Keep reaching out to the world with trade
Today will be my last as Australia's Minister for Trade, Tourism and Investment. It comes at a time of great global disruption for many of the businesses I have had the honour and pleasure of working with.
COVID-19 has seen global trade plummet. The World Trade Organisation (WTO) predicts that volumes of merchandise trade will be down more than nine per cent this year. Services trade is impacted even more, with sectors like international tourism ground to a near halt and many others like international education dramatically impeded by widespread travel restrictions.
Exporters who still have willing buyers face enormous logistical challenges. Our government has implemented the International Freight Assistance Mechanism to help ensure that sufficient planes are flying out of Australia to get our premium goods to market. It has helped more than $3.5 billion worth of Australian produce reach customers overseas, which may otherwise have gone to waste in Australia.
Some businesses are also now feeling or bracing for the impact of China's punitive trade actions. Having acted with nothing but honour in supplying high quality, safe and reliable goods and services at competitive market terms to Chinese customers, the targeting of these Australian businesses is unfair, unjust and unwarranted.
In the face of these difficulties it would be easy to be pessimistic or even resigned to defeat. But we should bring the opposite disposition. If there was to be just one piece of advice I would offer it would be to keep on reaching out to the world because, over the long term, opportunities are still abound.
Despite the economic shocks of this year, the value of Australia's exports has, even in our worst month of 2020, remained above the value being routinely recorded just two years ago. The success of our exporters has driven 34 consecutive monthly trade surpluses for Australia, with us routinely exporting more as a nation than we import. This, in turn, contributed in the June quarter last year to the first quarterly current account surpluses for Australia since 1975.
With farmers who produce 70 per cent more food than our population needs, world leading resources companies fuelling the needs of other economies and services sectors offering quality second to none, Australia is good at trading. It's why one in five Australian jobs are trade related.
To sceptics who say ‘isn't it all just China' or ‘isn't it all just iron ore', I urge them to talk to the many Australian businesses growing trade in other goods or services with other markets. The number of Australian business exporting has grown by at least 27 per cent since our election in 2013, with a further 12,000 plus businesses tapping into increasing opportunities in many other countries. For those businesses who had become too reliant on one market there are some who will see the necessity of diversification as a good thing.
My immediate predecessors as trade minister secured and implemented important agreements with South Korea and Japan, as well as China. I have had the honour of overseeing implementation of the Trans Pacific Partnership, providing our first ever trade pact with Canada and Mexico, as well as improved access into markets like Vietnam and Japan. In recent years we have also implemented a bilateral agreement with Peru, while also concluding and implementing agreements with Hong Kong and, crucially, the 270 million people of our near neighbour Indonesia.
Most recently we signed the 15 nation Regional Comprehensive Economic Partnership Agreement, which cements Australia's place as an integrated regional partner of the 10 member states of the Association of South East Asian Nations. Just one week ago we also achieved entry into force of the Pacific Agreement on Closer Economic Relations, which provides new opportunities for economic collaboration with our Pacific Island family.
These agreements have pushed the share of Australian trade enjoying preferential access into major markets up from around 27 per cent when we won government to around 70 per cent now. Like the World Trade Organisation, these agreements aren't all perfect and can't always guarantee the behaviour of other nations, but they do provide worthwhile competitive advantages and have delivered ongoing liberalisation that enhances economic and, ultimately, human outcomes.
Trade is dynamic and the competition is always growing, which is why we can't rest on our laurels. The first round of negotiations for an agreement with the European Union was held in 2018, while negotiations with the United Kingdom were launched last year. Each of these agreements should be concluded within the next year, along with the Pacific Alliance agreement with Latin American nations.
We have seen strong recent growth in trade with India, who last week launched their own companion to our India Economic Strategy, while hopefully the Middle Eastern nations of the Gulf Cooperation Council can find a pathway to restart negotiations. However, deals must be commercially meaningful and all of our partners should know that in negotiating agreements we will never sacrifice the prime ambitions of substantially eliminating trade distorting tariffs, quotas and other non-tariff barriers.
Looking even further ahead, in this year's budget we committed funding to scope out the potential for other, new agreements with Israel and the four non-EU countries of the European Free Trade Association, or EFTA (Iceland, Liechtenstein, Norway and Switzerland). These would be logical extensions of our network, with total merchandise trade with Israel standing at $1.1 billion in 2019 whilst total trade with EFTA countries reached $9.4 billion in 2019.
As COVID-19 has demonstrated and accelerated, the nature of trade is changing too. Australia is leading the charge to modernise trading rules, having last year launched WTO negotiations on e-commerce and this year sealed a Digital Economy Agreement with Singapore that sets a standard for much of the rest of the world. The WTO itself needs modernising too, which Australia has actively pushed for, because as a mid-sized trading nation it is demonstrably in our interests to have good rules transparently applied.
We must embrace change, not turn our backs on it. Our government has given major project status to ambitious proposals to use masses of solar and wind energy to export green hydrogen from Australia, cementing our reputation as a reliable resources powerhouse for the region.
Australia's comparative advantages are strong, including in services. Safe, high quality, English education experiences will remain in demand. Our offering of nature based or adventure tourism remains world leading, with investment we are making into support growth of indigenous tourism experiences adding a further valuable cultural appeal. In new fields like Fintech our reputation for world class standards and skills provide a crucial base for growth.
Australia should continue to back our exporters, opening doors for them into foreign markets because this drives their innovation and competitiveness, delivering improved incomes and living standards across our nation. We owe them, as we do our trade officials and advocates, a great deal.
Ministers may change portfolios but they accumulate interests and knowledge. Australia's exporters and tourism businesses will be in good hands with my successor Dan Tehan. He will have my full support to see these dynamic businesses through current challenges and to ensure their continued success long into the future.
Simon Birmingham has been Minister for Trade, Tourism and Investment since August 2018. He is now Minister for Finance.
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