Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the Melbourne Business School

Introduction

It gives me great pleasure tonight to be at the Centre for the Practice of International Trade.

The establishment of this Centre is an excellent initiative of the Melbourne Business School, led by Professor John Rose. It is an example of what can be achieved by the joint efforts of government and business in the formulation of trade policy.

I would also take the opportunity to congratulate Professor David Robertson who has just been appointed to the John Gough Chair in the Practice of International Trade.

The Centre will have a key role in the education and training of the next generation of business leaders. International trade is constantly changing. We need people who understand this, and who can take up the challenge of new issues. The Centre should aim to promote a greater discussion in the community of trade policy issues and therefore become a focus for trade policy analysis in Australia.

For me, tonight is a great opportunity to meet and talk to some of our leading private sector representatives. It is intended that this lecture will become an annual event. The lecture will raise the profile of trade issues and opportunities among Australian business and academic circles. I am pleased to have been offered the first opportunity to enjoy this honour.

Our capacity to create new jobs, and to raise the living standards of all Australians, depends vitally on increasing our national wealth through trade.

We have demonstrated our capacity for competitiveness in the export of minerals and primary products. We are making great strides in improving our manufacturing export base. Our services exports are growing very rapidly, and they in particular offer scope for adding value and promoting employment.

Technology is driving major changes in the economic, political and social environment. A major task for us as a nation is to adapt quickly and maximise the returns from trade in a rapidly changing technological environment.

The globalisation of business is a fact of life. Production processes are becoming integrated among many countries. There is also greater competition in every market. Globalisation is one of the main reasons why the trade effort is becoming much more complex and more challenging.

Competition is intensifying, national boundaries are becoming less relevant in global trade, and industries are no longer dependent on domestic markets to nurture them. And the boundary between domestic policy and international policy is blurred, if not lost.

Governments ignore this at their peril. Every aspect of the economy now needs to be considered from the trade aspect. Only a whole-of-government approach to the challenges facing us will do. It is for this reason that I launched the annual Trade Outcomes and Objectives Statement in Parliament on the 5th of February. The Statement brings a clear focus to trade policy and establishes for the first time a comprehensive and integrated structure in which we can maximise our trading opportunities.

Let me return to the Statement shortly, but first let me say a little more about the particular challenges and opportunities posed by technological changes.

The technological revolution

The technological revolution provides massive opportunities in all areas of activities. Technological change is one of the most powerful factors driving policy and the world of ideas. The challenge will be how we can use the opportunities it presents to advance our national well-being.

Technological change also drives the development of international trade. It opens up borders that otherwise would remain closed. While tariffs are still an important impediment to the expansion of our exports, market access is no longer only about border protection. Investment, market presence, movement of professional people and the protection of ideas have become crucial for the expansion of international trade.

Two recent trade outcomes underpin the possibilities inherent in technological change.

The Information Technology Agreement

At the WTO Singapore Ministerial Meeting last December we reached agreement to negotiate a rules-based Information Technology Agreement. It will cover at least 90 per cent of world trade. Already, nearly thirty economies, including our key regional trading partners, have agreed to reduce tariffs to zero on a wide range of information technology and telecommunications products by 2000.

The ITA will shape the Australian information technology industry well into the twenty-first century. It will give business duty-free access to all of the major information technology markets. It will also give Australia an additional incentive to innovate and to compete.

The ITA is an interesting example of what can be done when business forms a clear strategy and sells it to government. International business was the driving force for the Agreement from the start. It did much of the conceptual work, and it demonstrated that the proposal was feasible. Governments then took the idea up, and it was concluded in record time because much of the preliminary work had been done.

The WTO telecommunications agreement

Telecommunications are the backbone of modern business. I therefore welcome the recent successful outcome of the negotiations on basic telecommunications in the World Trade Organization. Australia is a leader in telecommunications reform. Australian firms are very competitive in the provision of services. The agreement will underpin further growth in the telecommunications services trade. This will lead to more opportunities and jobs in the sector.

Australia did not have to make any policy changes as part of our undertakings for this agreement, and liberalisation in many of the key markets will take place soon after the implementation of Australia's domestic reforms initiated by the Minister for Communications and the Arts, Senator Richard Alston.

The Australian telecommunications industry contributed in important ways to the refinement of Australian negotiating priorities. A clear focus on commercial objectives enabled the negotiators to focus on key markets.

It is significant that these achievements both in information technology and telecommunications occurred in industries that are at the forefront of technological innovation and change.

The Trade Outcomes and Objectives Statement

I previously mentioned the Trade Outcomes and Objectives Statement as a clear statement of our trade policy and priorities.

This Statement was a key election commitment and it is designed to bring government and business closer in the identification of priorities. It focuses our trade effort to bring greater benefits to the Australian community.

It illustrates the critical importance of trade to the Australian economy. We have set ourselves the task of measuring trade progress. While we will be concentrating on a new group of countries in next year's Statement, we will also be comparing our progress with the targets we have set ourselves for the countries in the first Statement. This is an important way in which the Government can be more open and honest with the Australian people.

The Statement will be published annually. Each year it will focus on key and potential markets, identifying opportunities and barriers to trade, our priorities and our achievements. This year we concentrated on major markets mainly in our region and some emerging markets. Next year we will cover the European Community. All of these markets have one thing in common: they are full of exciting opportunities, but only if we continue to develop and refine the strategies, and if we apply them with dedication and confidence.

The government has a pragmatic trade policy . . .

The Government has adopted a deliberately pragmatic and flexible approach to trade policy. We have increased our effort at the bilateral level to better take advantage of existing opportunities. This is within an integrated policy framework which sees bilateral, regional and multilateral approaches as complementary, and which is flexible enough to make the most of opportunities as they arise.

