Tuesday 2 July 1996

(Check Against Delivery)

Introduction

I welcome the opportunity to address you today.

Because no business forum in Australia has a better record of contributing to practical debate on trade policy than CEDA does.

My topic today - APEC - is vitally important for Australian business.

The bottom line is that nearly four out of five of Australia's export dollars now come from APEC economies. Two-thirds of our services exports go to them. Half of our total stock of direct investment is located in APEC economies.

On the basis of these figures alone, we clearly have a vital stake in the economic success of the region and in opening further its rapidly growing markets.

The other members of APEC also have an equally vital stake in the success of the region. They, too, have the same need to advance work through APEC's three-part process - trade and investment liberalisation, trade facilitation, and economic and technical cooperation.

It's about that process - and the benefits it will bring to Australian business - that I want to talk to you today.

APEC's November Meetings

At the level of Government, the pace of activity in APEC quickens in the second half of the year, as APEC economies begin to focus more intensively on securing the best possible outcome from the annual APEC meetings in November.

This year is no exception. In less than two weeks, I will be representing Australia at a meeting of APEC Trade Ministers in Christchurch.

That meeting will help shape outcomes for November, when APEC Ministers meet in Manila and Leaders in Subic Bay. And it will also help to set the agenda for the first Ministerial Meeting of the World Trade Organisation in December in Singapore.

The business communities in the Asia Pacific, including Australia. have a very strong interest in the outcomes of both of these meetings.

The New Partnership with Business

In the last year or so, APEC has gone through an important transition towards a greater awareness of business needs and business realities.

Last year, APEC Leaders at Osaka agreed to form an APEC Business Advisory Council (or ABAC).

Three distinguished Australian business representatives - Mr Michael Crouch, Mrs Imelda Roche, and Mr Ian Webber - have joined the Council as Australia's representatives.

ABAC has already met for the first time, and it has scheduled further meetings over the course of the year. Its representatives will be talking about business priorities to APEC Leaders this November.

President Ramos of the Philippines has also conceived the idea of a much larger gathering - an APEC Business Forum - with something like 25 representatives from each APEC economy.

We expect this group, too, will meet to discuss APEC's priorities in November.

And when more details are available on the Forum, the Government will be contacting business to gauge interest in participating in it.

As you would know, we in Australia have also put in place new arrangements for business consultation. The Government regards that as an important part of the Coalition commitment to upgrade consultations with business.

Supplementing the Trade Policy Advisory Council as the principal mechanism for exchanges with business on APEC, we have also announced a new Business Advisory Forum on APEC.

The Forum will allow the Government to exchange ideas with a wide range of business people from a wide range of interests.

It will meet for the first time in Sydney in September.

And I am confident that it will make a strong contribution to shaping Australia's approach to the APEC meetings.

The Transition to Implementing Trade Liberalisation

Beyond its increasing links with business, APEC is undergoing a further important transition - from agenda-building and goal-setting to the implementation stage.

APEC already has a set of ambitious objectives, including the key Bogor commitments of achieving free and open trade and investment in the region.

The phase of implementation began last year at Osaka, where APEC Leaders endorsed a 34-page blueprint for achieving the Bogor goals.

The key will be to manage this transition so that the interests of all our economies are advanced in a "win-win" process of trade liberalisation.

This year, putting our APEC goals into effect centres on preparing Individual Action Plans - or IAPs. These set out how each economy will go about implementing the Bogor goals.

The IAPs cover the whole range of APEC trade and investment issues, but especially the core trade liberalisation issues: tariffs, non-tariff barriers, services and investment.

They are to be tabled when Ministers meet in Manila in November, and draft versions have already been put down by all economies.

Implementation of IAPs will begin from 1 January next year.

But it is important to emphasise that they will not be static documents. They will be subject to annual review and updating. In the process, each economy will find itself under pressure from others to move further and faster.

Let me assure you that Australia will be using the review process to press its priorities with our regional partners.

The plus for us is that most economies in the region already accept that they need to free up barriers in order to improve the efficiency of their economies and attract scarce investment capital.

For example, Korea and Malaysia have cut their import duties by more than half.

The challenge before us, therefore, is a double one. To push this process faster, and to ensure that it advances the Australian business community's priority interests.

As you find with any process of transition, re-orienting APEC towards taking the hard decisions of the implementation stage presents real challenges.

Frankly the days of easy successes in APEC have passed. We have a new process of trade liberalisation to bed down, and all economies will inevitably be feeling their way.

Some economies in the region, notably the United States and Japan, face elections either this year or soon after. The United States Government faces the added difficulty that it lacks fast-track authority to negotiate tariff concessions with other economies - except in some residual areas left over from the Uruguay Round.

The challenge in the Philippines will therefore be to secure an outcome which provides concrete benefits for business - and confirms APEC as a leader in regional and global trade liberalisation.

The Balance of Australia's Interests

The benefits Australia has already gained from trade liberalisation are clearly very substantial. The Uruguay Round, for example, is delivering major market access gains to Australian industry.

By way of example, the proportion of our exports facing zero tariffs will more than double - from 20 to 43 per cent - when the Uruguay Round cuts are fully implemented.

There will then be over 400,000 tonnes less subsidised cheese on the world market. Australia will also have access by 2000 to global rice imports by Japan of 758,000 tonnes. Japan, the EU, Korea and the United States are eliminating many of their tariffs on steel products.

