Margaret River, WA, 3 May 2004

Speech to the First International Wine Tourism Conference

Introduction

Thank you [name of MC], distinguished guests, ladies and gentlemen.

I am very pleased to be here today.

In particular, I would like to extend a special welcome to those of you who have travelled great distances to get here

• from all around Australia and all around the world.

The Australian Government recognises both the current value of wine tourism and its potential for growth

• the sector having been identified as having considerable development potential in the Government's recent Tourism White Paper.

It is no surprise, therefore, that the Government has funded the development and implementation of a National Wine Tourism Strategy.

This Strategy is an excellent example of industry and government working together to develop a market where Australia has a natural advantage.

The Strategy brings together two of our largest and most successful export earners in a recipe for success

• Tourism which employs more than 550,000 Australians and generates some A$17 billion per year in exports;
• And the wine industry, which employs 30,000 Australians and has exports totalling A$2.4 billion.

Margaret River is the perfect example of wine tourism at work.

Trade and the wine industry

The Australian wine industry has done a tremendous job in promoting and marketing their product overseas.

As a result exports have been booming.

However, the phenomenal export growth and industry expansion over the last decade has also brought new challenges to the industry.

And today I would like to discuss the challenges and opportunities the industry faces in maintaining and increasing their export markets

• And most importantly what the Government is doing to assist.

Well over 50 per cent of Australian wine production (some 520 million litres) is exported.

The EU, as a whole, is our largest export destination with a greater than 50 per cent share of exports, followed by the US, Canada and New Zealand.

We know we cannot take our export success in these markets and elsewhere for granted

• and we will have to work hard to maintain and increase market share.

Two factors are crucial - competitiveness and access to markets.

Competitiveness starts at home.

The Government has been, and remains, focussed on creating the right conditions for business to compete and flourish.

Australia is enjoying the longest unbroken period of economic growth since the 1960s

• Strong economic growth is continuing - the forecast is for 3.75% in 2003/04
• Inflation and interest rates are low
• And unemployment remains at historically low levels.

But a competitive and strong Australian economy is one part of the story for the continued success of our wine industry.

Internationally, the challenge is to secure better access to overseas markets, as well as a transparent and fair, rules-based trading environment.

That is why the Government is pursuing every opportunity - be it at the multilateral level, the regional level or the bilateral level - to improve conditions for Australian trade in international markets.

Multilateral approaches

At the multilateral level, Australia remains fully committed to negotiations in the World Trade Organization.

These negotiations offer the best chance for the largest gains for Australian business. They also offer the prospect of the largest gains, across the largest number of sectors, for the greatest number of economies.

For the wine sector, the WTO negotiations provide an opportunity to address the relatively high tariffs on imported wine in some countries of Asia and South America.

They will also put under pressure the high levels of domestic support provided to European Union wine makers - worth A$2 billion in 2002 - which is equivalent to the total value of the Australian wine market.

And WTO negotiations could abolish EU wine maker's access to export subsidies of the order of A$40 million per year.

While WTO negotiations essentially stalled following a Ministerial Meeting last September, we have seen some encouraging signs in the last few months that members are willing, to re-engage.

We will keep up the pressure.

And I have faith that the WTO trade negotiations will come to a successful conclusion.

The world simply can't afford to let this opportunity to reform the global trading system slip by - particularly in agriculture.

But the WTO is not the only avenue the Government is pursuing to create a fair and stable environment for world wine trade.

The Government is also working with international organisations, such as the International Office Of Vine And Wine (OIV) and the recently formed World Wine Trade Group, to improve access for Australian wine to international markets.

The World Wine Trade Group membership of Australia, the US, Canada, New Zealand, South Africa, Chile and Argentina, meet regularly to find ways to facilitate international trade in wine.

The group's major achievement has been to sign a groundbreaking agreement which provides that wine, which is acceptable in the country of export, will be acceptable in the importing country.

