Annual Report 2004-2005

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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 :: Trade policy coordination and business liaison


The department worked to maintain the standing of the Asia–Pacific Economic Cooperation (APEC) forum as the region's pre-eminent multilateral forum. APEC's contribution to regional cooperation, economic growth and stability in the Asia–Pacific remains integral to Australia's national interest. The department led efforts to promote and implement key elements of APEC's agenda, including trade and investment liberalisation and facilitation, counter-terrorism and secure trade, and disaster response and emergency preparedness.

To reinforce Australia's standing as a major driver of APEC and to ensure that the forum's future agenda continues to advance Australia's trade and foreign policy goals, we began early policy planning for Australia's hosting of APEC 2007.

To devise and promote trade policy that met public and commercial expectations, the department consulted business and community groups and made publicly available a considerable amount of information about the Government's trade policy agenda. This information included the annual, policy-setting Trade 2005 statement, which Mr Vaile delivered and we drafted.

The department worked closely with the Department of Agriculture, Fisheries and Forestry in negotiating memorandums of understanding with four live-animal trading partners (the United Arab Emirates, Kuwait, Saudi Arabia and Jordan), solidifying relations with these important markets. We coordinated Australia's involvement in the Kimberley Process Certification Scheme for rough diamonds to help protect the trade interests of Australian diamond producers.

Consistent with the Government's objective of a democratic, stable and economically independent Iraq, the department contributed effectively to successful Paris Club negotiations on the forgiveness of Iraq's debt.


Photo - See caption below for description
From left to right: Mr Chip Goodyear (CEO BHP), Minister for Trade Mr Mark Vaile, Sr. Diego Hernandez (President BHP), and Sr. Mauro Valdes (Vice President of Public Affairs, Minera Escondida), attend the BHP Copper Art Exhibition in Santiago, Chile during APEC 2004.
Enlarge image :: Photo gallery

Trade and investment liberalisation and facilitation

The department worked throughout the year to promote and implement APEC's trade and investment liberalisation and facilitation agenda.

We led the Government's efforts within APEC to push forward the Doha Round of World Trade Organization (WTO) multilateral trade negotiations by working closely with other economies to develop common policy positions on key negotiating items. In a breakthrough for the Doha Round, APEC economies agreed for the first time in June 2005 on a common formula (the 'Swiss formula') to calculate tariff reductions for industrial goods. The Swiss formula involves steeper cuts to higher tariffs in order to harmonise tariff rates across countries. This would greatly reduce the gap between high and low tariff rates and set a top limit for all tariffs. The department played a central role in advocating this outcome and drafting language for the statement. As a country with relatively low tariffs, this approach is in Australia's interests.

At meetings in Chile in November 2004 and in the Republic of Korea in June 2005, the department played a lead role in drafting APEC Leaders' and Ministers' statements demonstrating support for Doha Round negotiations and committing APEC economies to an ambitious work program in the lead-up to the Sixth WTO Ministerial Conference in December 2005.

APEC's goals of free and open trade and investment in the Asia–Pacific region—known as 'the Bogor Goals'—remain the key organising principle for APEC. In support of these goals, the department led efforts to have APEC Leaders launch the Santiago Initiative for Expanded Trade in APEC in November 2004. The initiative commits economies to further liberalise trade and investment in the region, reduce business transaction costs and promote secure trade. We joined several other APEC economies to oversee work in 2005 on a mid-term stocktake of progress towards the Bogor Goals. The aim is to provide clear recommendations towards achieving the objective of an open, predictable and non-discriminatory trading environment in the Asia–Pacific. Our involvement included contributing to a symposium on the issue in the Republic of Korea in May 2005 and securing senior officials' agreement on the modalities, content and timeline for the stocktake. The latter was based on a paper prepared by the department. Final recommendations will be provided to APEC Ministers and Leaders in November 2005.

Discovering the real benefits of freer trade and investment in the APEC region

As a contribution to the mid-term stocktake of progress towards the Bogor Goals—the name given to APEC's goals of free and open trade and investment in the Asia–Pacific—the department commissioned a report Open economies delivering to people, 2005: Regional integration and outcomes in the APEC region.

The report outlines the significant liberalisation of trade and investment in the Asia–Pacific region since APEC's formation, and shows how these gains have delivered vital social and welfare benefits to the region's people, particularly those from developing economies. The benefits include:

The report is available at:

The department led efforts within APEC to advance understanding of the positive contribution that FTAs and regional trade agreements (RTAs) make to free and open trade, and to encourage the development of high-quality, well-constructed regional FTAs that are comprehensive, transparent and trade-liberalising. We played a central role in developing two tools APEC members can use in pursuit of those goals:

These initiatives will help APEC economies progress towards the Bogor Goals, increase market access and reduce costs to business in the region for Australian exporters.


