Speech at the Australia-China Business Council, West Australian Branch, Chinese New Year Reception

Welcoming the Year of the Pig

Wednesday 21 February 2007, Perth

Introduction

Thank you Dr Williams. (Desmond Williams – chair of ACBC)

Ladies and Gentlemen …

It is a great pleasure to be here in Perth and to celebrate Chinese New Year with you.

Chinese New Year is a time of renewal – a time to take stock of the past year’s achievements and to commit ourselves to future endeavours.

Australian Economy

2006 was another good year for the Australian economy – GDP grew more than three per cent. Western Australia is a key driver of Australia’s growth - with the state growing at nearly five per cent in 2005-2006.

China is a critical link in this growth.

Australia-China trade

My first job as Trade Minister in October last year was to host the Joint Ministerial Economic Commission with China in Sydney. I had a good, long meeting with my counterpart, China’s Minister for Commerce Mr Bo Xilai.

Minister Bo and I met with members of the ACBC at that time.

For me, it was a good way to start in the job – by talking trade with one of our most important trading partners.

You are probably all familiar with the remarkable success story of Australia-China trade.

China is now our second-largest trading partner – second only to Japan. Our total two-way trade in goods and services with China amounted to just over $50 billion in 2006.

Bilateral merchandise trade has grown from around $8 billion in 1996 to around $46 billion in 2006 - a more than fivefold increase.

Exports from Western Australia played a key role in that growth.

The contract to supply LNG to China will be worth $25 billion over the next 25 years.

China’s insatiable demand for iron ore has seen the dollar value of exports grow more than ten-fold in the past decade.

I see government and business as partners in developing international trade opportunities – particularly in relation to China, where the government plays a large role in the economy. The Australian Government seeks to manage the political relationship in a way that promotes and supports the business relationship. I take every opportunity to raise our market access concerns with the Chinese Government.

I want to pay tribute to you, the business community, and the ACBC in particular, because it is business people who actually achieve these results.

It has been your commitment to engagement with China that has delivered the results you are now enjoying – year-on-year growth in WA’s trade with China was more than 40 per cent in the December quarter last year.

Australia-China Free Trade Agreement (FTA)

Of course, the Free Trade Agreement that Australia and China are negotiating is an important part of our relationship.

The FTA negotiations are ongoing, and we know that they will continue to be tough. Let me tell you how things stand.

Market access negotiations for both goods and services began at the seventh negotiating round which was held in Canberra in December. We exchanged offers and requests on tariffs and began to exchange lists of trade barriers affecting services.

Australia’s tariff offer was high quality. It was designed to put Australia in a good position to insist on a serious, liberalising offer by China.

But, of course, the offer also recognised Australian industry’s concerns about pressure from competition from China. We did not offer acceleration of tariff cuts in industry plans.

In response, China presented a complete tariff offer as Australia had requested. Their offer was a useful start to the negotiations, but there is a lot more work to be done.

The next round will be held in Beijing in late March and we look forward to more progress.

Our negotiations don’t just cover merchandise exports.

Australian exporters have strong interests in securing better access to a wide range of services sectors in China. These include mining services, where Australian firms, including some from WA, are exporting leading-edge software dealing with mine management techniques. The companies are active in exploration for mineral deposits in China.

On education services, WA universities are providing a range of courses in China, in addition to attracting Chinese students to Australia. Access to the services sector, however, remains constrained and this limits opportunities for Australian services exporters to do more business in China.

On investment, China agreed that at the next meeting both sides would identify specific barriers affecting investment in each other’s country. While two-way trade with China is strong, two-way investment is weak. China’s investment in Australia is increasing and we welcome that. In the FTA, we are looking for ways to increase Australian investment in China.

Our FTA negotiations with China also include discussions about intellectual property rights. We are working to ensure that the FTA includes provisions to enhance protection for Australian intellectual property in China.

Negotiations are also continuing on the draft text of a set of chapters that we believe will be necessary in order to achieve a comprehensive FTA. We want an FTA that includes chapters covering all sectors, and are working to persuade the Chinese about this.

China has proposed that both sides aim to achieve breakthroughs on major issues by mid-2008.

We have told the Chinese we will work towards their goal, but we have set no deadline for the conclusion of negotiations. We have always said we will take as long as is necessary to achieve commercially-meaningful outcomes for Australian business and to ensure that sensitivities are handled appropriately.

Ensuring the Pig is golden

I mentioned earlier that the coming year will be a prosperous one. It is not only the year of the pig in the Chinese zodiac, but the year of the golden pig – an omen of particular prosperity. But it will only be truly golden if we work to make it so.

You may know that I was born in the Year of the Rat. Who would have thought a politician would openly declare that they are a rat – but only in the context of Chinese astrology let me assure you. So I feel comfortable in saying that achieving success this year will require rat-like qualities – discipline, hard work and tenacity.

In my portfolio, we have a challenging trade agenda in the year ahead. We have the WTO Doha Round, APEC and a range of other FTAs in the works.

Achieving a successful conclusion to the Doha Round is Australia’s highest trade priority. We are working hard for a result that delivers genuine, new commercial trade opportunities across all the negotiating sectors.

Clearly, one of the most important issues to be resolved is agriculture. We will be pushing hard for meaningful tariff cuts and substantial subsidy reductions. A lot will hinge on what the EU and the United States can offer, but all WTO members share responsibility for ensuring the success of the Round. We will be keeping the pressure on, including as Chair of the Cairns Group.

APEC is another key element of our trade policy. From Australia’s perspective, it is the pre-eminent regional economic forum. APEC brings together economies from the most dynamic region of the world and promotes economic integration across the Pacific. Participants include the United States, China and Japan, and eight of Australia’s top 10 export markets. Our total trade with APEC is worth more than $250 billion.

Australia is hosting APEC this year. Just last week, Perth played host to the first Ministerial Meeting when my colleague Ian Macfarlane convened the APEC Mining Ministers’ Meeting.

As host this year, Australia has a good opportunity to drive APEC’s policy agenda. We want to push forward with trade liberalisation. We will be responding to developments in the WTO negotiations and preparing a study into ways and means to promote economic integration in the region. One option being examined is a Free Trade Agreement of the Asia-Pacific as a long-term objective.

We will also boost APEC cooperation to facilitate trade and investment, both at the border and behind borders. We recognise that APEC has to deliver real results to business. We want to make sure that APEC initiatives reduce the cost of doing business in the region and promote a constructive energy security agenda within the region.

In addition to our APEC and Doha Round work, we are negotiating other FTAs. Through all of our FTAs, we aim to open new commercial opportunities for Australian exporters.

I am pleased to note that the Prime Minister announced in December that Australia and Japan would begin negotiations on a Free Trade Agreement this year. Japan is Australia’s largest trading partner – a position it has occupied for the last 40 years. It is the biggest market for our primary products - including agricultural, mining, fuels and other non-manufactured products. An FTA will help to open new export opportunities in Japan for Australian businesses.

We are working on the ASEAN-Australia-New Zealand FTA. Perth is set to host a negotiating round for that FTA in late July. Successful negotiations could provide a real boost to our $68 billion a year trade with the ASEAN countries.

A key part of our FTA strategy is engaging with industry in all states and territories. The comments and submissions we receive feed directly into the process for shaping our policy objectives. I would encourage you to contact our negotiating teams if you have issues to raise.

Conclusion

I think we will all have a busy year ahead. But I am confident we can make this year truly a Year of the Golden Pig.

We just have to remember that it will take Rat-like grit and determination to get there.

I wish you all well in your business ventures for the year ahead.

Thank you.