Standing Committee on
Primary Industries, Resources and Rural and Regional Affairs
KEY CONCLUSIONS AND RECOMMENDATIONS
CHAPTER TWO: GLOBALISATION AND LIBERALISATION
As an exporter of 70 per cent of its agricultural products
and a nation exporting five times more than it imports, Australia is positioned
to gain substantially from trade liberalisation in agriculture. The outcomes
of liberalisation are already contributing to economic and employment
growth for Australia. Government and industry rely on up-to-date information
to underpin trade policies. The Committee recommends that:
(1) the Australian Bureau of Agricultural and
Resource Economics place high priority on research into the economic
impact of trade liberalisation (within Australia and globally) for regional
Australia and Australia's primary industries. A major aspect of the
research should be aimed at finding direct linkages between trade reform,
farm returns and employment. Another major aspect of the research should
be to consider the impact of agricultural trade reform on consumer prices.
(Paragraph 2.76)
The Committee recognises that there are industries facing
serious challenges to their traditional domestic markets as a result of
trade liberalisation. The process for structural adjustment to the new
business environments must be properly managed by government and understood
by the rural community. A number of options for adjustment assistance
are available to industries adversely affected by the impact of trade
liberalisation. The Committee recommends that:
(2) the Commonwealth Government acknowledges
its responsibilities in providing practical industry adjustment measures
designed to improve the international competitiveness of industries
adversely affected by trade liberalisation. The government should
provide more information to the public on the availability of industry
adjustment measures.
(Paragraph 2.84)
CHAPTER THREE: AWARENESS AND ATTITUDE
In 1996-97 rural exports from Australia increased by
7.4 per cent to $21 billion. This rate of export growth of Australian
primary industries is encouraging. Support for trade liberalisation is
wide spread among industry leaders but a stronger export culture needs
to be fostered among grassroots producers. There is some concern about
the pace of reform and the need to safeguard industries against the effects
of rapid change. The Committee recommends that:
(3) the Departments of Foreign Affairs and
Trade and Primary Industries and Energy, in conjunction with peak
industry bodies, undertake a study to determine the motivations for
change and the resistance to change among primary producers faced
with new business environments as a result of trade reform. The aim
of the study should be to provide a better understanding of the motivations
of primary producers. (Paragraph 3.25)
Australian agribusiness reflects the multiculturalism
of the wider society. The agribusiness sector is under-utilising the valuable
strengths of its people who have knowledge of languages, customs and the
way business is done in other countries. The Committee recommends that:
(4) coordination and linkages between activities
within the Foreign Affairs and Trade, Primary Industries and Energy
and Immigration and Multicultural Affairs portfolios be strengthened
to develop programs that provide Australian primary producers with
a better understanding of the business cultures of overseas countries
and the potential within our own multicultural agricultural sector
for exploiting export opportunities. (Paragraph 3.31)
Developing an export culture requires long term approaches,
as well as more immediate strategies. An investment in the education of
future key players in agribusiness is important. The Committee recommends
that:
(5) the Commonwealth develop scholarship and
intern programs to provide opportunities for tertiary agribusiness
students, producers and others from rural areas to undertake short
term placements in agribusiness trade-related agencies such as Austrade,
Research and Development Corporations and Statutory Marketing Corporations.
These placements should be incorporated into broader educational and
networking programs designed to enhance export skills and awareness.
(Paragraph 3.33)
(6) as a long term educational strategy, the
Departments of Foreign Affairs and Trade, Primary Industries and Energy
and Employment, Education, Training and Youth Affairs, in conjunction
with statutory marketing authorities and industry organisations, develop
an export and trade liberalisation package designed for use in schools
across Australia. The objective of the package should be to promote
awareness of Australia's export objectives, including global trade
liberalisation policies.
(Paragraph 3.34)
Awards already exist for achieving excellence in agribusiness
exporting, but there is scope to give such achievements greater recognition
and raise the public profile of those who are succeeding in agricultural
export performance. The Committee recommends that:
(7) the Commonwealth Government promotes export
excellence by sponsoring and raising the profile of a program of awards
specifically targeted to primary producers recognising superior achievement
in exporting and ensuring the program is recognised nationally as
Australia's premier awards for excellence in agricultural exporting.
(Paragraph 3.35)
(8) the Commonwealth Government, in association
with state governments, local governments and industry, implement
public awareness programs to:
(a) clearly showcase successful export enterprises
to serve as examples to potential exporters; and
(b) to demonstrate the benefits of trade reforms
to regional communities, particularly in terms of job creation
and local economies. (Paragraph 3.41)
Industry and government must acknowledge joint responsibility
for providing information on trade liberalisation to the public. A partnership
approach is required to keep the public informed on trade reform issues.
