AUSTRALIA'S ECONOMIC INTERESTS
Trade and investment are vital to Australia’s economic prosperity. Over 1.7 million Australian jobs are directly or indirectly connected to exports. Australia is pursuing an ambitious trade policy agenda, which combines multilateral, regional and bilateral strategies to open new markets, reduce barriers to trade and promote Australian goods and services.
Australia’s trade policies and practices are described in detail in the Australian Government Trade Minister’s annual Trade Statement, Trade 2006 (see <http://www.dfat.gov.au/trade/trade2006>) and are discussed at National Trade Consultations and meetings of the Trade Policy Advisory Council. Economic fact sheets for over 170 of Australia’s trading partners, including summaries of their trade with Australia, are available at <http://www.dfat.gov.au/geo/fs>.
WORLD TRADE ORGANIZATION (WTO)
Australia is a strong supporter of the WTO as the premier forum for global trade liberalisation. A stronger multilateral trading system is the most effective way of providing Australian exporters with increased access to world markets for their products and services.
Australia is pursuing the reduction of trade barriers and the expansion of markets through the Doha Round of multilateral negotiations in the WTO. Despite setbacks in 2006, the round would deliver major benefits for the Australian economy by opening up international markets for Australian goods and services exporters. Australia is encouraging a high level of ambition in WTO negotiations on further liberalisation of agriculture, industrials and services. Industrials account for 76% of Australia’s merchandise exports while; services now represent more than 70% of Australia’s GDP. Australia also actively encourages all WTO members to engage constructively in the negotiations.
The Doha Round also has the potential to deliver significant economic benefit to Australia by reducing subsidies in agriculture, which remains the most distorted sector in world trade. Australia co-founded and continues to chair the Cairns Group of 18 agricultural exporting countries, which has been influential in the debate over agriculture trade reform since its inception in 1986. Achieving an ambitious outcome on agriculture in the Doha Round is a key priority for Australia as well as other group members. Australia hosted the 20th anniversary meeting of the Cairns Group in September 2006.
Australia pursues a number of other trade objectives through the WTO, including through its dispute settlement procedures. Australia participates in negotiations with countries seeking to join the WTO and works with regional developing countries to assist their efforts to accede.
ASIA-PACIFIC ECONOMIC COOPERATION (APEC)
Australia strongly supports the APEC forum, which makes an important contribution to regional cooperation, economic growth and stability. APEC economies represent over 60% of global GDP and over 50% of world trade. They account for over two-thirds of Australia’s trade, amounting to $211b in 2005.
A core APEC objective is encompassed in the ‘Bogor Goals’ to achieve free and open trade and investment in the Asia-Pacific region. In recent years, APEC Leaders have recognised the growing need to address ‘beyond the border’ impediments to business activity, including intellectual property rights and transparency-related issues, and have commissioned new work in this area. They have also recognised that economic prosperity is not possible without security and, at their annual meeting in 2003, adopted the complementary goal of protecting the security of their people. As a result, APEC now has a far more comprehensive and diverse agenda. The forum supports work across its diverse agenda with practical activities in the areas of capacity building and economic and technical cooperation and through engagement with business.
Australia is working to promote and implement key elements of APEC’s agenda, including trade and investment liberalisation, business facilitation, counter-terrorism, secure trade, and disaster response and emergency preparedness. Australia has led APEC’s response to the challenges that avian influenza and other emergencies pose to growth, stability and welfare in the region. Australia hosted the APEC Avian Influenza Preparedness and Response Meeting in Brisbane in October 2005 and, in June 2006, convened a ‘desktop’ exercise to test communications in the region in the event of an outbreak.
Responsibility for hosting APEC meetings rotates among members annually. Australia will host APEC in 2007. This will involve up to 100 days of meetings during the year, including a meeting of the Leaders of APEC’s 21 members, seven ministerial meetings and meetings of officials, business and academics.
FREE TRADE AGREEMENTS (FTAs)
Australia negotiates FTAs with important trading partners to deliver improved access for Australian exporters in target markets. FTAs are consistent with WTO principles, help to open up all trade in goods, provide improved conditions for services trade and investment, and are generally faster to negotiate and implement than other trade deals.
Australia’s longest-standing free trade agreement is the Australia New Zealand Closer Economic Relations Trade Agreement, which began in 1983. The Agreement is widely regarded as a model trade agreement and has been very successful in boosting trans-Tasman trade and investment links and strengthening the international competitiveness of both economies.
The Singapore-Australia FTA entered into force in 2003. In addition to tariff elimination, the agreement provides increased market access for Australian exporters of services and provides a more open and predictable business environment.
The Australia-United States FTA, which entered into force on 1 January 2005, is a landmark agreement with the world’s largest economy. It has led to significantly improved access for Australian industrial and agricultural goods in the USA and provides important guarantees to underpin the substantial bilateral services trade.
The Thailand-Australia FTA, which also entered into force on 1 January 2005, is a major market opening agreement. Under the agreement, more than half of Thailand’s 5,000 tariffs - accounting for nearly 80% of Australia’s exports to Thailand - were eliminated and those not immediately eliminated will be phased down.
Australia is negotiating a number of new FTAs. Negotiations with China were launched in April 2005 and the significant economic complementarities between the two economies mean that an FTA would deliver substantial mutual economic gains. The prime ministers of Australia and Malaysia agreed in April 2005 to launch negotiations for a bilateral FTA and a number of negotiation rounds have been held since then. An FTA would secure access to Malaysia’s market and provide certainty for Australian firms doing business there. Australia, together with New Zealand, is negotiating a comprehensive FTA with the countries of ASEAN covering trade in goods and services and investment. Australia and the United Arab Emirates are no longer negotiating an FTA following the implementation of a unified trade policy across the Gulf Cooperation Council.
Australia and Japan are also engaged in work on a FTA feasibility study. Australia and Mexico have agreed to establish a Joint Experts Group to examine ways of expanding the economic relationship, including through a possible FTA.