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

Speech

Opening Address by the Minister for Trade and Deputy Leader of the National Party, The Hon Mark Vaile MP
at the Australian National Centre for Latin American Studies Conference 2001

Canberra, 25 September 2001
(Check against delivery)

Australia and Latin America: The Relationship in Global and Regional Contexts

Introduction

Thank you, Professor Richards; Ambassadors, members of the diplomatic corps, distinguished guests, ladies and gentlemen.

It's a great pleasure to open this second annual conference of the Australian National Centre for Latin American Studies here at the Australian National University. There has been a pleasing increase in people-to-people contacts between Australia and Latin America, both official and private, and this is evident from the number of guests from the region at this conference. On behalf of the Australian Government, I extend a warm welcome to all our overseas guests attending this conference.

I am also pleased to release this morning a DFAT publication entitled Australia's Trade with the Americas which shows that trade with all the Americas grew by 28% in 2000.

As many of you would know, I've just returned from a visit to Mexico, Uruguay and Chile. I was greatly impressed by the vitality of all three countries, and excited about the opportunities they present for Australian trade and investment. It is very timely, therefore, that I am able to address this conference today.

Australia, Latin America and regional economic integration

It is clear to me, as Australia's Trade Minister, that the greatest challenge facing our country, in its relations with Latin America as a whole, is to adjust to the implications of regional integration, as the commercial influence of the United States and the European Union continues to grow there.

Latin American countries are at the forefront of the trend towards regional and bilateral FTAs. There is a complex web of such agreements either in place, under negotiation or just under consideration. Mexico alone, for example, now has FTAs or preferential trade arrangements with over thirty countries.

The Free Trade Area of the Americas (FTAA), Mercosur's negotiations with the European Union and the Andean Community and dialogue with the United States, and talk about the possible expansion of NAFTA - to name just a few - all have the potential to affect our interests in the region.

Despite this, public debate in Australia seems rarely to extend to integration within the Americas, or to its implications for Australia.

There is little doubt that Latin America could be a much larger destination for Australian goods, services and investment than is currently the case. Merchandise exports to the region were just A$1.3 billion in 2000, or 1.2 per cent of Australia's total exports. Even as a group, Latin America barely makes it into the list of Australia's top twenty export markets.

In services trade, the story is a little better, but still disappointing. Services exports to Latin America were valued at A$701 million in 2000, or 2.2 per cent of Australia's total services exports. The figures are very similar when we look at Australia's imports from the region.

There is potential for increased investment flows. We have a number of significant investments in the region, particularly in the mining sector.

But, overall, commercial relations between Australia and Latin America are modest.

Should Australia be paying more attention to regional integration in Latin America? I believe we should, and there are a number of reasons for this.

Firstly, we should protect our commercial interests wherever possible, and look for new opportunities as they arise.

Secondly, several Latin American countries are our major competitors in world agricultural markets. For example, Argentina, Brazil, Uruguay and some Central American countries are leading beef exporters. Brazil, Central America and Argentina are sugar exporters, and Chile and Argentina are significant wine exporters.

Thirdly, the successful conclusion of an FTAA, a Mercosur-United States FTA or some future agreement not yet on the table, could have significant implications - not only for our interests in Latin America, but for our trade with third country markets, such as the United States and Canada, as well.

Preferential access to the United States for Mercosur countries, for example, could impact negatively on Australia's exports of sugar, meat, cotton, wine, dairy products, textiles and motor vehicles - to name just a few.

As noted in the recent report by my Department's Economic Analytical Unit, Investing in Latin American Growth, any expansion of arrangements to cover services and investment could constrain potential Australian investment in sectors of natural complementarity like mining, agribusiness, finance, telecommunications and information technology.

I think all of this is an area where more work needs to be done, and where more public debate is needed. That is why I warmly welcome this conference, and the highly topical theme that it has chosen.

Australia, Latin America and the WTO

Let me state clearly, though, that the Australian Government understands the trends that are drawing Latin American countries into processes of regional integration.

After all, Australia is subject to similar trends. We have, for example, recently agreed with ASEAN and New Zealand on a framework for the Closer Economic Partnership (CEP) between the twelve countries. This Framework is designed to promote closer economic integration, and improve the business and trading climate with ASEAN. Earlier this month in Hanoi, Ministers agreed to formalise this CEP framework next year.

Australia also shares membership with several Latin American countries in APEC, working towards trade and investment liberalisation and business facilitation in the Asia-Pacific region. It is pleasing that the majority of APEC member economies have reported further tariff reductions or significant steps to reduce non-tariff measures this year. We look forward to working constructively with Mexico when it takes on the job of chairing APEC in 2002.

Overall, it is important that regional economic integration proceeds in a manner that is WTO-consistent, and does not distort trade and investment with third countries. We want Australia's trade and investment relations with Latin America to grow, at a realistic pace, to their full potential - for our mutual benefit.

The Government's firm belief is that open markets are vital for achieving economic growth, more jobs and better living standards for all. We pursue these objectives through an integrated bilateral, regional and multilateral trade policy approach. We recognise the need for a strong, transparent and rules-based multilateral trading system.

The next WTO Ministerial Conference will be held in Doha, Qatar in November - just six weeks away. It will provide the opportunity to launch a new round of multilateral trade negotiations. Australia remains strongly committed to the launch of a round at Doha. We recognise the significant benefits that increased international access will give Australian exporters, especially agricultural producers.

It is by no means certain that a new round can be launched at Doha. Limited signs of flexibility from key members, on an increasingly complex set of trade issues facing the diverse WTO membership, mean that many differences are still to be narrowed in the remaining weeks before the meeting.

