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1301.0 - Year Book Australia, 2012  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 24/05/2012   
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Int Relations

AUSTRALIA'S ECONOMIC INTERESTS

Australia continues to pursue 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. With these objectives in mind, the government's April 2011 trade policy statement set out five guiding principles for Australia's trade policy. These are: a commitment to unilateral liberalisation, non-discrimination in trade, separation of foreign and trade policy considerations, transparency in negotiations and decision-making, and the indivisibility of trade policy and wider economic reform. The statement provides a framework for fulfilling the government’s commitment to free trade as a pathway to more and better jobs and greater prosperity.

Australia faces a highly challenging international trading environment. Despite overall growth in exports, particularly for raw materials, exporters in some sectors face continuing challenges caused by the high value of the Australian dollar and uncertainty over the debt crisis in Europe. In this environment, Australia remained active in multilateral economic institutions, including the G20, World Trade Organization (WTO), Asia-Pacific Economic Cooperation (APEC) and Organisation for Economic Co-operation and Development (OECD).


The Australian Year of the Farmer – 2012

In 2012, Australia celebrates the Australian Year of the Farmer. The Year recognises the importance of agriculture to Australia’s economy and the hard work of farmers involved in producing, processing, handling and selling products from 134,000 agricultural businesses across the country. Australia is known for its diverse range of premium quality agricultural products and Australian farmers are among the world’s most efficient, providing competitive agricultural produce to world markets.

Around 60% of farm production is exported and, in 2010, agricultural products accounted for 11% of Australia’s total exports. Key export destinations for Australian agricultural products are China, Japan, Indonesia, the United States and the Republic of Korea.

Globally, agricultural trade is a distorted and highly protected sector, characterised by very high tariffs and high levels of government support to primary producers. Average tariffs for agricultural goods are more than three times higher than for non-agricultural goods – some agricultural tariffs are as high as 800%. Millions of farmers around the world, including in developing countries, are unfairly disadvantaged in selling their produce to the world market.

The Australian Government continues to work hard to remove impediments to global trade and help make global agricultural trade fairer. This directly benefits Australian farmers by expanding access to international markets. Since the early 1970s, Australia has reduced its own tariff levels on agricultural and food products through a series of across-the-board measures. General tariffs have been phased down to 5% and assistance to industries competing with imports has been substantially reduced.

Australia plays an active role in the World Trade Organization, including in seeking a successful conclusion to the Doha Round of negotiations. As Chair of the Cairns Group, a coalition of 19 agricultural exporting countries, Australia has pushed for fundamental agricultural trade reform, namely significant reductions in agricultural tariffs and trade-distorting subsidies, and elimination of export subsidies. This effort is reinforced by Australia’s active free trade agreement agenda, which seeks new market opportunities for Australian exports, including agricultural products, and seek to expand trade in existing markets.


WORLD TRADE ORGANIZATION

Australia has a major stake in maintaining a healthy, rules-based multilateral trading system. Australia is a strong supporter of the WTO, the international institution responsible for overseeing the international trade rules and the premier forum for negotiating multilateral trade liberalisation. The government’s April 2011 trade policy statement reinforced Australia’s commitment to multilateral trade reform and liberalisation. Australia has been at the centre of efforts to strengthen international support for trade liberalisation and combat protectionism, including proposing a new pathway to complete the stalled Doha Round negotiations. This proposal won broad support at G20 and APEC forums in November 2011 and at the 8th WTO Ministerial Conference (MC8) in December 2011. Australia’s plan includes breaking the Round into more manageable parts, and looking to take the negotiations forward in a way that helps the world's least developed countries. The G20 and APEC Leaders’ meetings in November 2011 reaffirmed, and extended, earlier anti-protectionism pledges. At MC8, more than 50 countries, representing 70% of world GDP, joined an Australian initiative in pledging to fight all forms of protectionism in the strongest terms.

Australia continues to play a leading role in efforts to promote global trade reform at the WTO. Australia advocates fundamental agricultural trade policy reform through the reductions of tariffs and subsidies, including as Chair of the Cairns Group. On non-agricultural market access, Australia is working with the United States, European Union and Japan to progress initiatives such as sectoral tariff elimination. In services, which comprise the largest sector of the Australian economy, Australia gives priority to reducing foreign equity caps on investment, greater regulatory transparency and improved business mobility. Given its strong research tradition and the need to access new technologies, Australia works to protect its intellectual property interests pursuant to the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights. The plurilateral Anti-Counterfeiting Trade Agreement, signed on 1 October 2011, builds on WTO standards in this area.

