1301.0 - Year Book Australia, 2008  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 07/02/2008   
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Contents >> International Relations >> Australia's economic interests


Trade and investment are vital to Australia’s economic prosperity. 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 2007 (see <http://www.dfat.gov.au/ trade/trade2007/index.html>) and are discussed at National Trade Consultations and meetings of the Trade Policy Council. Economic fact sheets for 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 has a major stake in maintaining a healthy, rules-based multilateral trading system. Australia is a strong supporter of the WTO, the only global body dealing with rules for trade between countries and the premier forum for multilateral trade liberalisation. Australia’s top trade priority is 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. After a six-month suspension, these negotiations resumed in February 2007. 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 Doha 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 Doha 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 size of tariff cuts.

Service industries comprise the largest sector of the Australian economy, accounting for 72% of GDP and employing 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. Australia takes a lead in discussions on geographical indications, patent disclosure requirements and the enforcement 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 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)

Australia strongly supports the APEC forum as the pre-eminent forum in the Asia-Pacific region and one which makes an important contribution to regional cooperation, economic growth and stability. APEC economies represent over 56% of global GDP and 44% of world trade and account for over two-thirds of Australia’s trade.

As host of APEC in 2007, Australia had the opportunity to influence the medium term direction of the forum, pursue important trade and foreign policy objectives, while showcasing Australia to key regional business and government leaders. During the course of 2007, Australia organised over 100 days of meetings, including nine ministerial meetings and a diverse range of meetings of officials, business representatives and academics. The APEC Economic Leaders' Meeting in Sydney on 8-9 September was the most significant gathering of international leaders ever held in Australia.

APEC’s economic agenda is focussed on three main areas: trade and investment liberalisation; business facilitation; and economic and technical cooperation. In 2007, Australia worked to achieve strong political commitment by APEC members to support for the WTO Doha Round and for measures to further enhance regional economic integration. Australia obtained agreement on APEC’s Second Trade Facilitation Action Plan, designed to achieve a further 5% reduction in trade transaction costs by 2010 and to the promotion of structural reform as an important APEC priority. Structural reform involves measures to improve market efficiency and the main themes APEC aims to tackle are regulatory reform, competition policy, public sector governance, corporate governance and strengthening the economic and legal infrastructure. Australia also drove work to achieve consistency in the proliferation of regional trade agreements (RTAs) and FTAs.

APEC has an important complementary agenda in areas such as energy security, counter-terrorism, secure trade, health and emergency preparedness. Australia led APEC’s responses to these challenges, which pose threats to growth, stability and security in the region. Australia for the first time placed climate change on the agenda for APEC Leaders which has helped to ensure that a strong Asia-Pacific perspective is registered in the evolving international debate on the post-Kyoto framework for climate change.

Australia has supported a range of reform measures intended to strengthen APEC institutionally. These measures included establishment of a Policy Support Unit, increased membership contributions to the budget and staffing changes to ensure a professionally managed Secretariat with greater continuity.

Responsibility for hosting APEC meetings rotates among members annually. Peru is to host APEC in 2008.
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’s longest-standing FTA is the ANZCERTA, 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. New Rules of Origin for establishing preferential tariff access for Australian and New Zealand goods in each others’ markets under ANZCERTA were introduced on 1 January 2007.

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 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 Thailand-Australia FTA has been important in underpinning growth in trade since its entry into force on 1 January 2005 when it eliminated tariffs on almost half of Thailand’s 5,000 tariff items. As a result, in 2006, over 80% of Australia's merchandise exports to Thailand were tariff free. Over 90% of Thai tariffs will be eliminated by 2010.

Australia is currently negotiating a number of FTAs. Negotiations with China were launched in April 2005. 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 on 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 greater 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. In December 2006, Australia and the GCC agreed to commence negotiations on an FTA. Australia and Japan, our largest export market, commenced bilateral FTA negotiations in April 2007. Australia and Chile commenced negotiations on an FTA in early 2007. A joint non-government FTA feasibility study with ROK commenced in April 2007. In July 2007, the Prime Minister of Australia and President of Indonesia agreed to commence a feasibility study to examine the merits of an FTA between Australia and Indonesia.

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