Speech
Melbourne, 11 November 2002
At the Australian-American Association
(Check against delivery)
Introduction
Thank you Tony (Tony McAdam, President of the Australian-American Association) for that kind introduction.
The Ambassador to the United States, Tom Schieffer, Dame Elizabeth Murdoch, other distinguished guests, ladies and gentlemen.
I am delighted to have this opportunity to address the Australian-American Association and the Australian Institute of Company Directors, here in Melbourne. And I am pleased to extend my personal congratulations to the Australian American Association for its continuing efforts in strengthening our two countries’links.
Today’s symposium on the proposed Free Trade Agreement with the United States is another example of the excellent work of the Association, as is next week’s Inaugural Business Leaders Strategy Visit to the United States, led by Tony.
The visit should do much to enhance business relations between our two countries and I wish Tony and the delegation every success.
Today I would like to say a few words about the broader relationship between Australia and the United States, before discussing the proposed Free Trade Agreement.
Australia and America
Ladies and gentlemen
The United States is a vitally important nation, and a key partner of Australia. We have a long history as two peoples who share common values and ideals –deep democratic traditions and aspirations, elements of a common heritage and a lasting record of cooperation and shared sacrifice.
President Bush’s visit to Australia last month reaffirmed the strong affinity between our two people, and the vitality and strength of the partnership.
This close friendship extends to our economic and commercial relations.
The United States, by some measures, is now our largest overall trading partner.
In 2002-03, US firms exported $28.6 billion worth of goods and services to Australia, while the United States imported $15.6 billion from Australian firms.
Today the United States accounts for 11 percent of Australian exports, and for 17 percent of our imports.
While our largest single export item remains beef, our exports to the United States have become increasingly diversified –wine, transport services, motor vehicles and parts, computers and information services, for example.
Just as important is the growth in bilateral investment. Australia is the twelfth largest destination of US foreign investment –representing over one-third of our investment inflow.
Indeed the United States is Australia’s biggest source of investment. US investment in Australia has been growing at 15 per cent annually, compared to 11 per cent for investment from all sources.
The United States also looms large for Australian foreign direct investment overseas. It is now host to just under 50 per cent of Australia’s total overseas investment, having surpassed the UK in 1998 as our largest destination for foreign direct investment.
And we are not an insignificant player in the US economy: Australians are leaders in broadcasting, mining, shopping malls, real estate management, construction, building materials and steel manufacturing.
Australia’s and the United States’vibrant commercial relationship can only be enhanced by our mutual efforts to reduce bilateral and global barriers to trade.
AUSFTA
For Australia, an FTA would be the next logical step in building a closer economic relationship with the US.
Indeed an FTA with the United States represents a unique opportunity to integrate Australia more closely with the world’s biggest and most innovative economy.
First of all, of course, there would be straightforward economic gains from reducing remaining barriers to trade between us. According to a study by the Centre for International Economics, an FTA with the United States offers the prospect of boosting Australia’s GDP by as much as $4 billion annually within several years.
Second, an FTA will also attract foreign investment and result in greater business integration, as Australian and US companies realise synergies in innovation, research and development, material sourcing, product development, marketing and information technology.
Third, a closer economic relationship will lock Australia’s future with the most competitive economy in the world, giving added impetus to economic reform and boosting productivity and living standards.
But an FTA with the United States offers us not just direct economic and commercial benefits.
Because of the sheer size and reach of the United States, the FTA will provide Australia with spin-off benefits far and beyond the actual text of the agreement.
It is an opportunity to negotiate deeper integration with not only the world’s largest economy, but also the world’s pre-eminent strategic power.
It is an opportunity to shape US attitudes and positions, as influential as they are, in the Doha Round of multilateral trade negotiations and for the multilateral trading system itself.
And it is an opportunity to put our economic relations on the same mature footing as our political and security relations.
Of course, no one is pretending that we won’t face questions from the Americans about sensitive sectors of our economy –just as they will face questions from us.
But we have no intention of entering into any agreement that would undermine our national interest, or our ability to deliver core public policies and programs.
I would like to emphasize that popular Australian television and Australian movies will not be affected by the FTA.
The Government remains committed to preserving the right to regulate audiovisual media to achieve its cultural and social objectives, and to maintaining an appropriate set of support measures for the audiovisual sector.
We have discussed these issues with the US and made clear that subsidies and grants to audiovisual and other cultural industries will not be covered.
Similarly, the Government will ensure that an FTA will not impair Australia’s ability to meet fundamental policy objectives in health care.
The FTA will not compromise our commitment to ensuring access to affordable medicines through a sustainable Pharmaceutical Benefits Scheme.
