US/JAPAN AGREEMENT ON FINANCIAL SERVICES

The Minister for Trade, Senator Bob McMullan, today welcomed news of a financial services agreement reached this week between the United States and Japan.

The agreement was confirmed yesterday in Washington at a meeting between Prime Minister Murayama and President Clinton.

Senator McMullan said he will meet with members of the Australian financial services industry to discuss their future approach to the Japanese market following this agreement, and to identify how the government can best support their efforts.

"During my visit to Japan last year, representatives of the Australian financial services industry raised with me their interest in liberalisation of the Japanese market," Senator McMullan said.

Senator McMullan said that in anticipation of a breakthrough in the US/Japan discussions, the Australian Ambassador in Tokyo and Austrade officials have made representations to the Japanese authorities to underline the importance of financial services liberalisation, and to emphasise the competitiveness of the Australian industry.

The US/Japan agreement follows more than a year of difficult negotiations.

"I am hopeful that, following on from US/Japan trade agreements announced last October, there will be a shift to a less confrontational economic relationship between the two powers.

"Such a move would be a positive development for Australia for trade and investment prospects in the region, and for the future of cooperation in APEC."

While full details of the agreement are not yet available, the financial services package is expected to result in improved access to Japanese pension funds, mutual funds (unit trusts) and corporate bonds.

Senator McMullan said that Australia will be looking to both the US and Japan to honour their assurances to implement the agreement on a non discriminatory basis. Australia will be consulting with Japan on the implementation of the agreement.

"It is crucial that competitive Australian firms are able to compete for new market opening opportunities on an equal footing, consistent with the key principles of the World Trade Organisation," Senator McMullan said.

Senator McMullan noted that the agreement was also a significant step forward in achieving international liberalisation of financial services.

"I am confident it will provide a positive impetus to the post-Uruguay Round negotiations on financial services which are aimed at finalising a multilateral agreement under the General Agreement on Trade in Services (GATS).

"Services is the fastest-growing component of world trade and a substantial part of that growth is in financial services.

"Following the deregulation undertaken by the government over the past decade, the financial services sector in Australia is now highly competitive internationally.

"Our companies are well-placed to take advantage of new opportunities, particularly in Japan.

"By freeing up the conditions under which foreign financial institutions and investment funds managers can operate in the Japanese market, the agreement will provide substantial opportunities in the Japanese pension and mutual funds markets, which together are worth more than $1,500 billion."

Senator McMullan said that it is now up to Australian financial services companies to move quickly to seize the commercial advantages which will emerge from this important agreement.

Further information:

Senator McMullan's Office: Jean Dunn (06) 277 7420

Dept of Foreign Affairs and Trade: Justin Brown (06) 261 2711