The Department of Foreign Affairs and Trade, Australia

Media Release


 18 July 1996 TR 47

JOINT MEDIA RELEASE

THE DEPUTY PRIME MINISTER AND MINISTER FOR TRADE AND THE MINISTER FOR PRIMARY INDUSTRIES AND ENERGY

WOOL INDUSTRY ALLIANCE WITH MEXICO SET TO BOOST EXPORTS

Australia's wool exports to Mexico have been given a boost today with the signing of an industry to industry co-operation agreement witnessed by Deputy Prime Minister and Minister for Trade, Tim Fischer, Minister for Primary Industries and Energy, John Anderson and Mexican Trade Minister, Dr Herminio Blanco.

The signing of the agreement between the International Wool Secretariat and Mexico's development bank (NAFIN) is based on a Wool Textile Industry Development Plan for Mexico, which provides a blueprint for the development of Mexico's wool spinning, weaving and garment manufacturing industry.

"The Wool Industry Plan and the Co-operation Agreement will consolidate Mexico as a long term and increasingly important customer for Australian wool and follows the decision by Mexico earlier this year to eliminate its 10% tariff on semi processed Australian wool," Mr Fischer said.

"Co-operation between the Australian wool industry and Mexico's wool textile sector will create a gateway for Australian wool to enter the large US market in the form of quality, fashionable garments," Mr Anderson said.

The US is the fourth largest wool apparel consuming country in the world. Their wool apparel market is valued at around $41.6 billion, and Mexico is the second largest exporter of apparel to the US. As a member of the North American Free Trade Agreement (NAFTA), which progressively frees trade between member countries, Mexico's access to the US market is set to increase.

"This strategic alliance should see a significant boost in Australia's wool exports to Mexico," Mr Fischer said.

The Mexican Government has also welcomed the Co-operation Agreement, which will improve the competitiveness of Mexico's wool textiles sector. Mexico's development bank (NAFIN) has cleared the way for the provision of financial assistance to Mexican wool textile companies participating in the Wool Industry Plan.


ADVANCE BACKGROUND BRIEFING

WOOL INDUSTRY ALLIANCE MEXICO-AUSTRALIA

Deputy Prime Minister and Trade Minister, Tim Fischer, the Minister for Primary Industries and Energy, John Anderson and the Mexican Minister for Trade, Dr Herminio Blanco will today launch a Wool Textile Industry Plan for Mexico and witness the signing of an industry level Co-operation Agreement between the International Wool Secretariat and Mexico's development bank, Nacional Financiera (Nafin).

The Mexican Wool Textile Industry Plan follows Mexico's decision in January this year to eliminate its 10% tariff on semi processed Australian wool. As a result, Australia's exports of scoured wool and tops to Mexico jumped to A$5.6 million in the first quarter of 1996, up 1,236% from 1994/95 (A$419,000).

The Plan for the development of Mexico's wool textile industry will not only consolidate Mexico as a long term customer for Australian wool but also establish the basis for a strategic alliance between Australia's wool industry and Mexico's wool textiles industry to take advantage of opportunities in the US wool apparel market.

With its preferential treatment under NAFTA to the giant North American markets, Mexico is a potentially valuable strategic commercial partner for Australian wool growers and textile firms.

 

BACKGROUND: AUSTRALIA - MEXICO COMMERCIAL RELATIONS

Australia has a long-standing but relatively modest commercial relationship with Mexico.

Australia's merchandise trade with Mexico expanded in the early 1990's, albeit from a relatively low base, but has also slowed in 1995 following the Mexican peso crisis. The devalued peso and collapse of domestic demand in 1995 saw a reversal in the balance of trade, which in recent years had been in Australia's favour. Australia's exports to Mexico in 1995 (mainly agricultural products) dropped to A$76.6 million, down 62% from A$200.6 million in 1994. Imports from Mexico (mainly manufactures) rose to $156.4 million in 1995, up 32% from $118 million in 1994. Australia is the second largest investor in Mexico among Western Pacific countries (behind Japan). Australian investment is mainly in the manufacturing sector.

Tonight, Minister Fischer and Minister Blanco will conduct a meeting under the auspices of the bilateral Trade and Investment Commission to review progress in the bilateral trade relationship.

Contacts:

Jeremy Kruse, DFAT (06) 261 2564

Chris Wilcox, lWS Manager of Trade Policy (03) 9341 9264 or 041 934 4259


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