Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the Australian Institute of Export, Sydney, 20 August 1997

Ladies and Gentleman

It's always a great pleasure to address the Australian Institute of Export. The Institute has a long and distinguished history in building the export skills of Australian business, and in promoting the value and importance of exports to Australia - and never have these activities been more important than they are today.

Over the past decade Australian business attitudes towards exporting have gone through a period of change. While some of our industries have always looked to world markets, it is fair to say that, for others, export is a comparatively recent priority. The last 10 years has seen a strong shift from a 'surplus mentality', where exporting was simply protection against a slump in domestic demand, to a truly global focus. Overseas markets are now recognised by more and more managers, in companies large and small,-as a core part of their business.

Increased jobs through Trade Liberalisation

Trade liberalisation, and its contribution to export growth, means jobs for Australians. A survey in 1996 of Austrade’s exporter clients showed that nearly 60% had either increased employment or expected to do so as a result of exporting.

A 1996 ABS survey of the growth and performance of small to medium sized enterprises showed that a higher proportion of exporting businesses increased employment than non-exporting businesses.

The main way in which exports create jobs is by increasing the rate of economic growth.

Exports are a vital component of economic growth. Their contribution to Australia’s GDP has increased from 16 to 20 per cent over the past decade; figures for ‘95-’96 show an increase of 13 per cent in export revenue - to $76 billion. Over the last five years, Australian exports have risen more than 33 per cent, and in the past year, more than half of Australia’s economic growth was the result of growth in exports of goods and services. Australian goods and services exports have been rising in trend terms since September 1996, with export growth averaging around 1.5 per cent per month

The Implications of Regional Trade Arrangements

Today I want to say a few words about a subject that is closely linked in to the trade liberalisation debate.

There have been suggestions that we should attempt to expand our export opportunities through entering into preferential regional trade agreements. In the past few years some of or major trading partners have taken this road and, increasingly, arrangements like the European Union, NAFTA, MERCOSUR, AFTA and CER are becoming a feature of world trade I should stress that our experience with CER certainly has been very good, creating trade and investment opportunities and deepening economic integration. But there are few countries now with which we have a similar relationship.

The Government recently looked at global developments in terms of preferential trade arrangements, and it concluded that in terms- of broad policy the existing mix of approaches continues to serve Australia well. We have greatly benefited from the guaranteed and non-discriminatory market access the multilateral trading system gives us. These rules will continue to inform our basic approach to trade policy.

Nevertheless, we cannot close our eyes to developments among our trading partners. Regional trading arrangements are assuming an increasing profile in International trade and the government needs to be ready to look at all the possibilities and make a hard-headed assessment of the benefits, both in the short and longer term.

I might mention that over the past twelve months the idea of a freetrade arrangement with the United States has come up informally several times. Some see such an arrangement as a way to exporting more to the US, and in this way to reduce the massive trade deficit we have with that country.

And there can be no doubting of the importance to us of the US as a market, as a supplier and as a source of investment, and of the importance of US leadership in global and regional trade liberalisation.

But it is true also that we continue to experience access difficulties to the American market, especially in agricultural products where we also tend to be competitors. Much of the reason for the bilateral trade deficit also stems from the fact that we are a large importer of capital goods.

The results for Mexico and Canada suggest that NAFTA should not be seen as some sort of instant panacea for these difficulties in agricultural trade. There is a good likelihood that we would get free trade in many product areas, but it would be difficult to achieve a clean sweep of all of our agricultural market access concerns.

Equally, we would not expect to grant the US a clean sweep in those areas where it is seeking better access to our market. Of course, the basis for any bilateral free trade agreement is to secure market access benefits across a comprehensive range of sectors, goods - including agriculture - services and investment.

But let us for a moment disregard difficulties in individual product areas and look at the problem in a broader context. One of the Government’s highest foreign policy priorities is the strengthening of economic relations with our regional neighbors. Sixty percent of our merchandise exports go to East and Southeast Asian markets. Overall growth in these economies shows little sign of slackening despite occasional hiccups. There is good reason for assuming that the relative importance of these markets to us will continue to grow for the foreseeable future.

When governments conclude free trade agreements, they make choices. I frankly don’t know how some of our regional trading partners might react if we decided, for example, to allow American cars in free of tariffs, while other imported cars would be subject to normal Australian tariffs. There are other products, such as textiles, where we could be in the same predicament.

The Government is committed to maintaining and building existing markets for Australian exporters and to develop new ones as part of its approach to promoting national economic prosperity and creating jobs. We are not wedded to any single approach, and we will use bilateral efforts, the APEC regional approach and the rules of the multilateral trading system to achieve the aim of developing exports.

Each time we tackle a market access problem, we choose the most suitable option. Sometimes this means two or three in combination. This approach produces results, and we will continue to refine it.

Last week the MTIA released its report on the fixture of Australia’s manufacturing industry. One of the report’s recommendations concerns the conclusion of fee-trade agreement between Australia and New Zealand on the one hand and ASEAN on the other. The Government is certainly aware that significant sectors of Australian industry share our enthusiasm for closer and deeper economic cooperation with ASEAN.

We are already doing much under the CER-AFTA umbrella to promote this idea. We have a very active work program on trade facilitation, particularly in the standards and conformance area. And we have established an enhanced dialogue at the ministerial and officials level.

In two weeks’ time a conference in Singapore organised by think-tanks in Australia, New Zealand and ASEAN will examine options for closer economic cooperation between CER and ASEAN. All of this is buttressed by a dynamic cooperation program at the business level which is aimed squarely at reducing trade barriers between the two free-trade areas.

There should be no doubt at all about the importance the Government attaches to achieving closer economic and trade cooperation with the ASEAN economies. Fifteen per cent of our merchandise exports go to ASEAN, and for the past five years they have gown at nearly ten per cent per year.

Our approach to the CER-AFTA linkage makes clear our willingness to examine all options. The eventual development of a fee-trade area covering Australia, New Zealand and ASEAN is one possible direction. But a lot of work remains to be done by all the parties to establish the costs and benefits that might be involved and, indeed, whether the idea is feasible at all. Let us not forget that ASEAN itself is expanding, and that it has fee challenging task-of integrating nine economies of widely disparate magnitudes and differing stages of development ahead of it.

Nor should we make the mistake of assuming that, simply because we are ready to explore the idea of closer economic cooperation further, ASEAN is waiting for us to come forward with a proposal. And we cannot automatically assume that a future free-trade area is the only option. There is, however, a strong desire by both sides to expand trade, and we will devote ourselves to that aim through the best use of the resources available to us.

Conclusion

The Government’s main aim in trade policy is always to gain greater market access for Australian business. We will use all the tools at our disposal - bilateral, regional and multilateral - to ensure that the interests of Australian exporters are advanced.

The Institute is a valuable source of assistance to our exporters, and I once again commend your role in assisting Australian companies to achieve their export potential.

Thank you.