The Committee recommends that:
(9) (a) government departments address the
lack of public information on free trade policies by providing
information from government and particularly farmer groups, businesses
and individuals to demonstrate benefits of trade liberalisation;
(b) the Departments of Foreign Affairs and
Trade and Primary Industries and Energy accept responsibility for
seeking a partnership with industry bodies to develop community information
programs; and
(c) that sources other than printed material
are used for this purpose, particularly regional television. (Paragraph
3.61)
CHAPTER FOUR: INFORMATION AND TECHNOLOGY
There is an urgent need for primary producers and the
general public to be better informed about trade reform and emerging market
opportunities. Neither industry nor government agencies are working effectively
in this area. A proactive strategy is urgently needed to deliver public
messages in an effective way. The Committee recommends that:
(10) (a) the Departments of Foreign Affairs
and Trade and Primary Industries and Energy, in consultation with
professional marketing expertise, adopt a strategic approach for
disseminating information on trade liberalisation and export market
development;
(b) this strategy fully consider the use
of written and electronic media as a means of broadcasting information
on trade liberalisation and marketing opportunities. (Paragraph
4.34)
The establishment of local groups of exporters and potential
exporters should be encouraged as a means of information exchange. The
Committee recommends that:
(11) (a) the Commonwealth government encourage
facilitation of groups along the lines of Export Clubs focussed on
changes to trade and based on the regional export forums of the Supermarket
to Asia Council; and
(b) the purpose of these groups be to provide
an opportunity for local agrifood exporters and potential exporters
to interact with each other, to communicate with government on trade
and marketing issues, and to disseminate information to producers.
(Paragraph 4.36)
(12) the Departments of Foreign Affairs and
Trade and Primary Industries and Energy involve industry groups and
statutory marketing authorities in the development and implementation
of information and communication strategies relevant to particular
industries on trade liberalisation issues and market development opportunities
(as proposed in Recommendation 10). (Paragraph 4.45)
Industry should acknowledge its partnership role with
government departments in providing information to primary producers on
trade liberalisation. The Committee recommends that:
(14) (a) the Commonwealth Government include
in its telecommunications Universal Service Obligations a requirement
that all Australians, regardless of location, have access to communications
infrastructure of a standard sufficient to enable internet connection
and communication at a reasonable cost; and
(b) as part of the information strategy
proposed in Recommendation 10, the Commonwealth Government ensures
the media is made aware of and encouraged to publicise government
grants available to upgrade rural and remote telecommunications infrastructure.
(Paragraph 4.70)
(15) the Commonwealth Government's FarmBis
program includes provision in its funding arrangements for primary
producers living in remote regions to have the costs of participation
in training courses subsidised to an equivalent level as those attending
from non-isolated regions.
(Paragraph 4.72)
The emerging importance of electronic commerce and the
internet is expected to bring significant business opportunities for primary
producers. The Committee recommends that:
(16) (a) the Departments of Industry, Science
and Tourism, Foreign Affairs and Trade, Primary Industries and Energy
and Communications and the Arts, in consultation with industry and
statutory marketing authorities, explore the potential benefits to
agrifood exporting arising from the development of the United Nations
Global Trade Point Network; and
(b) report back to the government on opportunities
to promote the electronic trading service to existing and potential
exporters. (Paragraph 4.88)
CHAPTER FIVE: TRADE BARRIERS, MARKET ACCESS AND QUARANTINE
While the Uruguay Round succeeded in bringing agricultural
trade into the General Agreement on Tariffs and Trade (GATT), the degree
of actual progress on reducing and eliminating trade barriers was unsatisfactory.
Restrictive barriers continue to prevent Australian exporters gaining
access to, or being competitive in, various world markets. Further, there
is an increasing reliance on the application of non-tariff barriers to
counter the effects of tariff reductions. The European Union remains a
highly protected market for Australian agricultural products and the incorporation
into the EU of several central and eastern European countries could expand
the application of subsidies for agricultural production. The farm policies
of the United States, particularly its Export Enhancement Program, also
impede Australia's ability to compete on fair terms in world markets.
The Committee recommends that:
(17) the Department of Foreign Affairs and
Trade take a much more aggressive approach to bringing down the use
of subsidised agricultural exports by the European Union (notwithstanding
the incorporation of new members into the European Union) and by the
United States, and to improving access for Australian produce to those
markets.
(Paragraph 5.11)
There is concern that the Asian economic crisis may slow
or reverse the trade liberalisation process in affected countries. Australia
needs to ensure its long term trade objectives in the Asian region are
not compromised by reversions to protectionist policies. The Committee
recommends that:
(18) as a matter of urgency, the Department
of Foreign Affairs and Trade review the likelihood of key Asian markets
adopting a more protectionist agricultural trade stance, and that
it respond quickly to minimise any adverse impacts on Australian exports.
