APEC: Priorities for Government and Business

Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the Australian Business Chamber Annual Dinner, Sydney, 30 October 1997.

Introduction

The past two years have seen a fundamental shift in APEC's direction - from vision to action. With APEC focused more and more on implementing its goals, the role of business is now more prominent.

I am therefore very pleased to be able to address this distinguished business forum tonight. I want to outline for you progress over the past year and the prospects for the annual APEC Leaders' and Ministerial meetings, now only a few weeks away.

Those of you who are outside Government may not be aware that the intensity of these coming weeks can be regarded as the diplomatic equivalent of the lead-up to the Melbourne Cup!

The key question for member economies is how work undertaken through the year will be addressed at the APEC Ministerial and Leaders' Meetings - to take place in Vancouver 21-25 November. Several unresolved issues remain for APEC - in spite of Canada's careful preparations as Chair.

Australia will certainly exert maximum effort over the next few weeks to press the interests of our agricultural, mining, manufacturing and services industries. At the same time, there are enough "win-win" outcomes already in place for us to make the judgement that APEC continues as a significant plus in the armoury of our trade policy.

APEC certainly complements and reinforces our bilateral and multilateral trade efforts and the Government's domestic efforts to lift our competitiveness.

We want to improve export opportunities for Australian business through greater regional trade liberalisation and improved market access. The bottom line is that more exports mean more jobs.

An Increasing Role for Business

The role of business in APEC is essential.

APEC's peak regional advisory body - the APEC Business Advisory Council (ABAC) - is playing an increasingly important part in assessing APEC's progress and shaping its priorities.

ABAC's 1997 report has set a new standard in its detail and comprehensiveness. It will be presented to Canada's Prime Minister Chretien next Monday. Our own ABAC representatives - Imelda Roche, Michael Crouch and Malcolm Kinnaird - will be releasing it in Australia soon afterwards.

Without breaching the embargo on the report, I can say that it represents both an endorsement of APEC's existing work and a call for faster, more detailed action in key areas of interest to business. It is also a call for government and business to work more closely together to build support for APEC.

These fundamental messages are ones which Australia can endorse.

ABAC representatives will, of course, have an opportunity to press the specific recommendations they have made directly with Ministers and Leaders at the Vancouver meetings.

Canada will also be convening a CEO Summit just prior to the Leaders Meeting, building on the idea developed in the Philippines last year by President Ramos. We expect a number of Australian business leaders to be attending the Summit, which will include an address by Prime Minister Howard.

Events like the CEO Summit are, of course, only the most striking and visible manifestations of the increasing role of business, which has been involved in a wide range of specialist meetings through the year.

At the national level, our own consultations with business have been more intense than ever - through the National Trade Consultative Process, the Trade Policy Advisory Council, the APEC Business Forum and in a variety of other ways.

In the context of APEC's sectoral work, my officials have sat down regularly over the year with farm, food, manufacturing and services organisations in an effort to direct our discussions within APEC forums along lines which provide maximum advantage to industry.

Implementing Trade Liberalisation

A key part of APEC's work is on trade liberalisation, which is intended to take the region forward to meet the Bogor goals of free and open trade and investment in the region by 2010/2020.

Essentially, this work is on track - and it has been assessed to be so by a major Pacific Economic Cooperation Council report.

Last year, every APEC economy tabled an Individual Action Plan (IAP) showing how it would move towards free trade.

These plans varied in their level of ambition, but overall, they presented a credible base on which to build. Updated ones will be presented this year.

I will shortly be tabling in the Parliament Australia's 1997 IAP which represents our commitment to continue to move towards the Bogor goals.

There were were some real benefits for Australian business in the 1996 plans of APEC members.

Last year China, for example, promised to reduce its simple average tariff from 23 percent in 1996 to around 15 percent by 2000. Chile agreed to reduce tariffs on most products to zero by 2010. Among specific market-opening measures, Japan foreshadowed new quarantine measures, Hong Kong a relaxation of import restrictions on rice, and China an increased number of licenses for foreign financial firms.

This year, although it seems to have been harder for APEC economies to come forward with new commitments, I am expecting some incremental gains when the plans are fully revealed next month. For example, Chile - one of Australia's fastest-growing markets - aims to reduce its general tariff rate from 11 percent to 8 percent. Indonesia has announced further reductions in tariffs, and simplified trading and taxation procedures. Japan has extended its deregulation program.

Australia has worked hard through the year to make progress on issues of interest to our business community, such as high manufactures tariffs, and impediments to agricultural, mining and services trade.

Moreover, the opportunity to comment on APEC plans is a valuable addition to the work we are doing in other areas. For example, it complements the work we are doing multilaterally to bring down barriers though negotiations on China's accession to the WTO.

It also adds to the pressure brought to bear by our Market Development Task Force which gives priority to substantial market access barriers in the region of key interest to Australian business.

To some extent, however, the focus of the trade liberalisation debate in APEC has this year shifted away from the Action Plans, towards the new area of early sectoral trade liberalisation which shows some promise for exporters.

APEC Leaders in Subic Bay last year, and Trade Ministers in Montreal this year, have given clear priority to this initiative which stems from last year's Information Technology Agreement discussions. In this sector APEC set the pace, which led to a full agreement in the WTO this year.

