of the individual firm, taking advantage of these new openings in foreign markets requires facing up to some challenges.
Understanding another’s nation’s culture and business is a demanding activity, not just at the linguistic level but also in a broader cultural sense.
Many of you here today are studying in the field of international business; no doubt, upon graduation, many of you will join the private sector to become exporters or investors.
More than most of your contemporaries, however, you will need to know more than just the details of the goods or services you are selling to customers.
You will need to understand foreign cultures and the workings of international markets.
You might need to learn a foreign language, or absorb the complexity of a different culture, or become more aware that consumers have differing tastes according to nationality.
You will certainly need to appreciate the complexities of different government systems and laws, especially as they relate to trade or investment.
One of the purposes of Austrade’s Short Film Competition is to inspire filmmakers to explore some of these challenges in the hope that they will inspire exporters to succeed.
Which is why the Competition will ask students to focus on some of the specific problems which exporters face in overseas markets.
These include: Cross cultural communication, product adaptation to a different region or market, market entry strategies, managing foreign staff and working with different ideals of corporate responsibility.
Austrade’s Short Film Competition will award a cash prize of $500 for a winner at the State or Territory level, and $2,000 for the overall national winner.
Austrade hopes that these short films will also be used by lecturers and others to get the message out to exporters that they can succeed if they pay attention to the details of their markets.
I wish all of you the best in your studies. I encourage all of you here today to participate in some shape or form in the production of one of these short films.
I very much look forward to viewing some of the short films that will be submitted to Austrade’s 2010 Short Film Competition.
Thank you.
ENDS