Address by the Deputy Prime Minister Leader of the National Party Minister for Trade The Hon. Tim Fischer MP to the National Press Club Advancing Australia's Interests: The 1998 Trade Outcomes and Objectives Statement, Canberra, 4 March 1998

 (Check Against Delivery)

Introduction

It is a great pleasure to be here at the National Press Club again, and to have the opportunity to speak to you.

Today I am launching the second Trade Outcomes and Objectives Statement against a background of considerable challenges and opportunities for Australia.

This complex trade environment makes the Government's commitment to report to the Australian people annually on trade - a commitment honoured by the tabling in Parliament of this Statement - even more important.

It is essential that the Australian people and Australian business are fully informed about the Government's efforts, and future plans, to protect and promote our trade interests.

Because, quite simply, trade means jobs.

Trade means more jobs and better jobs. It means better standards of living. It means more opportunities for those Australians who want to get out there and give exporting a go.

And all of this means that the Government is doing its utmost to ensure that our exporters are given as fair a deal as possible.

The Trade Outcomes and Objectives Statement is our annual reporting document on trade achievements. But it is more than that. It also sets objectives for the next two years.

So this year's statement is critical as it looks out into the future and details the Government's determination to improve market access and market opportunities for Australian exporters to Asia and beyond.

Against the background of the financial instability in Indonesia, South Korea and Thailand, we are in there batting for Australian jobs and lending a hand to neighbours at this important time.

We have expanded our credit insurance for exporters, extended the Export Market Development Grants Scheme (EMDG), contributed to the IMF packages in Asia, set up special assistance through Austrade and, through Exporter Summits and individually, talked to exporters about how we can best help.

The Government is committed to Asia for the long haul. We realise that many of our exporters are doing it tough at the moment and we will do all we can to protect our market share both for now, and for the future. We must not let our competitors steal a march on us in Asia.

We also must not forget that there are often opportunities in adversity. With careful risk management and a more competitive Australian dollar against US and European currencies, a strategic approach to Asian markets may well pay significant export dividends as Asian economies recover.

Indonesia, South Korea and Thailand are not the only markets in Asia, although they are the markets that have been most affected by the financial crisis. There are others, like China, Japan and Taiwan, that still present many exciting opportunities for Australian exporters.

And we must not forget that those business and personal relationships that have been carefully cultivated over many years are still the bedrock on which to build future business relations. It is important to show those Asian contacts that Australian businesses are not just fair weather friends.

The Trade Outcomes and Objectives Statement clearly spells out that there are many opportunities beyond Asia as well. As promised in the lead up to the 1996 election, the Government will continue to expand our market access and development efforts across the globe.

For example, in 1996-97 our fastest growing markets included Iran (71% increase in exports), Egypt (51%), South Africa (31%) and Mexico (24%). And exporters are telling me that they believe they can cover shortfalls in business in Asia, with growth in promising markets in other parts of the world.

Therefore I am pleased to announce that Australia's merchandise exports were up by 15 percent in the first seven months of 1997-98 compared to the same period the year before, and that increase is worth $7 billion to Australian exporters. Our exporters are obviously in there making the most of opportunities wherever they exist.

Imports were also up by 14 percent over the same period. Recognising that the impact of events in Asia are starting to come through in the January 1998 export figures, I remain confident but cautious, especially as the bulk of our export effort traditionally is in the second half of the financial year.

Clearly therefore, on a practical level the Government's strategy is to safeguard our trade interests in affected Asian markets, promote our trade interests in other parts of Asia and expand our efforts elsewhere in the world. This is a sensible strategy and one that we had been pursuing prior to the economic fallout in some neighbouring countries.

Yet we need to recognise that financial instability and volatile currency movements in parts of Asia can be expected to continue - at least to some extent - until markets are confident that governments in the affected Asian economies are implementing effective reforms.

For Australia, which produces many of the goods and services the region requires, East Asian markets are - and will remain - vital to our prosperity and well being. Regardless of shorter-term growth prospects, the East Asian market is 18 times larger than the Australian market, and imports around US$1.4 trillion worth of merchandise each year.

The economic and financial instability affecting key Asian markets will undoubtedly affect Australian export growth to these areas. The full impact is unlikely to be felt before the second half of 1998, reflecting the lag between orders and delivery, and the fact that much of our commodities trade operates under long-term contractual arrangements.

A strong domestic economy here at home, plus growing demand from the large United States and European Union markets - in which we are now more competitive - should help offset the impact on Australia of slower exports to Asia.

Government Action

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 to assist Australian companies over coming months. 

