Rural Press Club of Queensland
Thanks so much Stacy for that kind introduction and good afternoon to everybody. Thank you for taking the time out to join us here. I'm thrilled to have the chance to speak to the Queensland Rural Press Club. I have visions in my mind that when Press Club usually gathers, I trust that there is an amazing choice between magnificent Queensland cattle beef or fresh Queensland seafood on the table and that of course there'd be an abundance of XXXX, maybe even Bundy or perhaps even some wines from the Granite Belt region to celebrate. But unfortunately, COVID means we're meeting by these platforms instead. But I'm really pleased to have the chance to speak with you in what turns out to be quite a timely opportunity today to speak as well, given some of the commentary over the last couple of weeks.
You know, COVID-19 has tested all of us in so many ways, whether it's the way in which we need to engage, whether it's the health challenges in which Australia stands out amongst the world as a country who has demonstrated how best to tackle those issues, how to ensure the safety and well-being of our population. And even on the economic side, how to ensure the maximum degree of support and resilience that we need and that support and resilience has been possible because our Government entered the COVID-19 crisis with a much stronger balance sheet and budget position and stronger economy than many others around the world, which has allowed us to stand up critical programs like the JobKeeper Program initiative, to be able to give support to Australians who need it and to see them through the tough economic times that have been caused by, of course, the restrictions put in place on COVID here in Australia and of course, restrictions elsewhere around the world.
Despite COVID-19, though, we can see very strong resilience in parts of especially our export economy through the early stages of this year and that's so incredibly? and encouraging that it's the case. I know it was a mixed story for different sectors as some saw heavy disruption due to the closing down of markets in China or elsewhere, and disruption, for example, to Lunar New Year celebrations. But despite COVID-19, the latest ABS trade data shows that Australia recorded our 27th consecutive monthly trade surplus in March. It was a record $10.6 billion. That's pretty incredible to think about the fact that Australia has now stretched out that run over several years of consecutive monthly trade surpluses, reversing a long history of Australia being a country that imported more than we exported and so many of those from different producer organisations and indeed, producers themselves have been on the line today, have played a huge role in that. And I want to give a big shout out to my senate colleague, Susan McDonald, who I understand's with us today and I know Susan as a voice for Queensland agriculture, but also somebody so deeply connected there. You've helped so many in playing a role in driving some of that export growth forward.
If we look at indeed what the first few months of this year were like, we see that that our beef exports frozen, chilled and fresh were up some $455 million or more than 21 per cent compared with the first three months of 2019. That's pretty phenomenal when we think about the disruption that was occurring in the world at the start of this year and the fact that we were still seeing such phenomenal growth in our exports, coming off what was already a record year last year. And that growth was diverse and in fact was largely driven by some very strong growth pleasingly in the Japanese market, where we saw a $313 million lift or 65 per cent growth compared to the same period 12 months ago. So that's demonstration that we are actually seeing growth recorded in a range of different markets where we have successfully negotiated trade agreements in recent years. And part of the determination to keep that going.
But the disruption to logistics has been real, particularly for fresh premium produce that traditionally leaves the country in the belly of passenger aircraft. That's why we've had to stand up specialised support to be able to keep those goods flowing out of the country. Our Government responded by putting $110 million towards the International Freight Assistance Mechanism. So just as we've put in place programs like JobKeeper to ensure Australians kept their jobs at this time, we put in place this Freight Assistance Mechanism to make sure that those who'd worked so damn hard to secure export markets in recent years, didn't lose them just because there was an absence of planes flying to get their goods there. I [indistinct] helping keep supply lines open and so our farmers can get their premium produce to market and on the latest check, we've committed support to now more than 733 flights leaving Australia from seven different departure points, heading into some 28 different international destinations; hundreds and hundreds of millions of dollars in goods exports have been supported in their transit on those flights, equating to over 17,000 tonnes of premium quality pork, beef, lamb, seafood, horticulture and dairy and worth over $700 million on current tallies.
