Speech at the National Press Club

Launch of the Trade Statement 2007

13 June 2007, Canberra

Thank you Ken Randall
Board members of the National Press Club
Distinguished guests
Ladies and gentlemen

I’m delighted to be here at the National Press Club to present the 2007 Trade Statement - my first in this role.

Today, I’d like to explain why trade matters to the Australian people and to talk about what the Government has been doing, and will be doing, to make sure our trade continues to grow.

For the first time in history, Australian exports in 2006 surpassed the 200 billion dollar mark. Our exports of 210 billion dollars last year were well over double the level of 1996. The year was also a record in volume terms.

More trade means more wealth and more and better jobs for Australians. I note that the unemployment rate of 4.2 per cent is half what we inherited from Labor in 1996.

We are today enjoying export prices that have grown much higher relative to import prices. The last time we experienced this combination was during the so-called Korean War wool boom in the early 1950s. Back then, it was said we rode on the sheep’s back. But in this new century, many sectors drive our trade performance.

Resources exports are growing strongly. It may surprise many of the critics in the unions and elsewhere, but Australia is maintaining and also creating new export markets in manufactures. We are doing the same in services and rural goods, thanks to our smart businesses and the drive of Australia’s workforce.

We have achieved our record exports despite the worst drought in 100 years hurting our rural exporters, and the high value of our dollar which has appreciated 45 per cent against the US dollar in the past five years. Our exports have grown in spite of cyclones and infrastructure constraints affecting our biggest commodities.

Put simply, ladies and gentlemen, our trade performance is strong.

Our trade performance is strong because the economies of our developed world markets in Japan, the United States and the EU, which continue to account for the largest share of our exports, have been growing and are expected to grow at a healthy rate.

It is strong because Australia is well positioned to respond to Asia’s remarkable economic growth. Rapid industrialisation in China and, now, India, has seen those two countries’ share of world trade double from 1999 to 2005. Australia’s exports to India and China grew by about a quarter in 2006 alone.

Our trade performance is strong because we have built an internationally competitive domestic economy through a series of major economic reforms. The Government’s trade policy and our prudent economic management have created the right climate for Australian exporters to make the most of rapidly growing opportunities in the global economy.

We all gain from trade

We all gain from trade. As a trading nation, our abundant resources and skills are building wealth at home and abroad. And through trade, business and consumers get more choice of the best that the world has to offer, usually at lower prices.

One in five Australian jobs depends on exports. But imports also create jobs by providing low cost inputs to manufacturing, mining, farming and services and as goods move from port to shop.

If Australia had not opened its markets to foreign goods and services, consumer choice would be narrower and spending power would be weaker. Our economy would be less focused on our strengths and would be less competitive. If we still had the tariff levels of the 1980s, clothes and shoes would cost around 18 per cent more - enough to blow a serious hole in many family budgets.

Some people say that cheap imports reduce job opportunities. But lower tariffs have not led to higher unemployment. Unemployment in Australia today is at its lowest level in 33 years; even though Australia’s average tariff rate has fallen from more than 15 per cent since the 1980s to 3.5 per cent today.

Now, that is not to say that some jobs have not been displaced – but they have been replaced several times over by jobs in sectors where Australia is more competitive.

Some people say that lower tariffs flood our market with imports that push out local manufacturers. But over the past 25 years, Australia’s manufacturing output has risen by around 40 per cent and the volume of Australia’s manufacturing exports has risen fivefold.

It’s quite clear that trade matters more than ever. Exports amount to around 20 per cent of our GDP compared with around 15 per cent in the 1980s.

Many Australian companies now focus both locally and globally. Tourism, medicines, education and cars are now key exports. Last year, around 40 per cent of Australian-made passenger motor vehicles were exported, compared with less than 5 per cent in the late 1980s. Education is a key export and today supports more than 50,000 Australian jobs.

ResMed is a good example of an Australian company working in global supply chains. ResMed has pioneered products to screen and treat sleep-disorders and other respiratory ailments and first exported in 1989. It has developed today into a global business that markets its products in more than 65 countries. ResMed employs more than 2,500 people world-wide, including around 1,100 in Australia. ResMed was the 2006 DHL Australian Exporter of the Year and it is an excellent example of how Australia’s strengths and initiatives in advanced manufacturing can translate into outstanding export success.

The Government has worked hard to ensure we have a domestic environment that encourages an export culture. The Government’s latest Industry Statement provides more than 1.4 billion dollars over ten years to Australian industries to allow them to become even more internationally competitive and sustainable. That Industry Statement provides 254 million dollars to help small and medium enterprises spot global supply opportunities and bid for work on major international projects.

