Australia’s trade agenda: Opportunities for the grains sector

  • Speech, check against delivery

I am delighted to be here this morning because the Australian grains industry is one of Australia's great exporting sectors.

More than 70 per cent of the sector's output is destined for export markets.

That translated into export earnings of $14.6 billion last year.

It explains why the sector is so outward-looking.

It is why the sector understands the importance of open markets undistorted by tariffs, quotas, subsidies or non-tariff measures.

It is also a sector that doesn't always enjoy a level playing field in global markets.

For that reason alone, I am very proud of the fact that the Coalition has embarked on the most ambitious trade agenda in Australia's history.

We want to create the framework where export-oriented, competitive sectors like the Australian grains sector can succeed and prosper in global markets.

In my remarks this morning I want to focus on three broad themes.

First, I want to outline the broad trade strategy that we are prosecuting to create more opportunities for Australian exporters and to create new jobs, especially in regional Australia.

Second, I will talk about how that agenda is delivering for the grains sector and highlight areas where we have more work to do.

Third, I want to touch on our strategy to work with others to rejuvenate the global trading system based around the World Trade Organisation.

Without a well-functioning rules-based trading system, key exporting sectors like the grains sector will be disadvantaged.

Ladies and Gentlemen, over the last year or so, global trade policy developments have made more headlines than is probably desirable.

Some commentators – and even some of my counterparts from other nations – seem paralysed by the spectacle.

Our response has been very different.

Our focus has been to intensify our work on securing rules-based market opening deals with a wide range of our most important trading partners.

The last few weeks provides a good example of the scale and breadth of our trade agenda.

Last week I was in Mexico meeting with my ministerial counterparts from Pacific Alliance countries, which include Chile, Peru, Colombia and Mexico.

A few days earlier I met my British colleague, Liam Fox, in London to talk about the prospect of a free trade deal with the United Kingdom after it concludes its exit from the European Union.

A fortnight ago Australian negotiators met with counterparts from Hong Kong to work through the last phase of talks on a bilateral free trade agreement.

At the same time officials from the 11 members of the Trans-Pacific Partnership discussed progress to ratification by the end of the year.

Just a few weeks ago, our officials had the first round of talks with the EU.

In early July I had very productive discussions with Indonesia's Trade Minister Lukita Enggartiasto on finalising a bilateral Comprehensive Economic Agreement.

And last week Australian negotiators met their counterparts from 15 other regional economies to make a push toward the conclusion of the Regional Comprehensive Economic Partnership.

While most of the global headlines on trade focus on the tit-for-tat escalation of tensions between some of the world's largest economies, Australia is working quietly but deliberately to implement an ambitious and comprehensive strategy to secure the interests of Australian households and exporters.

As the rules-based trading system comes under pressure from above, we are carefully crafting together a network of binding trade relationships from the ground up. The scale of this effort is quite remarkable.

The Coalition has concluded or is undertaking free trade talks with countries accounting for nearly $AUD55 trillion in combined GDP.

Our agenda will give our goods and services exporters tariff-free or preferential access to 3.65 billion consumers.

Most of those market opening deals have been done with the fastest growing economies in the world.

This has arguably been the most productive period in trade policy in Australia's economic history.

Since the Coalition was elected, the coverage of our free trade agreements has increased from 26.4 per cent to nearly 70 per cent of our two way trade.

By the time current negotiations are concluded, we will have locked in binding rules-based commitments with countries accounting for more than 88 per cent of our two-way trade.

This is the most effective hedge an open trading economy like Australia can have against protectionism.

I am pleased to note that this agenda has made good progress in opening markets for agricultural exporters including Australian grains exporters.

We made some good progress on tariff and access issues with our three North Asian FTAs.

The TPP-11 built on these gains by securing the elimination of Canada's wheat tariffs on entry into force and the phasing of Mexico's tariffs on wheat from 67 per cent to zero over the next decade. I know that we didn't secure everything that we wanted in those agreements.

Our current FTAs under negotiation and reviews of existing deals will provide further chances to expand the sector's market access in growing markets.

I am pleased with the progress we are making with Indonesia on a high-quality Comprehensive Economic Partnership Agreement (IA-CEPA).

Greater certainty in access for Australian feed grains is one of my central ambitions for the IA-CEPA market access package.

We have also been discussing the idea of a partnership on grains with Indonesia as part of the IA-CEPA economic cooperation package.

This offers the potential for deeper industry partnership, helping to cement Australia as Indonesia's preferred grains supplier.

We will also do what we can to make some gains in the RCEP agreement, the Pacific Alliance and the scheduled reviews of our existing deals.

We will be looking for significant gains on agriculture in the EU FTA.

I continue to find it hard to believe that Australia - with a population of 25 million - imports more agricultural goods from the EU than the EU – with 510 million consumers - imports from us.

We are also looking beyond our FTAs to make it easier for the sector to secure more opportunities.

This is because market access gains are necessary but not always sufficient ensure fair access to a market.

That's because while Australian exporters continue to confront non-tariff measures in key markets.

The grains sector knows this better than anyone else.

I commend the sector for its recent study which found that non-tariff measures affect all categories of grains exports and are particularly prevalent in the wheat, barley and canola sectors.

