1301.0 - Year Book Australia, 2009–10  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 04/06/2010   
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Contents >> International Relations >> Australia's economic interests


Successive Australian Governments have recognised the importance of foreign investment inflows to expand the economy over the medium- to long-term. Such investments create new jobs and support existing jobs; boost innovation, research and development; introduce new technologies and techniques; and promote a competitive environment within the business sector. Similarly an open, liberal trading environment provides significant benefits to Australia.

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. The government takes a twin-pillars approach to trade policy. The first pillar is reform at-the-border through trade agreements; the second is dealing with the behind-the-border issues of structural reform. The Council of Australian Governments (COAG) Ministerial Council on International Trade facilitates cooperation between the Commonwealth and state and territory governments on measures to enhance Australia’s international competitiveness and export performance.

Details of Australia’s trade policies and practices are available at <http://www.dfat.gov.au/trade>. Trade and economic fact sheets for 175 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 has a major stake in maintaining a healthy, rules-based multilateral trading system. Australia is a strong supporter of the World Trade Organization (WTO), the only global body overseeing the rules for trade between countries and the premier forum for multilateral trade liberalisation. Australia’s top trade priority remains the successful conclusion of the current round of WTO trade negotiations, known as the Doha Round, which was launched in November 2001. A successful Round would stimulate global economic growth and create substantial new trade opportunities for Australian businesses through global market openings.

Following a period of subdued political engagement on the Round after the breakdown of talks at the WTO Ministerial Meeting in July 2008, engagement intensified in 2009. The global economic crisis has underlined the importance of concluding the Round to safeguard against protectionism and rekindle economic growth through open markets, particularly for those developing countries most affected by the economic downturn.

The Australian Government supports the WTO’s monitoring of trade and trade-related measures taken since the beginning of the global economic crisis. The fact that there has not been a descent into high intensity protectionism emphasises the important role of multilateral trade rules in preventing protectionism.

At the G20 Leaders’ Summit in Pittsburgh, Leaders committed to refrain from raising barriers or imposing new barriers to trade in goods and services. They reaffirmed their commitment to seek an ambitious and balanced conclusion to the Round in 2010 and asked Trade Ministers to take stock of the situation no later than early 2010. The Australian Government is committed to using all opportunities of engagement to achieve this.

The Australian Government’s objective is to maximise market access for agriculture, industrial products and services, as well as to reduce trade-distorting subsidies and further strengthen WTO rules.

With agricultural trade highly distorted by barriers as well as subsidies, Australia has been a strong voice for reform in the Round, particularly as leader of the Cairns Group. A coalition of 19 agricultural exporting countries from the Americas, Africa, Asia and the Pacific, the Cairns Group plays an influential role in the negotiations.

Australia also continues to work in the Round for tangible improvements in market access for industrial products (including manufactured goods, minerals, energy, forestry and fisheries). Broad agreement has been reached on the formula for cutting tariffs on industrial products, but significant differences remain on the need for additional liberalisation at the sectoral level.

Service industries comprise the largest sector of the Australian economy, accounting for 70 per cent of GDP and employing more than four out of five Australians. Accordingly, the Australian Government gives high priority to the Doha negotiations on services. Australia’s main objectives are to make it easier for Australian services providers to establish operations overseas, for professionals to work temporarily overseas, and to ensure regulations do not act as unjustifiable barriers to trade.

Given its strong research tradition and need to access new technologies, Australia is active in the WTO in protecting its intellectual property interests, particularly through the effective implementation of the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights.

Beyond the Doha Round, Australia uses the WTO in a number of ways to advance its trade interests. The WTO dispute settlement system enables countries to seek binding rulings where they consider others are not applying WTO trade rules correctly. It has removed some of the most distorting global trade practices. Australia also negotiates with countries seeking to join the WTO to ensure that they make appropriate commitments to liberalise their markets. Australia contributes to the WTO’s development activities to assistant developing countries’ fair participation in the multilateral trading system. Australia participates regularly in a wide range of WTO committee meetings, such as the Committees on Agriculture and on Regional Trade Agreements.

Asia-Pacific Economic Cooperation (APEC)

APEC has evolved to become the leading economic forum in our region, bringing together the Leaders of 21 Asia-Pacific economies, including many of Australia’s major trading partners. APEC economies account for 68.1 per cent of Australia’s two-way trade in goods and services. Together, APEC economies account for 54.2 per cent of global GDP, 43.7 per cent of world trade and around 40.5 per cent of the world’s population. APEC is a major driving force in promoting open trade and investment, sustainable economic development and prosperity in our region. APEC celebrates its 20th anniversary in 2009.

Australia plays a leading role in APEC, driving an ambitious agenda to: provide support and momentum to the multilateral trading system; accelerate regional economic integration through trade; facilitate trade and investment liberalisation; intensify structural economic reform; and promote human security and institutional reform. Australia assisted Singapore in 2009 to drive the implementation of the initiatives set in train during Australia’s host year in 2007.

