Sydney, 25 November 2004

Speech to the Australian Services Roundtable

(Check Against Delivery)

Introduction

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

Earlier this year [February], I attended the launch of the Australian Services Roundtable.

I noted then that the Roundtable provided an opportunity for an effective voice for the services sector and it’s a pleasure to be here today at this first annual general meeting of the Roundtable.

Since the Roundtable came into being, the Government has found it very helpful to have an industry body with whom to consult on services issues

• in addition, of course, to talking with individual firms.

I appreciate the difficulty in co-ordinating across what is a diverse membership but encourage you to keep up the good work, particularly as we face a busy period ahead in identifying and pursuing export opportunities for Australian services.

I’d like to update you on the Government’s ambitious trade policy agenda – from the WTO to free trade agreements

• and outline where the services sector fits in this agenda.

The importance of the services sector

The Government is acutely aware of the importance of the services sector to the Australian economy.

After all, the sector accounts for over 70 per cent of our national output and employs four out of every five workers.

But the services sector is also crucially important in terms of exports

• last financial year accounting for almost one-quarter – or $34 billion – of Australia’s total exports
• and growing by an average of 6 per cent per annum over the past decade.

While tourism and education-related services continue make up the lion’s share of Australia’s services exports

• our services exports are also diversifying
  • exports of legal, architectural, accountancy, engineering and medical services, were worth more than $1.1 billion last financial year
  • and exports of financial and insurance services were worth another $1.7 billion.

And Australian services firms are doing well in a range of countries, with recent successes including

• Melbourne company Cleanevent providing cleaning and waste management services for the Athens Olympics
• Kip McGrath commencing franchise operations in Mexico in tutoring children with learning difficulties
• Jamieson Consulting providing environmental management services in Chile
• and firms such as Australia Post, Linfox, the Garvan Institute and Mayne Logistics, undertaking ventures in China.

Many of these companies enlisted Austrade’s assistance to foster a market presence.

Austrade’s Global Service Exports team, focusing specifically on helping Australia's services exporters, recently published a new booklet called From Contacts to Contracts – A guide to successful exporting for the Australian professional services sector

• designed to advise small professional service companies on successful pathways to securing international business, the publication is now available on-line and in hard copy form
• Austrade is currently promoting the booklet to encourage potential and emerging exporters to utilise the wide range of Austrade's support, and seize the opportunities that are available internationally.

One of the factors that gives Australian service exporters an edge internationally is the strength and competitiveness of the Australian economy.

Australia has one of the strongest performing economies in the world.

The government’s economic reforms, in the labour market, taxation, telecommunications and on the waterfront, have all contributed to significant increases in productivity

• and improved the international competitiveness of Australian business and our services sector.

But increased access to overseas markets is also important to the continued success of our services exports.

Services in trade negotiations

The Productivity Commission has estimated Australia could gain up to US$2 billion a year from global services trade liberalisation.

Of course, securing that liberalisation is no simple task, given the diversity of the sector and the complexity and variety of barriers which apply to services trade.

Professional and business service providers face very different barriers to firms operating in network-based sectors such as telecommunications, transport and energy services.

But let me assure you, securing greater liberalisation in global services trade is a prime trade policy objective for the Government

• whether through multilateral negotiations or through direct negotiations with our key trading partners.

GATS negotiations

As I have said on a number of occasions, the WTO Doha Round of trade negotiations remains the government’s number one trade policy priority.

And the reason is simple, these negotiations offer the best chance to deliver the broadest and deepest market access gains for our exporters.

Market access negotiations on services – under the General Agreement on Trade in Services (GATS) – are an integral part of the Doha Round, alongside agriculture and industrials.

Australia is in a strong position to push these negotiations forward.

Our own services sector is considerably more liberal and internationally competitive than that of many of our trading partners.

And we are able to use this as a basis to seek new commitments in markets and sectors where there is significant potential and interest among our exporters.

So far in the WTO negotiations we have made requests of 35 WTO Members, including the US, EC, China, India and the ASEANs.

These requests were framed after consultation with State and Territory Governments, industry associations and companies, non-government organisations, and the public.

These requests include efforts to:

• improve the entry and temporary stay of Australian service suppliers in overseas markets;
• strengthen the ability of Australian service suppliers to invest overseas – including without having to form joint ventures;
• seek commitments to ensure regulatory environments are transparent to overseas suppliers – especially in the areas of licensing, qualification recognition and bidding processes for contracts.

While our objective in these negotiations is to get a better deal for our exporters, we will also defend our right to efficient regulation as well as to provide public services to the community.

Australia is not, for example, making any offers in the areas of public health, public education, or the ownership of water.

After a number of set-backs I am confident that the WTO Doha Round negotiations are now back on track.

Australia welcomed the agreement at the end of July on a framework to help guide the negotiation of detailed new commitments and disciplines

• services are a vital part of this framework.

Under the framework Members agreed that improved market access offers on services are to be lodged by May 2005.