But there is still a long way to go. Many of the barriers identified at last year's CEDA conference on APEC are still there, as some of you know only too well.

For example, some economies in the region continue to maintain prohibitive barriers against our agricultural products, some effectively prevent us from selling goods like motor vehicles and parts, and some virtually prohibit the sale of services.

That hurts incomes in Australia and raises prices in our overseas markets.

CEDA's overview paper concluded, too, that regional barriers have caused some Australian firms to establish operations overseas, so stripping jobs from Australia.

So regional trade barriers are hurting growth in incomes and jobs, both here and in our partner economies. That is why bringing barriers down is so central to what Australia is about in APEC.

Australia's own draft IAP, drawn up earlier this year, incorporates the results of extensive discussions with our business community. It is a comprehensive plan and stands up well in comparison with the others.

It contains important new elements, but it essentially goes no further than the Government's existing priorities on tariff reduction and microeconomic reform.

On tariffs, the key elements of Australia's plan are the existing tariff reduction programs, together with a commitment to review post-2000 tariffs by the year 2000.

Our draft IAP also includes the Government's commitment to competition reform in energy and telecommunications, the Wallis review of the financial services industry, and a review of foreign investment screening.

The IAP process within APEC as a whole has got off to a promising start. All economies tabled IAPs when APEC Senior Officials met in Cebu in May.

However, the quality of the plans tabled varies considerably - from very good to poor.

An important part of our diplomatic effort over the next few months will therefore be to lift the level of ambition involved in these plans. Indeed, both Mr Downer and I have begun pressing for better IAPs with key regional partners during our recent visits to the region.

The Trade Ministers Meeting which I will be attending in Christchurch will be an opportunity for APEC Ministers to give serious collective thought to how the process is going.

I will be encouraging my colleagues at the Christchurch meeting to take their IAPs beyond their existing Uruguay Round and other measures. Because regional governments need to give APEC a truly value-added role in global liberalisation.

Let me assure you that what the Government is working for is indeed a "win-win" process. All the APEC economies are expected to pull their weight.

Australia is not about to put on the table additional elements to its IAP without clear evidence that other IAPs in turn address what interests us.

In that respect, I can assure you that Australia's final IAP for this year will not involve any changes to the Government's existing tariff reduction program to the year 2000.

Nor will our 1996 IAP prejudge the outcomes of reviews already announced in sectors like passenger motor vehicles, textiles, clothing and footwear, and sugar. Those reviews will take their course.

The Broader Gains from APEC

I have focussed so far today on trade liberalisation - the first part of APEC's three-part agenda. But it's important to recognise that APEC also offers major gains through work on the other two parts.

The facilitation agenda - the second part of APEC's work - has immediate relevance to business. The IAPs themselves, for instance, extend well beyond the traditional area of tariffs, and even beyond the newer areas of services and investment.

They cover, for example, areas as diverse as customs harmonisation, standards harmonisation, competition policy and deregulation.

While not having the high profile of the traditional trade liberalisation agenda, the facilitation agenda contains big potential gains, particularly in eliminating unnecessary procedures and paperwork.

Indeed, for many businesses, this is where the first gains from APEC are likely to come from.

In the area of customs, for example, APEC economies have committed themselves to harmonising tariff classifications, improving public access to information, computerising procedures, and adopting international valuation systems.

Australia has been putting a good deal of effort within APEC into finding ways to improve business mobility in the region.

As our own contribution, we are developing an APEC Business Card, which will eliminate the need for traditional visas and streamline entry through airports. The Government will work to ensure that this initiative is matched by better access for Australians elsewhere in the region.

The third part of the APEC agenda - economic and technical cooperation - has important benefits for business, too.

There are important opportunities to be gained not only from the substantive results of the cooperation programs, but also from the opportunities for networking with other companies in the region.

For example, last year's Small and Medium Enterprises Ministerial Meeting included business events in which more than 600 companies participated. Subsequent reports suggest that those events generated a significant amount of new business.

For a second example, take the first meeting of APEC Energy Ministers, which Australia will be hosting next month. It will carry forward the good work the APEC Energy Working Group has done, and it will be an important opportunity to develop a regional response to the energy challenges facing the Asia Pacific.

It will also be an important opportunity for companies with energy-related interests to meet counterparts from the region.

Business events associated with the Energy Ministers meeting will include a two-day international conference sponsored by the Business Council of Australia, a specialist group meeting of PECC, and visits to mining and energy sites by Ministers and business executives.

Looking further ahead, I invite you to keep in mind a third networking opportunity when Australia hosts a Ministerial Meeting on Telecommunications and Information Industry in September. The organisers will again be building in an active business program.

Conclusion

As I have said, our task this year in APEC is a challenging one. But the impressive thing is the distance we have travelled over the last few years.

At the beginning of the decade, trade liberalisation was regarded as a topic too sensitive to raise within APEC. Now, it is the focus of APEC's attention. And an APEC Secretariat was regarded as beyond practical politics. Now it is a going concern.

All of this demonstrates the interests that regional economies have in making APEC a success.

I am confident, in the light of that record of progress, and knowing the effort the Philippines is putting into the task, that this year's meetings will be a success. In the process, the Government will make some good yards for Australia and for Australian business.