Completed Inquiry: Australia's Trade and Investment Relationship with South America

Foreword

South America has emerged as a region of considerable economic significance. Most South American countries introduced market-oriented reforms and began reducing tariff levels during the 1990s. This reform process has led to improved levels of economic growth and with it has come an array of business opportunities.

Traditionally Australia has looked to the north for export markets and has given very little consideration to looking eastward. The development of the economies of South America means there is great scope for Australia and South America to expand their trade and investment partnership.

The first focus on South America as a region of considerable potential for Australia came with a report to the Federal Parliament by the Senate Standing Committee on Foreign Affairs, Defence and Trade in 1992. In the intervening eight years, while Australia's trade and investment relationship has grown with South America, it has not been a high priority.

The Hon Tim Fischer, MP, in his capacity as Minister for Trade, profiled the importance of South America and the business opportunities available there for Australian exporters. In his reference to the Joint Committee he noted the success of Australian exporters and their contribution to Australia's strong economic performance, and was particularly interested in the opportunities that South America represents for Australian exporters in the longer term.

In the first Trade Outcomes and Objectives Statement, tabled in 1997 (TOOS'97), the Government identified Chile and the Mercosur1 countries as important emerging markets for Australia. This importance continues today in spite of some difficult world economic conditions such as the Asian and Russian economic crises in 1997-1998 and Brazil's financial difficulties in 19981999.

Peru has been identified, in TOOS 2000, as another emerging South American market that has considerable potential for Australian exporters in the medium term.

The development of direct air links between South America and Australia in November 1998 has provided both the means and the catalyst for developing and improving the business linkages.

Time is of the essence. Eight years have passed since the bell was rung in relation to South America, and Australia's competitors, including New Zealand, are well and truly in the market making money. There is little time left for Australian business to gain valuable market access.

The Committee calls on Australian business to look at this dynamic and developing market and on the Government to increase its commitment to work with business to best position Australia to take full advantage of the opportunities in the region.

Hon G D Prosser, MP
Chairman, Trade Sub-Committee 1.    Common Market of the Southern Cone comprising Argentina, Brazil, Paraguay and Uruguay. Bolivia and Chile are associate members.

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