Australia continues to strongly support the world’s poorest countries playing an active role in, and benefitting from, the global trading system. Australia pledged at MC8 to continue to provide least developed countries with duty-free and quota-free market access for all products into Australian markets and announced a commitment of $16 million, over the period 2012 to 2015, in trade-related capacity-building assistance for developing and least developed countries.

Australia engages in all aspects of the WTO and has continued its participation in the WTO dispute settlement system, including defending Australia’s position in the dispute against Australia’s quarantine conditions affecting New Zealand apples, and participating as a third party in disputes that affect Australian interests. Engaging in negotiations with countries seeking to join the WTO is important to ensure that those countries make appropriate commitments to liberalise their markets. At MC8, Australia welcomed the accession to the WTO of four new countries – Russia, Samoa, Vanuatu and Montenegro. Australia also participates in the WTO’s extensive committee system and regular reviews of WTO members’ trade policies.


G20

Australia is committed to active participation and policy leadership within the G20, the pre-eminent forum for global economic co-operation. Membership of the G20 gives Australia the capacity to influence key policies relating to the global economy. For example, Australia has advocated and won support for an ongoing G20 commitment to fight trade protectionism.

Australia is represented at the G20 Leaders' Summits by the Prime Minister, while the Treasurer and the Reserve Bank Governor participate in G20 Finance Ministers and Central Bank Governors Meetings. The Prime Minister and the Treasurer are supported in their engagement with the G20 by the Australian G20 'Sherpa' (the Prime Minister's special representative for the G20) and the Finance Deputy.

Australia is committed to consulting non-G20 members so that their views are considered by the G20. Australian officials conduct active outreach with regional neighbours to ensure that the decisions of the G20 reflect the needs of the region. As part of the outcomes at the Commonwealth Heads of Government Meeting (CHOGM) in Perth (October 2011), Australia promoted the establishment of an officials-level Commonwealth meeting on the G20 development agenda to enhance Commonwealth countries’ voices on G20 issues. Australia encourages other G20 members to undertake outreach in their own regions, so that G20 decisions benefit all economies.

The Cannes Summit in November 2011 was dominated by discussion of the global economy, particularly the Eurozone sovereign debt crisis. Other issues discussed included financial regulation, trade, jobs, food security, agricultural productivity and development. At the conclusion of the summit, leaders released the Cannes Action Plan for Growth and Jobs to address short-term vulnerabilities and strengthen medium-term foundations for growth, including plans for a G20 taskforce on youth employment. Australia will host the G20 in 2014.


ASIA-PACIFIC ECONOMIC COOPERATION

The Asia-Pacific Economic Cooperation (APEC) is the leading economic forum for Australia’s engagement with the Asia-Pacific, the world’s fastest growing and most dynamic region. APEC has 21 member economies, including Canada, China, the United States and New Zealand. Two-way trade between Australia and APEC economies has risen from $82 billion, when APEC was formed in 1989, to $391 billion in 2010. Investment flows into Australia by APEC economies reached $859 billion in 2010 and outward Australian investment into the APEC region totalled $662 billion.

Australia plays a leading role in APEC, driving an ambitious agenda to provide support and momentum to the multilateral trading system, accelerating regional economic integration through trade, facilitating trade and investment liberalisation, intensifying structural economic reform, and promoting human security and institutional reform. In 2011, APEC economies agreed to resist protectionism and extend APEC’s standstill commitment to the end of 2015, reduce tariffs on environmental goods to 5% by the end of 2015, reduce region-wide energy intensity by 45% by 2035, implement policies to support market-driven innovation, address the top barriers to trade facing small and medium enterprises, implement good regulatory practices and structural reform priorities, and expedite business travel.

Australia has continued to promote in APEC the importance of structural economic reform as a way to boost growth and productivity. Structural reform has become a central pillar of APEC’s work, which Australia supports through its $3 million APEC Structural Reform Initiative. Australia has also welcomed the commitment to enhance the quality and efficiency of regulations in APEC economies, with a view to reducing the regulatory burdens on business. Australia supports APEC’s human security agenda to build resilience to disruptions to regional prosperity and stability, including from terrorism, disasters and disease.