Another 350 million dollars will be used to establish Australian Productivity Centres, helping manufacturing and services companies improve and measure their performance against the world’s best.

Australia’s place in a competitive world market depends heavily on the skills of our people. The Government’s Higher Education Endowment Fund, with an initial investment of 5 billion dollars, will support capital works and research facilities for our universities. It is a down payment for our future prosperity.

Our competitive edge will also depend on the physical port, road and rail infrastructure that is necessary to support our industries. That’s why the Australian Government is spending 15.8 billion dollars over the five years to 2008-2009 through AusLink and a further 22.3 billion dollars in the five years after.

We are helping to open doors for Australian exporters.

In the past financial year, Austrade, Australia’s export and international business development agency, helped 16,000 clients and more than 5,000 companies generate around 18 billion dollars in exports.

One Austrade client - the Western Australian-based Immersive Technologies - pioneers high-tech simulator training for the mining industry. It received help from the Government’s Export Market Development Grants scheme and its exports are now used in places ranging from the frozen Arctic to the deserts of Africa.

That export grants scheme is one of the Government's key financial assistance measures to Australian small and medium enterprises to help increase their export promotion activities. This year, Austrade expects to provide 3,500 grants worth about 143 million dollars.

We also help businesses through the Export Finance and Insurance Corporation, Australia’s export credit agency. Thanks to a new EFIC facility for small and medium-sized exporters, consumers in China, Canada, Korea and 30 other countries can now buy soft serve ice creams made by Queensland’s Frosty Boy, a company that began with a fleet of vans in suburban Brisbane.

So these are just some of many schemes the Government is funding to boost our trade and economic performance. What they add up to is a complete approach to help secure our long term prosperity and to facilitate Australia’s competitive advantage in international trade. 

The Australian people certainly appreciate the link between trade and prosperity.

WTO trade reform

The most effective way to provide for future prosperity through trade is to break down barriers to our exports and work for reform through the World Trade Organization.

Trade enhances growth and growth reduces poverty. The United Nations Development Programme has said that, far more than aid, trade can give the means for lifting millions of people out of poverty.[1]

I note that prominent Kenyan economics expert James Shikwati this week told German journal Der Spiegel that trade rather than aid is the solution for Africa’s economic woes.

Freer trade would encourage a spirit of entrepreneurship in local markets, inevitably leading to a growth in international trade.

The World Bank estimates that full merchandise trade liberalisation could boost global income levels by 287 billion US dollars in 2015. That is why nations must maintain the resolve to support free trade. And that’s why a successful conclusion to the World Trade Organization’s Doha Development Round is Australia’s top trade policy priority.

Australia wants a Doha package that will generate new, commercially usable market access in each of the core areas of agriculture, industrial products and services. We want to lock away forever agricultural export subsidies and to significantly cut farm subsidies. We want market access barriers for manufactured goods slashed and freer trade in services.

Australia continues to play an important role in the Doha negotiations. With others, we helped get the talks back on track earlier this year. At a G6 meeting in New Delhi in April, I agreed with the trade ministers from Brazil, India, the EU, the US and Japan that we should aim to complete the Round this year.

Another meeting of the G6, a meeting of the Cairns Group in Lahore and of 18 of the world’s trade ministers in Paris, plus many one-on-one discussions, have followed. More are scheduled in Cairns and Sydney as part of APEC.

We have a crucial opportunity in the next few months to break through the current impasse on agriculture and industrial products.  We all have a role to play, but the biggest players have a particular responsibility to show leadership – not just the US and the EU but also the developing world.

Partnerships for growth

Let me talk briefly now about our bilateral free trade agreements. FTAs are partnerships for growth and can offer faster and more extensive gains than can be achieved through the WTO.

Our FTA agenda is a very active one.

We already have FTAs with New Zealand, the United States, Singapore and Thailand. We are negotiating with Japan, China, Malaysia, ASEAN with New Zealand, and the Gulf Cooperation Councila and are working towards negotiations with Chile and Pacific Island countries.

Work has started on a joint non-government FTA study with the Republic of Korea; a very important initiative given the recently agreed FTA between Korea and the United States.

The FTAs we have concluded, and those that we are pursuing, cover more than 60 per cent of Australia’s total trade and six of our top ten export markets.

