12 March 2008
Australia's Engagement with Latin America
Address to The Australia Latin America Business Council ALABC
Salutation Chair, Excellencies, fellow Parliamentarians, distinguished guests, ladies and gentlemen.
Introduction
Thank you, Mr Blanco, for your introduction and for the invitation to speak about Australia's engagement with the Latin America region.
I would like to add my congratulations to you and the Council for the leading role you are playing in building our relationships with Latin America.
Our Government is committed to forging closer relationships with the countries of Latin America – not only in trade and investment, but beyond.
Australia and the countries of Latin America share important interests. The realisation of these common interests has eclipsed the impact of distance and unfamiliarity.
These shared interests include our desire for: a more liberal international trading system; a more stable Asia-Pacific region and; sustained and sustainable global economic growth.
Australia also recognises in many Latin American countries a determination to deepen the roots of democracy and a commitment to harness resources for the betterment of their peoples.
I was particularly pleased to hear today that Qantas is commencing its first ever non-stop services to South America, with flights from Sydney to Buenos Aires starting later this year. This development will foster both business and community links between Australia and South America.
Multilateral Cooperation – Trade, Climate Change
With world trade talks at a crucial juncture, one of the most important interests we in Australia share with our Latin American counterparts is achieving a balanced and successful outcome to the WTO Doha Round.
This is our Government's most pressing trade policy priority.
The global trading system has delivered incredible benefits to both Australia and Latin America. World trade has been one of the drivers of global GDP growth over the past 60 years. According to IMF figures, in 2006 the total value of the world's merchandise exports was equal to 25 per cent of global GDP – in 1950 it was only 14 per cent.
The global trade deals negotiated over this time have brought down tariffs and provided certainty to businesses and investors. The first GATT round produced tariff cuts covering some 40 per cent of world trade. By the end of the Uruguay Round in 1995, developed countries average tariffs on industrial goods fell to only 3.8 per cent.
But we cannot take this trading system for granted. We need to build on the gains we have made. To do this we need to renew our efforts to conclude the Doha Round of negotiations.
In working towards this goal, Australia knows we can count on our Latin American partners in pushing for much needed reform on agriculture and market access.
Australia values greatly the cooperation we have with the 10 Latin American member countries of the Cairns Group to achieve agricultural trade reform.
I am keen to work with other like-minded members – particularly the G20 grouping led by Brazil – to ensure we keep ambition high in the agriculture package.
But the political reality is clear. That is: we will not get ambition in agriculture without ambition in NAMA.
The two are inextricably linked and will only be progressed together.
And as I have also said repeatedly, Australia will not sign off on a Doha deal if it does not also include an ambitious outcome on services.
We are now at a critical juncture.
We are now at the point where countries have to genuinely negotiate.
Given that the Doha Round is a single undertaking progress in the negotiation is achieved by only by making compromises across each of the negotiating areas simultaneously.
Compromise is inevitable – that's nothing new in a trade negotiations.
But it is still proving extremely difficult to break the log-jam.
The time is limited. We cannot afford to miss this opportunity.
As Chair of the Cairns Group, I have been on the telephone almost daily to colleagues from the Group, and other key WTO members and groupings to encourage all to muster the necessary political will for a final push.
What we need to do now is move quickly in the next few weeks into a so-called ‘horizontal 's discussion across each of these areas at Ministerial level.
We need to translate the political will we saw coming out of the Davos meeting in January into concrete political decisions that can help move the Doha negotiations to their final phase.
We know that the path ahead will not be easy. But we know that reform is necessary to build on the gains we 'sve all enjoyed over the past 60 years.
Ladies and gentlemen,
The Government's determination to re-energise our effort on the Doha Round reflects our wider commitment to ensure Australia plays a more active multilateral role, including through the United Nations.
Many of the biggest challenges we face today - countering proliferation of weapons of mass destruction; mitigating climate change; maintaining free and open markets and preventing pandemics - require genuinely global cooperation. Working with our Latin American partners at the UN will be particularly important in making progress on these crucial challenges.
We particularly look forward to working together on tackling climate change.
You will be well aware of the importance our Government attaches to climate change issues. My first visit abroad as Minister in the Rudd Government was to Bali for the Trade Ministers 's dialogue.
The discussions I had there – with counterparts such as Foreign Minister Amorim of Brazil - confirmed that we share complementary views on these crucial global environmental challenges.
Regional cooperation
Australia also appreciates our regional engagement with Latin America – particularly through APEC.
APEC is the pre-eminent regional forum for prosperity and stability in the Asia-Pacific. It comprises 41 per cent of the world's population and 56 per cent of world GDP and it has a strong track record in practical measures to cut red tape in trade and investment. At crucial periods it has helped give momentum to the WTO Round.
The participation of Chile, Mexico and Peru in APEC builds an important bridge across the Pacific that promotes integration, highlights the importance of domestic economic reform and makes it easier to do business.
Our Government will seek to complement trade liberalisation gains derived from the multilateral process at the regional level through APEC to deliver ‘WTO-plus 's outcomes.
We will also take forward a new agenda in APEC aimed at encouraging economic reform and the so-called “behind the border” agenda. This is of direct benefit to business communities in Australia and Latin America.