(Paragraph 5.12)
As Australia's exports of food are fivefold over its
imports, it is in Australia's interests to see the adoption of international
rules for the application of the World Trade Organization (WTO) Sanitary
and Phytosanitary Agreement and to ensure that any remaining restrictions
on trade are legitimate. The Australian public needs to be reassured that
a strong stance is adopted in trade negotiations. The Committee recommends
that:
(19) (a) the Commonwealth Government significantly
increase its efforts to ensure compliance with the Sanitary and Phytosanitary
and Technical Barriers to Trade Agreements amongst Australia's trading
partners and pursue the removal of unjustifiable trade restrictions
on Australian agricultural and food exports;
(b) the Departments of Foreign Affairs
and Trade and Primary Industries and Energy provide public information
(including publication on the internet) on Australia's quarantine
negotiations as part of the communications strategy referred to in
recommendation 10;
(c) the Department of Foreign Affairs and
Trade publish, and continue to update, its trade barriers data base
on the internet (subject to commercial in confidence limitations);
and
(d) the Commonwealth Government and industry
ensure that sufficient resources are provided to embark on World Trade
Organization dispute settlement procedures as the need arises. (Paragraph
5.28)
Industry and government must adopt a close partnership
in the evaluation of market access priorities. It is essential that the
objectives of Australian trade negotiators are consistent with the needs
of industry. The Committee recommends that:
(20) the Departments of Foreign Affairs and
Trade and Primary Industries and Energy expand the Horticultural Market
Access Committee model (as described in paragraph 5.31) across all
major primary industries to ensure a comprehensive and fully consultative
approach is adopted in identifying market access priorities. (Paragraph
5.34)
Australian trade negotiators must be fully equipped with
the necessary commercial resources and skills to confidently and aggressively
pursue the removal of all trade barriers of significance to Australian
interests. The Committee recommends that:
(21) market access specialists with proven
commercial and industry experience be appointed to positions within
the Departments of Foreign Affairs and Trade and Primary Industries
and Energy to have responsibilities in trade negotiations for each
major Australian agricultural industry.
(Paragraph 5.39)
(22) as a matter of priority, the Commonwealth
Government strengthens all consultative arrangements in place involving
Commonwealth and State governments and industry to ensure Australian
negotiators enter forthcoming trade negotiations fully informed of
industry priorities.
(Paragraph 5.40)
There has been insufficient progress made on gaining
access to markets for processed product. Tariff escalation works contrary
to objectives for improving Australia's performance in exporting value
added product. The Committee recommends that:
(23) tariff escalation be a major focus for
Australian trade negotiators in future negotiations in order to reduce
and minimise the adverse impact on value-added export products. (Paragraph
5.44)
The lengthy process for market access negotiations can
offer an impression to producers that minimal efforts are being made to
win access to markets. Improved efforts need to be made to ensure grassroots
producers are kept informed of market access developments during the process.
The Committee recommends that:
(24) (a) the Department of Primary Industries
and Energy improves communication between the various interested parties
and grassroots producers to ensure producers are aware of negotiating
priorities and progress on issues on a regular basis (this should
include use of the database to be published on the internet, referred
to in recommendation 19);
(b) the Department be responsible for improving
communication arrangements to ensure producers have easy access to
negotiators to contribute to the identification of agricultural market
access issues; and
(c) that the consultation and communication
arrangements not be limited to peak producer organisations, but also
involve key regional community groups and other government departments.
(Paragraph 5.46)
Given the increasing importance of biosecurity issues
in international trade, it is imperative that Australia is well prepared
for possible pest and disease incursions and can respond quickly to biosecurity
issues affecting trade. Industry and government are not well served by
the current fragmented approach and narrow base of expertise. The Committee
recommends:
(25) (a) a Minister responsible for biosecurity
be appointed, with authority to draw on expertise from both government
and non-government organisations as necessary in order to provide
a timely response to biosecurity matters;
(b) the role of this Minister be to coordinate
and take overall responsibility for the exclusion, eradication or
effective management of unwanted pests and diseases in Australia;
(c) a Biosecurity Council, headed by an
independent Chairman and comprising representatives of all key stakeholders
with biosecurity and trade responsibilities be established to identify
biosecurity priorities and to determine responsibilities for newly
identified risks; and
(d) the Biosecurity Council report directly
to the Minister responsible for biosecurity. (Paragraph 5.66)
CHAPTER SIX: TRADE IMPEDIMENTS WITHIN AUSTRALIA
There is little sense in pursuing intensive market access
negotiations to open markets for Australian products if businesses are
unable to compete in international markets due to high costs incurred
in the supply chain. Australian Quarantine and Inspection Service (AQIS)
inspection charges contribute to costs incurred by Australian exporters.
