23 May 1995

DOWNER HAS A LOT TO LEARN ABOUT TRADE POLICY - McMULLAN

Commenting on a speech today by Opposition Foreign Affairs spokesperson, Alexander Downer, the Minister for Trade, Senator Bob McMullan, said the only sensible part of the speech was his announcement that the Opposition is not going to announce its trade policy.

"It's sensible because Mr Downer obviously has a lot to learn before he's in any position to make policy pronouncements," Senator McMullan said.

"His speech today about Australia's trade with Asia was a mishmash of fallacy and creative accounting which he attempted to pass off as reasoned analysis.

"The facts tell the story of Australia's economic engagement with Asia, particularly over the past decade. and it is quite a different story from Mr Downer's."

"The facts are as follows

"Australia has responded to fundamental shifts in the structure and nature of global commerce by internationalising its economy.

"Over the past decade, in particular, the share of exports of goods and services in GDP has increased substantially and, in contrast to 1980, is now above the OECD average (see tables I and II).

"OECD figures show that in the 10 years to 1993, real exports of Australian goods and services increased by 121 per cent. By comparison, the OECD average was 79 per cent, and for New Zealand it was 55 per cent.

"At the same time, the adoption of an outward-looking policy stance from the mid-1980s has seen both composition and the direction of Australia's exports change markedly (see tables III and IV).

"The strengthening competitiveness of the Australian economy over the past decade is reflected in growth of both high-value manufactured exports and services, relative to 'traditional' resource-based exports.

"Most importantly, our fastest growing markets are in Asia. The share of Australian exports to ASEAN has risen from around 9 per cent to 14 per cent in the past 10 years.

'In 1993, around 60 per cent of exports went to East Asia (including Japan). In fact, a highs proportion of our exports goes to East Asia compared with all other East Asian nations except China and Indonesia

"How is it then that Australia's share in East Asia is falling?

"As the table below shows, Australia is, in fact, increasing its market share in major categories of export to East Asia - commodities, manufactures and services.

"But aggregate market share is declining.

'This paradox reflects our low share of Asia's imports of manufactures relative to our share of Asia's imports of primary products, and the fact that Asia's imports of manufactures have grown much more rapidly than its imports of primary products.

"On the issue of Australian investment abroad, my Department, working with the Australian Bureau of Statistics, recently undertook a mapping exercise to trace the 'ultimate' destination of such investment.

"Preliminary results show that official statistics significantly underestimate Australian investment in emerging markets.

"For example, the recorded level of Australian direct investment in corporate equities at 30 June 1994 shows 'nil' for China In fact, it appears to be well in excess of $100 million.

"I will release full details of this mapping exercise upon its completion."

Senator McMullan said that while there is a continuing need to improve our trade performance, we ought to recognise the significant achievements of the past decade.

"In particular, the diversification of the Australian economy and its exports provides a sound basis to move forward.

"The Government will be making a major statement next month on trade policy and the imperative to win markets," Senator McMullan said.

Further information:

John Flannery, (06) 277 7420, 018 482 887