Those of you who do business in the APEC region know that inadequate regulatory systems, lack of transparency, and the inhibition of domestic and foreign competition impede our trade and investment just as much as tariffs and other trade barriers.
I have already had detailed discussion on these issues with Peru, Singapore, Japan and the US – as upcoming APEC hosts.
I would like to acknowledge the effort and planning that Peru is undertaking as host of APEC this year. I look forward to travelling to Peru in May for the APEC Trade Ministers 's meeting and I hope also to visit one or two neighbouring countries.
Bilateral Links
Of course, Australia's bilateral links with the countries of Latin America remain vital.
Assisted by the work of the Council and others, our economic, trade and investment relationship with our Latin American partners has grown over recent years.
In 2007, Australia's two-way merchandise trade with Latin America exceeded A$5 billion – an increase of 15 per cent over 2005.
Our top three trading partners were: Mexico (total trade of $1.8 billion); Brazil ($1.77 billion); and Chile ($541 million). Coal was Australia's stand-out export to each of these countries. We imported mostly end-products from Mexico such as vehicles, computers and engines and telecommunications equipment. And mostly inputs such as animal feed, pulp and metal from Brazil and Chile.
More than $5 billion of two-way trade is a good result and represents steady growth. However, it represents less than 2 per cent of Australia's total world trade. The challenge is to continue to realise opportunities and to further increase trade and investment. I am determined, as Minister, to ensure that the Government works in support of companies to achieve this goal.
You are all familiar with the foundation role the mining industry plays in many of our bilateral relationships in Latin America. Many of Australia's major mining companies are now active investors in Latin America.
Yet in the past decade we have diversified – not only into the export of related mining services but also into agribusiness, wine-related technologies and food and beverage exports. Our dairy brands, for example, are appearing on Latin American shelves, competing against brands from North America, New Zealand and Europe.
There are many opportunities that remain to be explored, such as the continuing deregulation of the telecommunications sector.
I welcome the fact that Australian companies are also forming successful joint ventures with Latin partners, primarily to explore business opportunities in Latin America, but also to look at supplying Asian markets.
Of course, it's not just trade and investment links that have been growing.
The past decade has seen a dramatic increase in people-to-people links - underpinned by Latin American students choosing to study in Australia.
Last year, more than 13,000 Latin American students began studies in Australia, with Brazil representing one of our fastest growing markets. Colombia is our second most important source of students from Latin America.
We appreciate that the students who come here will take their knowledge and awareness of Australia back home. This further fosters our bilateral links.
I also applaud the fact that in April more than 60 Australian companies will be represented at Expomin in Chile – one of the world's biggest mining expos – where we will showcase world class Australian mining services and technologies.
All of these developments speak to the successes both of the Latin American Business Council and the Council on Australia Latin America Relations (COALAR) in enhancing Australia's economic, political and social relations with Latin America.
Under the leadership of Bernard Wheelahan - and with the strong support of our ALABC chairman tonight and COALAR deputy chairman Jose Blanco - COALAR has much to be proud of in terms of lifting the profile of Australia in Latin America.
In the past year, for example, COALAR provided significant financial support to major business expos run by Austrade with Australia Education International in Buenos Aires, Lima and Mexico City.
COALAR was also a major sponsor of a successful visit by young Australian farmers to Argentina and Brazil for the 2nd World Conference of Young Farmers. Projects such as these complement COALAR's important work in promoting educational, tourism and cultural links between Australia and Latin America.
Further, three Council members undertook business missions to the region.
Finally, let me just briefly mention some important bilateral linkages:
The Free Trade Agreement we are negotiating with Chile will provide for greater commercial and investment opportunities. I understand that good progress has been made on the negotiations and I look forward to conclusion of the FTA soon.
The Australia-Mexico Joint Experts Group is drafting a final report on recommendations to strengthen our bilateral economic relationship. I welcome the prospect of building our links with Mexico – particularly in areas such as minerals and energy.
Brazil is keen to expand its links and connections with Australia and with Asia. We have just had, for example, a very successful Trade Mission from the Brazilian state of Minas Gerais visit Australia.
It is good to see Brazilian states taking the initiative to travel and talk to our government, business and universities. I am sure many of you too will enjoy travel, particularly to Canberra, on Virgin's new Embraer aircraft.
I look forward to exploring further opportunities with Argentina – we are such resource rich countries – the challenge is there to strengthen those connections.
We also have the opportunity this year to broaden our trading and investment relationship with Peru as it hosts APEC.
Colombia is now in the process of re-opening a mission in Canberra. I look forward to expanding our dialogue and trade.
And we have work to do with other countries in Latin America – with Uruguay, Ecuador, Cuba and Venezuela – where there is real scope to build our trade and political links .
Conclusion
From where I stand Australia and the countries of Latin America have many shared interests.
Our interest in global and Asia-Pacific openness and prosperity is the keystone of our relationship. As we work together in multilateral and regional fora to advance our interests we will also build stronger bilateral bridges across the Pacific.
I am keen to hear your ideas about how we can further strengthen links between us. From business, I am particularly keen to hear how the Government can support your endeavours to grow the trade and investment relationships.
Our Government is committed to forging even closer links with the countries of Latin America. I look forward to working with you as we tackle the challenges ahead
Thank you.