Joint Standing Committee on Foreign Affairs, Defence and Trade
Australia's trade with Mexico and the Region
August 2007
Canberra
© Commonwealth of Australia 2006
ISBN 978 0 642 78992 1 (printed version)
ISBN 978 0 642 78993 8 (HTML version)
Contents
Foreword
Membership of the Trade Sub-Committee
Terms of reference
List of abbreviations
List of recommendations
Chapter 1 Inquiry into Australia's trade with Mexico and the region
Chapter 2 Engagement with Mexico and the region
Chapter 3 Exports to Mexico and the region
Chapter 4 Imports from Mexico and the region
Chapter 5 Services to Mexico
Chapter 6 Australia - Mexico Free Trade Agreement
Chapter 7 Committee's visit report
Appendix A – List of Submissions
Appendix B – List of Exhibits
Appendix C – Witnesses appearing at public hearings
Foreword
Since the commencement of diplomatic relations in 1966, Australia and Mexico have developed a modest yet important economic relationship. Mexico is Australia’s largest trading partner in Latin America and our thirty-third largest trading partner. Australia is Mexico’s twenty-sixth largest trading partner.
In examining the state of economic relationships between Australia and the other nations of the region, the Committee noted the growth of trade and investment ties, albeit from very small bases. Whilst there was little conclusive data available to the committee, encouraging expansion potential and progress has been identified in areas such as agribusiness, food commodities and the provision of professional services.
Increasing imports and a burgeoning education sector have seen the Australia-Mexico bilateral relationship grow significantly in recent years. The Joint Experts Group established in May 2006 to explore possible directions for economic relations, including the possible negotiation of a Free Trade Agreement, has reinforced the importance of this relationship to both nations.
There are approximately 30-40 million members of the ‘middle class’ in Mexico which provide a significant potential buying power for Australian products. Australia’s main exports to Central America are dairy products, in particular milk, cream, butter and cheese. Whilst still modest, two-way merchandise trade with Central America has increased significantly over recent years.
In summary, the Committee has concluded that despite the challenges of distance, poor transport links, language and cultural differences and unfamiliar business environments, there is significant and unbridled potential within the Australia-Mexico trade relationship. As such it became clear to the committee that a Free Trade Agreement (FTA) with Mexico is a highly desirable outcome to the Australian and Mexican governments’ quest to progress and strengthen this relationship.
For both countries there are challenges involved in pursuing a free trade agreement. Agriculture for example is a sensitive area and the committee recommends that issues relating to agriculture should be determined at an early stage of any negotiations. The Committee also acknowledges that the current political and business conditions in Mexico are not ideal for an FTA and some time maybe needed to develop such conditions.
In conclusion, the committee would like to extend sincere thanks to all the officials of the Australian Embassy in Mexico City that assisted the delegation with the visit by the Trade Committee to Mexico. The visit proved very successful in terms of contacts made, opportunities identified and challenges addressed.
The committee would also like to acknowledge and thank the officials and business people in Mexico for their hospitality and input.
Hon B G Baird, MP
Chair
Membership of of the Trade Sub-Committee
Chair |
Hon B G Baird MP |
|
Deputy Chair |
Hon W E Snowdon MP |
|
Members |
Senator A Bartlett |
Senator A Eggleston |
|
Senator A B Ferguson (from 1/12/04 to 14/08/07) |
Senator M A Payne (ex officio) |
|
Mr P A Barresi, MP |
Mrs T Draper, MP |
|
Hon G J Edwards, MP (ex officio) |
Mr B W Haase, MP |
| |
Mr M J Hatton, MP |
Hon D F Jull, MP |
| |
Hon J E Moylan, MP |
Hon G D Prosser, MP |
| |
Hon B C Scott, MP |
Mr R C G Sercombe, MP |
| |
Dr A J Southcott, MP |
Mr C P Thompson, MP |
| |
Mr B Wakelin, MP |
Ms M Vamvakinou, MP |
| |
Mr K W Wilkie, MP |
|
Committee Secretariat
Secretary |
Dr Margot Kerley |
Inquiry Secretary |
Mr Robert Little |
| Research Officer |
Ms Allison Spies |
| Administrative Officers |
Ms Emma Martin |
| |
Ms Sonya Gaspar |
Terms of Reference
The Joint Standing Committee on Foreign Affairs, Defence and Trade shall examine and report on expanding Australia’s trade and investment relations with Mexico and the region with particular reference to:
- the nature of Australia’s existing trade and investment relations;
- likely future trends in these relations; and
- the role of the government in identifying and assisting Australian companies to maximise opportunities in Mexico and the region.
List of abbreviations
ADIC |
Australian Dairy Industry Council |
AEI |
Australian Education International |
AFTINET |
Australian Free Trade Investment Network |
AMWU |
Australian Manufacturing Workers Union |
APEC |
Asia Pacific Cooperation |
AQUIS |
Australian Quarantine and Inspection Service |
BSE |
Bovine Spongiform Encephalopathy / Mad Cow Disease |
COALAR |
Council of Australia-Latin American Relations |
CONACYT |
Mexican Council for Science and Technology |
DAFF |
Department of Agriculture, Fisheries and Forestry |
DEST |
Department of Education Science and Technology |
DFAT |
Department of Foreign Affairs and Trade |
DOTARS |
Department of Transport and Regional Services |
ELICOS |
English Language Intensive Courses for Overseas Students |
FEALAC |
Forum for East Asia – Latin America Cooperation |
FTA |
Free Trade Agreement |
GDP |
Gross Domestic Product |
JEG |
Joint Experts Group |
LNG |
Liquefied Natural Gas |
MLA |
Meat and Livestock Australia |
MoU |
Memorandum of Understanding |
NAFTA |
North American Free Trade Agreement |
SEP |
Mexican Ministry of Education |
TAFE |
Technical And Further Education |
TCF |
Textiles, Clothing and Footwear |
UNSW |
University of New South Wales |
UQ |
University of Queensland |
WTO |
World Trade Organisation |
List of recommendations
2 Engagement with Mexico and the region
Recommendation 1
The Committee recommends that the Australian Government, through the Department of Education, Science and Training, reactivate scientific and technological cooperation with Mexico.
Recommendation 2
The Committee recommends that DFAT review the viability of FEALAC and, if it is determined to be viable, ensure a greater effort is made fulfil its potential.
3 Exports to Mexico and the region
Recommendation 3
The Committee recommends that the Australian Government initiate or continue ministerial discussions with officials of Mexico and the region to address technical market access issues.
Recommendation 4
The Committee recommends that more resources be provided to Australian Government representatives in Mexico for promotional activities such as trade fairs and exhibitions to capitalise on the strong interest in Australian products.
6 Australia – Mexico Free Trade Agreement
Recommendation 5
The Committee recommends that the Australian Government move forward with a high quality comprehensive FTA with Mexico. In any negotiations, issues relating to agriculture should be determined at an early stage.