Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the Economist CEO Canberra Forum, Canberra, 21 October 1997.

Introduction

It is a pleasure to be here this evening to address the opening session of The Economist's 1997 Canberra CEO Forum - this is a particularly influential and knowledgeable group of senior business figures representing foreign companies operating in Australia.

It is businesses such as yours which trade - day in and day out - on a regional and global scale. You feel more acutely than most the keen winds of globalisation and technological change sweeping across this region. In this increasingly competitive trading environment, I'm sure your parent companies look to you from time-to-time to make the case for the continuing relevance of Australia as a source of innovation and dynamism in the Asia Pacific.

I might be a little biased, but I think it is fair to say that Australia remains a gateway to the most exciting region in the world. As many of you know first hand, Australia's geographical proximity and increasingly closer ties to regional economies make it an ideal location for companies to springboard into the dynamic region to the north.

More than that, we have a strong and relatively low cost skills base, high-quality education and training institutions, advanced physical infrastructure, cultural diversity and rich language skills - all of which are a significant advantage for doing business in a global economy.

Today I want to speak about the Australian Government's successful push over the last eighteen months to remove impediments to the export of Australia's high quality goods and services across the region and beyond.

Along the way I would also like to touch on the other side of our export success. That is, the Government's efforts to build an investment and export platform by improving the competitiveness of the Australian economy.

But first I would like to say a few words about Australia's first ever Foreign and Trade Policy White Paper which my colleague Alexander Downer and I released at the end of August.

Australia's Enduring Commitment to the Region

The White Paper is a landmark document in Australia's history - and it deserves in particular to be read by all who do business in Australia and beyond - because it represents a significant rearticulation and rebalancing of Australian foreign and trade policy. It outlines the priorities and broad strategies for Australia to pursue into the next century.

The White Paper underlines the pragmatic hard-headed approach Australia now takes to its foreign and trade policy. Our key aim is to improve the security, jobs and standard of living of all Australians. And, importantly, we are adopting a whole-of-government approach geared towards making Australia even more competitive in an increasingly globalised economy.

The White Paper also stresses once more that Australia gives the Asia Pacific region and, in particular, East Asia, its highest foreign and trade policy priority. It identifies the ongoing economic rise of East Asia and the momentum of globalisation, as the key influences on our policy over the next fifteen years.

I would like to emphasise that Australia's commitment to the Asia Pacific region, and particularly East Asia, has not been diminished by the events in some Asian financial markets over the last couple of months.

We need to focus objectively on what has been happening in the Asian markets. Clearly, there are concerns about what is happening in the region, reflected in currency falls in a number of the key countries, which have had a contagion effect across the region.

However, I would emphasis that depreciation in itself is not necessarily bad for these economies. It is going to make their economies more price competitive and help them increase their exports. As a major supplier of inputs to these countries, Australia is well placed to benefit from growth in their exports.

Around two-thirds of Australia's exports to these countries are used as intermediate inputs to both domestic and export production.

I am confident that the regional currencies will find stable levels again as Government and market players adjust to the new environment of freely floating exchange rates, and the markets respond to commitments by Governments to undertake policy reform.

Indeed, we should take heart from the fact that the currency upheavals have sent a very clear signal to regional policy makers about the policies they need to implement to continue the forward momentum. We should be encouraged by their recognition of the need to accelerate economic reforms, further liberalise their trade regimes, reduce the costs of those imports used to produce exports, and in particular strengthen their finance sectors.

Domestic Economic Policy Settings

Now let me turn to Australia's trade policy. I mentioned earlier that the first side of the trade policy equation is to create a vibrant investment and export platform through a competitive domestic environment. The Government is committed to this.

Much has been achieved already since this Government came to office, particularly in respect of fiscal consolidation. Australia's economic outlook now is for strong growth in activity, low inflation and faster employment growth.

The Government is pressing ahead with reforms to improve our competitiveness. We have announced significant reforms to industrial relations, business regulation, and the financial system.

The Government is proceeding with the significant privatisation of public assets, including the sale of federal airports and the float of one-third of Telstra. We are also pressing ahead with competition policy reforms, and reforms to the transport, telecommunications, and energy sectors.

However, make no mistake - the momentum for globally-integrated production will continue to forge ahead relentlessly, irrespective of what Australia does. If we don't we want to lose investment, production and jobs to other locations in the region, then we need to be ahead of the competition.

This leads me to the other side of the trade policy equation which I want to speak about - improving market access and prising open those overseas markets that remain closed.

