Preliminary pages
Through a lengthy and informative inquiry, members of the
Trade Sub-Committee (TSC) explored how we can improve Australia’s trade and
investment relations with the countries of Asia, the Pacific, and the Americas.
Trade is important to economic health and critical to the development of
bilateral and multilateral relationships between countries.
On the eve of going to print with our report, the Minister
for Trade, the Hon. Dr Craig Emerson MP, informed the TSC that he would soon
publish the Government’s Trade Policy Statement. We agreed to wait for the
statement and then took evidence on it. This has been incorporated into our
report.
When we commenced the inquiry, little did we know that the
Global Financial Crisis (GFC) was breathing down our neck and came to besiege
our nation and that of most of our trading partners. How Australia weathered
the GFC is the envy of the world, in particular those with developed economies.
Australia’s economy is strong and is ranked 12th within the OECD in terms of
Gross Domestic Product (GDP) purchasing power parity (14th if China and Russia
are added to the list).
Closer to home, most people seem unaware when the miracle of
Singapore is touted that the NSW economy is significantly larger than
Singapore’s.
The GFC caused some alarm that commitment to open trade
would dissolve, and in some cases it did. Surprisingly though, the general
commitment to open trade held, largely in order to complete the Doha round of
negotiations. Agricultural trade remains the most contentious issue for not
only developing countries, but developed economies as well.
Trading figures for Australia are healthy and on the rise.
From a deficit in 2007-2008, exports rose 27 per cent to $278 billion, and
imports were up 18.9 per cent to $283 billion. In 2008, exports dipped to
$249.9 billion and imports fell correspondingly to $253.9 billion. 2010 saw a
rise in exports to $284.9 billion, with imports increasing to $267.8 billion.
From an historical average monthly trade deficit, we now have an average
monthly trade surplus of $1,797 million.
The Australian Dollar is currently trading at an all time
high against other major trading currencies (USD$1.04, NZD$1.22, E €0.72, STG £
0.64 and ¥79).[1] This generally has the
effect of making Australian exports less competitive as the purchasing power of
foreign currencies is reduced.
Despite this, healthy export revenues are contributing to
trade surpluses through strong market prices and demand for Australian
resources. Conversely, a strong Australian Dollar sees imported products become
more competitively priced for Australian consumers, leading to increased
consumption. Both of these strengths are reflected in the current health of
Australia’s economy. The latter point was also underscored by the
representatives from the Department of Foreign Affairs and Trade at the final
TSC inquiry public hearing.
During the course of the inquiry, the ASEAN-Australia-New
Zealand Free Trade Agreement was signed off in February 2009, which was greeted
enthusiastically by business. The Productivity Commission also released its
Report on Bilateral Free Trade Agreements. Both of these were the subject of
much attention during the inquiry. The Productivity Commission’s report noted
however that there is little evidence to date to suggest that Australia’s six
Free Trade Agreement’s have produced “substantial commercial benefits”. The
Productivity Commission’s report also found that where trade had increased it
was due to trade diversion rather than trade creation.
Trade facilitation features large in our report, as it did
for all who gave evidence to the inquiry. Of particular note is the map at the
very last page of the report titled “Port of Melbourne Supply Chain Information
Map February 2006”. This details what can be a maze for importers and exporters
seeking to trade effectively. It highlights the complex chain of events that
importers and exporters have to follow, to the nth degree of course. I can only
say that we are fortunate that we have many businesses and business operators
who embrace the world of trade and the inherent benefits for them and the
economy.
Australian jobs depend in a large part on reciprocal trade,
and it is so for both city and country alike. This often gets lost in partisan
political debate, but cannot. Trade requires an open door, and it cuts both
ways.
Services in general account for eighteen per cent of
Australia’s exports. Trade services, particularly education and legal exports
were made a feature. To highlight, a little known figure is that education
services are Australia’s top services export, generating some $15.5 billion on
2008 figures.
I finish my foreword by
thanking all members of the Trade Sub-Committee, including Senator Michael
Forshaw Chair of the Joint Standing Committee on Foreign Affairs, Defence and
Trade, who is now retired. We started the inquiry with one set of members, and
finished it with others, some continuing, like previous Parliamentary Secretary
for Trade The Hon. John Murphy MP, and of course a new Parliament.
