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

Speech to the Economist Group Roundtable

Canberra,, 22 June 2005

Australia’s active trade policy

Distinguished guests, ladies and gentlemen.

Thank you to James O’Toole and Chris Cheatley of the International CEO Forum, for once again organising this enormously important gathering.

As Minister for Trade I am always eager to engage with the world’s business leaders, informing them of the tremendous opportunities that come from doing business with Australia.

I seldom have the opportunity to address, at one time, so many senior members of the business and investment community in Australia and globally…

… who have such an important stake in the continued growth and development of this great nation.

Your continued confidence in the future prosperity of Australia and the value of doing business here is warranted.

This is not a Government – nor a nation – which rests on its laurels, savouring its many successes or settling for an easy path. 

This is a Government which recognises that the world is a competitive place, a constantly evolving place – as is Australia itself…

… and that in order to continue to prosper, to continue to attract international businesses and investment – to justify your continued confidence…

… we must constantly seek to improve, to maintain our competitive edge, and to look for new business opportunities.

Australia’s multifaceted and mature trade agenda is an important part of our strategy for keeping the Australian economic success story firmly rolling ahead.

Ladies and Gentlemen,

Perhaps not since the time of our Federation have we seen trade take such a prominent place in the consciousness of the Australian public.

We have come a long way from that time…

… Australia today is one of the most open, most liberalised market places in the world today…

…internationally highly regarded for the vitality and strength of our economy, which has been underpinned by sound macroeconomic policies and structural reforms.

The past couple of decades have seen a series of productivity-boosting domestic reform measures implemented…

… including adoption of a floating exchange rate and measures to increase labour market flexibility and increase our openness to international market forces.

Our goods markets are among the most open in the world and our domestic support levels among the very lowest

Our openness to the rigours and the rewards of the world markets has driven productivity gains at home …

… and the development of an efficient and export-oriented business culture, earns respect internationally for our innovative and dependable business practices.

The Government has done much to promote sound monetary and fiscal policy frameworks and policies…

… with the granting of full independence to the Australian Reserve Bank back in 1996 being one of its first reform steps...

… and regularly delivering budget surpluses, which will see Australia’s general government net debt reduced from over 19 per cent of GDP ten years ago, to less than 3 per cent by June 2005.

We have also brought about fundamental reform of the Australian taxation system, including through the introduction of a goods and services tax…

…and much needed industrial relations changes to Australian workplaces including Australian wharfs.

For the third year in succession, the World Competitiveness Yearbook 2004 ranked Australia as the most resilient economy in the world…

…and in a mere, but highly productive, ten years we have moved from 15th to 4th place on the World Competitiveness Index.

We are now in our 14th straight year of economic expansion, with growth rates exceeding the OECD average in nine out of the past ten years...

… and are continuing to enjoy low inflation, low interest rates and the lowest unemployment levels in close to three decades.

But we know that our job is not done…

…we are continuing to push ahead – to make Australia even more attractive to international business and investors.

Announced under the 2005 Federal Budget, we have removed the 3 per cent tariff on imported business inputs, for which there are no domestically produced substitutes…

… we are moving to address critical skill shortages, by strengthening vocational and technical training and boosting the skilled migration intake…

…pursuing further reforms to our industrial relations system, which will increase its flexibility…

… and introducing much needed reforms to our taxation system, which will improve incentives and reward participation and hard work.

We are also working actively to ensure that infrastructure is in place to keep exports growing in the context of rapidly rising demand for our minerals.

Ladies and Gentlemen,

A successful trade policy is an essential ingredient of the Australian Government’s strategy for delivering continued prosperity to Australia.

Trade is central to our way of life…

… with some 70 per cent of our agricultural produce, 80 per cent of our resources and 18 per cent of our manufactured goods exported to foreign markets…

… and our services sector generating $34 billion in exports for the Australian economy.

Over recent decades, we have seen the Australian economy and our export story continue to evolve.

Over the last ten years, Australian exports of services have increased by an average of almost 6 per cent per year…

… with world class service providers in areas such as banking, education, insurance, telecommunications and travel …

… and with the services sector generating over 70 per cent of Australia’s GDP and employing over four out of every five Australian workers.