For Australia, a good agreement will also be one which is both deep and wide. It will be an agreement where Australia gains real market access, across all sectors, including –and especially –agriculture, the msot highly protected market sector of them all.
The exact details of how agriculture will be dealt with are obviously still being negotiated, but we have stressed to the United States that we are seeking a good deal that includes sugar, beef and dairy - as early as possible.
We are realistic about US sensitivities on agriculture, but also recognise that our two nations enjoy extensive cooperation at the multilateral trade policy level and substantial cross-investment in many agricultural sectors.
Difficult issues are always going to exist –that is the nature of trade negotiations. But through frank discussion and an understanding of the wider economic and trade benefits, I am confident such difficulties can be overcome.
I shall let our Chief Negotiator, Stephen Deady, update you on the negotiations.
Let me just say that the advances we made last month in Canberra during the fourth round of negotiations are consistent with meeting the end-of-year target for concluding the FTA, as reaffirmed recently by the Prime Minister and President Bush.
I will be in contact again soon with the United States Trade Representative Zoellick to assess what remains to be done and how best to advance the process.
We still have some hard work ahead of us. But now –at the sharp end of the negotiations and with gains from deeper integration to the world’s biggest market in sight - is not the time to shirk from doing the hard yards.
AUSFTA and the broader trade framework
I don’t need to tell you that there has been much debate in recent weeks about our approach to FTAs in general and our proposed FTA with the United States in particular.
Of course, FTA proposals deserve vigorous and thorough debate.
Personally, I find this development very encouraging: it means our proposals have legs, and that people are sitting up and noticing.
But people often fail to see the bigger picture. They don’t appreciate that a particular FTA is only one piece of the jigsaw puzzle.
Indeed Australia’s overall international economic strategy is to pursue opportunities for market opening at the multilateral, regional and bilateral levels.
Those opportunities must complement each other –and ultimately must support the global trade negotiations now under way at the World Trade Organisation.
Of course, we are working hard, as a first priority, to achieve a positive outcome in the Doha round of multilateral trade negotiations, particularly on agriculture, despite the recent setback at Cancun.
But we are also pursuing regional trade liberalisation and bilateral free trade agreements where these offer the prospect of significant gains ahead of what will be achievable in the WTO process.
We continue our work in APEC - on transactions costs …on governance …on non-tariff barriers …and on trade and investment facilitation.
We have established a closer economic partnership to integrate better Australia, New Zealand and the ten members of ASEAN.
We implemented an FTA with Singapore earlier this year and signed off on an Australia-Thailand FTA at the recent APEC meetings in Bangkok.
Last July, in Tokyo, Prime Ministers Howard and Koizumi signed a Trade and Economic Framework which charts a course for the future development of our trade and economic ties with Japan.
And the recent visit to Australia by Chinese President Hu Jintao saw our two Governments announce their intention of conducting a joint feasibility study on a free trade agreement between Australia and China.
This is a truly historic time in Australia’s trade history.
Some critics have suggested that this activity is somehow undermining the global trade negotiations underway at the World Trade Organisation.
They argue that FTAs risk creating obligations that are at odds with our commitments made at the WTO.
In fact FTAs can be a factor in “competitive liberalisation”, whereby they have a ‘demonstration effect’, raising the bar for other trade negotiations, in particular at the WTO.
Certainly negotiating such free-trade agreements can deliver market access benefits faster than they could be achieved in multilateral negotiations –just ask an Australian car maker if he would prefer to wait until the end of the Doha round for better access to the Thai market.
We see an FTA with the US as very much part of those broader trade objectives.
A comprehensive and outward-looking bilateral FTA with the US would assist our efforts to set the pace for an ambitious agenda at the WTO.
In this regard, I have been encouraged by US agreement that any FTA would need to be comprehensive in scope, including in areas like agriculture. This is vital if we are to ensure that an FTA can be used as a building block for WTO negotiations.
And there are a range of other issues - like electronic commerce, information technology, services and industrial products - where we believe an FTA could be used creatively to build momentum for WTO negotiations, as well as to deliver significant benefits to Australian exporters.
Conclusion
Ladies and gentlemen
I have outlined today some of the reasons why we are interested in an FTA with the United States. There is no doubt that it is a very big prize.
But we have entered this process fully aware of the challenges and opportunities such an agreement would entail. That is why I welcome today’s proceedings as an important contribution to the public debate on this issue.
I am looking forward to hearing your views on the proposed FTA. They will help inform our Government’s position as we move forward, and will help keep us focussed on our central objective, which will always be the national interest.
And to that end, I ask you to lend us your strong support. Thank you.