My Deputy, The Hon. Mr. Bruce Scott MP for Maranoa, provided
me with strong support and valuable input. Mr. Scott and I keep on eye as
always on what is good for regional Australia, and we were both pleased to
affirm that Australia’s general strong trading position of itself helps
regional Australia.
I would also like to thank all those who participated in
this inquiry, particularly those who have written submissions or given evidence
and public hearings.
Ms Janelle Saffin MP
Chair
Trade
Sub-Committee
The Joint Standing Committee on Foreign Affairs, Defence and
Trade shall examine and report on opportunities for expanding Australia's trade
and investment relations with the countries of Asia, the Pacific and Latin
America, with particular attention to:
n the nature of
existing trade and investment relations;
n likely future trends
in those relations;
n the role that these
countries might play in advancing the DOHA round of multilateral trade
negotiations in the WTO;
n the role of the
Government in identifying opportunities and assisting Australian companies,
especially those in rural and regional areas, to maximise opportunities in
these regions; and
In addition, the Committee will take into consideration the
review of Australia’s future trade policy framework.
APEC
Recommendation 1
Work towards the admission of India to membership of APEC as
soon as possible.
Recommendation 2
That Australia continues to strongly support the work in APEC
on the identification and elimination of choke points in regional supply chains
and the development of modern and efficient communications networks.
Recommendation 3
That Australia continues to set an example to other APEC
member economies by: (i) maintaining its momentum towards trade liberalisation;
and (ii) encouraging the APEC membership to push strongly for a positive and
forward-looking outcome in the Doha Round.
Trade Facilitation
Recommendation 4
That the Australian Government
commit itself to a concerted effort to lift Australia into the top 20 countries
in the World Bank’s list of economies having the easiest trade access.
Recommendation 5
That Australia work towards the complete introduction of
paperless trading as soon as possible and that it encourage and, where
necessary, assist its trading partners to achieve the same outcome.
Recommendation 6
That Australia should strongly encourage the complete
acceptance of the APEC Business Travel Card by the remaining members of APEC;
and also explore the possibility of establishing a similar arrangement with
other trading partners, e.g. non-APEC economies in Latin America, the EU and
India.
Recommendation 7
That Australia should take a leading role in working towards
the improvement of supply-chain processes in APEC and in encouraging other
trading partners to undertake a similar program.
Recommendation 8
That, in view of the benefits arising from the Export Market
Development Grants Scheme, it should continue indefinitely and be fully funded
to provide certainty for exporters seeking to widen their overseas market
focus.
Latin America
Recommendation 9
The Sub-Committee considers
that the introduction of electronic visa applications would be an excellent,
and inexpensive, way to assist in improving trade and investment relations with
the countries of Latin America. It would have valuable spin-off benefits for the
tourism industry and would also facilitate business travel to Australia.
Recommendation 10
The Sub-Committee recommends that the Government review the
processing of applications by skilled migrants and, where appropriate, seek
ways to fast track the recognition of their skills.
Recommendation 11
The Sub-Committee also recommends that urgent attention be
given to achieving mutual recognition of university qualification between
Australia and the countries of Latin America. This would assist the efforts of
Australia’s universities to attract post-graduate students, who might otherwise
go to American or British universities. It would also assist tourism through
attracting the relatives and friends of such students to visit Australia.
Recommendation 12
Allied to the previous recommendation, the Sub-Committee
recommends the adoption of a “working holiday” scheme for visitors from Latin
America. At present, visitors from 27 countries can access such arrangements,
but of the Latin American countries only Chile is included in that list.
Recommendation 13
All of the Latin American
Ambassadors indicated how much they appreciated visits by Ministers,
particularly at the head of business delegations, and by Parliamentary
representatives. The Sub-Committee recommends that increased priority be
assigned to visits such as these to the countries of Latin America – in line
with the Government’s declared intention to engage more closely with Latin
America and the Caribbean.
Recommendation 14
That COAG make improved cooperation between the Commonwealth
and the States, and between the States themselves, a high priority – to achieve
higher levels of efficiency in the transport and logistics supply chains,
provision of infrastructure, and trade facilitation.
The Pacific
Recommendation 15
The Sub-Committee expressed its satisfaction that AusAID has
given some emphasis to gender issues in negotiations with the Pacific Islands
Forum countries. It proposes that these issues should continue to be advanced
by DFAT and AusAID as a priority.