Annual Report 2003-2004
 

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Your location: Performance > Outcome 1 > Output 1.1 > 1.1.6 Trade development/policy coordination and Asia-Pacific Economic Cooperation

OUTPUT 1.1: Protection and advocacy of Australia’s international interests through the provision of policy advice to ministers and overseas diplomatic activity

1.1.6 Trade development/policy coordination and Asia-Pacific Economic Cooperation

On this page: Overview :: APEC :: ASEAN, Australia and New Zealand :: Indian Ocean Rim Association for Regional Cooperation (IOR–ARC) :: Export credit policy :: Trade policy coordination and business liaison

Overview

The department worked to maintain the standing of the Asia–Pacific Economic Cooperation (APEC) forum as the pre-eminent economic forum in the region. Since its formation in 1989, APEC has contributed to Australia's national prosperity, enhanced regional security and strengthened global cooperation in ways that advance Australia's interests.

Throughout 2003–04, the department successfully led efforts to shape and promote key elements of APEC's agenda, including trade and investment liberalisation and facilitation, structural reform, capacity-building, counter-terrorism and improving the security of trade. We were also instrumental in advancing initiatives aimed at strengthening APEC as a regional forum. The department led efforts towards deeper regional integration through the ASEAN Free Trade Area (AFTA)–Closer Economic Relationship (CER) Closer Economic Partnership (CEP). Another important outcome which demonstrated ASEAN's interest in deeper economic integration with Australia was the announcement of ASEAN support for an ASEAN, Australia and New Zealand Free Trade Agreement (FTA).

The department played a central role in the successful sale of the Export Finance and Insurance Corporation's (EFIC) short-term export credit insurance business. We also managed the whole-of-government coordination of National Interest Account (NIA) transactions, represented Australia in the Paris Club group of creditor nations and worked to advance disciplines on export credit agencies in the OECD.

The department ensured appropriate consultation and transparency in the trade policy formulation process and made available to the public considerable information about the Government's trade policy agenda. We produced the Trade 2004 statement, organised the National Trade Consultations with state governments and meetings of the Trade Policy Advisory Council and supported Mr Downer's participation in the World Economic Forum Annual Meeting. We also coordinated Australia's involvement in the Kimberley Process for rough diamonds, which helps protect the trade interests of Australian diamond producers.

APEC

Trade and investment liberalisation and facilitation

The department again led efforts to promote and implement APEC's trade and investment liberalisation and facilitation agenda in 2003–04. The Bogor goals of free and open trade and investment in the Asia–Pacific region remain the organising principle for APEC. We supported the Government's efforts in APEC to get the WTO Doha Round of multilateral trade negotiations back on track. The October 2003 APEC Leaders' Declaration was instrumental in re-energising the Doha Round following the disappointing outcome of the WTO Ministerial Conference in Cancún, Mexico in September 2003. Again in June 2004, APEC Ministers Responsible for Trade produced a strong and ambitious statement in support of the Round. As a result, APEC narrowed differences over key issues and helped pave the way for renewed progress in the negotiations in 2004. (See also sub-output 1.1.5).

We led efforts in APEC to highlight the fact that FTAs and regional trade agreements have the potential to contribute to the Bogor goals of free and open trade and investment in the region. In June 2004, we played a central role in securing the agreement of APEC Ministers Responsible for Trade on two initiatives—that APEC should:

Counter-terrorism in APEC

The department was an active participant in shaping APEC's counter-terrorism agenda and efforts to improve the security of trade. The agenda gained momentum in October 2003 when APEC Economic Leaders committed themselves to a complementary mission of 'ensuring the security of our people'. In making this commitment, Leaders acknowledged that there can be 'no prosperity without security'. The department worked closely with other APEC economies to achieve this outcome, recognising that Australia's national interest is heavily dependent on a stable Asia–Pacific region and the safe flow of people and trade within it. This complementary goal for APEC can only strengthen its relevance and standing in the region.

To support the case for implementing more secure transport security arrangements in the region, the department's Economic Analytical Unit (EAU) produced a report, Combating terrorism in the transport sector—Economic costs and benefits. The report demonstrates that longer-term economic efficiencies could be expected as a result of collective action within APEC to implement these, and other, secure trade measures.

We supported activities by other Australian government agencies to implement counter-terrorism initiatives in APEC, advocating and promoting the initiatives through the APEC senior officials meeting and relevant sub-forums. Initiatives included efforts by the Department of Immigration, Multicultural and Indigenous Affairs to develop an APEC electronic advance passenger clearance system and a possible trial of a people movement alert system that might include a shared database of lost and stolen passports.

The department worked within APEC's Counter-Terrorism Task Force and in consultations with other Australian Government agencies to support APEC's counter-terrorism capacity-building efforts, particularly in the area of transportation security. We worked closely with the United States in advancing a Regional Trade and Financial Security Initiative—a fund within the Asian Development Bank. The initiative will identify and finance port and border security measures in APEC developing economies, further improving coordination of regional trade security efforts. At the 2003 APEC Leaders' meeting, the Prime Minister announced a contribution of US$1 million to the fund.

