New Frontiers

Address by The Hon Tim Fischer MP, Deputy Prime Minister, Leader of the National Party, Minister for Trade, to the NSW State Chamber of Commerce, Sydney, 5 September 1997.

Thank you Katie Lahey. Distinguished guests, ladies and gentlemen.

It is a great pleasure to be here at this international business luncheon organised by the hardworking NSW State Chamber of Commerce.

I have three objectives in talking to you today.

The first thing I want to do is thank the many businesses and enterprises in NSW - small and large - who have played such a vital role in lifting Australia's export performance over the past year.

As I announced in Parliament a week or two ago, the financial year ending 30 June saw an all-time record export figure for Australian exporters - a figure of $104.4 billion, up almost six and a half per cent. For the first time ever, there was a surplus in both goods and services. And that figure of $104.4 billion represents a lot of jobs for NSW and the rest of Australia - to quote the ABS, over 345,000 jobs in Australia are underpinned by our exports to Japan alone.

I think this shows clearly that the Government is doing something right in its comprehensive and practical market access efforts and broader trade policy agenda. But it reflects even more credit on the dynamism and vitality of Australia's private sector : you - after all - are the ones leading the way for better jobs and sustained prosperity in this country. And - like you - the Government is not resting on its laurels : we are pushing ahead to open new markets and obtain fairer access in existing markets.

We are always interested in pursuing trade on new frontiers. And in that context I want to talk to you today about two very different, but equally exciting frontiers - the Indian Ocean region, and cyberspace.

Indian Ocean Region

I want to outline what the Government is doing to help Australian businesses and enterprises tap into the great economic potential that the Indian Ocean region offers.

In March this year, I had the honour to represent Australia at a meeting of 14 Indian Ocean Rim nations on the island of Mauritius.

At that meeting, Australia - in company with a range of other countries - became a founding member of the Indian Ocean Rim Association for Regional Cooperation - a very valuable grouping but sadly burdened with a most unfortunate acronym: IOR-ARC.

Along with Australia, the new Association includes India, Indonesia, Kenya, Madagascar, Malaysia, Mauritius, Mozambique, Oman, Singapore, South Africa, Sri Lanka, Tanzania and Yemen.

We hope that the new Association will be able to offer, in due course, considerable progress on trade and investment liberalisation in the Indian Ocean region. And I am pleased to say that IOR-ARC has already come a considerable distance in quite a short time.

When the original seven members came together two years ago there were, not surprisingly, different views about the role of the organisation. Some saw it as primarily involving development cooperation. Others, including Australia, looked to expanded trade through freed-up markets to assist in raising living standards.

Over the course of the last two years members have been able to agree on a Charter focusing on our common aims and aspirations. We have been able to commit ourselves to open regionalism. Finally, at the March Ministerial meeting, it was also possible to agree that the Association would be a forum for policy dialogue and coordination rather than merely managing joint projects.

We can be pleased with the progress to date although we need to be realistic about further advances towards trade and investment liberalisation. The differences in economic development among Association members mean that they will be coming from different starting points and moving at different speeds. The important thing, however, is that we all agree to move in the same direction and, as quickly as we can, towards the same goals.

If the IOR-ARC is to realise its potential, however, we consider it vital that priority be given to improving the economic environment for business in the Indian Ocean region. I believe that the future of the Association depends on business working together with governments to identify and remove impediments to trade and investment in the region.

Electronic Commerce

My other key objective in speaking to you today is to launch the report Putting Australia on the New Silk Road: The Role of Trade Policy in Advancing Electronic Commerce. This report was written by officers of my department after extensive consultations with stakeholders over the last few months.

The report contains some startling insights. Probably the most significant from a trade policy perspective is that electronic commerce through the Internet and world wide web has the potential to transform the way large chunks of world trade are conducted, over a very short period of time.

Electronic commerce is still in its infancy, but is the fastest growing type of international, value-added trade. Estimates of the potential global value of Internet transactions by 2000 vary widely, but most lie in the range of US$100 billion to US$150 billion per year compared with around US$3 billion per year currently.

This extraordinarily fast growth will be the result of many factors. Probably the most important is the continuing worldwide surge in the number of Internet users - which is expected to grow from approximately 70 million currently to 170 million by 2000. Other factors include the appealing consumer profiles of Internet users, being mostly young, educated and affluent; and the shift which is occurring in consumer sentiment towards transactions over the Internet, as problems like privacy and the security of on-line transactions are addressed.

The takeoff in transactions through the Internet is also underpinned by firms wanting to invest in electronic commerce to improve their own efficiency and therefore competitiveness, and wanting to extend their reach to potential customers. For example, the Internet can free staff from routine assignments and allow them to focus more on creative things like using information to shorten product development cycles and improve customer service.