At the same time, agriculture remains a vital part of the Australian export equation…

… with recent research by the Australian Farm Institute indicating that farming supports about 12 per cent of Australia’s Gross Domestic Product and providing 1.6 million jobs.

Recognising the ongoing importance of the agriculture sector, the Australian Government announced a new drought package of over $250 million dollars, adding to the $1 billion already committed to helping farmers deal with the drought afflicting many parts of Australia.

Australian industry has also developed its competitive strength as a supplier of niche manufactures over the last decade…

… with exports of precision instruments having nearly trebled, exports of medicaments having more than quadrupled and exports of passenger motor vehicles having had almost a six-fold increase – that’s all happened in the last ten years.

As with many industries, the future of the Australian automotive industry is dependent on its ability to export.

During my recent visit to Korea I was privileged to be able to mark the arrival of the Holden Statesman as the flagship luxury car for GM Daewoo…

… a significant step in a market that produces as many quality cars as Korea does.

The resources sector has contributed significantly to our export success…

… with ABARE forecasting export earnings from resources to increase 22 per cent next financial year to $82.6 billion.

Australian exports are in good shape, having grown by 13.8 per cent in the ten months to April 2005 to $133 billion compared to the 10 months to April 2004…

Our exports are now firmly on track to achieve record highs in the 2004-2005 financial year.

The forecast moderation in the pace of world growth is not expected to have a significant impact on Australia’s major export markets.

Higher commodity prices, particularly for coal and iron ore, are now being reflected in long-term supply contracts…

… and our terms of trade are expected to reach a 50 year high next financial year.

Located in a dynamic economic region of the world, with one of the most stable economic, political and social environments in that region, underpinned by reliable, transparent and internationally competitive institutions…

… together with a highly skilled and diverse workforce, cost competitive business inputs, sophisticated ICT systems and an innovative and export oriented culture…

… Australia is well placed for further growth in trade and foreign investment.

Ladies and Gentlemen,

Australia has a modern, dynamic and broadly based economy, demanding a mature, balanced and ambitious trade strategy.

It has one…

… where comprehensive outcomes are sought across the Australian economy…

… where market opportunities are pursued at every level – multilateral, regional or bilateral.

Reform of the international market-place through the World Trade Organisation is vitally important…

… with significant distortions remaining in the global trading system, particularly in the agriculture sector.

Let us not forget that removing these distortions promises enormous gains for the world’s most impoverished…

… as illustrated by World Bank estimates indicating that an ambitious conclusion to the Doha Round could deliver $269 billion in welfare gains…

… of which around 40 per cent would flow through to developing countries.

An outcome without ambition will do little to improve the lot of developing nations – including those in our own region.

Now is the time for the WTO membership to collectively demonstrate its commitment to addressing the distortions.

Australia has been playing its part.  We have stepped up to the plate.

We are active in all areas of the negotiations – pushing as hard as possible for ambitious outcomes across the board – on agriculture, services, industrial products, trade facilitation and reform of WTO rules.

We lead by example because we know first hand the massive economic benefits that trade liberalisation brings.

Just last month, Australia lodged in Geneva its revised offer in the WTO services trade negotiations…

… our initial offer was good, but our revised offer is even better, providing improved access to our markets across a range of sectors…

… and putting us in a strong negotiating position to open up world markets and achieve significant benefits for Australian services exporters.

Now we expect other WTO members to follow suit, tabling substantial offers which will add further momentum to the negotiations.

Australia has been working intensively over the last several years to firstly start, then revive and now conclude the Round.

Last year we played a key role – including as a member of the Five Interested Parties group in the agriculture negotiations – in helping to get the Doha Round back on track – with a Framework Package agreed in July.

Since then we have been working hard to fill in the details of the Framework Package and build the political momentum necessary to make the final, hard decisions…

… which will allow the Round to come to a successful conclusion.

We are aiming high – for the back of the negotiations to be broken by the Sixth WTO Ministerial Conference in Hong Kong in December…

… enabling conclusion of the Round in 2006.

While a lot of technical work was done after the July Package was agreed last year, the Round had started to drift and lose sharp focus by the beginning of 2005.

A group of key WTO Ministers decided we had to become much more involved in the negotiations than we were before the Cancun WTO meeting and provide greater leadership…

… we met in Davos in January, Mombasa in March, in Paris last month and at APEC in Korea this month and will meet again in Dalian, China on 12 July.