. We are 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.

 

. We are holding `exporter summits' at which industry representatives can discuss directly with Ministers, the impacts on Australian firms and how we can assist.

 

. We are providing information and identifying opportunities through Austrade's Asia Crisis Centre and Internet site, with alerts and advice updated weekly.

 

. The Australia Summit will be held in mid-June in Melbourne and will focus on regional economic and business developments and strategies for the twenty-first century.

 

. 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.

 

. We are continuing AusAID's programmes in the region focussed on institution-building and good governance.

 

. We are pursuing foreign investment in Australia through promoting our economic and political stability, our highly educated and skilled workforce, our competitive costs, and our strong natural resources base.

We are encouraging companies to defend their markets in Asia, as well as to carefully explore new opportunities in the region. Since we were elected to Government, we have also been urging Australian business to take full advantage of opportunities in new and emerging markets.

Many of these markets are covered in this year's Trade Outcomes and Objectives Statement, which will be a useful tool for business in their planning for the year ahead.

Let me turn to the specifics of the 1998 Trade Outcomes and Objectives Statement, which outlines what we have achieved over the past year, defines the challenges and obstacles that still need to be overcome, and charts the way ahead for Australia - bilaterally, regionally and multilaterally.

1998 Trade Outcomes and Objective Statement

The 1998 Trade Outcomes and Objectives Statement features a new sectoral focus, and includes a series of special reports on key issues that will shape the trading environment over the next few years.

It examines important markets not covered in last year's Statement, such as the European Union, a number of Asia Pacific economies, and a number of emerging markets. This year, we are also focusing more on trade and investment opportunities, while still identifying market access achievements and challenges.

It also emphasises the importance of Government and business working together to improve market access and to develop new markets.

In reviewing the trade and investment achievements of the past 12 months, the Statement highlights some notable successes.

Australian exporters chalked up record overseas sales of goods and services in 1996-97, 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.

Last year, market access negotiations and trade promotion efforts yielded excellent results, including improved access for Australian agricultural products in China, Mexico, India, Japan and the Philippines.

Many bilateral successes were achieved both under the umbrella of the Market Development Task Force - an initiative of this Government which coordinates a whole-of-government approach to securing trade and investment outcomes, as well as in other bilateral trade forums.

In its first year, the Market Development Task Force pursued 101 priority objectives, achieving positive outcomes or measurable progress in 86 cases. These ranged 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.

In addition, our trade promotion work delivered significant results, both in terms of export earnings and in helping more Australian companies to become exporters. Targeted sectoral promotions in Asia and Europe 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.

The Government - through Austrade - helped more than 900 companies to begin exporting in the first half of 1997 alone. More than half of Austrade's clients are firms with fewer than 50 employees.

The Government also refocussed the Export Market Development Grants scheme towards smaller firms, cut the minimum expenditure required to obtain a grant from $30,000 to $20,000, gave the tourism industry full access to the scheme at a 50 per cent grant rate, simplified the EMDG legislation, extended the funding of the scheme to the year 2001-02 at a cost of $300 million, and introduced a capping system to keep the scheme within a manageable budget.

With regard to the capping mechanism and its impact on exporters whose EMDG claim is over $50,000, I am pleased to be able to advise that - on current projections - the final payment will likely be in excess of 90 percent of the outstanding grant.

Regionally, through APEC, Australia played a leading role in securing APEC's agreement to early liberalisation of specific sectors. Australia has significant interests in most of the 15 sectors identified for early voluntary liberalisation, and Australian companies are well placed to reap the rewards of APEC-driven market liberalisation.

Australia also advanced its objective of greater regional economic cooperation by participating in several new initiatives in 1997. These included the Australia-Indonesia Development Area (AIDA) and the Indian Ocean Rim-Association for Regional Cooperation.

At the multilateral level, through the World Trade Organisation (WTO), negotiations yielded significant gains for Australian business interests.

These included a new WTO trade agreement on global financial services which will provide easier access to key financial and insurance markets, as well as tariff reductions which could add $400 million a year to Australian telecommunications exports by 2000.

Also, using WTO mechanisms, Australia secured India's agreement to remove quantitative restrictions by 2000 on a number of priority products. This could boost Australian exports to India by at least $30 million a year.

That is not to say, however, that we have succeeded in all that we have set out to achieve. The Statement I have presented to Parliament today is a frank report on both our achievements and the areas on which we still have to work. We are, however, continuing our efforts to crack these problems and I hope to report to you next year that we have made worthwhile progress.

