Speech
25 November 2004
Emerging markets, new visions
Speech to the Wine Industry Outlook Conference, Sydney
Introduction
Thank you MC, distinguished guests, ladies and gentlemen.
It's a pleasure to be here today.
The Australian wine industry is often held up as the classic export success story.
But as anyone in the industry will tell you, export success has not simply come overnight.
Of course the fundamental building block of a truly great product has always been there.
But aside from that, it has taken foresight, strategy, investment, promotion, cooperation with Government - both State and Federal - and a lot of hard work to get the Australian industry to where it is today.
This conference is another example of the industry's pro-active approach to securing a bright future
- both for Australian wine exporters
- and for the more than 30,000 Australians - in over 60 regions across Australia - who rely on the industry for their livelihood.
Despite the effects of drought, the industry's export record continues to impress.
The most recent figures show that, in the 12 months to September 2004, Australian wine exports:
- have increased by 17 per cent
- have passed 600 million litres for the first time
- and have grown to over A$2.6 billion.
This last figure exceeds the industry's own export target of $2.5 billion in export sales by 2005, laid down in the 'marketing decade' strategy launched back in 2000.
This very same strategy sets a target of $5 billion in export sales by 2010.
A further doubling of wine sales over the next six years is a big ask
- but based on current export trends, it would be a brave person to bet against this target being reached.
However as we all know, the international wine business is an extremely competitive one.
And we simply cannot afford to take our current export success for granted.
Two factors, in particular, are crucial to the export future of the industry - competitiveness and market access.
A competitive economy
In terms of competitiveness, the Government remains committed to maintaining the right conditions for Australian business to compete and flourish.
It is no accident that 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.
As a result, Australians have enjoyed solid growth, more jobs,
falling unemployment, real wage increases, low inflation and interest rates and increasing wealth and incomes.
A reform of particular importance to the wine industry is of course the Wine Equalisation Tax (WET) Rebate which has been in effect since 1 October.
I am pleased to say that this rebate will provide significant benefits to small wine producers and effectively exempt 90 per cent of wine producers from the WET.
A competitive and strong Australian economy and sensible reforms are one part of the story for the continued success of our wine industry.
Exports are another.
With a record Australian vintage in 2004 and well over half of our wine production now being exported
- securing better access to overseas markets is more important than ever.
Not only in our traditional markets in the EU - in particular the UK - the United States, Canada and New Zealand
- but also in the new and emerging markets of Asia and Latin America.
The Government is meeting this challenge by pursuing the most ambitious trade policy in Australia's history - through multilateral negotiations, and in direct negotiations with our key trading partners.
Multilateral approaches
The WTO Doha Round of trade negotiations remains the government's number one trade policy priority
- these negotiations promise enormous gains for Australia and other WTO Members.
For Australia's wine industry the negotiations provide an opportunity to:
- address high wine tariffs still imposed by some countries in Asia and South America;
- put under pressure the high levels of domestic support provided to European Union wine makers - worth some $2 billion in 2002; and
- abolish EU wine-maker's access to export subsidies which are in the order of $40 million per year.
After a number of set-backs I am confident that the WTO 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
- and we will continue to accord these negotiations the highest priority.
But the WTO is not the only avenue the Government is pursuing to create a fair and stable environment for world wine trade.
We are working hard 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, comprising Australia, the US, Canada, New Zealand, South Africa, Chile and Argentina, has already tasted success by signing an agreement which provides that wine which is acceptable in the country of export, will be acceptable in the importing country.
And the group is now working on other issues of great importance to facilitating wine exports, including how to reduce unnecessary and overlapping labelling requirements.
The objective is to allow our exporters to develop labels which can be accepted in all of the major wine markets of the world.
I have written to all State Premiers and Territory Chief Ministers to encourage support for this work of the World Wine Trade Group.
This approach will be further developed at the next meeting of the World Wine Trade Group to be held in New Zealand in March 2005.
Bilateral discussions and FTAs
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 the United States.
The US FTA is a truly landmark deal.
It will further integrate Australia's economy with the largest, most dynamic and innovative economy in the world and will create significant new benefits and opportunities for Australian exporters.
The US has, of course, been the major driver for our wine export growth over the past few years.
Under the Agreement all US tariffs on wine will reduce to zero over 11 years and, importantly, the FTA will also help restore our competitiveness against others who already have preferential access to the US market such as Chile and South Africa.
There is also good news for the wine industry in the free trade agreement with Thailand.
While Thailand is a smaller 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 to zero by 2015.
Ensuring timely entry into force of the US and Thai FTAs is understandably a very high priority for the Government. We are therefore delighted that it was confirmed last week that both agreements will enter into force, as scheduled, on the 1 st of January 2005.
The government will also continue to vigorously pursue the possibility of FTAs with China, ASEAN, Malaysia, and the United Arab Emirates.
The Australia-China joint feasibility study into an FTA is progressing well and should be finalised early next year.
We are undertaking a scoping study on a possible FTA with Malaysia.
Along with New Zealand, we are preparing the ground for an FTA with ASEAN.
Further afield, we are also vigorously pursuing an FTA with the UAE, which would become our first FTA partner in the Middle East.
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 remains our most important export destination for wine.
Many of you will be familiar with the 1994 EU-Australia Wine Agreement and the contribution this has made to facilitating the development of the European market for Australian wine producers.
The Agreement did, however, leave a number of issues outstanding
- such as setting final phase-out dates for several well-known EU geographical indications - including champagne, port and sherry - as well as finalising the arrangements to apply to the use of several so-called EU traditional expressions.
We have been negotiating for some time to address these issues and to update the Agreement to reflect developments over the last 10 years as well as address issues such as oenological practices and other labelling matters.
There have been a number of meetings this year to move the negotiations forward - including last week in Canberra - and good progress has been made towards concluding a new Agreement.
I am hopeful that we will be able to finalise negotiations quickly.
Conclusion
Ladies and gentlemen
The Government continues to work hard across the breadth of its trade policy agenda to improve the international trading environment for the Australian wine industry.
In doing so, we have received excellent support and cooperation from the wine industry.
From significant contributions the industry has made to our negotiations in the WTO, World Wine Trade Group, and with the EU, to valuable submissions made in the context of our various FTA negotiations, the Australian wine industry continues to be a central player for the Government in the formulation of our negotiating positions.
As we look to the future and the exciting new trade opportunities on the horizon, I look forward to continuing this close working relationship with the industry
- and securing the best deal possible for our wine exporters.