At Davos we set the road map – we got the negotiations focused back on the key issues – agriculture, non-agricultural market access, services, trade facilitation and rules, and achieving a proper reflection of the development dimension agreed at Doha…

… we also set clear timelines and goals for the year – instructing our officials to get “first approximations” – the key modalities necessary to set the parameters of the final deal – on the table by the end of July.

I can’t deny the process is a hard slog.

This is a complex endeavour – with 148 WTO members it cannot be otherwise – but we are moving forward.

We will soon have a new Director-General – Pascal Lamy.

Given his previous EU responsibilities, Pascal Lamy is no stranger to building consensus among a polarised membership and addressing difficult issues…

… and I look forward to working with him and my Ministerial colleagues to successfully conclude the Doha Round.

An ambitious outcome to the Round is what our world-class farmers, producers, manufacturers and service providers need and deserve…

… and my negotiating team and I are committed to working as hard as possible to give it to them.

Ladies and Gentlemen,

The Australian public and business people in particular are increasingly aware of the important role that free trade agreements can play in securing Australia’s prosperity…

… and interested in seeing how the new opportunities can be used to their advantage.

There are enormous gains for Australia through the Government’s pragmatic and pro-active approach to free trade agreements…

… growing bilateral and regional trade liberalisation can help to stimulate multilateral liberalisation and enhanced appetite for global reform, with all the benefits that involves…

… while, at the same time, delivering deeper and faster gains on some issues than is possible through multilateral negotiations.

Over the next few years, I anticipate that the interest of the Australian business community in the benefits of FTAs will continue to grow…

… as we see more and more examples of export successes arising from the free trade agreements we have reached in recent years with the United States, Singapore and Thailand.

As an example of the export successes to come, let me tell you briefly about Aerosonde, a leading Australian developer of Unmanned Aerial Vehicles.

Amongst the many market access gains we secured under our FTA with the United States, Australian businesses can now access the lucrative US Government procurement market directly.

Quick to take up this opportunity, Aerosonde has recently entered into a strategic alliance with Lockheed Martin, the United States’ largest defence contractor…

… providing a major boost to Aerosonde’s efforts to gain sales for its technology in the US…

… and forecast to deliver multi-million dollar sales over the next 12 months.

The Australian Government is working hard to make potential Australian exporters aware of the array of new opportunities now available – helping to ensure trade policy wins become trade dollars and new trade jobs.

At the same time, we are vigorously pursuing possible new FTAs with China, Malaysia, the United Arab Emirates and, along with New Zealand, the ten members of ASEAN.

A few weeks ago I officially launched the first negotiating session with China, where we were able to progress a range of matters that will help to ensure a smooth negotiating process.

Now, our task is to prepare ourselves thoroughly for what is likely to be a difficult, complex and long negotiation…

… getting the clearest understanding of the problems faced by Australian business in China.

As with all our trade negotiations, I would very much welcome your contribution to developing this understanding.

We have now had two rounds of negotiations with ASEAN and New Zealand – with the next scheduled for late June in Wellington…

… held our first round of negotiations with Malaysia in May, with our next round coming up in July…

… and earlier this month officials returned from fruitful talks with the United Arab Emirates on FTA issues.

As you can see, the Australian Government has a full trade agenda.

That said, we do not close the door to taking on further challenges in the future…

… as we have demonstrated through our agreement to undertake an FTA feasibility study with Japan and the start of work on a Trade and Economic Framework with India…

… and in 2007 we will be hosting APEC – a tremendous opportunity to showcase Australia and Australian businesses.

You will have to wait and see where these initiatives take us…

… but you should feel confident that the strengths of the Australian economy, our prudent management of that economy and our ambitious trade agenda, will see Australia maintain its competitive edge in the global market. 

Conclusion

Ladies and Gentlemen,

The Australian Government has had many successes – and has worked hard to achieve these.

But we have not run out of ideas for further improvement and the delivery of greater prosperity.

This is clear when you look at what our ambitious trade agenda has been able to achieve in the last few years and what it is poised to achieve in the future.

Far from relaxing, the Government is gearing up for an even busier time and an even brighter future.

We look forward to doing business with you, now and in that future.

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