Bilateral and Sectoral Trade Policy

In February this year, I set out - in my Trade Outcomes and Objectives Statement to Parliament - a detailed strategy for further improving Australia's trade performance this year.

The Statement highlighted priorities across a number of specific markets. It focused particularly on bilateral market access issues in addition to ongoing efforts in regional and multilateral forums. The strategy is pragmatic and flexible, allowing us to pick up opportunities for Australian business wherever they arise.

Bilaterally, we have had considerable success by establishing a Market Development Task Force. The Task Force is aimed at coordinating government activity to target realistic priority markets for access, trade promotion and trade development.

As a result, we've made market access gains in some difficult food areas in Japan by having bans removed on products such as tomatoes, capsicums, mangoes and some shellfish. We've also been able to keep the applied tariff for milk into Malaysia at zero which has delivered big export gains in that market.

We've also seen some impressive investment and export gains as a result of promotional work. These range from the announcements of a major German chemicals investment proposal which could mean 1000 new jobs in Australia to increased agrifood contracts and sales in Japan, Hong Kong, Taiwan, Thailand and the Gulf States.

These are just a few of the positive outcomes that have been achieved to date from focusing our attention on specific markets, and we will be looking to build further on these successful beginnings.

The Task Force has been one important innovation in the way in which we have sought to identify industry's trade concerns and act effectively to redress them.

We are now developing other innovative approaches to helping specific sectors realise their export potential. In all of this we are working closely with business.

For instance, we are focusing on the agri-food sector where enormous opportunities are opening up in the fast growing markets of Asia. Conservative estimates see Asian food consumption growing by $20 billion per year as incomes and population levels increase.

To make real progress on resolving some of the key market access issues I have appointed a senior trade negotiator within my Department as Market Access Facilitator for Processed Food and Beverages.

Regional Efforts

At the regional level APEC is the principal arm of our regional trade policy.

The APEC Trade Ministers' meeting in Montreal earlier this year gave additional political impetus to the APEC economies' progress towards free trade in the region. Ministers decided to push ahead quickly in identifying priority sectors for early liberalisation. We have therefore been working closely with our industry to press sectors of interest to Australia, such as food and chemicals.

In the area of trade facilitation there have also been important advances. For example, APEC's tariffs have been put on the Internet, so that they can be freely accessed by business. Work on harmonising standards and customs procedures has also continued to move forward. The APEC Business Travel Card announced last year has commenced on a trial basis, involving around 300 Australian business representatives.

We have seen tremendous tariff reductions in the region this decade. ASEAN, in particular, has cut applied tariffs - on a trade-weighted basis - by two-thirds and most recently Indonesia has announced further cuts.

These figures give the lie to a widely held view in Australia that we lowered trade barriers without similar reductions by our regional trade partners.

Also on the regional front, Australia is eager to see even greater cooperation between AFTA and the Australia New Zealand Closer Economic Relations Trade Agreement - known as CER.

Multilateral Efforts

Australia's trade interests are global as well as regional. That is why the Government is pursuing strongly Australia's trading interests in the World Trade Organization or WTO.

I welcomed Sir Leon Brittan's call earlier this year for momentum towards a new, millennium round of multilateral trade negotiations.

Such a round would offer considerable scope for Australia to achieve further gains in key sectors such as agriculture and services (where negotiations are already mandated to begin in 1999 and 2000 respectively) and on industrial tariffs (where there is no agreement as yet in the WTO for further negotiations). It is important to recognise that a new multilateral round will help achieve a balanced outcome for further liberalisation across all sectors.

Accession to the WTO of major new members such as China also offers Australia considerable scope to extract market access concessions in return for our agreement to their joining.

The financial services sector is another where we hope to see progress this year. We are eager to see the current round of negotiations produce a credible liberalisation package by the December deadline. We are therefore discussing with key regional partners a range of impediments to access in Hong Kong, India, Korea and the ASEANs.

Conclusion

I want to conclude today with the thought that Australia's practical trade policies are bringing benefits across the board for business - for both Australian and foreign companies operating in Australia - and are also laying the foundations for Australia's future prosperity.

I know that many of your parent companies are looking to build stronger business and investment alliances in Australia and elsewhere in the region. The key message I have for you is that the Government is getting the policy settings right at home. We are creating a more competitive environment. And we are opening `hard-to-budge' market doors overseas - all the time consulting closely with business.

The Australian Government remains determined to continue down this path, because that is the only way we can secure the best possible outcomes - for all the Australians who live and work here, and all the enterprises that trade and invest here.