Annual Report 2006-2007
 

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Your location: Performance > Outcome 1 > Output 1.1 > 1.1.7 Bilateral, regional and multilateral trade negotiations

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

1.1.7 Bilateral, regional and multilateral trade negotiations

On this page: Overview :: WTO Doha Round negotiations :: Supporting the WTO and trade liberalisation in other international trade bodies :: WTO Compliance and dispute settlement :: WTO accessions ::New free trade agreement negotiations :: Implementation of existing free trade agreements :: Outlook

Overview

The department pursued vigorously the reduction of trade barriers and expansion of Australia’s markets through multilateral, regional and bilateral trade negotiations.

Our top trade priority in 2006–07 remained the successful conclusion of the World Trade Organization (WTO) Doha Round negotiations across the core areas of agriculture, industrial products and services in a manner that delivers commercially meaningful new trade opportunities. A successful Doha Round would stimulate global economic growth and create substantial new opportunities for Australian businesses.

Following the suspension of the Doha Round in July 2006, the department was at the forefront of attempts to revive the negotiations, including by supporting the efforts of Mr Truss and his predecessor Mr Vaile to bring WTO ministers back to the negotiating table. Once negotiations resumed in February 2007, Australia was actively engaged, including through our leadership of the Cairns Group of agricultural exporters. In June 2007, an attempt by the United States, European Union (EU), Brazil and India (known as the G4) to bridge the key gaps on agriculture and industrial products broke down. While this was a disappointing setback, WTO members remain committed to concluding the Round as soon as possible.

The department led Australia’s participation in a number of WTO disputes in 2006–07, advancing our commercial and systemic legal interests. We agreed with the EU on a bilateral solution to its challenge to Australia’s quarantine regime. We coordinated Australia’s involvement as a third party in important WTO disputes, including Brazil’s challenge to US cotton subsidies and challenges to the EU’s import regime for biotech products and China’s for automotive parts. The department also advanced Australia’s trade interests in a wide range of WTO committees, including those on Agriculture and on Regional Trade Agreements.

The department oversaw the implementation of the Government’s expanded bilateral and regional trade liberalisation agenda, including the commencement of free trade agreement negotiations with Japan, the Gulf Cooperation Council and Chile.

The department continued to engage with key stakeholders on the Government’s trade policy agenda. Departmental officials met frequently with Australian state and territory governments, industry, academics and non-government organisations. The department published regular electronic bulletins on the Doha Round, the Doha services negotiations, the WTO dispute settlement system and FTA negotiations.

The department, through Australia’s OECD delegation in Paris, influenced the OECD’s deliberations on enlargement of its membership and its decision to enhance engagement with South-East Asia, particularly Indonesia.

WTO Doha Round negotiations

The department’s key objective in the Doha Round negotiations is to maximise market access outcomes for Australia on agriculture, industrial products and services, as well as to reduce agricultural subsidies and further strengthen WTO rules.

Following the resumption of negotiations in February 2007, Australia continued to be a major contributor to the effort to secure worthwhile outcomes, particularly as Chair of the Cairns Group. In support of Mr Truss’s efforts, the department worked closely with the major trading powers, including the G4 countries, to find a way forward. Although the G4 were not able to reach agreement, they did make some important progress on key issues under negotiation. The department facilitated Mr Truss’s participation in the G6 (G4 members plus Australia and Japan), which met at ministerial level in April and May 2007 in New Delhi and Paris respectively.

WTO members are working hard to take the negotiations forward, including by focusing on draft texts on agriculture and industrial products. While some progress has been made, significant divergences remain. The department will continue to give the highest priority to concluding the Doha Round in a way that delivers a commercially worthwhile outcome.

