Remarks to the Bruegel Institute, Brussels
The 18th century was a turning point for Australia. European exploration across the South Pacific, in particular of the east coast of our great Southern land, ultimately led to European settlement. Subsequent, successive waves of migrants from across Europe and around the world have joined with the first, indigenous Australians to build our modern nation.
Our journey has not been without some mistakes but the story of modern Australia is on the whole one of amazing success. Without civil war or major conflict, Australia today stands tall as an independent and principled nation; the 13th largest global economy despite having only the 53rd largest populace. Australians enjoy a way of life the envy of many and our global influence reaches beyond the economic, as a leader in diplomatic, defence, cultural and other spheres.
The 18th century was also critical for Australia as, back here in Europe, the Age of Enlightenment evolved. Principles born in Europe, of the Enlightenment, espousing the ideals of liberty, tolerance, constitutional government and the separation of church and state have been central to our growth and success as a nation.
Economic liberty, forged through effective trade relations with the world, has been a central feature of our success. It is with this in mind that today I will specifically touch on two related issues:
- the need for the EU and Australia to work hand-in-hand to strengthen the international rules-based trading system, that has enabled economic liberty to advance human prosperity; and
- the importance of Australia - EU Free Trade Agreement negotiations to further advance both liberty and prosperity, including as a mechanism to help protect and international rules.
Trade – and trade agreements – are increasingly being negatively and unfairly portrayed in many countries as a convenient excuse for many economic and social problems. Defying evidence to the contrary, some wish to retreat inwards, yearning for a mythical, non-existent era when prosperity was, apparently, greater.
Many governments face populist forces, or even reflect populist forces, that are questioning the benefits of trade and globalisation and are pressing for a retreat to protectionism. In doing so, they over-simplify an international economy that is anything but simple. And they jeopardise the integrity of the rules-based multilateral trading system which Australia and Europe have worked hard to develop over the past 70 years.
It is a system built from our shared commitment to the rule of law, to global norms, and free and open markets. It is a system that has helped economies all over the world flourish – key amongst them being Australia.
Australia unequivocally sees open trade and investment policies as essential for growth rather than as a threat.
Of course parts of Australia have faced challenges from economic reform, including from trade liberalisation.
But on the whole these tough decisions have paid off, as most recently demonstrated by the fact that Australia has recorded 27 years of uninterrupted economic growth. There is no accident or coincidence in this – our commitment to free trade has driven economic growth.
Australia's geographic isolation and the relatively small domestic market means that trade and investment have always loomed large in our economy, especially as an exporter of natural resources.
From what was a protected economy in the 1970s, we have internationalised our economy to the point where today it is among the most open in the world. The positive consequences for our people are meaningful, with Australian household incomes estimated to be $8,500 higher as a result of trade liberalisation. We have more than doubled the number of Australians employed, with jobs growth comfortably outstripping population growth, kept unemployment low and come close to doubling our real GDP per capita.
This private sector economic success generates the tax revenue and income to support investment in our education and health services and to maintain a strong social safety net. Markets themselves are a theoretical construct, what matters are the benefits this economic success yields for the quality of life created for people across our nations.
The fact that our thriving trade performance has contributed to our economic growth is no accident or coincidence – it is a determined strategy. This is why we as a government we will continue to pursue a trade agenda that opens new markets for Australian businesses, farmers and exporters to sell their Australian grown or made products and contributes to a strong economy that generates new Australian jobs and opportunities for all Australians. Despite the objections and opposition of others, our government will continue to press for progress in international trade.
Over the past five years, we have concluded ambitious Free Trade Agreements with China, Japan and the Republic of Korea, as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – otherwise known as the "TPP-11". We have updated existing agreements, are at various stages of signing or implementing several new agreements and have a full program of live negotiations. Australia now has FTAs with seven of our top eight export markets for goods and services.
Five years ago, Australia had duty-free or preferential access to markets representing around a quarter (26 per cent) of our goods and services trade. Today, Australia has signed agreements with countries that account for nearly 70 per cent of our trade. And once we conclude our negotiations currently underway, 88 per cent of our trade will be covered by free trade agreements.
Our strategy is to deliberately and purposefully use FTAs and WTO negotiations to continue to open markets and provide our consumers, exporters and farmers with new opportunities and choices.
And the Australia-EU FTA will be a big part of our goal to expand our network of agreements to ensure that we have FTAs with countries that account for over 80 per cent of our trade.
The TPP-11 ranks as one of the most important trade agreements concluded since the end of the Uruguay Round. When it entered into force on 30 December last year, the TPP-11 offered our exporters two tariff cuts in short order. And while some would have walked away when the US decided to withdraw from negotiations, I'm proud that – despite the objections and opposition of some abroad and at home – Australia, Japan and others buckled down to get this agreement across the line. This is a reflection of the support of the 11 members for an international trading system that is rules-based and market-oriented, and characterised by high standards and high ambition.