And we know that so long as we have these disruptions to global aviation, we're going to have to continue to work hard as to how do we maintain those export routes for our producers and, of course, how we work with the aviation sector to stand back up normal capacity as quickly as possible. Equally, it's been important to keep supply routes and lines open around the world and we've worked with a number of like-minded countries in terms of making mutual commitments to one another and encouraging others around the world to do so, to keep those supply lines open, whether it's South Korea or Singapore, Canada or New Zealand, we'll continue to keep working with our like-minded nations to keep trade routes open and to emphasise crucially, as we have with many others, the importance of, as we exit COVID-19, ensuring the openness of markets around the world and an ongoing commitment to trade liberalisation and market access right across the globe as a crucial part of harnessing effective economic recovery.
Obviously much of the commentary in the last couple of weeks is focused on some of the issues that relate to China. Some people want to say that we are in a trade war, some even tried to use Cold War rhetoric. We need to keep a perspective around measures that come up at this time. Trade disputes are as old as civilisation itself. And although we talk a lot about free trade, in reality we live in a world of rules-based trade and we want those rules as an exporting nation like Australia to work as effectively as they possibly can, to be as consistent as they can, and to be as liberal as they can in allowing trade to flow. We want rules that ensure mid-sized countries and small countries can compete fairly alongside large nations. And that's why we are such a staunch defender of the global rules-based trading system and one who seeks to make sure that in all aspects of our activities, we do firmly pursue a global order that supports and facilitates predictable investment and predictable trade flows. We're also one though who is not afraid to use the rules in the system where we think others aren't playing by the rulebook. That's why in terms of World Trade Organization disputes, we've pursued one with our great friends from Canada in relation to the wine industry, with our valued partners from India in relation to the sugar industry. Just as our good friends and near neighbours in Indonesia did the same with us on A4 copy paper. That's using the system as it should be used, where each of us has a disagreement about the policy approach of another and we ought to use effective trade remedies and call in the independent international umpire where necessary. We have other disputes or disagreements that may not be at WTO stage, but continue on in terms of different aspects of trade policy with the US or the EU, or even across the ditch with our friends in New Zealand in relation to Manuka honey.
As our largest trading partner, China has been crucial to Australia's standard of living, to growth of jobs here. But we shouldn't overstate that either, China's been a country with which we've seen strong trade growth, especially in recent years, but so too are we seeing with many others. And we should also be mindful that the trade benefits that flow between Australia and China are mutual benefits. China-Australia Free Trade Agreement has delivered real gains to both of our countries, stimulated economic growth and fueled much of China's industrial capacity in recent years. And in doing so, it has helped to lift hundreds of millions of people out of poverty not only in China but across the broader Southeast Asia region. And as those who've heard me speak before would know, when I speak in defence of having open free markets, I often use that humanitarian aspect of the way in which the economic liberalisation across our region in recent decades has lifted those hundreds of millions out of poverty, created better living standards, longer lives and better health education and other opportunities, and is the real dividends of free trade and economic liberalisation. And that's why we want to make sure we continue that because whilst we've gained, so too have others gained, and we all ought make sure we keep mindful those mutual benefits that can flow from such engagement.
Obviously we were disappointed with China's ruling when it came to their assessment of our barley industry. We don't agree with it. Our barley producers operate free of any type of distorting government subsidies and they certainly don't go around the world dumping product on other nations at below cost value. And they are like all Australian farmers, exceptional in their skill, their innovation and it is that skill and that innovative drive that makes them some of the most productive in the world and able to be able to produce when climate conditions allow large crops, premium grains at high value to the rest of the world. And we'll defend their integrity as strongly as we possibly can. That's why we're considering carefully the next steps that we will take in relation to our barley industry. Again, we ought to be mindful that there are mutual interests at play here. China's brewing industry has valued our malting barley for years. They recognise the quality of the Australian product and it will be those Chinese businesses and consumers who will pay a price of having to pay more for barley or get substandard product from other countries as a result of this determination.