The creative use of information is now a defining factor in the export and investment successes of companies and, by implication, of industries and nations. Electronic commerce is a key tool enabling companies to access and use information so that products and services focus on quality, timeliness and customer needs, and thus succeed in highly competitive markets.

A small but growing number of Australian companies use the Internet to access export markets and source products. The New Silk Road contains case study evidence showing that micro companies with one or two employees find the Internet and the world wide web cheap and effective in reaching suppliers and markets that would otherwise be closed to them.

For example, White Hat Tours advertises tours of Melbourne to overseas and interstate tourists over the Internet. Here the web provides information to clients and a booking service, enabling the firm to extend its overseas market significantly. Another example is Dionysus, a specialist wine selling venture which markets boutique wines exclusively over the Internet. Its web page attracts wine buffs to purchase wines that would otherwise be unavailable to them.

What these sorts of examples reveal is that a firm's size is not necessarily a barrier to being able to operate internationally on a regular basis. What matters is that its web page is inviting; its product or service is high in quality and is wanted; the electronic ordering form is simple; and methods of delivery are cheap and effective.

The New Silk Road also contains case studies showing how electronic commerce can strengthen the competitive advantage of larger SMEs.

For example, TOWER Software, a Canberra-based company, specialises in records management and electronic document management. The company uses the Internet to advertise over the web, demonstrate versions of its products to distributors to trial with customers, accept orders and distribute product. Exports currently account for around 30 per cent of the company's turnover compared with virtually nothing in 1994-95.

And very importantly employment in the company is increasing very quickly, partly on the basis of rapid export growth. TOWER Software's rapid growth to date and its uptake of opportunities in export markets are built around its use of electronic commerce, particularly the Internet.

What this type of example reveals is that electronic commerce provides an efficient and cheap way to stay in close touch with clients and markets through electronic mail, remote on-line data bases, video links and the transaction of electronic business. In other words, electronic commerce adds reinforcing strands to traditional business relationships.

By slaying the tyranny of distance, the Internet and the web also offer significant opportunities to SMEs located in rural and regional Australia to become involved in export activities.

A good example of this is the fruit growers in northern Victoria supplying premium quality vegetables to Singaporean restaurants and hotels. Electronic mail orders are received before the vegetables are picked. They are then picked, packed and supplied just-in-time to buyers who pay electronically on delivery the same day. The whole process takes 24 hours.

To me, these kinds of case studies show two things. They reveal the enormous potential of Internet-based electronic commerce to facilitate access by Australian SMEs to global markets and, of course, access by overseas companies to our markets. And they underscore just how important it is for Australia's future prosperity to put in place, as a matter of urgency, an environment that anticipates the role electronic commerce will play in international trade in the next ten years.

The New Silk Road identifies domestic and international elements of a trade strategy for advancing the interests of Australian companies on international markets.

These elements include: working to ensure that Australia can make a robust contribution to developing the international environment for electronic commerce; developing principles for the conduct of cross-border electronic commerce to minimise the risk of countries developing fundamentally different approaches; promoting liberalisation of trade in services; working to create a strong global intellectual property framework; and providing export-related on-line services to companies.

This listing is not comprehensive. It is, at best, the starting point for further discussions with stakeholders on the elements of an effective trade strategy for on-line business.

This brings me to why I commissioned The New Silk Road. I wanted to stimulate discussion among stakeholders about an on-line trade strategy. And I wanted this feedback to be a key element in what ever recommendations are made to me and to the Government as a whole about an on-line trade strategy.

To maximise feedback from stakeholders, my officials will hold roundtables in various capital cities and some regional centres in the last quarter of 1997. Written inputs would also be welcome and I urge all of you here to have a look at the report and send me any feedback.

I will also be asking my officials to continue their close consultation with industry and experts in academia - to analyse more closely why companies in a range of sectors are going on-line, and how companies might be further assisted to develop their international business capabilities using the Internet. This will be vital information for Australia's trade future.

Conclusion

In conclusion, I would like to emphasise three things. First, Australia's export performance is experiencing a record high.

Second, we can never take such performance for granted and need to continually adjust our horizons in order to succeed. We must continually look to new frontiers, whether they be new regions of potential economic growth, such as the Indian Ocean region, or new means of trading like the Internet. The world economy is in a state of continual change and we must act on this premise.

And finally, I would emphasise that to make our way in the world - now and in the future - Australia must trade, and trade well, if we are to build wealth and create more the jobs. This involves seizing opportunities around the world - wherever they might be - using traditional or electronic mediums - whatever is most suitable.

In concluding then, it gives me great pleasure to launch this new report, Putting Australia on the New Silk Road: The Role of Trade Policy in Advancing Electronic Commerce. It is a double pleasure to be launching it here today with an audience of 'doers' who are already contributing to Australia's export performance.