Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, tothe Arthur Andersen Senior Business Forum, Melbourne , 20 June 1997.

Introduction

Fergus Ryan, Country Managing Partner, Arthur Andersen; Most Reverend George Pell, Archbishop, Roman Catholic Archdiocese of Melbourne; other senior business representatives here today.

One of the Government's fundamental foreign and trade policy objectives is to improve the economic well-being of all Australians.

Achieving that objective depends on how well Australia competes in the regional and global marketplace, and how outward-looking and flexible our economy is.

In short, to make its way in the world - now and in the future - Australia must trade, and trade well. The more we build our capacity to export, the more the job situation at home will improve.

Australia's dynamic, highly diversified services sector, which is capable of providing high value added services tailored to individual countries' needs, is certainly making a strong contribution to Australia's export performance.

1995-96 was a real breakthrough for the services sector. For the first time we recorded a surplus on services trade world-wide. Exports of over $23 billion represented some 23 per cent of total exports, up from only 16 per cent a decade ago. Current estimates for 1996-97 indicate the figure could well be in excess of $25 billion.

I applaud that achievement.

But we can do still more. Today I would like to speak to you about what the Government is doing to pursue vigorously its efforts to free up further the international trading environment for the services sector.

International Trade and Australia's Services Sector

Our integrated trade strategy places renewed emphasis on bilateral market access issues in addition to ongoing discussions in regional and multilateral forums. The strategy is deliberately flexible, to pick up opportunities for Australian business wherever they arise.

Services, as I noted earlier, now represent nearly a quarter of our exports. Moreover, services such as financial, telecommunications, air-freight, legal and accountancy, are also important 'drivers' of Australia's international competitiveness.

Services are, therefore, an increasingly important focus of our trade strategy.

We rely heavily, of course, on business input to establish our negotiating objectives. As well as working with the Australian Coalition of Service Industries, the Government has established industry consultation groups in financial, telecommunications, accountancy, legal and engineering services.

Bilateral Approaches

As part of its renewed emphasis on bilateral approaches, the Government has established a Market Development Task Force aimed at coordinating government activity to target realistic priority markets for access, trade promotion and trade development.

Good results have been obtained from bilateral activities, many jointly with industry, in the services sector:

• India has recently granted the ANZ its 57th branch, making it the largest foreign owned bank, and India has undertaken to bring forward reviews of its monopolies in long distance and international telecommunications services from 1999 and 2004 respectively.
• China has granted the ANZ a second branch licence to operate in Beijing and Blake Dawson and Waldron has been granted a licence to practice in Shanghai.
• Thailand has granted National Mutual Australasia a licence to operate in a joint venture arrangement with Thailand's General Finance Group and the Government Savings Bank.
• The National Australia Bank has been granted an offshore banking license in Malaysia.

Regional

The regional goal of free trade and investment in APEC by 2010 for industrialised countries and 2020 for developing countries provides the benchmark for all market access. APEC Trade Ministers recently agreed to identify, by November 1997, sectors for early liberalisation by APEC.

This list is likely to include some services sectors:

• Korea is reviewing its restrictions on commercial presence for foreign accounting firms and ways to improve access for foreign lawyers
• Singapore has undertaken to remove commercial presence restrictions on engineers and architects and to continuously review the list of accredited medical degrees
• Hong Kong will consider establishing criteria for foreign lawyers to practice as barristers by 2000 and remove preferential arrangements for recognising qualifications for some other professions in 1997.
• Japan is reviewing this year its laws relating to foreign legal operations in Japan.
• Thailand will increase the number of licences for joint ventures in the insurance sectors and Singapore intends to gradually open its domestic banking sector to foreign banks.

Multilateral Approaches

I was very pleased earlier this month to attend the OECD Ministerial Meeting in Paris. The meeting produced a strong, forward looking statement on the need to further strengthen the multilateral trading system.

I welcomed at the OECD, the call by Sir Leon Brittan, Vice-President of the European Commission, for momentum towards a new, millennium round of multilateral trade negotiations. This is an approach Australia supports, particularly if by starting important analytical work now, a new Round can be conducted in a shorter period of time than the Uruguay Round, which took seven years.