The report found that these NTMs can take the form of technical and biosecurity issues (including maximum residue limits), distribution restrictions, licensing or quota controls, price control measures and technical standards issues.

None of these issues are easy to resolve, but they can effectively block our trade ambitions.

That is why the Government is stepping up our efforts to tackle these barriers.

This effort will include streamlined reporting of barriers and better and faster co-ordination of government and industry efforts to address these barriers.

We want to ensure our exporters operate under a trading system that is fair and transparent, and will work with the grains sector to achieve this goal.

You won't be surprised to hear that I also want to say a few words about India.

As this audience knows better than anyone, Australian farm exporters to India have been whacked with a range of new trade distortions over the past year.

This has included higher tariffs on chickpeas, wheat and lentils, quantitative restrictions on mung beans and yellow peas and what we consider export subsidies on sugar.

These are profoundly disappointing developments.

They have had, and will continue to have, an adverse impact on Australian producers.

The Turnbull Government has expressed its concerns to the Indian Government at the highest levels in the clearest possible terms.

When I met Indian Commerce Minister Suresh Prabhu in late June, I signalled that the Government is determined to vigorously defend the interests of our producers and is examining the WTO-consistency of a number of recent measures.

While some of these trade actions are within WTO rules, there are real doubts about other measures and we are working closely with industry and other affected trading partners to evaluate the prospects for a successful challenge.

In my meetings with Indian counterparts I have stressed that while Australia is well placed to help meet India's growing food needs. But Australian exporters require certainty to enable further investment to expand and grow exports to the Indian market.

I have also pointed out that the Indian agricultural sector has nothing to fear from Australian exports.

The truth is India's demand for food products, including grains and pulses, will outstrip supply by a wide margin.

It is one of the reasons why we retain the ambition to conclude a bilateral FTA or Comprehensive Economic Cooperation Agreement (CECA) with India.

Unfortunately, those negotiations have been stalled because our positions have been too far apart.

That said, my Indian counterpart Suresh Prabhu and I had a promising discussion in late June and he undertook to bring forward new proposals to rejuvenate the negotiations.

But a CECA with India will only be possible if it delivers commercially meaningful gains.

In the interim, the Government has been looks at ways beyond free trade agreements to expand our bilateral economic relationship.

This is why the Prime Minister and I asked Peter Varghese, former Secretary of the Department of Foreign Affairs and Trade and former High Commissioner to India, to prepare an independent report on ways to build the economic relationship out to 2035.

The report, launched a few weeks ago, presents a clear-eyed assessment of the opportunities and challenges of trading with and investing in India.

The report identifies agri-business as a lead sector, and provides practical recommendations on how and where to advance Australia's commercial interests.

This includes the establishment of an Australia-India Food Partnership with an International Agricultural Services Hub to package Australian policy, implementation and services expertise for the Indian market.

There is much in the report and I commend it to you.

The Australian Government is now developing its response to the Strategy and we especially welcome views from the grains sector.

And will continue to engage with the Indian Government at senior levels.

I also wanted to refer to the US announcement of new package of up to US$12 billion in assistance for US farmers.

The package responds to the impacts of trade retaliation against US tariffs and highlights the fact that escalating tariffs is a vicious cycle.

As I have said many times, a trade war will have no winners.

I note that this view is shared by respected US congressman Senator John Thune when he said that US taxpayers will be asked to write cheques to farmers in lieu of having a trade policy that actually opens and expands more markets.

We are seeking more details from the US about the assistance package in order to assess possible impacts on Australian farmers and commodity exports.

We urge all Members to work within existing WTO frameworks to resolve disagreements.

The grains sector - like all Australian export sectors - has a big stake in a well-functioning rules-based global trading system.

Some critics argue that our FTA strategy means we are forsaking the multilateral system.

Nonsense. The opposite is true.

Our ambition is to take the best elements of our high quality FTAs to the multilateral system. For example, the Trans Pacific Partnership includes state-of-the-art commitments on electronic commerce.

We want even more countries to adopt these disciplines which will keep the veins of global trade open as the world embraces digital trade.

In this way, our FTAs are strengthening not weakening the multilateral system.

We also recognise that there is a strong case for reform of the World Trade Organisation.

All international organisations need to be constantly renewed.

There is always scope for improvement – the WTO is no different – and for that reason we have always been supportive of discussions on improving WTO rules.

For this reason, we are working closely with key trading partners to develop practical initiatives to improve the functioning of the system.

The WTO can move slowly at times.

The former head of the WTO Mike Moore once likened the decision-making progress amongst the WTO membership to a motor vehicle which has 144 handbrakes and one accelerator.

More specifically, we need to ensure the WTO is capable of resolving disputes more quickly.

And after the disappointment of the Doha Round, it is also imperative that we demonstrate that the WTO can work as a negotiating body.

The negotiating pillar is needed to set and update rules and open markets.

The Government believes a strong multilateral trading system is essential for economic stability and global prosperity.

A trading system based on might and power rather than agreed rules will not suit Australian exporters, including in the grains sector.

In closing, I thank you for your efforts in support of a strong Australian economy.

Australia is a great trading nation and the grains sector is a major part of that export performance.

The progress we have made together over the last five years in opening new markets is good for Australia.

Good for growth and good for jobs, especially in regional Australia.

We have more to do and I look forward in working together over coming months and years.

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