Speech to The Australian Chamber of Commerce, Beijing
19 April 2007, Beijing
Introduction
Thank you. It is a pleasure to be back in Beijing.
My last visit to China was just over a year ago to celebrate the first Sydney-Beijing direct flight by QANTAS – I am sure many of you are familiar with that flight.
But this is my first visit as Minister for Trade, a portfolio to which I was appointed in October of last year.
Australia’s economic performance
Before I update you on the Government’s trade policy agenda with China, let me mention the Australian economy.
Despite the ongoing impact of the drought on farm production, Australia’s GDP grew by nearly three per cent in the year to December 2006. Our strong trade performance is a key driver of this growth. In February this year, Australia’s exports set a new record – $18.5 billion for the month. Of course, mineral exports were a big part of that, but manufactured goods exports hit 3.9 billion dollars – the highest level on record. It was a good month on all fronts!
These good monthly figures confirm the long-term trend of healthy growth in our exports. Our exports to China are leading the way, increasing 26 per cent over the previous year.
Australia-China Free Trade Agreement
The trade figures may be good, but we cannot be complacent. We have to keep looking for opportunities to expand our exports and that is where trade policy comes in. An Australian journalist once said that 'trade policy is the enemy of health'. He was referring to the late-night negotiating sessions and the endless rounds of take-away food that go hand-in-hand with those sessions. I hope that negotiations are not really the enemy of health because my officials have a very busy year of negotiations ahead of them!
Last month, the Australian negotiating team for our Free Trade Agreement with China came to Beijing for the eighth round of negotiations. Even though our negotiators had some useful discussions in technical areas, progress was mixed.
Unfortunately, we made very little progress on key market access issues. We knew at the start of this process that negotiations would be difficult and would take time. The issues that matter to Australia are sensitive for China. We need to be patient. Our goal is an FTA that delivers real economic gains for Australia. We are not interested in signing an agreement that does not deliver benefits.
Our negotiators agreed to have the next round of negotiations at the end of June. Our team will be ready to discuss all aspects of the FTA in detail. We are keen to see progress and we are committed to achieving a meaningful result.
Being the first major developed country to negotiate an FTA with China presents particular challenges – our economic systems and stages of development are very different but it is worth putting in the effort to overcome the challenges. We have a real chance to gain improved access for important Australian goods and services exports.
Other FTAs
China is not our only FTA negotiating partner, however. We also are negotiating with ASEAN and New Zealand, Malaysia, Japan and the Gulf Cooperation Council. We are talking to Chile about an FTA and we are undertaking a study on a possible FTA with the Republic of Korea. We already have FTAs with New Zealand, the US, Singapore and Thailand.
Together, these countries account for more than 60per cent of our total two-way trade in goods and services. High-quality FTAs with them can make an important contribution to Australia’s long-term economic prosperity.
It is also important to keep in mind that we have offensive and defensive interests in pursuing our FTAs. On the one hand, we are pushing to improve our own market access. On the other hand, we are making sure that we do not suffer from preferences given to our competitors.
Multilateral Trade Policy
Before I finish up, I would like to underline the importance of the World Trade Organization and the ongoing Doha Round of talks. A successful conclusion to the Doha Round continues to be our top trade policy priority. The negotiations might be difficult, but we can not give up. Multilateral trade negotiations have the potential to deliver the largest economic benefits. The WTO system of global trade rules has been crucial for the very rapid growth of international commerce in recent decades and remains of great importance to both China and Australia.
The Doha Round offers us our best chance to enhance trade opportunities and to strengthen the WTO framework. We need to ensure that the outcome of the Round results in real market opening for agriculture, industrial products and services. It must also substantially cut trade-distorting farm subsidies. We have already agreed that agricultural export subsidies should be eliminated.
Australia is working hard to move Doha forward and to make sure that it delivers genuine reform. Last week, I participated in a meeting of some of the major players in the negotiations, including the US and the EC. We agreed that it was critical to intensify the negotiations with the aim of bringing them to a conclusion by the end of this year.
Just yesterday, I was in Pakistan to chair a meeting of Cairns Group Ministers. The Cairns Group represents the interests of agricultural exporters and is determined to secure substantial reform in this Round. Agricultural trade reform is of key interest to developing countries and without progress on that issue it will be very hard to make progress on industrial products and services.
The other part of the WTO that is sometimes overlooked when we talk about negotiations is the dispute settlement system. The system is only 12 years old, but is clearly effective. For example, Australia used the system to successfully challenge European export subsidies on sugar. We are aware, of course, that the United States and China currently have a number of disputes before the WTO and we will be following them closely.
Conclusion
Australia’s economic relationship with China is already in great shape – two-way trade last year was worth around $A50 billion. It is you – the business community – that drives this relationship to keep it in tip top condition.
Governments too have a role. We can make it easier to trade. Our efforts to negotiate FTAs and are presence in the WTO are focused on getting better market access for our goods and services.
I wish you well in your business endeavours here in Beijing and I look forward to answering any questions.
Thank you.
ENDS