Australia has played a leading part in developing the sectoral work, which aims to free up trade quickly in specific sectors. I am pleased to say around 60 proposals have already been tabled.

In cooperation with other economies, we have actively supported some of the key proposals being discussed - such as chemicals, environmental services and fish.

Moreover, we have been working hard to progress nominations we have put forward ourselves - for freeing up trade in energy, food and non-ferrous metals.

It is too early to say what will result from this work. But Australia will be urging that a number of sectors be chosen for further work by Ministers and Leaders when they meet.

In the lead up, we will continue to work hard for a balanced package of sectors to be chosen which are of interest to our farming and business communities, and where there is scope for liberalisation and improved market access.

Trade Facilitation

APEC's work on liberalisation is reinforced by its work on trade facilitation. This addresses some of the key non-tariff barriers - in area like standards and customs - which confront business in the region.

The work on trade facilitation provides direct and tangible gains to business and APEC's work this year has generated some useful results.

For example, APEC tariff data is now available freely on the Internet, providing a useful step forward in terms of transparency. A wide range of other material is also available - such as on investment regulations, government procurement and business travel.

APEC - importantly - made good progress on mutual recognition of differing standards and testing for conformance with those standards. Last year's Food Mutual Recognition Arrangement has now entered into force, though much has to be done to make it operational.

Also, APEC Transport Ministers agreed in June to a model Mutual Recognition Arrangement on automotive products, designed to cut the costs associated with differing vehicle standards in the region.

Standards are also being aligned with those agreed internationally in areas like food labelling and electrical appliances - industrialised economies will achieve this goal by 2000 - and others by 2005.

Some APEC economies - such as Korea and the Philippines - have made commitments which go beyond these priority areas.

In the customs area, APEC is moving towards paperless trading through the use of Electronic Data Interchange, along with steps to harmonise and simplify customs procedures and introduce clear appeal provisions.

On business travel, the APEC Business Travel Card which Australia promoted last year has begun a trial phase involving the Philippines and Korea. This provides accredited business people with the equivalent of visa-free travel in each economy and will fast-track cardholders at major airports. Chile and Hong Kong have announced they will join the scheme early next year.

Economic And Technical Cooperation

APEC's third major arm - economic and technical cooperation - is increasingly focusing on six major themes which are critical to regional development. At the same time, it is also emerging as more central to what APEC is doing to free up and facilitate trade.

Part of APEC's work to remove impediments to trade and investment is thus taking place in the context of its economic cooperation on energy, transport, telecommunications and fisheries.

The APEC economic cooperation agenda is of interest to business. Its work on infrastructure, designed to promote best practice and encourage private sector financing, is increasingly important in the light of currency instability which has recently affected the region.

Specialist meetings also provide an important opportunity for networking - with other businesses and with government. APEC's Small and Medium Enterprises meeting in Ottawa last month attracted over 600 exhibitors and 2000 visitors from the region.

The Agenda for Vancouver

In Vancouver APEC Ministers and Leaders will - we expect - endorse most of the solid work done this year, some of which I have just outlined for you.

But there are also new issues where Ministers and Leaders will need to be very closely involved.

I have already referred to APEC's work on sectoral trade liberalisation, which is likely to be the subject of intense discussion right up to the Vancouver meetings. Australia is pushing for an outcome that will see further work on advancing specific sectors for liberalisation in the region.

The currency turmoil in East Asia is another issue which is likely to be prominent in discussions.

Our view is that APEC can make a valuable contribution to regional stability this year by reaffirming its confidence in the long-term economic potential of the region and its continued support for the Bogor goals.

It is possible that APEC Finance Ministers will be called on to look closely at options for addressing regional currency instability.

For its part, the Australian Government has made it clear that it maintains its confidence in the region's strong growth prospects, based on high rates of saving and investment, progress with market-opening, and strong investment in human capital.

Another issue we believe will be important in Vancouver concerns the benefits of trade liberalisation.

In Australia, we know that while trade liberalisation sometimes gets considerable bad press, many quiet success stories don't make the media. Trade liberalisation has, in fact, enabled Australians to enjoy additional jobs and incomes - in areas as diverse as selling fresh milk to Hong Kong and exporting Australian medical and scientific equipment around the globe.

Research commissioned from the Centre for International Economics this year suggests that APEC-wide trade liberalisation - for goods alone - would lift real wages in Australia by 1.5 percent and employment by up to 0.5 percent. Work which Japan and Singapore have been coordinating shows gains to each economy already flowing from the initial steps in the Action Plans.

We believe that economies in the region have much to gain from sharing the results of research and analysis into the benefits from APEC's trade liberalisation and Australia will be advocating further work in this area.

Electronic commerce is another issue which I know is close to business' heart and which is important to discuss in an APEC context.

Conclusion

APEC continues to be a key part of the Government's trade policy.

Ours in not an Asia only policy, but it is an Asia first policy. The Government has been pursuing Australia's interests around the globe but it retains a focus on the Asia Pacific. As long as prudent economic policies are in place, we have confidence that the long-term outlook for East Asia and the broader region is for continued growth.

We therefore give APEC considerable priority in our trade efforts. APEC already has a number of runs on the board. Now that APEC has moved into its action phase, close business involvement is all the more important for APEC to be successful and relevant. And the Australian Government is determined to help APEC succeed, both in Vancouver and beyond.