Agriculture

Photo - See caption below for description
The former Minister for Trade, Mr Mark Vaile (sixth from right), with his Cairns Group colleagues at the 20th Anniversary Cairns Group Ministerial Meeting in Cairns on 20–22 September 2006. At the meeting, ministers reaffirmed the Group’s commitment to achieving ambitious outcomes on agricultural trade liberalisation in the Doha Round of WTO negotiations.
Enlarge image :: Photo gallery

The department maintained pressure for an ambitious Doha Round outcome on agriculture, which is still the most distorted sector of global trade in goods and remains at centre stage in the negotiations. We continued to press WTO members to deliver real improvements in market access for Australian producers, as well as substantial reductions in trade-distorting subsidies. We worked closely with key agricultural industry groups, including the National Farmers’ Federation, to refine Australia’s positions and strategies on agricultural negotiating issues.

The Cairns Group of 19 agricultural exporting countries, led by Australia, remained active in the negotiations and a strong voice for agricultural trade reform throughout the year. Cairns Group ministers met for the 20th Anniversary of the Group in Cairns in September 2006 and again in Lahore, Pakistan, in April 2007, reaffirming their strong commitment to a successful conclusion to the Doha Round. The Group welcomed Peru as its nineteenth member. It produced a number of influential proposals in key areas of the negotiations, including on sensitive products, tropical products, food aid and export credits, and the special agricultural safeguard.

The department worked closely with the wine industry to conclude negotiations with the United States, Chile, Argentina, New Zealand and Canada on the World Wine Trade Group Agreement on Wine Labelling. The Agreement was signed by Mr Truss in January 2007 and will allow producers to develop a common label acceptable in all major wine markets, reducing production costs. Wine is Australia’s third-largest agricultural export, worth about $3 billion annually and employing 30 000 people in Australia.

FIGURE 13. Direction of Australia’s exports 2006

FIGURE 13. Direction of Australia’s exports 2006
Source: DFAT STARS database and ABS Catalogue 5368.0.

Industrials

Departmental officials continued to work in the Doha Round negotiations for commercially meaningful improvements in market access for industrial products (including manufactured goods, minerals, energy, forestry and fisheries). We consulted closely with industry to ensure the department focused on products of most interest to Australian exporters.

Although broad agreement was reached about the formula for cutting tariffs on industrial products, significant differences of view remain on the size of tariff cuts. This reflected the reluctance of key developing countries to cut industrial tariffs without more progress on agriculture, as well as the fact that the industrial sector remains sensitive for a number of countries. Some limited progress was made on a number of other issues, including the treatment of non-tariff barriers and in developing proposals for the liberalisation of specific sectors.

Services

Given the importance of services in the Australian economy, the department continued to place a high priority on improving access through the Doha Round to overseas markets for services exports. The department’s main objectives are to make it easier for Australian services providers to set up operations overseas, for professionals to work temporarily overseas, and to ensure regulations do not act as unnecessary barriers to trade. We worked closely with domestic agencies, industry and like-minded WTO members, focusing on the financial, telecommunications, education, mining-related, environmental and professional services sectors.

Progress on services market access was hampered by the lack of agreement on agriculture and industrial products. Until progress is made on those issues, developing countries are likely to continue to resist tabling improved services offers. Nevertheless, some progress was made in key markets of interest to Australia, including in Asia, and by focusing more on specific sectors such as education and professional services.

The department participated in negotiations regarding possible rules on the domestic regulation of services. Without compromising the rights of governments to regulate or creating unnecessary administrative burdens, strong disciplines on domestic regulation (covering qualifications requirements and procedures, licensing and technical standards) would benefit Australian services exporters by tackling protectionism disguised as regulation.

Apart from the Doha Round negotiations, the department led efforts in the WTO’s review of air transport services to lock in liberalisation of ancillary air transport services, including ground handling and airport operation services. We successfully negotiated improved services access as compensation for changes made by the EU and the United States to their scheduled WTO commitments.

Intellectual property

The department was active in advocating Australia’s intellectual property (IP) interests internationally, reflecting a growing bilateral, regional and multilateral IP agenda.

