Speech

Australian Minister for Trade, Mark Vaile

 Bangkok, 12 February 2000

Australian -Thai Chamber of Commerce

Introduction

Thank you ladies and gentlemen.

It’s a great pleasure to be at this luncheon with members of the Australian-Thai Chamber of Commerce, on my second visit to Thailand as Trade Minister.

I’d like to start by talking about the strength of Australia's relationship with Thailand. I then want to say a few words about our Government's commitment to continued economic reform and growth in Australia, before outlining our current trade agenda including, of course, the WTO negotiations.

Australia-Thailand relations - growing stronger

Thailand is a natural partner for Australia in Southeast Asia, and one of our closest and most important partners in the Asia Pacific region. The links between our countries are strong and productive - between our armed forces in East Timor; our parliamentarians and our students; and as the Sydney Olympics draw near, between our sports people. We also work closely on trade issues and, as members of the Cairns Group of agricultural free traders, we both have a strong interest in opening up global agricultural markets.Trade between our two countries has continued to grow. From 1997/98 to 1998/99, two-way trade grew by 12 per cent to $3.2 billion. Predictably the regional economic crisis did have a negative impact on Australia's exports to Thailand, however, latest figures indicate a positive improvement with exports growing by 12 per cent to A$1.4 billion in 1999. Thailand's exports to Australia grew by 34 per cent to A$ 2.2 billion. The past two years have been particularly challenging for Thailand, and the Thai Government deserves considerable credit for its policy settings. I welcome its moves to promote economic recovery, through tariff cuts on capital goods and raw materials and legislative reforms to encourage greater competition, transparency and accountability. These measures are paying off, and Thailand has returned to positive growth.Australian firms here have also had a tough time. The fact that you are still here shows commitment to Thailand's long-term future, although I understand that many of you want further improvements to the business environment.Of course, there is no magic wand to make the frustrations of doing business here vanish, but we've made good progress. Our Government will continue to press Australian business interests, and to encourage Thailand at bilateral, regional and multilateral forums to further liberalise its trade, investment and business regime.

Australia's economy and the reform agenda

At home, the Coalition Government continues to demonstrate the economic benefits of sustained reform. We've maintained one of the highest rates of economic growth in the developed world over recent years, while Australia's trade performance has continued to improve significantly, underlining the emerging contribution of foreign trade to economic growth.Recovery in East Asia provided the backbone of a steady export performance, with exports growing by 6 per cent in December 1999, particularly to Japan, Singapore and Taiwan. Australia's monthly trade deficit narrowed by nearly A$150 million to just over A$1 billion in December.Most analysts agree that Australia's current account deficit is now past its peak and will boost fourth quarter GDP growth. These latest trade figures show that Australian exporters are well positioned to take advantage of improved conditions in 2000, and to meet our mid-year forecast of 5 per cent growth in export volumes for 1999/2000.The Government continues to pursue economic reform, including:

. broad-based tax reform;
. financial sector reform to promote Australia as a centre for global financial services;
. labour market reform;
. changes to foreign investment regulation;
. a productivity commission review of the general tariff rate; and
. the removal of nuisance tariffs.

We've introduced a new tax system that includes a broad-based consumption tax of 10 per cent - the GST. This will boost the economy's growth potential through more efficient resource allocation and by providing improved incentives to work, save and invest. Exports of goods will be GST-free, as will exports of services used or enjoyed outside Australia. Our package slashes the hidden costs of exporters - in fact, costs to exporters will be slashed by more than $3.5 billion.In foreign investment, and I might say unlike Thailand's Foreign Business Law, the Government will reduce notification obligations on business and streamline the administration of foreign investment policy. And on November 1, last year, we abolished nuisance tariffs on almost 400 items - on everything from video games to overhead travelling cranes to refills for ball point pens.

The WTO and our trade agenda for 2000

I’d now like to spend a few minutes outlining recent developments in international trade talks.Late last year I led the Australian delegation to the WTO Ministerial Conference in Seattle, which also included representatives from major industries and key government agencies, and the opposition spokesman on trade - a real "team Australia" approach.Australia and its Cairns Group partners did make significant progress on many agricultural issues, but similar progress was lacking in other areas. The main stumbling blocks were:

- an unwieldy agenda;
- insufficient preperation and organisational difficulties on the ground;
- unrealistic ambitions in new areas like investment and competition;
- excessive emphasis on labour standards despite objections from developing countries; and In the end, there were not enough compromises reached.

But we won't give up: trade must not be exploited as a scapegoat for domestic political problems. Seattle was not all bad news. We moved forward the negotiations in agriculture and services — that were already mandated and have now started - and in some other areas. On agriculture, almost all WTO members agree that they want to:

- move toward the elimination of export subsidies;
- avoid the protectionist banner of "multifunctionality";
- achieve substantial and progressive reductions in domestic support;
- pursue market access negotiations aimed at the broadest level of liberalisation; and
- deal with issues like environment and rural welfare in ways that do not distort production and trade.

These elements will provide positive direction to the negotiations.The mandate for the services negotiations has not been controversial. I expect good progress on market access in sectors such as financial, telecommunications, professional services, electronic commerce, and intellectual property rights.Australia continues to argue for a new round while pushing ahead with the agriculture and services negotiations. We maintain our concern at attempts to overload the WTO agenda with complicated and controversial issues, although we do support sensible programs that will free up trade while supporting environmental goals and the broad objective of sustainable development. We believe that labour standards are better dealt with in other international forums, like the International Labour Organisation.Beyond the WTO, the Government is moving to take advantage of the region's economic recovery. We will work to invigorate trade liberalisation and facilitation when Australia hosts the APEC Trade Ministers' Meeting in June. And in October last year, I reached agreement with my ASEAN and New Zealand colleagues on a task force to examine the feasibility of establishing by 2010 a free trade area between ASEAN and Australia and New Zealand, which would promote access to ASEAN markets for goods, services and investment.Our Government is open-minded about other free trade agreements, provided they offer substantial market access gains that cannot otherwise be found

Conclusion

That is a just a snapshot of the Government's domestic, bilateral and multilateral trade agenda. As you know, I am here to attend the tenth UN Conference on Trade and Development - another opportunity for me to pursue Australia's trade interests with Dr Supachai and my other colleagues.Australia has a vital interest in maintaining and building a fair global trading system. So does Thailand. The Australian Government is committed to working productively with Thailand to pursue our objectives bilaterally, in the Cairns Group, in APEC and in the WTO. Free trade benefits citizens of all nations. Thailand's efforts to liberalise its trade and investment have started to bear fruit. It’s important that these efforts be maintained, and Australians - in government and business alike - play their part in highlighting the advantages of open markets to our counterparts in Thailand.

ENDS