Australia and Britain: Strong on Trade

Speech by the Deputy Prime Minister and Minister for Trade The Hon Tim Fischer MP to the Australian British Chamber of Commerce

Hilton Hotel, Sydney, 4 June 1999

(Check Against Delivery)

Thank you Tony Holt (Managing Director, Wilson Australia Pty Ltd).

Your Excellency Alex Allan (British High Commissioner), Ron Chandler (Chairman ABCC NSW); ladies and gentlemen.

It is a great pleasure to be here, talking to a bilateral Chamber that must be about the oldest in Australia. I note that you were established back in 1910 at a time when relations with "the mother country" were so close you really have to wonder what kind of functions the Chamber performed back then.

Well 90 years on I am glad to see the Chamber is still thriving. Many things have changed over those years, but I am happy to note that the close and mutually beneficial relationship between Australia and Britain is something that has stood the test of time. We may have our occasional differences, but most of those occur on the sporting field - the World Cup cricket being the current focus of that ongoing rivalry.

A Close Commercial Relationship

The strength of our ties is very much evident in our trade and investment links. In 1998, the UK became Australia's third-largest merchandise trading partner - related to some extent, admittedly, to the economic downturn in East Asia, but also reflecting the importance of the Government's trade diversification strategies.

Australia's exports to the UK in 1998 were $4.7 billion and imports from the UK stood at $5.8 billion. In services trade, the UK is our third-largest export destination, and second-largest source of imports. And I am glad to say that our trade deficit is falling, with Australian exporters making some good inroads into British markets in the last twelve months.

For example, the UK is our largest market for wine, accounting for $434 million at the end of April 1999. That's a 34 per cent increase in value over the last twelve months, and a figure that now accounts for 46 per cent of the total value of Australia's wine exports. I can only applaud the export performance of our wine industry which recently passed the one billion dollar export target a full two years earlier than what had been predicted by industry leaders in the early 1990s.

The UK is now the largest foreign investor in Australia, with the latest figures giving total investments at something around $145 billion. The UK accounts for around three-quarters of EU-sourced investment in Australia, and is the largest foreign investor in the manufacturing sector. That's important for us, because it creates around 250,000 jobs in Australia. The other main sectors attracting inward investment from the UK are services and mining.

Such high commercial regard is obviously mutual, because Australia is the sixth-largest foreign direct investor in the UK - at £6.5 billion, behind the US, the Netherlands, France, Switzerland and Germany.

There are over 1000 Australian companies active in the UK. The list is a Who's Who of Australian business - with names such as News Corporation, Fosters, all four of our main banks, BHP, TNT, Brambles, AMP and Boral. And there are many other less prominent firms that have also made the leap into the UK market.

Regional Gateways

Part of the reason for the close interest we take in each other is the potential we offer each other as gateways to much wider commercial opportunities. Many of the Australian companies in the UK see their operations as being crucial to making a successful leap into the EU market.

And British businesses have traditionally viewed Australia as an attractive base for regional operations. Around half of all the EU companies with established regional headquarters operations in Australia are British. I welcome the choice that these British companies have made, which is in line with the Government's ambition to establish Australia as a key global trade and financial centre.

The trade dimension

On trade issues we also have much in common. Both Australia and the UK have a strong tradition and commitment to free trade which is why we are both supporters of a new round of WTO negotiations, hopefully to be launched at the WTO Ministerial conference in Seattle later this year.

I was pleased to speak with Sir Leon Brittan about our plans for Seattle during my recent overseas visit which also included discussions with US Trade Representative Charlene Barshefsky, OECD Ministers in Paris and a special meeting of Ministers supporting a new WTO round in Budapest.

Another issue that featured prominently in my discussions was the current impasse over the WTO Director Generalship. While both Australia and the UK are supporters of the Thai candidate Dr Supachai, we both want an early resolution of this issue so it does not get in the way of our preparations for Seattle. That is why I have actively been canvassing a "circuit breaker" to the current impasse during my recent discussions overseas.

Agriculture, of course, remains a sticking point in our dealings with Europe. I do, however, welcome that Britain stands at the more sensible end of that unfathomable debate in Europe. In fact I was encouraged to hear during my recent visit to Europe, that there is an increasing band of northern European countries, including Britain, pushing for changes to the gross over-subsidisation and support provided by the CAP that European taxpayers are forced to bear.

The failure of the Agenda 2000 reforms to deliver any meaningful reforms earlier this year, means that Australia and the Cairns Group of agricultural fair traders, will be pursuing agricultural reform all the more vigorously in the forthcoming WTO negotiations.

Conclusion - Enduring Links

Since coming to office in 1996, the Government has made a conscious effort to boost ties between Australia and our more traditional markets, including the UK. I've been very pleased to see that effort pay off, as each year our trade statistics indicate growing levels of trade and also a growing trade diversity.

But governments can only do so much, and due credit must be given to groups such as yours, who have been the true engine-room for growth in bilateral trade. I salute you for your efforts, and urge you to keep your aim high.

For my part, I can commit our Government to this promise - that we will do all we can to exploit the potential that exists in our close economic relationship. This will help you - the business people of Australia and the United Kingdom - to move our relationship on to a new level at the start of the new millennium.