Structural reform

The department was successful in encouraging support for accelerating the process of structural reform in the APEC region. Our approach received strong political support from Leaders at their meeting in Bangkok in October 2003. We continued to broaden the structural reform agenda with APEC, in recognition that such reform is required to ensure sustainable economic development and openness in the region.

The department prepared a report titled the Enforcement of business regulation and commercial laws in the APEC region. The report articulated enforcement experiences in commercial laws, corporate governance and competition policy. We also produced a booklet titled Strengthening commercial laws in the APEC region. It featured articles on best practice approaches to the key legal issues affecting APEC economies, including corporate governance, contract law, insolvency and intellectual property rights. More than 800 copies of the booklet have been distributed to APEC members, government agencies, legal associations and libraries. Feedback from these bodies was positive.

Advancing good corporate governance in APEC

APEC has identified corporate governance as a key consideration in trade and investment decisions. To promote this message, in April 2004, the department and the Malaysian Securities Commission sponsored a two-day APEC seminar in Kuala Lumpur on Enforcement in corporate governance. The seminar attracted around 60 participants from 14 APEC economies, including senior judges and regulators from across the Asia–Pacific region.

The seminar:

Participants rated the seminar as excellent and expressed considerable interest in further activities of this kind.

Capacity-building

One of APEC's pillars is capacity-building, where the more developed economies help other APEC economies acquire the policy and physical capacity to implement their APEC-related trade liberalisation, economic reform and security commitments. With the support of AusAID's APEC Support Program, the department has been able to undertake a range of capacity-building initiatives, including counter-terrorism initiatives, improving market access for small and medium enterprises, and implementation and enforcement of commercial law. The aim is to encourage liberalisation of trade and investment in APEC economies. All of these projects were supported and commended by large numbers of senior participants from developing APEC economies.

We have also begun work on capacity-building seminars on FTA negotiations and the business case for adopting internationally recognised product standards.

Strengthening APEC

The department has been leading efforts within APEC to strengthen the grouping as a key regional forum. The APEC Economic Leaders' Meeting (AELM) has become one of the most important meetings of global leaders held each year. Our objective is to ensure that APEC's work program fully supports Leaders' priorities. This agenda was specifically acknowledged and endorsed by the AELM held in Bangkok, Thailand, in October 2003.

We have led efforts in APEC to improve interaction with the business community, engage in more public outreach to explain APEC's objectives and achievements, ensure that APEC work programs better support APEC priorities, and that effective evaluation strategies for APEC forums and work programs are in place. The department has worked with AusAID to develop an evaluation strategy for APEC activities. The strategy now has broad support.

ASEAN, Australia and New Zealand

The AFTA–CER Closer Economic Partnership (CEP) aims to implement practical measures to lower business costs and reduce impediments to Australia's trade and investment with ASEAN. The department used the CEP to raise priority trade issues for Australian companies with ASEAN officials and business. Those issues include technical barriers to trade, non-tariff barriers, customs cooperation, trade and investment facilitation, capacity-building, standards and conformity assessment, e-commerce, and small and medium enterprises. In 2003–04, twelve separate projects were completed as part of the CEP work program, in the areas of standards, small and medium-size enterprises, and trade and investment.

To facilitate and expedite the CEP work program, relevant ASEAN sectoral working groups held consultations with CER to draw up work plans, including targets and timeframes. The department supported discussions on intellectual property, services, small and medium enterprises, standards and conformance, investment and customs. The outcomes of these discussions with ASEAN helped to shape the broader CEP work program.

The department continued to work closely with Australia's senior industry representatives on the AFTA–CER Business Council (ACBC) to ensure the CEP work program reflects business needs. In April 2004, two Australian representatives, Mr Wal King, CEO of Leighton Holdings, and Mr Peter O'Brien of Oceanis Australia, were appointed Co-Chairs of the ACBC for a two-year term.

Indian Ocean Rim Association for Regional Cooperation (IOR–ARC)

The department led efforts to ensure the October 2003 Colombo meeting adopted the High Level Task Force report on the future direction of IOR–ARC, a grouping of eighteen Indian Ocean littoral and island states. The key recommendation seeks to ensure the Association's activities are streamlined in order to develop a credible program in the trade and investment fields.

Export credit policy

The department worked with the Export Finance and Insurance Corporation (EFIC) to implement the sale of EFIC's short-term export credit insurance business to Atradius (formerly known as Gerling NCM). The sale was concluded at the end of September 2003, after Atradius had demonstrated its ability to support Australian exporters and provide improved services to them through an alliance period with EFIC.

The department managed the whole-of-government coordination of National Interest Account (NIA) transactions, which provide support to Australian exports deemed to be in the national interest and where the private market is unable to provide cover. The department arranged with EFIC to re-insure with the private sector existing assets on the NIA, thus boosting the quality of NIA exposures for the Australian taxpayer. Overall, the NIA supported $20.2 million worth of exports and $9.1 million was paid in claims. See administered items for Outcome 1 on page 140 for further details on the NIA.