In the WTO, the department played an active role on a range of commercially sensitive IP issues, including geographical indications, patent disclosure requirements and the effective enforcement of IP rights. We protected and promoted Australia’s IP interests in other multilateral forums, including the World Intellectual Property Organization and the World Health Organization. We managed the treaty-making process for Australia’s accession to the Protocol on Amending the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights, which will allow developing countries greater access to affordable medicines.

The department worked in the APEC Intellectual Property Experts Group to promote Australia’s IP interests, including by encouraging the effective enforcement of IP rights and by assisting APEC members to implement their IP commitments. We also contributed to the Government’s response to industry reviews designed to enhance Australia’s domestic IP regime, including the Advisory Council on Intellectual Property’s report on patents and experimental use, and the Australian Law Reform Commission’s report on gene patenting and human health.

WTO rules, including trade facilitation

The department led Australia’s participation in negotiations on WTO rules (anti-dumping, subsidies and fisheries subsidies). Australia tabled proposals on prohibited export subsidies, which seek to provide increased fairness and certainty for Australian exporters. We helped advance negotiations on strengthening WTO rules to discipline fisheries subsidies, which would reduce overfishing and overcapacity.

The department continued to play a leading role in negotiations to build on WTO rules on free trade agreements (FTAs). In December 2006, the WTO adopted a transparency mechanism providing increased scrutiny of FTAs to ensure they are trade liberalising and WTO consistent. The Thailand–Australia FTA (TAFTA) was the first FTA to be reviewed under the mechanism. TAFTA was well received by WTO members who commented positively on the standard and coverage of the FTA. The Australia–United States FTA is scheduled to be reviewed in the near future. The department will continue to pursue stronger WTO rules on FTAs.

The Doha negotiations on trade facilitation intensified. The outcomes have the potential to reduce the costs and time associated with the import, export and transit of goods across borders. The department’s work focused on developing rules that would reduce business costs by simplifying customs procedures and making them more predictable and transparent.

WTO development agenda

Photo - See caption below for description
Minister for Trade, Mr Warren Truss (right), meets WTO Director-General, Mr Pascal Lamy, at the WTO Secretariat in Geneva in November 2006 to discuss the Doha Round of negotiations.
Enlarge image :: Photo gallery

Australia believes that a successful Doha Round is a key means for advancing development and helping to alleviate global poverty.

The department continued to advocate the need for trade reform in core negotiating areas, particularly agriculture, in order to deliver on the Doha Round’s development mandate. Agriculture is marked by high levels of trade distortion and is the sector from which the majority of developing country populations derive their livelihood. Australia worked closely with developing country agricultural exporters in the Cairns Group to press for agricultural trade reform. The department also contributed constructively to the negotiations on a wide range of other issues of particular interest to developing countries. We encouraged other countries to follow Australia’s leadership in providing tariff-free, quota-free access for all products from least-developed countries.

Australia continued to help developing countries integrate into the world trading system through the provision of trade-related technical assistance. Through AusAID, Australia contributed $500 000 to the WTO Global Trust Fund in 2007 to support developing country participation in the Doha Round negotiations, bringing the Government’s total contribution to the Fund to $2.96 million.

WTO trade and environment

The department led Australia’s participation in the Doha negotiations on trade and environment. We tabled a proposal that underlines the importance of countries taking steps to enhance the mutual supportiveness of their national trade and environment policies. Our proposal also encourages further sharing of national experiences between WTO members. We will continue to work with other members towards a constructive outcome that does not allow countries to use environmental measures for protectionist purposes.

Supporting the WTO and trade liberalisation in other international trade bodies

In meetings of other international bodies, including the Asia-Pacific Economic Cooperation (APEC) forum and the Organisation for Economic Co-operation and Development (OECD), the department underlined the importance of a successful outcome to the Doha negotiations. We helped negotiate strong statements of support for the Round by APEC leaders and ministers at their meetings in Vietnam in 2006. Australia will be working to use the APEC meetings in Australia in 2007 to help move the Doha Round forward.