So, we hope that there will be reconsideration of it in time. We'll continue to mount strong arguments in defence of the Australian industry and we'll maintain our right to apply all possible sanctions or opportunities that we can in terms of seeking to resolve it, using the normal pathways through China's domestic systems or the WTO if we need to.
I know in Queensland in particular- there would have been much concern in talking with Susan and others in Queensland around the decisions made about meat processing plants and the suspension of those four licences. These, again, were highly technical decisions made as a result, allegedly, of failures in terms of compliance with quarantine or customs requirements around labelling or the like. I said publicly that I think it's extremely disappointing the suspension occurred with no real warning in terms of the notice period, and particularly a notice period that would have allowed for us to demonstrate the type of rectification that had been applied by those processors to be able to continue to supply to China, and for China to have confidence that any issues or problems that had been- had been fixed. However, we have what we have in terms of the determination that was made, and our authorities through the Agriculture Department are working really closely with the companies involved and with Chinese authorities, to try to resolve these issues as quickly as possible. We've been down this path before when we had a cluster of even more processors suspended a few years ago, and so we understand what's necessary to demonstrate that sound rectification plans are in place, that policies and practices as such, that can give everyone confidence that all the rules are being adhered to. And we trust that as that evidence is provided to China and to their authorities, that they will respond swiftly and hopefully reinstate, and the licenses for those processing facilities.
Over the course of this last couple of weeks, I've had numerous hook-ups and engagements across the barley industry, the NFF, growers' groups, with meat processors and others. And we will continue to have that open dialogue knowing that the best way for us to resolve these issues is to work collaboratively, that this has got to be a response across the arms and agencies of government, my department in trade, David Littleproud's department in agriculture, our posts and our embassy is working flat out, but also industry and industry contacts all working together to make sure that we restore this market access where we possibly can.
With trade supporting some one in five Australian jobs, our government remains deeply committed to giving our farmers, our exporters, our businesses the maximum range of choices with whom they do business. And we have many valued partners around the world and we want to continue to work with all of them, while we also try to seize new markets and new opportunities. Trade, covered by agreements largely negotiated by our government, has increased from 26 per cent of Australia's trade in 2013 to around 70 per cent of Australia's trade today. That means that over time we've successfully given more and more exporters preferential rights and access into other markets around the world, giving them a head start on their competitors from other nations. And we're determined to keep doing that wherever we can.
Our agreements with Hong Kong and Peru came into force earlier this year, and we're working towards the signing of the Regional Comprehensive Economic Partnership Agreement later this year, which will be an agreement encompassing at least 15 nations - including all of the ASEAN nations: Japan, Korea, China, New Zealand and ourselves. We're also delighted that come 5 July we'll see the Indonesia-Australia Comprehensive Economic Partnership Agreement come into force, giving real opportunities that I'll touch on shortly. And of course, we continue to work hard to our- to secure our agreements with the UK and the EU. Our agricultural exports in 2019 was some 26 per cent more than they were in 2013, notwithstanding the drought conditions that much of Australia had faced, the floods that parts of Queensland had faced, and many difficulties that were there. Those exports have grown to be more than $52.5 billion, and I'm firmly committed to making sure that I'm not just an advocate for Australian exports internationally, but that I work hard as an advocate for Australian agriculture domestically, trying to make sure the rest of the country understands just how much our rural sectors contribute.
As a government, we facilitate trade for business to undertake. We've facilitated through the types of trade deals that we do. For example, Australian agricultural exporters have benefited from around a one third cut in tariffs under the TPP-11 that occurred earlier this year. And TPP-11 partners benefiting from tariff reductions include our exports to Mexico of beef, which were valued at $13.3 million in 2019. Small relative to the totality of the Australian beef industry, but the benefit of TPP-11 evident because that was an around 250 per cent increase relative to 2018. Our exports of fresh grapes to Japan, for example, were valued at more than $50 million in 2019, which again, was a 32 per cent increase compared to 2018.