Which brings me to the World Trade Organization which is – and remains – fundamental to our trade interests.
We see the WTO as essential to effective global trade governance and in promoting growth and development.
The WTO is not perfect. There are some very substantial weaknesses in the WTO system. However, an alternative of no rules, no transparency and no dispute resolution processes is no alternative at all.
Instead, we are committed to dialogue to achieve consensus on change, to address the shortcomings of the WTO by enhancing and improving the institution rather than abandoning or destroying it. There is simply no other viable alternative.
Australia and the EU have been on a unity ticket on this issue, and I have been pleased to work closely with Commissioner MalmstrÃ¶m.
Australia joined with the EU and others in signing a joint communique from the Ottawa ministerial on WTO reform held in October. This made clear our mutual support for the international rules based order, as well as our agreed ambitions to improve and strengthen it.
We have co-sponsored an EU proposal – as well as initiating our own – on reform of the WTO's dispute settlement system and we have also supported the proposal from the US, Japan and the EU to enhance transparency.
On the negotiating side of the WTO, Australia has been at the forefront of efforts in the WTO to launch negotiations to establish new, modern WTO rules on e-commerce.
We have appreciated the EU's support and close engagement on this initiative.
These represent important steps in the right direction, but we don't underestimate the scale of the challenge in finding common ground across the diversity of the WTO membership.
The conclusion of the CPTPP and the Japan-EU FTA represents a welcome reinforcement of support for trade liberalisation and reform.
Domestically, each successful agreement is a way to demonstrate the benefits of trade and investment, and to counter the narrative of protectionism.
But to quote Europe's Trade Commissioner MalmstrÃ¶m during her visit to Australia for the launch of the FTA in June last year:
"Economic interests aside, this is also important because trade agreements are also linking people together. It's sending a strong signal today that we are like-minded partners. We are coming together."
I will be meeting Commissioner MalmstrÃ¶m later this morning to find a path forward for our Australia - EU deal, which can gain send such a strong signal of our like-minded partnership.
An ambitious and comprehensive Australia-EU FTA will also provide a major demonstration of our mutual confidence in rules-based trade.
More than that, in fact – I hope it will be an opportunity to craft new rules, perhaps with the potential for multilateral application.
Good progress is being made in the negotiations since they were launched last June [when Commissioner MalmstrÃ¶m visited Australia].
Our respective leaders agreed at last November's G20 Summit to seek to accelerate progress on the FTA. We will working hard to seek to realise the objective of a comprehensive and ambitious FTA as quickly as possible.
As it stands today, two-way trade and investment between Australia and the EU is a relationship marked by strength – it delivers tangible outcomes to both sides by way of jobs and of economic growth.
This FTA is an opportunity to enhance that relationship.
For example, we want to create certainty and opportunity in key services sectors – education, finance – as well as promoting growth in new areas to support the digital economy.
As a bloc, the EU28 is Australia's second largest trading partner and biggest two-way investment partner. Brexit, should it occur, will not alter the importance of the relationship. The EU27 would still be Australia's second largest trading partner
While Europe enjoys our gold, oil seeds and wines, Australia is the seventh largest market for European motor vehicle exports and is also a steadily growing market for EU wine. We are the fourth largest destination for EU cheese and curd exports.
Without doubt, I expect agriculture to be a prominent and complex issue in negotiations.
Our existing access is actually very limited – and is far below that of New Zealand, which is currently undertaking a separate FTA negotiation. Our access is expected to be shrunk even further post-Brexit.
Separate to the FTA negotiations, an important focus for this visit will be to defend our existing access to the EU market.
Australian farmers are understandably concerned at the prospect of any actions that will have a negative impact on their export interests in the EU.
Australia's views are well-known on the importance we attach to the existing high-quality, hormone free beef quota and I intend to reinforce that in my meetings today.
Substantial dilution of this access would run counter to the ambitions we claim to share for our FTA negotiations. Put simply, reducing access in a key, existing market is no place to start negotiations of an FTA.
Nonetheless, these issues are far from insurmountable and I believe we stand on the cusp of a new era in Australia-EU trade relations.
I do not underestimate the challenges but am ever mindful of the benefits the Australian economy has enjoyed as a result of international trade. There are clearly tangible potential benefits for both sides in the Australia-EU FTA negotiations and that augurs well for successful outcomes.
Through our continued work on WTO reform and progress on the Australia-EU FTA, I am confident we can continue to protect, and strengthen the case for liberal markets, underpinned by the international rules based trading system. We are exemplars for the rest of the world and we must live up to those responsibilities.