Australia would like the WTO services negotiations in 2000 to take a comprehensive approach to covering all services sectors and updating the existing multilateral rules. It is vital that the WTO stays up to date with developments in the complex and fast-changing services trade environment.

To these ends, Australia is proposing that the preparatory work focus on the impact of current and emerging developments in trade in services, including electronic commerce. We would like this work to focus on how trade in services is evolving and how to ensure that the 2000 negotiating agenda reflects that.

It is all the more important, therefore, for business to join with the Government in looking ahead to consider how Australia can shape those negotiations, according to our interests. What issues will be key for you in the next five years - we need to get these on the global agenda, to start influencing the scope and therefore the outcomes of these important negotiations.

There is already considerable momentum in discussions on services in the WTO. We saw an interim agreement on financial services in 1995 and a good outcome on basic telecommunications liberalisation earlier this year.

This year the WTO is having a second crack at financial services, with a deadline of December this year. Negotiations on liberalising professional services and on extending the WTO services rules to cover safeguards, subsidies and government procurement have been under way since 1995.

I'd like now to outline for you, in particular, the state of play in the WTO on financial, accountancy and legal services.

..... on financial services, ...

Australia is eager to see the current round of financial services negotiations produce a credible liberalisation package by the December deadline.

In particular, we are seeking:

• greater liberalisation from ASEAN, India and Korea in banking and insurance; and
• the removal by the United States of its exemption of financial services from the MFN principle (that is, the rule requiring that all foreign suppliers be treated equally in a market).

Other negotiating objectives include gaining new licences, raising foreign equity levels and increasing transparency to give businesses greater certainty in their operations.

Australian industry is certainly strongly placed to capture new market opportunities created by the WTO negotiations if the considerable barriers to financial services exports and investment in Asia and India were to be lowered or, indeed, removed.

The Government is, as I indicated earlier, consulting extensively with industry, in particular the banking sector and insurance companies, and with State Governments on approaches to these negotiations.

International business coalitions, however, are increasingly driving the global trade liberalisation agenda, as we saw last year with the Information Technology Agreement. One of our key strategies to help the negotiations along therefore has been to invite senior Australian business representatives, together with their counterparts from the EU, US and Canada, to participate in a private sector Financial Leaders Group.

...on accountancy ....

Accountancy is another key services sector in which negotiations are already under way in the WTO. Australia's accountancy sector has also taken a strong interest in these activities.

Market access, however, remains problematic. In particular, Malaysia, Indonesia, Thailand, Korea and Singapore restrict the right to establish a commercial presence by, for example, not allowing any commercial relationship with local professionals.

The Government has therefore placed priority on the WTO accountancy negotiations and worked hard to keep the momentum going in a busy WTO agenda and without much enthusiasm from developing countries.

Working closely with the US and EU, we are aiming to remove regulatory barriers in accountancy by the next WTO Ministerial in 1998. Australia intends to push the work along by putting forward proposals this year for disciplines on licensing, qualifications requirements and commercial presence.

.... and legal services

Australia's legal services sector faces similar market access problems to financial and accountancy service exports. Yet despite this, legal services exports have almost doubled in the last five years to $173 million. The Government has recognised the growing significance of legal services exports and has recently established new arrangements through the International Legal Services Advisory Council to address legal services market access issues.

As part of Taiwan's accession to the WTO, Australia secured major improvements in market access which will significantly increase the scope of Australian legal firms' activities in Taiwan.

Negotiations on legal services are also under way with China in the context of China's accession to the WTO. We are pressing China to grant additional licenses to those Australian legal firms wishing to practice foreign law, as currently only two have been granted to Australian legal firms.

Conclusion

To conclude, I would like to congratulate Australia's service exporters on their success in capturing some of the growing opportunities in an increasingly competitive global environment. These have been achieved despite significant market access barriers in the region.

With the help of your advice on where best to target our efforts, the Government will not rest in endeavouring to obtain substantial improvements in liberalisation through the current and future rounds of WTO services negotiations, APEC discussions and bilateral negotiations.