Overseas competitors are not always subject to full cost recovery for
the equivalent service in their country of origin. The WTO currently does
not include inspection charges in the Aggregated Measurement of Support
reduction commitment. The Committee recommends that:
(26) Australia puts forward a strong case in
trade negotiations:
(a) by establishing the significant market
distorting effect of government-subsidised provision of inspection
services in other countries and arguing for their transferal to a
cost-recovery basis; and
(b) by arguing that the subsidised provision
of inspection services be removed from the Agreement on Agriculture
"green box" exemptions and be fully accounted for in calculations
of the Aggregate Measurement of Support. (Paragraph 6.43)
Producers from labour intensive industries such as horticulture
can find it difficult to attract sufficient labour at critical times to
harvest highly perishable product. The seasonal nature of harvest work
limits the availability of a sufficient labour supply from the local region
and growers consequently rely heavily on itinerant workers. The Committee
recommends that:
(27) the Department of Employment, Education,
Training and Youth Affairs require new employment service providers
(Job Network Members) to develop strategies which will improve the
ability of primary producers, particularly in horticultural industries,
to meet their labour requirements.
(Paragraph 6.52)
The Committee also recommends that:
(28) the Department of Immigration and
Multicultural Affairs encourages the uptake of harvest work among
Working Holiday Makers and increases the number of young workers to
the country under the Working Holiday Maker Scheme by widening the
scope of countries participating in the Scheme. (Paragraph
6.53)
Australians are not yet proficient at consolidating containers
of fresh product for export to provide cost advantages. The Committee
recommends that:
(29) that the Minister for Transport and Regional
Development refers the problem of the lack of consolidation of fresh
foods into export containers to the sea and air freight export councils,
as they are established, for consideration. (Paragraph 6.79)
New technologies are becoming increasingly utilised to
prolong the shelf life of harvested horticultural products. Perishable
products previously unable to enter certain export markets because of
the high costs of airfreight are now able to reach those markets more
competitively due to a combination of the technologies and the relatively
cheaper costs of sea freight. The Committee recommends that:
(30) the Commonwealth Government liaise with
exporting and transport industries to facilitate the commercialisation
of research and development into packaging designed to extend the
shelf life of perishable products, while maintaining product quality.
(Paragraph 6.83)
A number of primary industries were critical of the current
taxation arrangements in Australia which adversely impact on industry
competitiveness. The Committee notes that the Government is currently
reviewing existing taxation arrangements and recommends that:
(31) a major outcome of reforms to the tax
system should be a reduced tax burden on export products, thereby
improving the competitiveness of Australian primary industries in
overseas markets. (Paragraph 6.88)
CHAPTER SEVEN - MARKETING STRATEGIES
Increased exposure to the volatility of world markets
has prompted many agribusinesses to review their marketing strategies.
Networks are providing an effective vehicle for information exchange between
producers. This includes technical research information, market information
or general industry information. Networks are also building critical mass
through amalgamation, resulting in the potential for lower costs across
the supply chain and co-ordination of supply. Co-ordinated marketing strategies
from a network of exporters can reduce the number of competitors in a
market and reduce marketing costs. The Committee recommends that:
(32) the Department of Primary Industries
and Energy, in partnership with industry, increase awareness among
primary producers and exporters of the advantages of networks which
can aggregate supply and co-ordinate marketing in a strategic way.
The Department and industry should encourage primary producers to
establish partnerships along the supply chain, nationally and internationally,
to improve market information mechanisms. (Paragraph 7.36)
Statutory authorities should improve their efforts in
informing producers about the trade reform process. The Committee recommends
that:
(33) statutory marketing authorities improve
efforts to inform their levy-paying producers of the significance
of trade liberalisation and electronic commerce. Statutory marketing
authorities should also ensure that they provide producers with information
on marketing activities undertaken by the authorities in response
to changes in world markets. (Paragraph 7.43)
Feedback from industry indicates an inconsistent performance
by Austrade in serving Australian agribusiness. The value of Austrade
service is heavily dependent on the individual engaged for the contract.
There is also a serious lack of attention to the needs of smaller clients.
The Committee recommends that:
(34) the Commonwealth Government review the
role and activities of Austrade in the context of providing export
marketing services to agribusinesses. The review should examine the
perception of Austrade among agribusinesses and identify measures
to encourage greater delivery of Austrade services to smaller clients.
The review should also examine the role of Austrade in relation to
the development of electronic trading facilities for primary industries.
(Paragraph 7.59)
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