In doing so, we are seeking to advance the national interest by a hard-headed focus on results rather than rhetoric. And the most important result of this is to contribute to continued jobs growth in Australia.

We have sought to give a clearer focus to Australia's trade policy and to increase the competitiveness of the economy in order to give Australian traders a better chance at the starting blocks. We have structured our objectives to secure the best possible conditions and opportunities for Australian firms and industries trading and investing overseas. Our trade policy is aimed squarely at promoting economic growth and more jobs at home.

A practical example of our approach is the export of motor cars to Taiwan. Under the bilateral market access package we concluded last October, we have new access for 2,000 cars. Once Taiwan joins the World Trade Organisation, this will go up to 6,000 cars, and it will grow by 10 per cent a year after that. That is the sort of package that translates directly into jobs for Australians.

Trade promotion and support for Australian business overseas complements the Government's market access activities. Information on markets, contacts and assistance, advocacy and government-to-government activities, all assist our exporters take advantage of improved business conditions and take up export opportunities.

. . . consisting of bilateral . . .

Australia's capacity to protect and advance its commercial interests starts with the quality of its bilateral commercial relationships. Building a bilateral trade relationship involves the coordination of market access, market development and promotion activities. Targeted, integrated approaches, supported by industry, concentrating on specific sectors in a particular market, can establish and strengthen Australia's commercial presence and increase exports.

The emerging markets need particular attention. We want them to become our established markets. There are clear signs that Latin America, South Africa, the Gulf region and Vietnam aim to achieve economic growth through running open economies. Bilateral efforts will be prominent in the development of Australian exports to these exciting new markets.

We are revitalising the bilateral mechanisms to give greater emphasis to market access issues. Wherever possible, we encourage business representatives to participate in the meetings. This makes our efforts more focused, and relevant to business, so that government efforts will better meet your needs.

As a practical example of the increased emphasis on our bilateral relations, I have established the Market Development Task Force. It gives priority and focus to bilateral trade efforts. A key role for the Task Force is to better coordinate our trade policy and trade promotion activities - to open up markets and assist companies to enter these markets.

And I will soon be releasing the first implementation report of the Australia-US Trade and Investment Review.

The original Review - which I released in August 1996 - examined the causes of Australia's bilateral trade deficit with the United States and the outlook for United States trade policy and its impact on Australia. The Review found that, notwithstanding the deficit and a number of long-standing problems of market access - which the government is committed to resolving with business - there are a number of areas in the relationship where linkages are expanding, particularly in investment and services.

The implementation report will look at new opportunities and progress made in resolving problems in the relationship. For example, it will highlight recent successes in attracting US companies, such as American Express and SmithKline Beecham, to establish regional headquarters in Australia, despite stiff competition from other countries in the region.

And I will also be releasing a study on our relationship with South America later in May.

. . . regional . . .

The focus of our regional effort has been on APEC. The Individual Action Plans tabled at the APEC Summit in the Philippines last November represent a sustained effort by all APEC members to open up their economies in a non-discriminatory way.

APEC is also working on ways to reduce the costs of doing business. It is, for example, addressing standards problems and streamlining customs procedures.

The CER-AFTA linkage plays a regional role also. Australia and New Zealand are important partners and neighbours of some of the world's fastest-growing economies, the ASEAN region countries. I have noted with great satisfaction that Australian business has organised itself to become a key part of the CER-AFTA linkage.

And in May I will participate in the first meeting of Ministers between CER and the South American Mercosur countries.

. . . and multilateral elements.

Active and constructive participation in the non-discriminatory multilateral trading system remains one of our approaches to trade policy. Traders need the predictability, transparency and consistency that can only be provided by the rules-based multilateral system. It is the one system that guarantees that nobody will discriminate against you simply because you are an Australian exporter.

The ITA and the telecommunications agreement are outstanding examples of the type of result the multilateral system can produce.

The Government will live up to its task . . .

Of course, our efforts to improve trade performance must begin at home. The Government has committed itself to a medium-term fiscal consolidation strategy. This should help to reduce our reliance on overseas savings to finance investment and thereby help lower the current account deficit.

Also vital to creating a more supportive business climate is to address deep-seated impediments to improved productivity and competitiveness by reinvigorating microeconomic reform. This involves lifting the efficiency of infrastructure services, creating a more adaptable labour market, and cutting the regulatory burden faced by business.

This is critical to Australia's future development and the Government is firmly committed to this program of reform.

. . . but business is the key to the development of trade.

The Government has set itself the task of improving market access. It will use in each case the appropriate mechanism. It will seek to enhance the effectiveness of its trade promotion efforts. But the Government recognises that it is businesses that trade. It is, therefore, through the entrepreneurial capacity and continuing efforts of Australia's business people, together with government action, that will see an expansion of net exports, higher economic growth and the creation of jobs.

Conclusion

In conclusion, let me affirm that Australia has a great exporting future in front of it. We are committed to working cooperatively with business as all of us have a role to play in raising standards of living and the creation of jobs.

Trade is important to us. Our position as an exporter is improving, but our efforts need to be focused much more clearly. We need to become more efficient, and our people need to become better educated to be able to build on the existing foundation.

The Melbourne Business School is one of the institutions now training the next generation of business leaders and managers. Business needs managers who can deal with the new challenges with an open mind. Just as it is no longer possible to run government policy in isolation, it is equally no longer possible to run a business without a good understanding of the factors outside its traditional ambit.

I am convinced that the Melbourne Business School will develop its role of promoting a strengthened Australian export culture. I wish the school and its supporters well.

It gives me great pleasure therefore to present the Government's financial contribution for this year to the Head of the School, Professor Rose.