Australia Still Trading Well
Speech by the Australian Deputy Prime Minister and Minister for Trade, The Hon Tim Fischer to the Union Club, Sydney, 19 March 1998.
John Bullwinkel, Ralph Evans - thank you for that introduction.
Addressing the Union Club makes me feel very much at home as I have been a member of the club for a number of years now. I know that it brings together people of distinction in their field who have something to contribute to important discussions about public policy.
Today I would like to discuss with you the situation in Asia and how we can improve Australia's trade performance.
Asian Economic Developments
Parts of the Asian region are clearly facing a period of considerable instability and uncertainty.
What is clear is that, the short-to-medium term growth prospects of some of our major regional partners will be reduced, especially Korea and the ASEAN economies.
An interim IMF assessment of the world economy released last December provided some indication of the likely magnitude of this slowdown.
According to the IMF, growth in the ASEAN 4 - Indonesia, Malaysia, the Philippines and Thailand - is estimated to have slowed from an average of 7.4 per cent in 1996, to 4.0 per cent in 1997 and is forecast to slow further to 1.7 per cent in 1998.
And growth in the `Newly Industrialising' Asian economies - Hong Kong, Taiwan, Korea and Singapore - is estimated to have slowed from 6.4 per cent in 1996 to 6.2 per cent in 1997 and the forecast is for around 3.6 per cent in 1998.
To their credit, most affected economies in the region have demonstrated over the past few months a preparedness to address the problems which had caused international investors to mark down their currencies and their stock exchanges.
But the continuing financial instability means that it is important that those economies remain committed to carrying forward the economic reforms necessary for reinvigorated growth.
The Impact on Australia
The problems in parts of Asia obviously have an impact on Australia's economy. With over 60 per cent of Australian exports going to the broader Asian region this is not surprising.
However, in the first seven months of 1997-98, Australia's merchandise exports to the world were up 15% compared to the same period the year before. That increase is worth $7 billion to Australian exporters, who are obviously making the most of opportunities wherever they exist - in Asia and beyond.
Yet on a cautious note, it is likely we will not see the full impact of the instability in Asia on our exports until well into the year due to the nature of trade and financial contracts. And there are opportunities in Asia at this time, provided business take a strategic approach and carefully manage risk.
Market entry is generally cheaper during a downturn - due to less competition and lower establishment costs. The expected fall in asset prices will offer significant investment opportunities either in new ventures or in expansion of equity in existing joint ventures.
In addition, Asian economies are continuing to liberalise even at this difficult time - creating new opportunities for Australian businesses.
How is the Government Responding?
While opportunities exist, the Government realises that it has to act to support exporters through these difficult times.
To minimise the negative impact, the Government - in close consultation with the private sector - is refining our trade strategies in Asia and beyond.
In addition to our involvement in IMF reform packages, the Government has put in place a number of practical measures including:
. Ensuring the availability of appropriate levels of trade credit and insurance, through the short-term National Interest insurance cover for exports to Korea and Indonesia.
- $300 million was set aside for Korea and the Prime Minister recently announced a $380 million provision to insure the balance of Australia's wheat sales to Indonesia for 1998.
. Holding `exporter summits' at which industry representatives can discuss developments in the region directly with Ministers.
. Providing information and identifying opportunities through Austrade's Asia Crisis Centre and Internet site.
. The Australia Summit will be held in mid-June in Melbourne and will focus on regional economic and business developments.
. We are stepping up tourism promotions where our competitive position has improved with the weaker dollar, and where we can capitalise on publicity surrounding the Sydney 2000 Olympics.
Improving Australia's Competitiveness
All of these measures are, of course, in addition to our ongoing efforts to enhance Australia's international trade competitiveness. The Government has ensured that the economic fundamentals are in place for sustained, low inflation, job-creating growth.
We are improving the competitiveness of the Australian economy through reforms to our financial sector, industrial relations, business regulation, telecommunications, and the transport and energy sectors.
But, in a rapidly globalising world, Australia cannot afford to be complacent. The intensification of competition worldwide means that Australia must push ahead on microeconomic reform, including measures to make our taxation system more competitive and to improve labour productivity.
Trade Outcomes and Objectives Statement
Earlier this month I tabled in Parliament my second annual Trade Outcomes and Objectives Statement.
The Statement is our annual report on trade achievements and it sets trade objectives for the next two years.
The 1998 Trade Outcomes and Objectives Statement highlights some notable trade successes.
Last financial year, Australian businesses chalked up record overseas sales of goods and services, with exports exceeding $100 billion for the first time. The merchandise trade balance showed a $1.4 billion surplus, while the services trade deficit all but disappeared.
These impressive results are a credit to Australian exporters and also point to the success of the Government's integrated bilateral, regional and multilateral trade policy efforts in securing market access for Australian business.
Let me tell you about two key areas where the Government has been making progress and will continue to do so over the course of the Trade Outcomes and Objectives Statement's two year timetable.
The Market Development Task Force
One of Government's main mechanisms for addressing our bilateral trade competitiveness is the Market Development Task Force.
This is a whole-of-government strategic effort aimed at securing trade and investment outcomes.
In its first year, the Task Force pursued 101 priority objectives, achieving positive outcomes or measurable progress in 86 cases - ranging from better access for Australian sugar, rice and citrus in Japan, to financial services licences in China and Thailand, and valuable progress on Double Taxation Agreements with Mexico, Russia and South Africa.
Moreover, targeted sectoral promotions led to $200 million in information technology sales to Europe, $20 million in food exports to Japan, $23 million in building materials sales to Hong Kong, and $250 million worth of passenger ferries to Italy, Argentina and Singapore.
Last week the Task Force held a special strategy session to reassess priority objectives for Asian markets in light of the crisis. A few priorities set six months ago are clearly no longer achievable and have been dropped. New opportunities have, however, opened up, and we will be pursuing these vigorously in a focused and coordinated way during the next six to twelve months.
The WTO and the Cairns Group - Playing By the Rules
The Government is also pushing hard to achieve gains for Australian agricultural and food exporters in key multilateral trade forums.
Australia is chair of the Cairns Group of fifteen agricultural exporting countries - a group that has done an enormous amount to put agriculture on the multilateral trade agenda and keep it there. The Cairns Group is the most successful and enduring issue-specific coalition in the multilateral trading system.
The Cairns Group Ministerial meeting which I will be chairing in Sydney early next month will be a critical meeting for the Group as it develops objectives for the next round of multilateral negotiations on agriculture in 1999.
These agriculture negotiations present a major opportunity for Australia, but we have a hard task ahead of us. Nevertheless you can be confident that Australia will be leading the campaign for fair trading rules on agriculture.
I would like to conclude today with the thought that Australia's export performance has continued to improve over the very difficult first seven months of 1997-98.
Here is evidence that Australian business is able to adjust rapidly to changing conditions and to make the most of opportunities wherever they may lie.
Also, this strong performance indicates that the Government's economic and trade settings are on the right track.
Let me assure you that we will be working even harder this year to ensure that success continues.
Local Date: Tuesday, 21-May-2013 03:56:52 EST