14 June 1995

VALUE-ADDED EXPORTS SOFTEN DROUGHT IMPACT ON TRADE FIGURES - McMULLAN

A ten per cent rise in the value of Australia's exports of sophisticated manufactured goods helped soften the impact of the drought and lower commodity prices on Australia's balance of merchandise trade in 1994, the Minister for Trade, Senator Bob McMullan, said today.

Releasing Composition of Trade, 1994, a biennial compendium of trade statistics and analysis, Senator McMullan said the growth in exports of Elaborately Transformed Manufactures (ETMs) demonstrated the fundamental change underway in Australia's export structure.

"The total value of ETM exports in 1994 was $14.2 billion, an increase of $1.2 billion over 1993 - the sixth consecutive rise in the share of ETM exports," Senator McMullan said.

"This underlines the long-term benefits of the sometimes painful process of micro-economic reform that Australia went through in the early to mid-1980s when tariffs and other support mechanisms were being reformed.

"These figures show clearly that the strong and the innovative companies are exporting more than ever before.

"They are focussed on the growing markets in our region and are providing diversity and reliability to Australia's trading regime."

Australia moved from five years of surplus into a deficit on the merchandise trade balance in 1994.

Exports totalled $65 billion, an increase of 3.5 per cent, against imports of $68 billion, an increase of 9.1 per cent over 1993.

Senator McMullan said the major impact of the drought on exports of primary products and lower coal prices were key reasons for the slower growth of exports.

These factors coincided with a surge in imports sparked by the strong level of domestic demand generated by the recovery of the last few years.

"The important factor is to look at the overall structure of exports, and that is sounder now than at any time in Australia's post-WW2 history," Senator McMullan said.

"The growth areas of ETMs, processed food, and services are providing a more diverse, reliable and predictable export base.

"Instead of being almost totally dependent on good rural conditions or commodity prices for exports, we are now better placed to survive the downturns and reap the benefits of the good times.

"With a brighter outlook for Australia's rural exports provided by the recent rains, and price increases for coal already negotiated, there is the very real prospect of Australia's merchandise trade balance moving back into surplus in the next twelve months."

Composition of Trade, 1994 shows that the Asia Pacific Economic Cooperation (APEC) group remained Australia's most important regional market in 1994, purchasing more than 75 per cent of Australia's merchandise exports.

Japan remained Australia's largest single export market, taking almost 25 per cent of total merchandise exports.

Other significant outcomes for 1994 included: