SPEECH

Deputy Prime Minister, Leader of the National Party, Minister for Trade

The Hon Tim Fischer MP, to the National Press Club

Trading on our Strengths - The 1999 Trade Outcomes and Objectives Statement

Canberra, 10 February 1999

(Check Against Delivery)

Introduction

I am pleased to be at the National Press Club once again to launch the Government's third annual Trade Outcomes and Objectives Statement which I tabled in Parliament earlier today.

Let me begin with a clear cut statement of thanks from the Trade Minister to our extraordinary exporters of goods and services to the world.

Australian exporters you have done very well against the odds over the last two years.

You have helped save the Australian economy from the nose dive experienced by many other economies of the world in 1997 and 1998.

You have contributed to over 20 per cent of Australia's economic activity, underpinning thousands of jobs through trade diversification.

The Federal Government will match your extraordinary efforts with enhanced trade facilitation and diversification efforts during the year, as well as intensified efforts on the multilateral front as we prepare for the Millennium multilateral trade negotiations in the WTO.

Trade negotiating activity and trade portfolio activity is no abstract exercise. It is about more jobs and economic growth in Australia where one in five jobs are tied up with exports. That is a significant slice of our economy riding on the efforts of our exporters.

That is why the TOOS - the Government's annual report card to the Parliament and the Australian people on our export successes and the challenges that lie ahead - has become such an important part of the Government's trade policy fabric in its short three year history.

A Challenging Year Ahead

Although exports in the 1997/98 financial year were a record $114.2 billion - up 8.4 per cent on the previous year - the difficult global trading conditions have had an impact on results in 1998. For calendar year 1998, exports have grown at just 2 per cent reflecting the delayed impact of the crisis in Asia. This is still a commendable performance by Australian exporters who, despite these difficult conditions, have been able to diversify their export efforts into new markets outside Asia.

The bottom line is that although we are still seeing positive export growth, Australian exporters will face a tough year in 1999. World trade growth has slowed. Much of East Asia is in recession. Some of our trading partners - Japan and the US for example - are facing domestic pressure on the trade liberalisation front.

Our exporters face challenges across all our major markets. Japan is still bumping along the bottom of the deepest slump in its postwar history. The fact that exports to our largest export market were worth $17 billion last year and have continued to grow shows this is not a time to give up on Japan. But equally, a region searching for growth cannot afford another year of Japanese economic malaise. 1999 is a critical year for Japan. Reform is happening, but not enough and not fast enough. Japan needs to embrace the challenge and set itself up for the opportunities and responsibilities of the new century.

In China, growth is under pressure from the regional economic turmoil with slowing demand for many products supplied by Australia. We have a big stake in seeing Chinese policy makers navigate a course which sustains growth and economic reform momentum. In the rest of Asia, economic recovery is likely to be slow and patchy at best given the depth of structural problems being experienced by some countries.

Outside of Asia, while the US economy has registered the longest peacetime expansion in its history, the prospect of a slow down remains a concern. Similarly, the outlook for Europe is for some moderation in growth this year.

Against this backdrop, the Government has a range of strategies in place to sustain our export performance. Some - like export diversification, defending existing markets and positioning ourselves for future growth - mark the continuation of policies we have used in the previous three years to great effect. Others - like improvements to the gathering of market information and the provision of National Interest credit insurance - are measures we have refined in response to the immediate fallout of the Asian crisis.

Diversification strategies are working. In 1997/98 our exports to non-East Asian markets grew at an average 18.4 per cent. In 1995, the last full year of the Labor Government, exports to East Asia comprised sixty per cent of Australia's exports. Today East Asia takes fifty per cent of Australian exports and the rest of the world claims fifty per cent as well. Our trade interests are truly global, and we must have a trade strategy to match.

A strong domestic economy

One of the most important things the Government has done for exporters is to get Australia's domestic economic fundamentals right. And the second thing is to tackle tax reform, which business wants and the Senate is hindering.

It is clear that our strong domestic economy has laid the groundwork for Australia's solid export performance. In the twelve months to September Australia registered 5 per cent growth, a remarkable performance when you consider that the GDP of our major trading partners is estimated to have fallen by 1.5 per cent in 1998. This is quality economic growth on our part - on the back of a budget in surplus, inflation below 2 per cent, the lowest interest rates in thirty years and unemployment at its lowest level in over eight years.

The Government's outcome-oriented trade policy is part of our overall economic strategy of fiscal discipline, financial transparency and flexible markets - a strategy that has received increasing international recognition. The OECD's most recent Economic Survey of Australia singled out Australia's capacity to diversify into new export markets as a key factor contributing to our "impressively resilient" performance in the face of the Asian economic crisis. Economist Paul Krugman has called Australia "the miracle economy of the world financial crisis".

And while the Government is getting on with the job - putting in place a pro-exports, 21st century tax system - our opponents are drifting in a policy twilight zone, desperately trying to figure out whether they are Paul Keating Old Labor, Cheryl Kernot New Labor, Third Way Latham Labor or is it Tanner Fourth Way this week?

Diversification Delivers

Global uncertainty emphasizes the need to pursue market opportunities on all fronts - bilaterally, regionally and multilaterally. Since coming into office the Government has worked at all these levels, deliberately reinvigorating with great success our bilateral trade efforts left languishing by our predecessors.

Diversification into new markets outside the East Asia region has been an important part of Australia's trade successes over the last financial year. For example our exports to the United States rose by 41 per cent, the European Union up by 25 per cent, and South Asia up 21 per cent. That's a powerful vindication of the Government's market diversification strategy, which has emphasized the importance of Australia making the most of all its trade opportunities, while building on our successes in traditional markets.

Despite the regional economic crisis, our exports to East Asia held up well, registering growth of 5.7 per cent for the last financial year. Our statistics have since shown that there was a delay in the effects of the regional downturn registering here - and in calendar year 1998, our exports to East Asia fell by 7 per cent compared to 1997. We have seen an uneven export performance across the region, with falls in exports to some markets such as Korea, Indonesia and Malaysia, and rises to others such as Japan and Taiwan.

While diversification strategies are a key platform in response to the Asian economic crisis, the Government remains committed to assisting Australian exporter's weather the difficult times in Asia. It is vital not to underestimate the long-term economic potential and importance of Asian markets.

With this commitment in mind, I announce today that I have commissioned a new report on the prospects for our agri-food exporters into the Asian region to be prepared by the Department of Foreign Affairs and Trade, in conjunction with the Supermarket to Asia Council and other interested organisations. The report will include both a realistic assessment of the current trading environment in the fast-growing agri-food export sector, and suggested strategies for improvinur last November. Under Prime Minister John Howard's leadership, Australia has continued to drive APEC's response to the crisis with initiatives such as our $50 million economic and financial management package designed to provide tangible support in areas of economic governance.

The Government has pursued a long-term, balanced approach to the three APEC pillars of trade liberalisation, trade facilitation and economic and technical cooperation. Although the decision to pursue liberalisation in tbeen pushing strongly over the last few years for a new round of trade negotiations - the so-called Millennium Round. A new round, together with our continued strong focus on bilateral and regional trade strategies, will be vital to delivering more market access openings to Australian exporters.

Australia will play a key role in building momentum for a new round in the lead up to the World Trade Organisation Ministerial Meeting to be held in the United States at the end of the year. I congratulate

On the bilateral front, I want to take this opportunity to pay a special tribute to the seventy-seven hard-working case officers across four Commonwealth agencies who have helped to make the Market Development Task Force one of the stand-out success stories of the Trade portfolio. Bilateral work will continue to be a key focus for the coming year, a commitment strengthened by new trade-related positions we have created in Buenos Aires, Pretoria and Brussels, and the new posts being opened in Lihave asked the Department of Foreign Affairs and Trade to prepare a major new study to analyse the economic benefits of a new round. The study will be released in May and will examine the potential benefits of a new round, not only for Australia, but for the international community as a whole.

Secondly, I am also announcing that the Government is setting up a process for public submissions to give all Australians the opportunity to have a say in refining our negotiating agenda - something Labor never did. This recognises that while we have a big task internationally, we also need to establish clear priorities domestically. Advertisements with further details will be appearing in national newspapers tomorrow and on the Department of Foreign Affairs and Trade home page. (www.dfat.gov.au)

There are many other avenues Australia will be using to maximise our WTO leverage. The Cairns Group of agricultural fair traders will continue to be a central plank and our meeting in Argentina later this year will be at a crucial time in preparing for the resumption of agriculture negotiations. As Chair of the Cairns Group I welcome the US's recent statements in support of working with the Cairns Group and calling for broad and deep reductions in agricultural tariffs and the outright elimination of export subsidies.

Europe will also be a key to further movement on agriculture, and in this regard I will be writing in the next few days to the German EU Presidency setting out Cairns Group objectives for the coming year. In Asia, countries such as Japan and Korea also need to recognise that the Uruguay Round was only a first step towards integrating agriculture into the international trading system.

We will also be pushing in a new Round for further reductions on industrial tariffs and negotiations in the vital services sector. We are developing a strategic approach of engaging like-minded countries in fora such as APEC to move our WTO market opening objectives forward.

APEC: The Regional Trade Dimension

Seattle, the venue for this year's WTO Ministerial, was of course the location for the first APEC Leaders' Meeting in 1993. APEC is central to the Government's regional trade policy and is an integral part of our commitment to Asia for the long haul. Against the backdrop of the largest regional economic crisis since the Second World War, APEC has played an important role in reaffirming support for open trade in the Asia Pacific, most recently in Kuala Lumpur last November. Under Prime Minister John Howard's leadership, Australia has continued to drive APEC's response to the crisis with initiatives such as our $50 million economic and financial management package designed to provide tangible support in areas of economic governance.

