Speech
Australian Minister for Trade, Mark Vaile
16 February 2000
AFTA-CER Free Trade Agreement
Speech by Australian Minister for Trade, the Hon Mark Vaile MP at the Workshop on the Proposal for an AFTA-CER Free Trade Agreement, Canberra,
Welcome Ladies and Gentlemen.
I'm delighted to join you today for this workshop on Australia's approach to the proposal for a free trade agreement between AFTA and CER - an initiative I announced with my ASEAN and New Zealand Ministerial colleagues last October.
This workshop has been organised to seek input from business and from policy analysts to ensure our approach to this proposal properly reflects Australia's trade interests.
At the outset I want to reaffirm the Government's total commitment to launching a new round of WTO trade negotiations at the earliest possible date.
I've just returned from Bangkok where I had meetings with key trade Ministers, and WTO Director-General Mike Moore, and efforts are being made to narrow the gaps apparent at Seattle last December.
Notwithstanding Seattle, we still have a very busy trade agenda in the first half of 2000 with mandated negotiations on agriculture and services now underway, and I will be hosting an important APEC Trade Ministers meeting in Darwin in June.
I believe that efforts to build closer economic integration between AFTA and CER will actually help maintain momentum for trade reform in our region, and globally.
The Government takes a practical approach to trade policy designed to get the best deal for Australian exporters. This includes being open to the idea of free trade agreements where they can deliver substantial benefits to Australia that are consistent with our APEC and WTO goals.
The decision to establish a high-level task force to look into the feasibility of a free trade area between AFTA and CER takes the cooperation between the two groupings into a new stage. I'm delighted that Tim Fischer has dusted off his Akubra to be Australia's representative on the task force; and thank you Tim for joining us this morning.
The task force will undertake a study on the feasibility of a FTA and report to ASEAN and CER ministers with recommendations in October this year.
We can't prejudge the outcome of the task force study. But it is pleasing to see the groundwork being laid for the possibility of an ambitious recommendation to pursue negotiations on an FTA. Governments would then decide how to respond to any recommendation.
The task force met for the first time in Jakarta last week, and will meet twice more before reporting to Ministers. The first meeting of the task force went very well, but I will leave it to Tim to report on the initial meeting.
The ASEAN and CER groupings have been working together for several years in areas such as quarantine, customs training and transport logistics. Entering into a free trade agreement between AFTA and CER would, of course, be a big step to take, and we would need to do so with a clear understanding of the implications for Australia.
This analysis is still underway, and this meeting is an important input. But there is evidence to suggest that a free trade area has the potential to bring significant benefits to Australia.
ASEAN is already an important market for Australia, taking $11.2 billion of our exports in 1999 - around 13 per cent of total exports. In 1997-98, Australian investment in the region was worth $6.6 billion, almost double what it was five years earlier.
But barriers to trade remain substantial. Protection in sectors such as automotives, agriculture, processed food and beverages, gems & jewellery, and textiles remains high, and there are significant barriers to services and investment.
Work undertaken by the Centre for International Economics in 1997 showed that a comprehensive FTA between AFTA and CER could result in economic gains over a 20 year time frame of around $8.5 billion for Australia and over $15 billion for ASEAN from the elimination of tariffs on goods alone.
The study notes that the actual gains are likely to be higher than these figures show. Not captured in this work are the benefits from reducing non-tariff barriers and services restrictions. And a free trade agreement is likely to bring further benefits as a result of productivity improvements and closer business links.
While my department will be doing further analytical work, we will, of course, be guided by the views of the business community. We want to know what business believes it stands to gain from an agreement, and what your market access priorities are. We are also interested in knowing about areas of domestic economic sensitivity that we need to keep in mind as we proceed.
Of course, this proposal is still at a very early stage of development. Before it could proceed, all AFTA and CER members would have to agree that their interests were met through closer economic integration. Generating political consensus to proceed with negotiations may be difficult. Nonetheless, the task force having made a positive start to looking at an FTA is a very good beginning.
Before concluding, I would like to say a few words about new business opportunities from market liberalisation which has already taken place in the region.
The region's economic recovery has exceeded most expectations, and progress in economic and financial reform has been a major contributor to that success. Reforms have included liberalisation of foreign investment, removal of some restrictions on foreign ownership, improved market access for imports, improved corporate governance and enhanced legal frameworks. Australia has been working to promote these reforms, especially through APEC and our bilateral aid programs.
While there is still much more that should be done, the reforms already in place in Asia are giving rise to new commercial opportunities. Demand has increased, for instance, for a range of professional services, including accountants, lawyers, and finance professionals, as well as those with administrative and managerial skills in infrastructure management.
These opportunities are not restricted to service industries. Liberalisation of trade in goods in the region has boosted both intra-regional trade and demand for Australian-sourced intermediate goods. It is also opening new markets that were previously closed in some countries, such as food, raw materials and industrial inputs.
This is good news for Australian business. It augurs well for closer economic integration between Australia and the region. Our task is to take full advantage of those opportunities, just as we should fully explore every aspect of the proposal for a free trade agreement between AFTA and CER.
For the Government to do this effectively, we need your input. Thank you all for attending this workshop, and I look forward to hearing your frank views on how we should take this proposal forward.
ENDS