Speech

Australian Minister for Trade, Mark Vaile

Gold Coast, 4 May 2000

Automotive Asia Pacific - The Next Phase to the 2000 Convention of the Federation of Automotive Products Manufacturers

Introduction

Thank you, Jo. John MacKenzie; ladies and gentlemen.

It's a great pleasure for me to be here and to open the FAPM annual Convention.

One month ago, I released the Government's 2000 Trade Outcomes and Objectives Statement. This Statement is the Government's "report card" to the Parliament, and indeed to all Australians, on Australia's trade and investment outcomes for the past year.

This year's report card contains several standout performances underlining the diversified base of Australian exports. At the very forefront of outstanding export performances in 1999 was the automotive industry - your industry.

An outstanding export performance

Last year, exports of automotive products were up 23 per cent to a record $3.2 billion. This included more than 73,000 passenger motor vehicles, 9,000 knocked-down vehicle kits and more than $1.4 billion in components sales abroad. There were also significant exports of tooling equipment, automotive research and development, design and training services - all boosting the industry's overall contribution to Australia's exports.

This is a great result from what is a vital industry for Australia. The automotive industry accounts for about seven per cent of total manufacturing value added and about one per cent of Australia's GDP. Some 60,000 people are directly engaged in automotive manufacturing right across Australia. Many of these people are living in regional centres - including my own home town of Taree, where Paul Tolcher and his team at Britax are busy exporting to some of the world's leading automobile producers in Europe and the United States.

Many of you here today contributed to this outstanding export result and you deserve congratulations. I would, however, like to single out Kurt Liedtke and Robert Bosch Australia, who had the distinction of winning an Australian Export Award for manufacturing last year. Robert Bosch airfreights over 4 tonnes of automotive electronics to Europe daily.

A global industry

The automotive industry is a global industry. And it is becoming even more closely integrated with daily reports of cross-continental mergers, strategic partnerships and the development of e-commerce in your industry.

I don't need to remind you that globalisation presents both challenges and opportunities for your companies. The challenges come from the ever-increasing demands for excellence and efficiency from customers, be they in Australia or overseas. The opportunities flow from operating in bigger markets.

Many of the traditional ways of doing business in the industry are changing. Companies will need to remain flexible and be prepared to think in new ways. Some traditional, first-tier suppliers will have to find new business as second-tier players. As you build strategic linkages to assemblers and global components producers in Australia and overseas, you will need to become even more international in your outlook.

The Automotive Trade Strategy

The Government recognises and appreciates the challenges facing the Australian automotive industry from globalisation. We are working hard to support you to meet these challenges and to obtain maximum benefit from the opportunities available.

Many of these efforts have been undertaken through the Government's Automotive Trade Strategy, with the advice and assistance of industry. All the elements of this strategy are directed towards a common objective: to facilitate the integration of Australian automotive companies into the global industry and marketplace.

I understand that later today Ian Grigg, the Prime Minister's Special Automotive Envoy - a role established under the Automotive Trade Strategy - will be conducting a specialist workshop on the Strategy.

I would also like to acknowledge the presence here today of our four Specialist Automotive Trade Commissioners, appointed under the Automotive Trade Strategy, who have returned to Australia to participate in this Convention.

"What's Up Downunder"

Many of you here today would have participated earlier this year in the "What's Up Downunder" exhibition and symposium at the prestigious Ford Technology Review Centre in Detroit. The opportunity for this event arose from one of the many high-level exchanges that Ian Grigg has with governments and industry in the key automotive centres - on this occasion with Jac Nasser, the CEO of Ford (himself one of Australia's most significant auto exports!).

"What's Up Downunder" provided a unique opportunity for 36 Australian automotive components companies to showcase Australia's cutting-edge automotive capacities in the heart of the world's major auto producer.

You seized this opportunity. Austrade informs me that, of visitors to the show that were surveyed, only 18% of respondents stated that, prior to the show, they considered Australia as being a very good or excellent innovative parts and technology supplier. After the show, this figure had risen to 82% of respondents. Austrade expects new export business of at least $500 million dollars to be generated over the next three to four years from the contacts made in Detroit.