Source: ABS Catalogue 5302.0 Balance of Payments and International Investment Position, March Quarter 2005.

The department further promoted the benefits of high-quality trade agreements by developing and co-hosting two FTA negotiations workshops held in Beijing and Bandar Seri Begawan in December 2004. Funded through AusAID's APEC Support Program, these workshops trained government officials from around the APEC region on major issues surrounding the lifecycle of FTA negotiations, including: identifying negotiating partners; maximising domestic support; options for liberalising trade in goods and services and freeing up investment flows; and ratification, implementation and review of agreements. More than 100 participants from 12 APEC economies attended, including sponsored participants from Indonesia, Papua New Guinea, the Philippines, Thailand and Vietnam. The accompanying report, Negotiating free trade agreements: A guide, was launched at the APEC Ministers Responsible for Trade Meeting in June 2005.

The department organised a workshop on preferential rules of origin (ROOs) held in Seoul in February 2005. It brought together market access experts and trade policy practitioners from the APEC region to examine the market access implications of ROOs as they apply to FTAs, such as approaches to tariff classification. The workshop was well received and contributed to Australia's promotion of high-quality FTAs/RTAs in the region.

Counter-terrorism and secure trade in APEC

The department remained active in shaping APEC's counter-terrorism and secure trade agenda. Secure trade—the safe movement of goods and people in the region through measures to protect cargo, ships, international aviation and people in transit—has become a priority for APEC to counteract increased barriers and costs to trade arising from the heightened international security environment.

We worked closely with other government agencies to secure APEC economies' agreement to implement effective export control systems for weapons of mass destruction, as well as ministers' agreement on guidelines for controlling Man-Portable Air Defence Systems (MANPADS). We continued to support the Department of Immigration and Multicultural and Indigenous Affairs' efforts to develop and trial the APEC Regional Movement Alert List (RMAL) passports system. At the front line of defence against illegal movements of people, including possibly terrorists, this system will enable border officials to use computer databases to make immediate checks on passenger movements and compare them against records of lost and stolen passports.

In response to regional concerns about security imperatives increasing business costs, the department produced the report APEC: Best practice in secure trade, which used case studies from around the APEC region to demonstrate how economies can meet the challenge of protecting their people while at the same time securing and facilitating trade. The report is an important public diplomacy tool in the Government's efforts to promote responsible trade practices within APEC, consistent with the Government's priorities.

Australia takes a leading role in APEC's tsunami response

Australia's leading role in the regional response to the Indian Ocean tsunami disaster was cemented when the department took on the role of co-chair, with Indonesia, of the APEC Task Force on Emergency Preparedness.

Established by APEC Senior Officials in March 2005, the Task Force held its inaugural meeting in Bali on 2–3 May 2005. By building regional networks and facilitating information-sharing between disaster-management experts, it aims to strengthen coordination among APEC member economies in preparing for and responding to regional emergencies such as disease outbreaks, natural disasters and terrorist actions (see sub-output 2.1.1 for more information on Australia's tsunami response).


The department continued to be a leading contributor to APEC's capacity-building work program, helping other APEC economies develop the intellectual and physical capacity to implement their APEC trade liberalisation, facilitation, economic reform and security commitments. In November 2004 APEC Leaders endorsed an Australian proposal to establish an APEC Support Fund to supplement resources available for APEC's capacity-building work. Australia will contribute $3 million over three years to the fund and has played a key role in developing its functions. The fund will begin operation before the end of 2005.

With the assistance of AusAID's APEC Support Program, the department coordinated capacity-building workshops covering FTA negotiations (see page 85) and the adoption of internationally recognised product standards. More than 100 regional participants attended the standards workshops, which helped participants understand the importance of high-quality standards and conformance regimes to facilitating trade and investment, improving competitiveness and reducing business costs.

Under AusAID's Public Sector Linkages Program for Asia, the department began three capacity-building projects for APEC developing economies. These projects will involve follow-up workshops on FTA negotiations, anti-corruption and international commercial dispute resolution. The program will help advance understanding within APEC of issues central to Australian objectives.

Strengthening APEC

The department led efforts to strengthen APEC as a key regional forum by advocating strongly that the forum's work program should respond directly to priorities established by APEC Leaders. We also worked to improve APEC's interaction with the business community by holding regular meetings with Australian APEC Business Advisory Council (ABAC) members to discuss developments in APEC and advocating reform of APEC operating procedures to make them more business-friendly and efficient.