The department continued to represent Australia in the Paris Club group of creditor nations, which coordinates the response of official creditors to requests from countries seeking debt relief. The Government announced in June 2004 that Australia was prepared to forgive most of the debt owed by Iraq to Australia, subject to negotiations in the Paris Club. These negotiations are ongoing. The Government also agreed to forgive Nicaragua's debt of $4.7 million under the Highly Indebted Poor Country (HIPC) initiative.

The department worked closely with other creditor countries in the Paris Club to conclude a new approach to debt relief for non-HIPC countries. The new approach, known as the 'Evian Approach', is designed to make debt relief more effective by being tailored to reflect the particular situation of individual debtor countries. In discussions on the new approach, the department worked closely with a group of like-minded creditors to ensure that it provided effective protection for sovereign exposures—official bilateral debt owed to Australia—while offering more effective debt relief for clearly defined needs.

The department worked to advance disciplines on export credit agencies in the OECD. We represented Australia in discussions in the OECD's Export Credits Group on environmental standards, and agreed with other members to work further on 'Common Approaches on Environment and Officially Supported Export Credits'. The department worked with other Cairns Group countries to advance disciplines in the WTO on export credits for agriculture.

Figure 13. Australia's exports by broad category 2003 (TEXT DESCRIPTION)

Figure 13. Australia's exports by broad category 2003

Source: ABS Catalogue 5302.0 Balance of payments and international investment position.

Trade policy coordination and business liaison

Trade 2004 statement

The department drafted the Minister for Trade's annual trade statement, launched in March 2004. Trade 2004 is an important public diplomacy document for the Minister and the department. It reports on priorities and strategies for pursuing Australia's trade interests and reviews Australia's 2003 trade outcomes. We issued with the statement an information brochure highlighting key points, a Fastfacts pamphlet on Australia's trade and a CD-ROM incorporating the statement, other trade policy materials and specialised teaching resources. The document was distributed widely by the department's state and territory offices.

National trade consultations

The department supported Mr Vaile in efforts to ensure that state and territory governments were fully informed and consulted on the Government's expanding trade priorities.

It facilitated Mr Vaile's consultations with state and territory ministers in November 2003 (Adelaide) and May 2004 (Hobart). The meetings were especially important given the states' increasingly active engagement with the Government's trade and investment agenda. Matters discussed included the Australia–United States Free Trade Agreement (AUSFTA); the Singapore–Australia Free Trade Agreement (SAFTA) review; the Trade and Economic Framework between Australia and China; the Thailand-Australia Free Trade Agreement (TAFTA); multilateral trade developments; assistance to exporters; and the trade development agenda.

In March 2004 the department held the first meeting of the new Senior Trade Officials' Group (STOG) in Canberra. The STOG is made up of one representative from each state and territory, and will meet at least twice a year before ministerial meetings.

The establishment of the STOG reflects the department's concern to ensure that the states and territories are fully informed and involved in the Government's trade policy work. Matters considered include state and territory trade facilitation strategies, their relationship with the Government's trade policy agenda, state and territory engagement in trade negotiations and their involvement in the implementation of trade treaties.

Throughout the year we also undertook a thematic, targeted approach in consulting with peak industry associations in all the main business and industry sectors, business representatives, and state and territory governments, particularly on FTAs. These consultations were integral in informing the trade policy agenda (see sub-output 1.3 for more information).

Trade Policy Advisory Council

The department continued to administer the Trade Policy Advisory Council (TPAC), a key source of business advice on trade policy. Mr Vaile held three TPAC meetings to seek business perspectives on Australian trade policy interests, including WTO negotiations, APEC developments, AUSFTA outcomes, the Australia–China FTA feasibility study, and closer economic ties with ASEAN. Members made presentations on specific issues of importance to Australia, including the impact of structural change in the air transport sector and of globalisation on the resources sector. TPAC also considered Australia's trade and investment relationships with a range of traditional and developing markets, including New Zealand, Malaysia, China and India.

World Economic Forum

The department supported Mr Downer's participation in the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland, in January 2004. Mr Downer used the WEF to highlight Australia's position on a range of social and strategic issues, and to promote Australia's economic credentials. Issues discussed included international terrorism, global security, building democracy, and Asian economic growth. Mr Downer also held private discussions with a number of high-level delegates at the meeting, including ministers and senior government representatives from Iraq, and garnered further support from US decision-makers for the AUSFTA negotiations.

Conflict diamonds

In cooperation with the Department of Industry, Tourism and Resources and the Australian Customs Service, the department coordinated Australia's involvement in the UN-sanctioned Kimberley Process Certification Scheme for rough diamonds, introduced on 1 January 2003. Australia's $600 million rough diamond export trade now benefits from a secure trading regime involving over 70 countries, including the world's major producers, distributors and polishers of rough diamonds.

The scheme targets the illegal trade in rough diamonds (known as 'conflict' diamonds), which have financed war and civil conflict in Africa. It balances the need to prevent trade in conflict diamonds with the requirement to facilitate the legitimate rough diamond trade. Under the scheme, trade in rough diamonds with non-participant countries is banned and shipments must be accompanied by certificates declaring that the diamonds have been handled in accordance with the scheme's requirements.

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Department of Foreign Affairs and Trade Annual Report 2003–2004
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