With only 48 initial offers of varying quality – covering 69 WTO Members – having been made as part of the services negotiations so far, we are looking for a substantial improvement prior to the May deadline

• particularly from trading partners that have not come forward to date, such as Philippines, Indonesia, Malaysia, South Africa and Egypt.

The Government is currently consulting with interested stakeholders in order to develop an improved Australian offer and a further list of requests of others

• and we will continue to accord these WTO negotiations the highest priority.

Regional and bilateral agreements

At the same time as negotiating at the multilateral level, we are continuing to pursue other opportunities for trade liberalisation, including through free trade agreements.

In recent years we have signed a number of free trade agreements – with Singapore, Thailand and, of course, with the United States.

Ensuring timely entry into force of the US and Thai FTAs has been a very high priority for the Government.

We are therefore delighted that it was confirmed last week that both will now enter into force, as scheduled, on the 1^st of January 2005.

There are gains for Australian service providers in each of these agreements.

The Singapore Australia Free Trade Agreement –or SAFTA as we call it – achieved a number of important outcomes for the services sector.

SAFTA commits Singapore to accord Australian service suppliers the same treatment as Singapore businesses – with few exceptions.

SAFTA also goes beyond the GATS on market access and national treatment, particularly for Australian exporters of financial, legal and education services.

Restrictions on wholesale banking licences and joint law ventures have been eased.

And residency requirements for Australian professionals such as architects, engineers, accountants and auditors have also been eased or removed.

Under the Thai FTA, Thailand will ease its strict foreign equity restrictions on Australian companies providing services in a range of sectors, including business services, construction services, distribution services and tourism and travel-related services.

Thailand will also improve the visa and work permit conditions applying to all Australians entering Thailand to provide services.

And Thailand has agreed to future negotiations to enhance its commitments on services within three years from entry into force.

The US FTA is, of course, a historic achievement

• further integrating Australia's economy with the largest, most dynamic and innovative economy in the world and creating significant new benefits and opportunities for Australian exporters.

Many of you would be aware the United States is by far the largest export market for Australian services – worth $4.8 billion last year.

On services the US FTA will provide a solid foundation to build on.

In particular:

• the agreement gives Australia binding commitments by the US on national treatment in the services area, going well beyond what the US has made in the WTO
  • including in education, professional services such as doctors, lawyers, engineers, engineers and accountants, and financial services.
• one of the biggest gains is the agreement to set up a Working Group on Professional Services
  • this will provide a high profile mechanism through which the two Parties can encourage mutual recognition of professional service suppliers.
• on financial services, the two countries have agreed to promote further integration of their financial services sector and a Financial Services Committee will be established to consider ways to promote cross-border trade in securities.
• In addition, we will gain non-discriminatory access to the $200 billion market in US federal government purchases of goods and services (and additional access to the $200 billion US state government procurement market).

So there is much for services sector to look forward to in the US FTA.

Future FTA possibilities

The Government will also continue to vigorously pursue a number of possible FTAs, including with

• Malaysia
• with ASEAN (along with New Zealand)
  • the Prime Minister will be discussing the possible launch of FTA negotiations with his New Zealand counterpart and ASEAN leaders at a historic meeting in Vientiane next week.
• and with the United Arab Emirates.

Of great interest to many of you in the room is the joint FTA feasibility study we are currently undertaking with China

• this feasibility study is progressing well and we expect it to be finalised in March next year
• both Governments are expected to take a decision on whether to negotiate an FTA shortly thereafter.

The services sector forms an important part of the joint study.

China represents a significant business opportunity for Australia in the services area

• services trade is expanding rapidly and will be an increasingly important element of the commercial relationship in the future.

One example of a services sector where mutual benefits from an FTA might be possible is education-related services – where China is already our number one source of foreign students

• a possible FTA with China could seek to address issues in areas such as investment, cross-border supply, commercial presence and the movement of educational professionals.

Another example is legal services, where greater liberalisation of the Chinese legal services sector would increase the opportunities for the sharing of professional skills and knowledge between Australian and Chinese lawyers and law firms

• this should also contribute to the creation of a wider range of, and more competitive, legal services in both countries.

Other areas where mutual benefits from an FTA might be possible include telecommunications, professional services, financial services, tourism, freight logistics, distribution services and energy services.

I know that a number of you in the room – along with all State Governments – have already put in submissions to DFAT discussing areas of potential benefit to the services sector from concluding an FTA with China

• and I would encourage further submissions from anyone here today with an interest.

Conclusion

Ladies and gentlemen.

The Australian Government remains highly ambitious when it comes to trade policy.

We are fully committed to working hard right across the breath of our agenda to improve the international trading environment for Australian exporters – including in the services sector.

Whether it be in the context of the GATS negotiations in the WTO or through the exciting range of possible new FTAs on the horizon

• the Government looks forward to continuing our close working relationship with the Australian Services Roundtable towards achieving the best deal possible for our services exporters.

Thank you.