We engaged in public outreach to explain APEC's objectives and achievements, producing a number of APEC-related publications, maintaining an up-to-date APEC section of the department's website and conducting an annual APEC Business Forum. Recent survey results suggest a high level of awareness of APEC in the Australian community.

APEC 2007

The department is responsible for coordinating Australia's role as host of APEC in 2007. We are leading policy coordination and public and media outreach for Australia's host year, and working closely with the Department of the Prime Minister and Cabinet task force responsible for meeting logistics and security planning. We have begun early policy planning for the event, with a view to ensuring real progress in the APEC work program in 2007, reinforcing Australia's standing as a major driver of APEC and producing strong outcomes that strengthen APEC as the key regional forum.

The department has initiated a public outreach strategy, initially involving ABAC and state and territory government officials. This will ensure that the Australian public, and in particular the business community, derives maximum benefit from APEC 2007. The strategy will showcase Australian society and culture to the international community.

Indian Ocean Rim Association for Regional Cooperation

The department successfully lobbied Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) member countries to participate in workshops on fisheries cooperation and management in Oman, and a disaster mitigation and management workshop in India—which took on greater relevance following the Indian Ocean tsunami disaster. Both workshops contributed directly to Australia's policy interests.

Trade finance

The department was heavily involved in prolonged Paris Club negotiations on the forgiveness of Iraq's debt. These negotiations produced international agreement, in part shaped by Australia, allowing secure recovery of a proportion of the debt, along with debt forgiveness of an order that will substantially help Iraq stabilise and renovate its economy.

We led the Australian team for negotiations on introduction of a debt moratorium for tsunami-affected countries. The final structure of that decision reflected sustained Australian lobbying within the Paris Club, and will help to ease the debt burden on affected countries during their extended rehabilitation and recovery phases.

Trade policy coordination and business liaison

Trade 2005 statement

The department drafted the Minister for Trade's annual trade statement, launched in April 2005. Trade 2005 is an important public diplomacy document for the minister and the department. It highlights priorities and strategies for pursuing Australia's national trade interests and reviews Australia's 2004 trade outcomes. We issued concurrently a comprehensive Trade Resources Kit CD-ROM incorporating the statement, other trade policy materials, statistics and specialised teaching resources. The resource was distributed widely by the department and Austrade and has been used as an advocacy tool to highlight the Government's achievements across the trade agenda.

National trade consultations

Trade consultation processes between the department and the states and territories were further enhanced, especially through frequent meetings of the Senior Trade Officials' Group (STOG), comprising one representative from each state and territory, which the department chairs. Close engagement with the states and territories was particularly important in the context of FTA negotiations and the Government's revised services offer in the Doha Round, where a unified and coordinated whole of government approach strengthened Australia's position.

Live animal exports

The department continued to work actively with the Department of Agriculture, Fisheries and Forestry to secure memorandums of understanding (MOUs) on the live animal trade with Middle Eastern trading partners. During 2004–05, joint departmental teams succeeded in concluding MOUs with four countries: the United Arab Emirates, Kuwait, Saudi Arabia and Jordan. An MOU on cooperation on agricultural issues was also concluded with Eritrea. This set of MOUs has created a more robust and durable framework for Australia's live animal trade with the region. For example, each of the MOUs has a key provision that all animals suspected of carrying disease will be offloaded into a quarantine facility for testing. With the Department of Agriculture, Fisheries and Forestry, we will continue negotiating in 2005–06 with the remaining trading partners in the region.

Given the importance of the Australian wool industry to the economy, we assisted the industry by explaining Australia's animal health and welfare policies and practices to overseas wool users, in particular through posts in Europe, North America and India.

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 $508 million diamond export trade now benefits from a secure trading regime involving over 70 countries, including the world's major producers, traders 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. Under the scheme, trade in rough diamonds with non-participant countries is banned and shipments must be accompanied by certificates declaring they have been handled in accordance with the scheme's requirements. Around 98 per cent of the rough diamond trade is now covered by the scheme.

Australia was an inaugural member of the scheme and is a member of the ad hoc working group that is mandated to carry out a review of the impact of the Kimberley Process Certification Scheme. The working group has been mandated to provide by 31 December 2006 a report of the review findings and recommendations. Australia is also a member of the Working Group of Diamond Experts and Technical Issues. This working group has been tasked to identify technical and practical problems in the implementation of the Kimberley Process Certification Scheme, to suggest solutions and to provide technical assistance.

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Department of Foreign Affairs and Trade Annual Report 2004–2005
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