Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the American Chamber of Commerce in Australia, Adelaide, 5 December 1997.

Introduction

Mr. Bill Anschutz, Senior Vice-President, American Chamber of Commerce in Australia and today's chair, Mr. Robert Fergusson, partner with Coopers and Lybrand which is sponsoring today's forum, other distinguished guests, ladies and gentlemen.

I am very pleased to be in Adelaide today to address the American Chamber of Commerce in Australia. AMCHAM makes an important contribution to our trade and investment relationship with the United States - our second largest trading partner.

Our export performance - and we have seen substantially increased exports to the US over the last eighteen months - is vital to creating new jobs for Australians. Partly due to greater exports we saw 75,000 created in September - the strongest jobs growth in almost two years.

This Government has been giving all the help it can to Australian firms looking to export. First, by creating an economic environment in which they can perform at their best; second, by achieving greater market access for Australian products; third, by helping promote Australian products overseas wherever we can.

This approach has yielded dividends in a greatly improved export performance to the US last financial year. I am pleased to say South Australian industries played an important part in that achievement.

I will come back to our trade and investment relationship with the US and what the Government is doing on that front shortly. First I would like to tell you about the outcomes of the recent APEC meetings which I attended in Vancouver at the end of last month.

APEC Outcomes

The APEC meetings this year were held against the backdrop of considerable economic turbulence in the region, and concerns in some quarters that APEC's liberalisation agenda might be blown off course.

In the event, the Vancouver outcomes were very positive. APEC addressed regional financial issues in a way which has enhanced and strengthened its credibility. And far from retreating from the ambitious Bogor commitments on trade liberalisation, APEC Leaders reaffirmed them and set down an ambitious liberalisation agenda.

In addressing the economic uncertainties facing the region, APEC Leaders reaffirmed both their confidence in the economic prospects of the Asia Pacific; and their commitment to the Bogor timetable for achieving free and open trade and investment.

In doing so, they sent a positive signal to the global community of the underlying strength of the region's economies and of their determination to press ahead with economic reform.

For Australia and our partners in the region have great confidence that regional economies will return to robust growth in the medium term - provided they adhere to responsible economic policies.

Also, APEC Leaders endorsed the goal of successfully finalising the WTO's negotiations on financial services by the agreed December 12 deadline. That is a powerful message to the rest of the world that the region is firmly committed to reforming its financial markets.

One of the most important outcomes of the APEC meetings for Australia was APEC leaders' endorsement of sweeping new proposals developed by APEC Ministers for early liberalisation - or other forms of cooperation - for fifteen sectors.

These sectors cover over US$800 billion of regional trade.

For nine of these sectors intensive work will be undertaken in the first half of 1998, with a view to beginning implementation in 1999. Australia - together with the US and other economies - sponsored two of these proposals for freeing up trade in energy and chemicals.

The top nine also include a number of others in which we have major trading interests - such as fish and fish products, environmental goods and services, and gems and precious metals.

For the other six of the fifteen sectors - which were not so close to finalisation - further work will be carried out for review by APEC Ministers in Kuching in mid-1998.

These include a proposal on food put forward by Australia, and one on automotive products advanced by the United States with our support. Getting agreement on food - one of the most sensitive sectors in regional trade - was a considerable achievement for us.

The outcome on sectoral liberalisation will have major implications for our trade with the region, and will require intensive negotiations involving our major APEC trading partners over the next few months.

Our energy proposal would, if implemented in its entirety, free up trade in coal and gas trade in the region worth $A5.9 billion annually and liberalise trade for energy-related equipment and services.

South Australian-based companies such as Santos, which operate with world class mining services and technologies, will be well placed to benefit. So too would smaller consultancies and sub-contractors.

In the case of fish, Australian exports to the region, which face tariffs of up to 60 percent, are worth some $A1.4 billion annually. The proposal before APEC, which has wide support, would see tariffs on most fish and fish products eliminated by the end of 2005, and would also address non-tariff barriers and subsidies.