The Importance of Trade Liberalisation

All the market access gains I have been speaking about point to the overriding importance of trade and investment liberalisation. In the current climate we must be alert to any resurgence of protectionist sentiment.

I am convinced that free and open markets are good - not just for Australian exporters, and for the economic health of the region and the world - but for all Australians. I say again, exports mean jobs.

In Australia - over the past decade - the average Australian family has saved more than $1000 a year from tariff reductions. Indeed, if 1988 tariffs still applied, imported cars would cost about 25 per cent more and imported clothes and shoes would cost 14 per cent more.

Increasingly, trade and investment policy, economic policy and industry policy go hand-in-hand. Trade liberalisation, microeconomic reform and technological advances have, together, raised the competitiveness of Australian industry, strengthened the industrial base, improved productivity, lowered input costs and boosted exports.

Of course, in this 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.

Looking Forward - The Trade Policy Outlook

In the immediate future, dealing with the impact of economic uncertainty in Asia will be a concern. The accession of new members to the WTO and APEC may affect these organisations' internal dynamics, and regional trading agreements may generate pressures on the multilateral system.

In addition, the international trade agenda is becoming increasingly complex as the focus moves to domestic regulatory regimes, and as pressures rise to address issues such as labour standards, the environment and competition policy.

The Government will continue to emphasise bilateral and sectoral trade initiatives, including through sectoral negotiators and the trade facilitation teams set up in my Department. These will target food, information technology, automotive products, and textiles, clothing and footwear.

We have a sharply focused set of bilateral objectives for the period 1998 - 2000. These objectives include securing exemption from European Union BSE-related bans; and gaining improved access to Philippines mining, Singapore professional services, and Russian meat and dairy markets.

In APEC, the Government will continue to push hard to accelerate the liberalisation of priority sectors.

We will also work towards harmonising standards, streamlining customs procedures, freeing up government procurement regimes, facilitating business travel, identifying and removing impediments to services trade, and encouraging appropriate electronic commerce policy frameworks.

Our multilateral objectives for 1998 are diverse and comprehensive, with the World Trade Organisation at the cornerstone of our multilateral approach, reflecting the importance of a strong, rules based international trading system.

We have a busy global agenda in store which will include building momentum for a new and comprehensive multilateral round of trade negotiations by 2000.

I will be hosting Cairns Group Ministers in Sydney in less than a month from now, which will be a vital opportunitiy to set our strategy for the next round of agriculture negotiations.

The WTO Ministerial meeting in May will also add to this momentum on the important occasion of the 50th anniversary of the WTO.

We will also build further momentum for multilateral action in areas as diverse as biotechnology, electronic commerce, professional services, intellectual property, and safeguarding Australian trade interests in implementing the Kyoto Protocol on climate change.

As many of you will be aware, Australia is engaged in negotiations within the OECD on a Multilateral Agreement on Investment (MAI).

By providing a comprehensive framework for international investment, the MAI aims to reinforce the multilateral trading system, while at the same time guaranteeing individual economies' freedom of action in areas of vital national interest.

Contrary to speculation from some quarters, the MAI will not override Australia's laws and policies. Indeed, Australia will only sign the treaty if it is in our national interest to do so, and only after following the Government's treaty-making processes of consultation and accountability. Foreign investors operating in Australia are - and always will be - required to adhere to Australia's laws and regulations.

Conclusion

I want to conclude my remarks with the thought that today, more than ever, governments are measured by their ability to deliver to their citizens employment, investment and a stable political and economic environment.

Since coming to office two years ago, the Coalition Government has given its highest priority to securing jobs for Australians through strengthening the domestic economy and boosting exports.

If we hadn't tackled Labor's deficit, our exporters would not have the secure base from which to operate.

If we hadn't restored the economic fundamentals, our exporters would not have been as competitive.

If we hadn't pursued the bilaterals which Labor ignored, we would not have achieved the gains we have.

If we hadn't succeeded in regional and multilateral forums, exporters would not have the market access they have today.

And we haven't ignored the rest of the world as Labor did - it is Asia first but not Asia only.

What we have delivered for exporters is low interest rates, low inflation and industrial relations reform.

In other words, rather than trying to pick winners, we have enabled exporters to be winners.

The Government will continue to work in partnership with exporters to take advantage of new opportunities and meet the challenges that lie ahead.

I commend the 1998 Trade Outcomes and Objectives Statement to you as a sharply focused, comprehensive and frank statement of Australia's trade and investment outcomes over the past year, and our policy direction for 1998 and beyond.

See the Trade Outcomes and Objectives Statement - 1998