So, these changes demonstrate that when you get a new agreement like TPP-11 in place that gives that preferential access and changes the market conditions, just how effective our farmers, our exporters, the rural businesses who support them and agribusinesses who support them are at seizing those opportunities and growing those new markets. When it comes to our negotiations with the EU and those that we hope to launch soon with the UK, we are firm in seeking commercially meaningful, improved market access into those destinations. Our goods exports, including our agricultural products, must benefit through the elimination and significant reduction of non-tariff barriers in a commercially meaningful way. We'll be taking the same approach across both of those negotiations, recognising our desire to make sure that those huge market opportunities present new opportunities for our farmers and exporters, and realising just how constrained we've been because of their policies in recent years, and the limited access that we've had.
I mentioned the Indonesia agreement before, in fact, it will enter into force on 5 July, allowing more than 99 per cent of Australian goods exports to Indonesia by value to enter duty free or under significantly improved preferential arrangements. Some examples of that: 575,000 head of live cattle will be able to enter Indonesia duty free in year one. 500,000 tonnes of feed grains will be duty free in year one. The equivalent of some 455 semi-trailer loads of oranges will enter duty free in year one. 10,000 tonnes of potatoes, 5000 tonnes of carrots will have their tariffs slashed from the current 25 per cent down to 10 per cent. There's also great breakthroughs in terms of market access and in dealing with some of the traditional non-tariff barriers that we face. India- Indonesia is committed to guaranteeing automatic issuance of import permits for live cattle, frozen beef, sheep meat, feed grains, rolled steel coil, citrus products, carrots and potatoes. And this all demonstrates just what a significant breakthrough that agreement is going to be and we hope to be able to see continued gains in the Indonesian market as year on year under that agreement we secure further liberalisation, further access and are committed to realising the same types of benefits in the Australia-Indonesia relationship, there are mutual growth in the development of their economy and their [indistinct] over time as we've seen with other trading partners.
Determined to make sure that COVID doesn't stop us from helping our exporters to get out to the rest of the world, next week we'll have our first online free trade agreement seminar targeted at Australian exporters and those businesses seeking to export. Where they can learn about the current state of play. The importance of operating in a free trade environment and the financial support and initiatives that are available to help make sure that exporters take successful first cautious steps into exporting. This is a very important step as we've run many, many of these FTA seminars across the country in recent years, helping provide the advice and the information to grow by many thousands, the number of exporting businesses in Australia. And our determination is to help businesses continue to do that even in these very challenging times.
I said at the outset though that the importance of a rules based system was very true to Australia and it remains so. We want to make sure that Australia's trading interests are protected by an independent umpire able to decide on disagreements related to trade, according to universally agreed rules. Now that's not always easy and there's no point pretending the WTO is a perfect body with perfect rules or perfect processes, but it's a whole lot better than anarchy or chaos in terms of global trading environments. We're disappointed that the WTO appellate body for example, ceased to function in December of 2019 and due to a blockage on new appointments to that body meaning that no longer has a quorum to hear new appeals. The consequences potentially of that are the trade disputes between nations could land in limbo indefinitely without that final point of resolution because the ultimate appeal body no longer can manage to meet. As a result of the impasse, Australia did what we do in so many global [indistinct] at so many times over so many years, and that's take a leading role in working with other countries to create new interim appeals arrangement. And this will allow appeals to be heard and to have been secured with an enforceability of decisions while this appellate body is not operational. We hope to be able to secure reforms through the WTO that bring the appellate body back to life and back to an operational level. But we weren't going to sit back in the interim and allow that appellate body mechanism to sit void and with no replacement, nor were we going to entertain the idea that there should be a thousand flowers bloom of different mechanisms to resolve appeals. That's why we're so pleased that 19 WTO members have now taken the initiative that Australia led in terms of establishing this interim arrangement. Joining this arrangement which became active on the 30 April. And we have significant commercial stakes- commercial interests at stake in terms of current WTO disputes. As I mentioned before, our Canada dispute, our India dispute and that reserving of our rights in relation to China. And I'm very pleased that countries like Canada and China have joined as parties to this interim appeal arrangement demonstrating our shared commitment to having those common rules in place and common effective independent umpires settling our disputes.