It will, however, require participation by economies such as Japan, Korea and Chinese Taipei to be effective. South Australia's tuna fishing industry and its aquaculture generally will be well placed to benefit.

Automotive products is another area which will be of interest to you. The American proposal involves work aimed at cutting costs in areas like standards and customs. It would also seek to identify trade and investment barriers to these products, where regional tariffs are as high as 300 percent, with the potential to put the issue of market access in this sector more firmly on the agenda in the long term.

Giving effect to all of these decisions will require hard work next year to turn initial proposals into tangible benefits for industry. We will be working closely with the United States and other like-minded economies in this, as we have done throughout 1997.

A source of concern for our continued cooperation with the US in this area is, however, the delay in granting President Clinton what is known as "fast track" negotiating authority on trade issues.

 We have urged the Administration and the Congress to continue to work towards concluding an approach to a "fast track" mandate which would allow the US to participate fully in efforts to secure an improved climate for global and regional trade.

It is worth noting, however, that the US has residual authority for a considerable portion of APEC's sectoral agenda. And the strong outcome for business on sectoral liberalisation in Vancouver will bolster the Administration's argument for obtaining "fast track".

The US-Australia Relationship

I would now like to turn to our trade and investment relationship with the United States. The US is our second largest trading partner with two-way trade accounting for 15 per cent of our total trade. The US is also our largest source of foreign investment. So this is a trading relationship which we have to get right.

I mentioned at the outset that our export performance to the United States had improved. I am very pleased to say that in 1996-97 our exports increased across the board by around $A900 million - or 20 per cent - to reach $A5.5 billion.

And we can thank South Australia for a large part of that increase.

Our exports of passenger motor vehicles had recently declined dramatically to only $A3 million in 1995-96 but these increased exponentially to $A426 million in 1996-97. This was a result of Mitsubishi's exporting approximately 7,000 Diamante Sedans to the US. The even better news is Mitsubishi expects to more than double that number this year.

South Australian wine also contributed significantly to a 47 per cent increase in alcoholic beverages exports to the US. Total wine exports there have now reached $A120 million.

Last month I attended the COMDEX information technology fair in Las Vegas where Austrade helped - for the first time - to arrange for 25 Australian firms to exhibit. Over the next two years the firms which attended expect to export over $A200 million worth of goods to the US. Some of them wrote around $A1.5 million worth of business on the spot. Needless to say - we will be back again next year.

This recent export success is very welcome as we have been running a very substantial trade deficit with the US for a number of years - in the order of $12 billion in 1996-97.

The reasons are complex. We have to some extent diverted our commodities sales to East Asia over the last decade where trade barriers to our goods have been coming down - unlike in the US. Also, we have been drawing to a greater extent on US inputs into our own increasingly sophisticated manufacturing processes.

But elaborately transformed manufactures - or ETMs - are now generating considerable export sales to the States - witness our IT success at COMDEX. The US is now our second largest export market in the ETMs sector - after annual average growth of around 14 per cent for the last decade.

South Australia has again figured prominently in this turnaround as the latter half of the eighties saw strong growth in sales to the US of iron and steel products.

We certainly hope also to see more robust sales of our traditional commodities to the US. To this end we have been raising with the US Administration, with Congress and with business and lobby groups the barriers to trade in these areas which continue to be of concern.

We will certainly continue to pursue vigorously trade issues such as the US's recent unwillingness to accredit our trial export meat inspection system - or Project 2.

Conclusion

In conclusion, Australia and the US work well together. We need each other. I know that you will all be doing what you can to make our business connections even stronger.

Let me say however that although Australia and the United States cooperate extremely well in pursuit of trade liberalisation everywhere else in the world - and particularly in discouraging unfair trade practices in the EU - we have real difficulty in eliminating the few remaining barriers between our two nations.

This will continue to be a priority for this Government. I encourage organisations such as AMCHAM to keep up the good work in keeping us informed of just where the difficulties lie.

Thank you for the opportunity to address you today.