Significantly, Ford has presented five supplier awards to Australian companies. General Motors has also announced that four Australian suppliers will be named among its current global suppliers of the year awards.

This is great news, particularly since the U.S. is our number one export market for auto products, taking $712 million last year. But "What's Up Downunder" also promoted export opportunities in Asia. This is because the major U.S. auto makers and first-tier component suppliers are significant investors throughout Asia. They are currently positioning themselves to take an even greater stake in anticipation of the higher demand which will arise in the near future. In servicing these markets, they will need established regional partners with the capacity to deliver the right product or service reliably - and at a competitive price.

The same factors impelling the Australian automotive sector to integrate with the global automotive industry are also forcing change in Asia. Despite differences in the maturity levels between automotive sectors in various economies in the region, it is clear that the industry and market in Asia will become ever more closely integrated. There will be an increased flow of vehicles, components and services across national borders.

Dialogue within APEC

"No company or country can go it alone". This was the clear message from the senior managers of both the U.S. and Japanese global auto makers at the recent second APEC Automotive Dialogue in Manila, another initiative under the Automotive Trade Strategy. The Dialogue, chaired by Australia, brings together senior industry and government representatives from around the Asia Pacific to enhance understanding of the major issues and trends shaping the regional automotive industry. The Australian automotive industry participated actively in the Dialogue.

Australia will be hosting the annual APEC Trade Ministers meeting this year in Darwin. I have placed automotive issues on the agenda for this meeting and Ian Grigg will report directly on the Automotive Dialogue to the APEC Ministers. This should considerably raise the profile of the Dialogue within APEC.

The ASEAN dimension

Within the Asia Pacific, much of the interest of the Australian automotive industry centres on ASEAN, the key markets of which remain largely closed to imports. Improved market access in ASEAN for Australian automotive exporters is a key focus of the Automotive Trade Strategy, and an objective that I pursued personally during my visit last year to Thailand.

The good news is that the market access situation in ASEAN will change and indeed is already improving in response to the pressures of globalisation. Last year, Indonesia dropped its automotive tariffs across the board. This year, Thailand has eliminated all local content requirements, allowing many automotive component imports for the first time. Realistically, however, this process of change will only be achieved gradually.

Within the framework of the Automotive Trade Strategy, Australia is making a concerted effort to foster ASEAN liberalisation. In addition to the Automotive Dialogue, government and industry together have co-sponsored an extensive research project on the ASEAN automotive industry. You will hear from the project leader, Christopher Findlay, later in the Convention.

Another initiative being pursued is the AFTA-CER Free Trade Task Force, exploring the feasibility of an AFTA-CER Free Trade Area by 2010. This is a key priority this year. As part of a pragmatic approach, the Government is open to concluding free trade arrangements with other countries and regions where they would lead to substantial gains in market access that Australia could not otherwise achieve in a similar time frame.

Australia's representative on the Task Force is my predecessor, Tim Fischer, who is well known to you. Again industry is playing a central role, with the automotive industry well represented at the consultative meeting I chaired on this proposal in Canberra earlier this year.

The WTO dimension

Another important arm of the Government's strategy to position the automotive industry for the future is our active participation in the World Trade Organization (WTO). As we know, Trade Ministers who met in Seattle in December 1999 were not able to reach agreement on an agenda for a new round of multilateral trade negotiations. A new round is essential for us if we are to secure substantive, long-term commitments to tariff reductions in many of our major markets.

I made it clear at the meeting that any negotiations would have to include a comprehensive agenda for industrial products. In that way, we would be able to address the high tariffs and the non-tariff measures in export markets.

The Government retains an unswerving commitment to the launch of a market access-focused round at the earliest opportunity. Work has not stopped since Seattle. I have been in regular contact with key WTO players, such as USTR Charlene Barshefsky and EC Trade Commissioner Pascal Lamy, urging them to show greater flexibility and to find the necessary common ground to enable an early launch.

Conclusion

In this, as in the other initiatives I have mentioned, the Government remains committed to supporting a vibrant and dynamic Australian automotive industry that competes with the world's best. Your industry has come a long way in the past few decades. Through continuing innovation and challenge, we are working closely together to ensure that a bright future for Australia's automotive industry is guaranteed.

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