Speech at the APEC Australian Business Forum

APEC: “Promises to keep”

Tuesday 28 November 2006, Canberra

Introduction

Twelve years ago, APEC Economic Leaders committed themselves to free and open trade and investment in the Asia Pacific.

That famous declaration in Bogor, Indonesia, was made in a spirit of great hope for the region’s future and it came with a few undertakings that still shape APEC’s trade agenda today.

These included:

• an undertaking to find co-operative solutions to regional economic challenges;
• an undertaking to support an open, multilateral world trading system;
• an undertaking to continue to reduce trade and investment barriers to enable goods, services and capital to flow freely among APEC economies.

So I’d like to speak about these undertakings, or, to borrow from the poet Robert Frost, the “promises to keep and the miles to go before we sleep.”

APEC’s promise

• Asia Pacific economic co-operation is not an end in itself but is aimed at propelling peace and sustained economic growth in the region and in the world.
• APEC has been a reliable and influential voice in support of world trade reform.
• When APEC speaks the world listens. This is because APEC is still the pre-eminent forum representing the world’s most dynamic economic region.

APEC economies represent well over half the world’s economy. APEC is the only regional forum that brings together the world’s three largest economies—the United States, Japan and China—with some of the world’s fastest growing economies.

APEC’s advantage

But APEC members know there is still work to do. That’s why APEC members agreed to the Busan Roadmap to guide APEC’s work.

So I want to briefly outline several key ways that we can implement the Busan Roadmap.

First, is APEC’s support for the multilateral trading system.

The conclusion of the Doha Round remains the Government’s top trade priority.

So I was very happy that the APEC meetings I have just attended in Hanoi called for the early resumption of the Round.

I am especially pleased with the commitment from the leaders of key WTO economies in APEC to do more themselves. 

I have also just returned from Geneva where  met with Cairns Group Ambassadors, Pascal Lamy and many other people who have key roles over the next month or two in getting the Doha Round moving again. 

It is pleasing to note that work has resumed in Geneva on the possible shape of a new WTO agreement.

I am concerned though that there is still not sufficient willingness from key groups of nations to make the concessions necessary to achieve the breakthroughs needed for a worthwhile agreement.

I am also concerned that the Round may be drowned in its own complexities. 

That’s part of the reason why we have put a simple breakthrough formula—the '5/5' proposal—on the table. It gives all parties an opportunity to move forward together and avoid the odium that might be associated with any individual country making the first step. 

I don’t think 5 plus 5 is too ambitious. I believe the US can do better than a five billion dollar reduction in their farm support and I think the Europeans can do better than an extra five per cent reduction in the tariff lines.  I think the developing world can do better than having 5 percent of their tariff lines being subjected to special product protection.

I think ours is an achievable proposal. The fact that there is already criticism of it being too ambitious for one side or the other shows that it is a fair compromise.  And we are prepared to develop the detail further.

The second aspect of the Busan Roadmap I’d like to discuss is the promotion of high-quality Regional Trade Agreements and Free Trade Agreements.

Now, I know that our friends in the business community are concerned about the spread of regional, sub-regional and bilateral trade agreements and the additional complexities they may cause.

In APEC we have started to address this problem by developing a set of model measures to improve the quality and consistency of FTAs.

In Hanoi, model chapters were approved which will promote greater coherence and substance in regional FTAs, but this process will take time.

As for Australia’s approach to FTAs, before we even prepare the jump to an FTA we set a few standards that raise the bar.

For Australia:

• An FTA should produce substantial economic benefits, including real commercial gains for Australian businesses;
• It should be fully consistent with the World Trade Organization’s principles and rules and free-up trade faster than we would normally be able to achieve through multilateral forums;
• And it should be comprehensive and provide for broad liberalisation across goods, services and investment. When we go into an FTA, our trading partner knows that all things, all sectors, should be open to negotiation. There are always sensitivities on both sides. But through negotiations we try to handle them and not dismiss them before we start.

Setting these standards may set the bar higher but they make an FTA all the more rewarding once Australia and our trading partner have agreed to it.

Over the past three years, Australia has successfully negotiated FTAs with Singapore, Thailand and the United States.

• We are preparing more FTAs with China, Malaysia and the Gulf Co-operation Council.
• With New Zealand, we are negotiating an overarching FTA with ASEAN.
• And we are looking into an FTA with Japan, the Republic of Korea and Chile.

Our FTA with the United States shows the merits of our approach.

• This is a quality agreement and it is comprehensive. It covers everything from agricultural and manufactured goods to financial, investment and business services and more. 
• It has bolstered Australia’s economic, foreign policy and strategic interests and reinforced Australia’s competitiveness in a key market.

The US is Australia’s single most important economic and strategic partner and our second-largest trading partner in goods and services.

• AUSFTA represents a long-term commitment to strengthening the trade and investment relationship and advancing the economic integration between two open and sophisticated economies.
• Australian businesses can now compete for access to the A$200 billion US market for government procurement. Australian companies have already made a great start; winning around A$95 million in contracts in 2005-06.

I’d like to stress again that everything we do with FTAs is WTO consistent or WTO plus. And it falls in line with what APEC is doing to make FTAs more coherent.

The third example of APEC’s Busan Roadmap gets down to some important details: the Busan Business Agenda.

Thanks to the energetic input from APEC’s business community, in Hanoi we agreed on a key part of the Busan Business Agenda that calls for further reductions in trade transaction costs by 5 per cent by 2010 and a full business facilitation program.

On so-called “behind the border” issues, APEC members have, for instance, pledged to make new efforts to protect intellectual property, fight corruption and boost investment. Momentum is building from the APEC Leaders Agenda to Implement Structural Reform.

The progress on these behind the border issues highlights the good habits of co-operation that have developed between APEC members.

APEC members are working out ways to resolve complex barriers to business in our neighbourhood. The way we do this is not through the usual give and take of negotiations but through building consensus and co-operation. This is a great example of APEC’s advantage.

FTA in the Asia Pacific

Finally, as you may know the APEC Business Advisory Council has asked Leaders to consider an FTAAP as a possible long term option.

• In Hanoi, we agreed to take a fresh look at the growing economic integration of the region and to study this proposal as one of the options in the long term.
• Our priority is the Doha Round but if we were unable to achieve a successful outcome to the Doha Round over the next twelve months, then the idea of an FTAAP could become more of a focus.

We all want to strengthen markets and economies and make our region more resilient against future shocks.

• This is one area that Australia would like to continue to work on when we host APEC next year.
• The Australian Government will soon begin outlining our plans to build on the good work achieved during Vietnam’s hosting of APEC this year.

Conclusion

Ladies and Gentlemen:

We still have miles to go before we sleep.

• That is why APEC’s agenda on trade reform remains so important today.
• I look forward to continuing to press the case when Australia hosts APEC next year.

Thank you.