The Government has pursued a long-term, balanced approach to the three APEC pillars of trade liberalisation, trade facilitation and economic and technical cooperation. Although the decision to pursue liberalisation in the nine Early Voluntary Sectoral Liberalisation (EVSL) sectors through the WTO is a "second best" option, this year, APEC economies have the opportunity to demonstrate that what some found too hard in an APEC context can add to momentum in the multilateral arena. Indeed APEC can play a key role in 1999 to build momentum for the new round. At the same time, Australia will continue to use APEC to deliver a range of practical trade facilitation outcomes.

Bilaterals: Delivering Concrete Results

On the bilateral front, I want to take this opportunity to pay a special tribute to the seventy-seven hard-working case officers across four Commonwealth agencies who have helped to make the Market Development Task Force one of the stand-out success stories of the Trade portfolio. Bilateral work will continue to be a key focus for the coming year, a commitment strengthened by new trade-related positions we have created in Buenos Aires, Pretoria and Brussels, and the new posts being opened in Lima, Bucharest and Abu Dhabi.

A large part of the 1999 Trade Outcomes and Objectives Statement details the Government's work at the bilateral level to increase Australian exports. The Market Development Task Force continues to deliver market access wins for Australia. Some highlights in the last year include:

. automotive components sales to Korea increased 7.4 per cent;

. sales of sugar to Saudi Arabia increased to $60 million

. exports of ships and marine equipment to Turkey increased to $114.3 million with the sale of high speed catamaran ferries.

For the coming year, our bilateral priorities will include

. continued trade diversification strategies and reshaping priorities in the East Asian region

. focusing on new demand in the services sector

. and monitoring multilateral and major donor aid packages to secure aid-related opportunities for competitive Australian suppliers

In a further boost to our bilateral trade efforts I will also be making a high-level working visit at the end of next week to Singapore, Indonesia, Iran, Turkey and beyond. In Singapore and Indonesia I will be building on our already well-established trade links to explore new opportunities. In Iran and Turkey I will be looking to build our export profile as part of our trade diversification efforts in important markets for Australian agricultural and manufacturing exports.

Trading as a Nation

As a trading nation, a partnership between government, business and the wider Australian community is critical if we are to make the most of global trade opportunities. The Government is committed to taking the export message not only to the corporate headquarters in the capital cities, but also to the business "grass roots", particularly in rural and regional Australia.

Electronic commerce is one of the new and exciting technologies that will enable all levels of Australian exporters, particularly small business and those in rural and regional Australia, to integrate more readily into the global export marketplace. To emphasise this point I have chosen the regional city of Wangaratta for the launch this coming Friday of two new reports on the Government's on-line trade strategy.

To assist our exporters I will be introducing into this Parliamentary session a Bill to extend the life of the Export Market Development Grants Scheme for a further two years. This will continue the process of simplification of the EMDG scheme, thereby ensuring that it is carefully targeted to the needs of emerging exporters.

Austrade will also continue to push forward with TradeStart and ExportAccess to assist small and medium enterprises to develop sustainable export platforms. And the movement of the Export Finance and Insurance Corporation into the trade portfolio will enable further refining and improvement of our trade finance architecture.

Improving public understanding of the benefits of international trade for Australia's prosperity and employment will continue to be a priority. It is an issue that can not be ignored if we are to overcome lingering concerns about the benefits that an open and outward trade system delivers to Australia.

Put simply, more and more jobs depend on trade. The Government, as shown in this document, is firmly committed to a strong trade future for Australia with this stark reality in mind. The strong trade framework we have put in place - bilateral, regional and multilateral; the continuing strength of the Australian economy; and the strong commitment of Australian industry to the export of quality goods and services - means that we are well equipped to deal with the opportunities and challenges in the coming year.

Conclusion

In concluding I would like to pay tribute to the dedication and professionalism behind this year's Trade Outcomes and Objectives Statement, principally the work of a dedicated band of officers in the Department of Foreign Affairs and Trade and associated agencies.

This document is fast becoming one of the most infamous in the Commonwealth bureaucracy for the time impost it creates over the Christmas-January period! But it provides us all - Government, exporters and dare I say journalists alike - with the framework with which to pursue our trade objectives for the year ahead. Even the Labor Party has adopted this Coalition initiative in order to bolster its otherwise unimaginative trade repetoire showing that, sometimes at least, they recognise a good idea when they see it.

This Government is committed to pursuing a proactive, export driven trade policy over the coming year as the 1999 Trade Outcomes and Objectives Statement makes clear. Let me just reiterate five of the concrete actions we will be taking for exporters this year:

. firstly, I will be directly leading our trade diversification efforts commencing with working visits to Iran, Turkey and beyond at the end of next week;

. secondly, legislation to extend the Export Market Development Grants Scheme for another two years will be introduced this session;

. thirdly, the Government will launch in May a major new study on the prospective economic benefits of a Millennium Round;

. fourthly, for the first time we are seeking public submissions to help refine our WTO negotiating agenda; and

. fifthly, a new study is to be prepared on agri-food export opportunities in the Asian region.

Ladies and gentlemen, I commend the 1999 Trade Outcomes and Objectives Statement to you.