The Hon. Mark Vaile, MP
The Hon. Mark Vaile, MP
FORMER MINISTER FOR TRADE

Speech

Australian Minister for Trade and Deputy Leader of the National Party, Mark Vaile

European Australian Business Council function hosted by the Swedish Australian Chamber of Commerce
Sydney, 21 June 2001

Australia and the EU: Expanding our Trade and Investment Links

(Check against delivery)

Introduction

It's a pleasure to speak to you tonight on a subject about which I have become very familiar - the importance of Australia's ties with Europe, especially our trade links, which underpin our economic relations and strategies.

Tonight's function is being held under the auspices of the Swedish Australian Chamber of Commerce. I would like to congratulate the Chamber on celebrating 90 years in Australia, which makes it one of our oldest chambers of commerce. And, of course, Sweden is the current holder of the EU Presidency, at an extremely challenging time for Europe, particularly for the EU enlargement negotiations. So it is very appropriate that our host tonight is the Swedish Australian Chamber of Commerce.

In my address tonight, I would like to take up the theme of Australia-Europe trade generally, emphasising its important contribution to our overall trade position, and the fact that continuing efforts on both sides will keep it prospering.

Role of the European Australian Business Council

I am pleased to see the establishment of the European Australian Business Council (EABC), bringing together chambers of commerce and trade offices from individual EU countries under the one organisation.

Having an orientation to European business in Australia, and covering a wide range of industries and services, the EABC already plays a key role in fostering commercial linkages, and expanding trade and investment, between Australia and Europe. It complements the activities of government in fostering links between Australian and European businesses.

Australia is, of course, a good base from which to expand into Asia. I am pleased that the EABC recognises the potential that exists to develop business jointly in Asian markets with Australian companies.

Our commercial relationship

Our commercial relationship with EU countries is in very good shape. We have seen our total merchandise trade with the EU almost triple over the past fifteen years, and trade in services has grown in a similarly impressive manner.

Today, the EU is Australia's largest trade and investment partner. Last year, our merchandise exports to the EU rose by over 15 per cent, to reach A$12.5 billion. That accounts for more than 11 per cent of total Australian exports. Europe is an important market for our coal, wool, wines, medicines and iron ore - just to name the most prominent of a host of exports. As well, we buy a great deal from the Europe, and last year bought over A$25 billion worth of goods. This result reflects the openness of the Australian economy, with medicines, telecommunications equipment and cars featuring prominently amongst our imports.

I am very pleased to see that bilateral trade in services has been growing strongly. The EU is now Australia's largest overseas market for services. In 2000, our services exports to Europe were worth more than A$6 billion, with particularly good results in travel and education services. Not only that, we imported $7.2 billion worth of services from the EU during the same period.

Our investment relationship

Investment is also important to our relationship. The EU is Australia's largest source of foreign investment, and the second largest destination for Australian investment overseas.

In June 1999, EU investment in Australia stood at A$209 billion, of which A$66 billion was foreign direct investment. In fact, EU direct investment in Australia has increased by almost one half in the past four years. As well, Australian investment in the EU was A$71 billion, including A$32 billion of foreign direct investment.

Trade policy issues

The EU is today an economic superpower with a major impact on the process of globalisation. Europe may be a long way from Australia, but that means nothing in today's world. The EU has considerable influence in areas such as the global trade and investment agenda, which have a direct bearing on Australia's interests.

For Australia, the impact of EU agricultural policies on international trade has been a dominating theme in our bilateral relations for many years. Our exports of agricultural products to the EU have been severely constrained by low quotas and prohibitive tariffs and, regrettably, these exports continue to be constrained. We also have to cope with world markets distorted by subsidised exports of surpluses generated by the EU Common Agricultural Policy.

We have attempted to address this problem both through bilateral approaches to Member States of the EU and through the multilateral trade negotiations. While the Cairns Group achieved considerable success in the Uruguay Round, there is still a long way to go if we are to achieve an open trading system for agricultural producers, many of whom belong to the less developed countries. We are, therefore, now working to achieve an ambitious result on agriculture in the WTO agriculture negotiations.

But I must emphasise that our relations with the EU are defined by more than just agriculture, important though it is. As I mentioned, we have an increasingly diverse economic relationship. But our relations with Europe go well beyond the purely economic. We continue to work to expand our bilateral relationship with individual Member States, and with the EU as an entity, into new areas of cooperation.

The importance of the Australia-EU relationship and our joint commitment to broadening links was underlined at the Australia-European Commission Ministerial Consultations held in Canberra in April. Together with my colleague Alexander Downer, I had an excellent exchange with EU External Relations Commissioner Chris Patten. I followed up these discussions with Pascal Lamy, the EU's Trade Commissioner, when I visited Europe in May. Mr Lamy and I are committed to working closely together in the lead up to the WTO Ministerial Meeting in Qatar in November.

Conclusion

We want to work with our trading partners to expand trade for everyone's benefit. Therefore, continued engagement and cooperation with Europe are essential.

As I said, Australia and Europe have done a good job of increasing our trade and investment links in recent years. We've come a long way, but I think we can do even better. I look to the EABC to continue the valuable role it has established for itself into the future. In doing so, it will make its own very distinctive contribution to the goal that we all share, which is to expand Australia's relationship with the EU further in the years ahead.


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