To strengthen APEC’s links with business, Australia provides financial support to Australia’s APEC Business Advisory Council members – three top Australian business leaders appointed by the Prime Minister to ensure that APEC’s work aligns with business priorities and generates economic benefits.


ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Australia has been an active member of the OECD since 1971 and values the OECD’s evidence-based economic and social policy analysis and advice. The OECD is an important source of detailed analysis on a wide range of issues of interest to Australia, including productivity, trade, agriculture, the environment and climate change, and global food security. Australia is involved actively in the OECD’s extensive work programs on core economic policy issues, statistics, labour market issues, digital economy and cyberspace, governance, education, health, migration and energy.

Australia regularly participates in high-level OECD ministerial meetings and working-level projects. These have pursued, among other aims, structural reform to support long-term growth and wealth creation; a greater role for science, innovation and technology in economic growth; the development of productive and competitive, low carbon economies; and identifying market mechanisms to achieve least-cost transition. Australia supports the OECD’s increasing engagement with emerging and developing countries under its enhanced engagement program.


FREE TRADE AGREEMENTS

Consistent with the Government’s April 2011 trade policy statement, in negotiations with other countries Australia advocates comprehensive, high quality, truly liberalising bilateral and regional Free Trade Agreements (FTAs) that do not detract from, but support, the multilateral trading system. Australia’s FTAs promote stronger trade and commercial ties between participating countries, and create opportunities for Australian exporters and investors to expand their business into key markets.

As at 2011, Australia is negotiating bilateral FTAs with six trading partners – China, Japan, Korea, Malaysia, India and Indonesia. Australia is also negotiating a FTA with the Gulf Cooperation Council, a Pacific trade and economic agreement (PACER Plus) and the Trans-Pacific Partnership (TPP). Present TPP negotiating partners are Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Vietnam. Those countries have agreed to pursue an agreement that is comprehensive and ambitious in all areas, eliminating tariffs and other barriers to trade and investment.

Outcomes from these FTA negotiations will build on Australia’s existing agreements, which include a regional FTA with ASEAN and New Zealand, and bilateral FTAs with New Zealand, the United States, Singapore, Thailand and Chile.

The ASEAN-Australia-New Zealand FTA (AANZFTA) was signed in February 2009. It will be in force for all 12 countries following its entry into force for Indonesia on 10 January 2012. Australia’s largest FTA, the AANZFTA is designed to increase trade flows and broader economic integration through the use of regional supply chains. The AANZFTA has commercially meaningful benefits to Australian business and strengthens Australia's commercial ties with ASEAN. It contains substantial tariff reduction and elimination commitments, WTO-plus commitments in other areas such as services, and an economic co-operation work program to support its implementation, business utilisation and regional economic integration.

The Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), Australia’s longest-standing FTA, entered into force in 1983. It has underpinned strong growth in trade between the two countries, with average annual increases in two-way goods trade of 8% during the life of the agreement. ANZCERTA is notable for its comprehensiveness, providing for free trade on all goods and almost all services. In February 2011, Australia and New Zealand signed an investment protocol that will liberalise trans-Tasman investments and enhance investor certainty.

The Australia-United States FTA (AUSFTA), 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 US and has further harmonised the substantial services and investment relationship.

The Singapore-Australia FTA (SAFTA), which entered into force on 28 July 2003, has eliminated and bound all tariffs at zero. Australia’s principal market access gains from SAFTA are through liberalisation of the services sector. The Thailand-Australia FTA (TAFTA) has underpinned the growth in Australia’s trade with Thailand. TAFTA has eliminated approximately 94% of Thailand's tariffs on Australian exports, and the rest will be gradually phased out over coming years. Bilateral trade has more than doubled since the agreement entered into force on 1 January 2005.

The Australia-Chile Free Trade Agreement, which entered into force on 6 March 2009, is considered to be a model agreement. It is Australia’s only FTA with a Latin American country and is an important milestone in Australia’s enhanced engagement with that region. The agreement provided for immediate reduction of tariffs on 97% of goods traded on entry. Tariffs on all existing merchandise trade between Australia and Chile will be eliminated by 2015.

 

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Statistics contained in the Year Book are the most recent available at the time of preparation. In many cases, the ABS website and the websites of other organisations provide access to more recent data. Each Year Book table or graph and the bibliography at the end of each chapter provides hyperlinks to the most up to date data release where available.


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