Australia is actively involved in efforts to facilitate trade in services, make rules of origin more ‘business friendly’, enhance trade logistics, conduct analytical work on a possible Free Trade Area of the Asia Pacific (FTAAP), and implement APEC’s trade and investment facilitation action plans. It has also contributed substantially to an APEC initiative to promote expanded trade in environmental goods and services.
Australia was instrumental in helping to secure APEC agreement on the fundamental importance of tackling ‘behind-the-border’ barriers to trade and investment. Australia has been vocal in APEC on the importance of structural economic reform as a way to boost growth and productivity, and to insulate the Asia-Pacific region form external economic shocks. Australia is working with APEC partners to identify how different institutional frameworks, processes and strategies could help economies successfully achieve reform.

Australia supports APEC’s human security agenda to build resilience to disruptions to regional prosperity and stability, including from terrorism, disasters and disease. Australia co-chaired, with Indonesia, APEC’s Task Force on Emergency Preparedness. Australia announced an additional $1 million contribution for APEC human security projects in November 2008.

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 APEC’s work aligns with business priorities and generates economic benefits.

Strengthening APEC is a key priority for Australia. In 2008-09, Australia was instrumental in efforts to create the position of APEC’s first fixed-term Executive Director, which will provide greater continuity and leadership in the APEC Secretariat in the coming year.

Australia is working closely with the current and two incoming APEC hosts - Singapore, Japan, the United States - to ensure that APEC remains ambitious and able to achieve its immediate and longer-term priorities.

Free Trade Agreements (FTAs)

FTAs promote stronger trade and commercial ties between participating countries, and open up opportunities for Australian exporters and investors to expand their business into key markets. They can speed up trade liberalisation by delivering gains faster than through multilateral or regional processes. FTAs that are comprehensive in scope and coverage can complement and provide momentum to Australia’s wider multilateral trade objectives.

Australia has bilateral FTAs with New Zealand, the United States of America (USA), Singapore, Thailand and Chile, and a regional FTA with ASEAN and New Zealand.

The Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), Australia’s longest-standing FTA, entered into force in 1983. ANZCERTA is notable for its comprehensiveness, providing for free trade on all goods and almost all services. It has underpinned strong growth in trade between the two countries, with average annual increases of nine per cent during the life of the agreement.

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 has further harmonised our 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 been important in underpinning growth in trade. On entry into force on 1 January 2005 it eliminated tariffs on around half of Thailand’s tariff items, accounting for roughly 80 per cent of Thai imports from Australia. A further 41 per cent of Thai tariffs will be phased to zero by 2010.
The Australia-Chile Free Trade Agreement (FTA), which entered into force on 6 March 2009, is Australia’s first FTA with a Latin American country and is an important milestone in Australia’s enhanced engagement with that region. The agreement provides for immediate reduction of tariffs on 97 per cent of goods currently traded on entry into force. Tariffs on all existing merchandise trade between Australia and Chile will be eliminated by 2015.

The Agreement Establishing the Association of Southeast Asian Nations (ASEAN)-Australia-New Zealand Free Trade Area (AANZFTA) was signed in February 2009 and will enter into force on 1 January 2010. AANZFTA is the largest FTA Australia has concluded. AANZFTA contains regional rules of origin and substantial tariff reduction and elimination commitments, as well as World Trade Organization (WTO)-plus commitments in other areas such as services, which will provide commercially meaningful benefits to Australian business and further strengthen Australia's commercial ties with ASEAN.

Australia is currently negotiating seven FTAs - bilateral FTAs with China, Japan, Korea and Malaysia, and regional/plurilateral FTAs with the Gulf Cooperation Council, the Trans-Pacific Partnership (TPP) and a new Pacific trade and economic agreement (PACER Plus). The website at: <http://www.dfat.gov.au/trade/ftas.html> provides more information about Australia’s existing FTAs and ongoing FTA negotiations.


G20 Leaders met in November 2008 as a first step in a coordinated international response to the unfolding global economic crisis. A second Summit was held in London in April 2009, and a third in Pittsburgh in September 2009. At the Pittsburgh Summit, Leaders designated the G20 as the pre-eminent global forum for economic cooperation. This designation recognises the success of the G20’s coordinated response to the global economic crisis.

The G20 derives its legitimacy from the balance of its membership. It comprises key developed and developing countries from all regions of the world: Argentina, Australia, Brazil, Canada, China, the EU, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK and the US. Together, member countries make up about 80 per cent of global trade and more than two-thirds of the world’s population.

The G20 Leaders’ Summit process emerged out of the Group of 20 Financial Ministers and Central Bank Governors, which was created in 1999 as a response to the financial crises of the late 1990s.

During the three Summits, leaders committed to measures to restore global growth and jobs via economic stimulus packages, to modernise international financial institutions, such as the International Monetary Fund and the World Bank, and to build a stronger, more globally consistent supervisory and regulatory framework. They also agreed to combat protectionism and to make all efforts to conclude the WTO Doha Round in 2010. At the Pittsburgh Summit, Leaders also agreed to establish a new framework for strong, sustainable balanced growth.

The coordinated and substantial policy responses by the G20 over the three Summits has contributed to a rise in global consumer and business confidence and supported the first tentative signs of global economic recovery. International trade has started to recover and industrial output has risen in nearly all G20 economies.

The decision to make the G20 the pre-eminent forum for global economic cooperation was an historic one for Australia, as it was the first time Australia had secured a permanent seat at the key international forum for global economic decision-making.

Two G20 Leaders Summits will be held in 2010 in Canada and Korea.

More detailed information of the G20’s decisions can be found at <http://www.g20.org/pub_communiques.aspx>.

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