House of Representatives Committees

Joint Standing Committee on Foreign Affairs, Defence and Trade

Committee activities (inquiries and reports)

Australia's trade with Mexico and the Region

August 2007
Canberra

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.

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