But all nations have a vital interest in the health of the global trading system. Indeed, given the potential negative impact of an already slowing global economy, the launch of a new trade round this year is of even greater importance.

Like Australia, Latin American members of the WTO are actively involved in the preparatory process for Doha. They have a vital role to play in building support for a new round, especially among developing countries.

I was encouraged by the positive and constructive discussion at the informal WTO Ministerial meeting I attended in Mexico earlier this month. The meeting provided an important opportunity to gauge preparations for Doha and to identify the compromises that will be required in the coming weeks.

I welcome the strong support for another Mexico type meeting in October, likely to be in Singapore on 13-14 October. The forthcoming APEC Ministerial and Leaders' meetings in Shanghai (17-21 October), and the Commonwealth Heads of Government meeting that Australia is hosting in Brisbane (6-9 October), will also provide other opportunities to build political momentum and support for a round launch at Doha.

Cairns Group

The Cairns Group has a central role in achieving progress on agriculture in a new round. The group, over half of whose membership is comprised of Latin American countries, has truly become the third force in global trade negotiations.

I chaired our recent meeting in Punta del Este, Uruguay, during which we celebrated fifteen years of cooperation. Ministers reaffirmed the Group's strong commitment to establishing a fair and market-oriented agricultural trading system. We are more united and determined than ever to push for agricultural reform.

With fourteen developing countries among our membership, we agreed that fundamental agricultural reform is essential for promoting development and eliminating poverty in developing countries.

We established our objectives for Doha. These include a clear commitment to end discrimination against agriculture and fully integrate it into WTO rules, and to eliminate all forms of export subsidies, improve market access and substantially reduce domestic support. We also reaffirmed our commitment to work with industry to promote agricultural trade reform.

A regional FTA?

Australia believes that the WTO is the primary vehicle for trade liberalisation.

Our approach to regional and bilateral free trade agreements is flexible. In examining options for FTAs, the Government considers whether they could deliver substantial gains in access for Australian exports that could not be achieved in a similar timeframe by other means. Such FTAs must also complement our multilateral and regional trade liberalisation goals.

Currently, we are pursuing a number of suggested FTAs. We're making good progress in negotiations for an FTA with Singapore. We're undertaking a joint scoping study with Thailand on a possible FTA. And we're also pursuing the possibility of an FTA with the United States.

I understand that the final session of this conference will consider the possibility of a regional FTA involving Australia and Latin America. I am also aware that the Argentine private sector has previously raised the possibility of a CER-Mercosur FTA. And an Australia-Mercosur FTA was recommended last year in the report by the Joint Standing Committee on Foreign Affairs, Defence and Trade entitled Building Australia's Trade and Investment Relationship with South America.

I welcome such debate, as these are the sorts of debates we should be having.

And, I would not rule out examining an FTA with the region down the track.

Building our relations with Latin America

The Government is doing all it can to foster Australia's trade and investment relationships in the region.

The Foreign Minister, Mr Downer, and I have both visited Latin America this year, as has Senator Minchin, the Industry Minister. There have also been recent visits to Australia by senior Ministers from Argentina, Colombia and Paraguay and I would like to visit again soon. There are also a number of outstanding Guest of Government invitations which we hope will be taken up soon, including by Mexican President Vicente Fox.

We have established a Council on Australia Latin America Relations (COALAR). The Council, which will have its first meeting later this week, has an important role to play in further strengthening relations between Australia and Latin America. I understand that the Chairperson of the Executive Committee of COALAR, Mr Bernard Wheelahan, will address this conference in one of the later sessions. I wish Mr Wheelahan and the Council all the best for their future work.

I've already mentioned the DFAT report Investing in Latin American Growth. This focused on unlocking opportunities for Australian business in the key markets of Brazil, Mexico, Argentina and Chile. We devoted a separate publication earlier in the year to the enormous potential offered by the Brazilian market. We hope next year to follow up these reports with further studies on other markets and the broader developments in the region.

Overall, we continue to put a framework in place for increased commercial relations with the region. A Double Taxation Agreement with Argentina entered into force in late 1999, and we are negotiating a similar agreement with Mexico.

While in Chile earlier this month, I signed a bilateral Air Services Agreement with Vice-Minister for Foreign Affairs, Heraldo Muñoz, and discussions on air services treaties are ongoing with Mexico and Brazil. I would like to encourage both Australian and Chilean carriers to consider operating services between our two regions when they judge these to be commercially viable. I believe that opening a second point of entry into Latin America is crucial for the further development of our trade and tourism.

While in Uruguay, I signed an Investment Promotion and Protection Agreement with Foreign Minister Didier Opertti, and discussions on a similar agreement are proceeding with Mexico. These treaty level agreements are in addition to a range of less formal arrangements we have finalised recently with countries in the region. They include cooperative arrangements in education, and in science and technology.

And, of course, there is ongoing work to improve market access for a wide range of Australian goods and services.

Conclusion

It is clear, therefore, that a lot is happening in Australia's relations with Latin America. And the Government is committed to pursuing the further development of our relations. We hope that business will respond to the opportunities that exist for developing our trade and investment relations within the frameworks that are being set up.

We will continue to monitor the complex range of trade negotiations under way in Latin America and what this means for Australia. We will promote and protect Australia's interests in the region, and in third markets. We will continue to improve the framework for expanding our commercial relations with the region. And we will encourage people-to-people contact, something which I believe is critical to helping overcome the relative lack of awareness we have of each other's potential.

This conference is a significant step in that process. I wish you success in your discussions on the important issues that are being considered, and in your overall program. And I also wish the Australian National Centre for Latin American Studies all the very best in its important, continuing work in the future.


Local Date: Tuesday, 07-Jan-2014 10:02:43 EST