This agreement, when it comes into force, will provide greater surety of access for Australia's exports to important North American wine markets, as well as a working alternative model to the more prescriptive EU positive listing approach.

The group is turning its attention to developing a multilateral labelling agreement that will simplify and streamline wine labelling arrangements between countries — an objective I'm sure everyone here would fully support.

In addition the Government is also working within the International Office of Vine and Wine (OIV), to ensure this Paris-based organisation bases its recommendations on sound science and consensus decision-making.

This will enable countries like Australia to better protect their national wine interests.

Bilateral discussions and FTAs

Australia has not confined itself to trade negotiations at the multilateral level.

We are also actively pursuing opportunities for Australian exporters through trade deals on a regional and bilateral basis.

The Government will consider free trade agreements where they offer significant gains to Australian business ahead of the timeframe possible in multilateral negotiations.

In this context, the free trade agreement with the United States is truly a landmark deal.

It will provide enhanced access for Australian exporters to the world's largest importer - a market of around 300 million people.

And will further integrate Australia's economy with the largest, most dynamic and innovative economy in the world.

There is no doubt that when the Agreement comes into force, potentially in early 2005, it will create significant new benefits and opportunities for Australian exporters.

On wine, all US tariffs will reduce to zero over 11 years.

This is important as according to the latest export figures, the US is now our largest single export market for wine - worth around A$870 million.

And for the past few years the US has also been the major driver for our wine export growth.

The FTA will also restore our competitiveness against others with FTAs with the US such as Chile and Mexico.

We have also recently concluded a free trade agreement with Thailand.

While Thailand is a small market for our wine, tariffs on wine will be reduced from their current level of up to 60 per cent, to 40 per cent when the Agreement enters into force, and will then reduce zero by 2015.

The European Union

While we are working to create opportunities in new and existing markets, we have not lost sight of the fact that the European Union, as a whole, remains our most important export destination for wine - as I said earlier, taking over 50 per cent of total exports.

Ongoing and fair market access to the EU is, therefore, a high priority for the Australian Government.

The EU's continued use of prescriptive regulatory arrangements for all types of grape and wine production and wine marketing is of great concern.

The recently passed — and well publicised — EC Wine labelling regulation is probably the best example of the European approach.

The Australian Government is working closely with Australian industry representatives and other like-minded countries to ensure this regulation does not adversely affect our ability to put wine into the EU.

Interestingly, the introduction of this regulation had been delayed twice following not only internal criticism but also lobbying by Australia and other countries in the Committees of the World Trade Organisation.

Another relevant area of concern is the 1994 EU-Australia Wine Agreement.

This agreement enabled Australian wine producers to use a range of oenological practices prohibited in Europe, streamlined export certification arrangements for our wine and provided for the reciprocal protection of Australian and European geographical indications.

As such, the Agreement has supported Australia's massive export growth into the EU over the past decade.

However, it also left several outstanding issues.

They included setting final phase-out dates for several well-known EU geographical indications, such as champagne, port and sherry, as well as finalising the arrangements to apply to the use of several so-called EU traditional expressions.

The Government — like the industry — remains committed to resolving these outstanding matters as soon as possible.

In fact, Australian officials met with the European Commission again last week and we hope to finalise an agreement as soon as possible.

Conclusion

Ladies and gentlemen

At a broader level we have a strong economy that is providing a sound basis for the growth of the Australian wine industry.  Internationally the Australian Government is working hard in many important forums to maintain and improve the international wine trade environment, so the Australian industry can continue its outstanding export success.

Over 1.5 million bottles of Australian wine are sold overseas each day - every one of them is a 'liquid postcard' for Australia and a tourism promotion.

I would like to extend my thanks to the Australian wine industry who provide great support to our endeavours.

This conference is another example of the industry's pro-active approach to securing a bright future for Australian wine exports.

And I wish the conference every success.

Thank you.