This year is the 50^th anniversary of the groundbreaking Australia-Japan Agreement on Commerce, which laid the foundation for our close and mutually beneficial economic partnership. Only 12 years after World War Two, this remarkable agreement was signed by The Nationals’ longest serving leader, “Black Jack” McEwen, and Japanese prime minister Nobusuke Kishi, the grandfather of Japan’s present leader, Shinzo Abe.

Japan has been our largest export market now for 40 years. Our goods exports to Japan are worth more than our goods exports to the United States and China combined. But both governments believe we can open up more opportunities through an FTA.

For example, while services make up around 70 per cent of our respective economies, they are a relatively small part of our total trade. By addressing regulatory barriers and improving access, an FTA could help us increase trade in this sector.

There’s no doubt that our negotiations will be challenging. But they are off to a good start. We plan to hold negotiation rounds every two to three months and we have agreed to cover a comprehensive range of issues, from goods, services and investment to people movement and competition policy.

Progress on the Australia – China FTA has been slow. To help develop confidence, Australian officials and business representatives have conducted seminars in Beijing about Australia’s capabilities in wool, wine, dairy, meat, sugar, insurance, banking, mining, accountancy and legal services sectors.

They have worked together to explain to Chinese business and government counterparts how China could help itself by opening its markets to Australia’s high quality goods and services in these sectors.

APEC

I’d like to talk finally about APEC, another part of our all-round approach to trade policy. 

As you know, in September, Australia hosts the annual APEC Economic Leaders’ Meeting. This is a matter of great pride for Australia and it represents the most important gathering of world leaders we have ever hosted.

The Leaders’ meeting and other APEC meetings are expected to bring around 15,000 people to Australia. APEC will showcase our economy and society to economies which account for more than two thirds of Australia’s total trade.

As hosts, our challenge is to reinvigorate APEC as the pre-eminent forum for economic cooperation in the region and to set it on a new mission. And as host, we want APEC to do what it can to help bring the Doha negotiations to a successful conclusion.

We want to develop a coherent regional policy response to energy security, the environment and climate change. These are core economic issues that will be at the top of the agenda for the Leaders’ retreat in Sydney. We want to submit to Leaders a practical plan to promote more regional economic integration. We want to press ahead with the work on human security, in areas like pandemics, health, avian influenza, HIV/Aids, counter-terrorism and emergency preparedness.

And lastly, we want to strengthen APEC's Secretariat to better support the membership and boost resources available to support APEC’s trade and economic analysis capabilities.

Regional rewards

Our APEC agenda is broad because we have so much to gain. If you take the total population of APEC economies — that’s around 2.7 billion people — GDP per person has more than doubled since 1989.[2]

The steady rise of a new consumer middle class across the Asia-Pacific offers tremendous opportunities for Australia. We can already see the rewards flowing to our tourism sector, our largest services export industry and our education and other service exports are thriving.

But we should not assume that these rewards are easy to reach. Our economy will not steer itself to prosperity. Our prosperity relies on careful management and prudent economic policy; an active and ambitious trade policy and a foreign policy that sets out a vision of where the country should be, how it should be placed, and how we get there.

How do we keep our trade strong? As a Government, we must continue to make carefully thought-through decisions that are in the best interest of Australians. You have heard me talk of those decisions today.

What should a Government not do? It should not remove flexibility from Australian workplaces. The last thing our mining industry needs is further constraint on its operations, on top of the problems it faces with exporting through poorly performing state-owned infrastructure on the east coast. The last thing our manufacturers and service industries need are restrictive work practices their competitors do not have to endure.

Conclusion

Ladies and gentlemen, Australia’s trade performance in 2006 was strong. Exports reached record levels. New investment is coming onstream, ensuring continued export growth.

Our exporters have coped remarkably well with a rising dollar and incredible competition from China, India and other successful producers.

We are working hard for a successful conclusion to the Doha Round. Australia has completed or commenced free trade agreement negotiations with our largest trading partners.

The Government’s 1.4 billion dollar Industry Statement, alongside services provided by Austrade and the Export Finance and Insurance Corporation, are helping more Australian exporters tap opportunities in the global marketplace.

And we are ready for the annual APEC Economic Leaders’ meeting, the most important gathering of world leaders we have ever hosted.

So, the Government’s trade agenda is the most ambitious in our nation’s history.

The 2007 Trade Statement outlines how our trade policy is working to help secure Australia’s prosperity long into the future. And I commend the statement to you as a report on a year of achievement and progress for Australia’s exporters.

Thank you.

Ends