It's not just in that area that we lead the way in terms of global negotiations in the trade policy front. We take a lead role as a nation in developing new trading rules to support economic growth, ever more import ant as the recovery of COVID-19 looms large, especially for example in areas of digital communications, business and trade. E-commerce negotiations which are crucial and which Australia has been pleased to chair WTO negotiations which I was pleased to initiate in January of last year. And this development of the first set of global digital trade rules will hopefully provide businesses again with a more open and reliable trading environment. A majority of WTO members now, some 84 countries, representing well over 90 per cent of world trade are now participating in those talks that were initiated by Australia. But just as we look to the future of e-commerce and we certainly have not forgotten the importance of our historical leadership roles in WTO settings, those historic leadership roles, especially in terms of agricultural trade reform. Australia is the leader of the Cairns Group in the WTO, a coalition of 19 agricultural exporting nations who have been committed to achieving free and fair trade in agriculture since it came together in 1986. It includes both developed and developing countries accounted for more than 25 per cent of the world's agricultural exports. Australia and the Cairns Group have long pursued meaningful global reforms to unfair agricultural subsidies that distort trade and have historically unfairly locked Australian farmers out of international markets. We're committed to help create a more level playing field for our farmers and exporters. As an example of this, I was pleased that we were able to launch a framework for negotiations on domestic support in agriculture in January of this year to tackle the growing global issue of agricultural subsidy entitlements. Estimates are that these entitlements could globally reach more than US $2 trillion by 2030 if they remain unchecked. And they particularly hurt Australian farmers who are efficient despite the sensitivity we have to the effects of climate and drought. Our farmers don't rely on government subsidies to remain competitive nor to turn a profit. Our proposal that we launched for these discussions seeks to cap and to reduce by at least one half the current sum of global trade distorting entitlements by 2030.
It's disappointing that ministerial council of the WTO which was scheduled to meet next month in Kazakhstan has had to be deferred by a year, but that won't deter Australia's resolve to push on with this concept and to try to build greater global support as we've successfully done in the past, to create a more open and fair trading environment for our agricultural sectors. Our farmers are amongst the lowest in the world when it comes to any subsidies that are receive. It compares and contrasts with those elsewhere. The OECD reported that Australia's support to agricultural producers continues to be amongst the lowest in the OECD. We see if we look at the contrast that countries such as Norway, Iceland or Switzerland in Europe, Japan or Korea in Asia, have some of the highest overall subsidies to the agricultural sector. Whilst ours such as they existed have been reformed in line with national competition policy and other pro-competitive reforms, others still have a way to go, that Australian subsidy rates are estimated to be around just 2.2 per cent of farm revenues compared to an OECD average of 18.5 per cent with rates at 10 per cent and 9.3 per cent respectively in the United States and Canada. An EU subsidy rate of some 19.7 per cent. This is a demonstration of why it's so important that we continue to drive an agenda of lowering those subsidies, capping, cutting, so that we can create a fairer environment for our exporters into the future. Australia remains determined to do that. We in no way resolve from fighting for reduction in agricultural subsidies and we stand up firmly for all of our farmers who operate free of such trade distorted subsidies and back all of you to be able to continue to access the rest of the world in a free and fair way, and to sell in a commercial sense your high quality, highly valued product to the world.
Thank you very much I know this has been a long address to sit through on a visual presence like this as I appreciate the patience of those who've been there. I look forward to engaging in the Q and A now to come. I look forward also to getting back out and seeing you all again as hopefully travel restrictions are lifted and we can resume some business as normal. One of the things I hope to be able to do next year is get along to Beef Australia in Rocky. I know it showcases the beef industry to the world and what better way to boost our nation's recovery and national spirit and then to look forward to being there in May next year. But hope to see many of you well before then as well. Thanks very much Stacey and thank you everyone.
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