The department organised a gathering of 18 key WTO ministers hosted by Mr Truss during the May 2007 OECD Ministerial Council Meeting in Paris, at which the Minister pressed for a breakthrough in the Doha negotiations.

Australia’s permanent delegation to the OECD was actively involved in deliberations on enlargement of membership and engagement with non-member economies. OECD ministers agreed to commence the accession process for a group of countries—Chile, Estonia, Israel, Russia and Slovenia—which maintained a geographical balance and did not overload the organisation. Through Australia’s OECD delegation, the department helped ensure that the OECD expanded its reach in Australia’s region by including Indonesia in the list of significant developing economies with which the OECD will enhance its engagement, together with Brazil, China, India and South Africa.

WTO compliance and dispute settlement

The department continued to lead Australia’s involvement in a number of WTO disputes to advance Australia’s commercial and legal interests.

The department reached an agreed resolution with the EU on its WTO challenge to Australia’s quarantine regime, bringing this case to an end. We continued to work with relevant domestic agencies to manage the Philippines’ challenges to our quarantine regime. We worked with the Department of Agriculture, Fisheries and Forestry (DAFF) to improve the transparency and timeliness of Australia’s import risk assessment regime. Changes to the regime were announced by the Government in October 2006.

Australia’s successful WTO challenge, with Brazil and Thailand, to the EU’s sugar export subsidies required the EU to introduce reforms in 2006. These reforms are likely to change the EU’s status from the world’s largest sugar exporter to a net sugar importer. The department continued to monitor the EU’s implementation of the WTO ruling on sugar. We also worked closely with Australian industry in lobbying other countries to remove export subsidies for agricultural and industrial products where these seem incompatible with WTO rules.

The department coordinated Australia’s involvement as a third party in a number of important WTO disputes with implications for our commercial interests and for WTO legal issues. These included challenges to various import regimes such as those for biotech products in the EU, wine and spirits in India, automotive parts in China and rice in Turkey. We participated as a third party in Brazil’s challenge to US cotton subsidies and in the disputes on EU and US large civil aircraft subsidies (the Boeing-Airbus case).

The department continued to support work in the WTO to improve the dispute settlement procedures and launched a publication titled Ten Years of WTO Dispute Settlement: Australian Perspectives to commemorate the tenth anniversary of the system. Australia’s ambassador to the WTO was appointed Chair of the Dispute Settlement Body.

We liaised extensively with other agencies and state and territory governments to ensure Australia’s industry assistance measures, including investment incentives, complied with our WTO obligations.

WTO accessions

The department continued to engage in WTO accession negotiations to ensure the commercial interests of Australian exporters were advanced and WTO rules met. We worked closely with Vietnam in developing the commitments it undertook to secure membership. Vietnam became a WTO member in January 2007. This will improve market access for Australian exports of dairy, sugar, confectionery and fruit, as well as banking, education, environment and mining services. We also worked to advance negotiations with Russia, Ukraine and a number of other countries on the terms under which they would join the WTO.

New free trade agreement negotiations

The department increased resources to secure commercially meaningful results through FTA negotiations, in the context of an expanding FTA agenda. Australia’s FTAs—with New Zealand, the United States, Singapore and Thailand—already cover 24 per cent of our 2006 two-way trade in goods and services. The Government aims to increase this coverage through current negotiations with Japan, China, Malaysia, ASEAN (with New Zealand), and the Gulf Cooperation Council. The countries involved in these negotiations represent a further 35 per cent of Australia’s two-way trade.

The Government also worked towards establishing FTA negotiations with Chile and Pacific island countries. In addition, work has progressed on FTA feasibility studies with the Republic of Korea and Mexico. The conclusion of all these negotiations would mean that Australia’s FTAs could eventually cover more than 60 per cent of current trade.

The department continued to engage key stakeholders in developing the Government’s FTA program and strategies through consultations with industry, state and territory governments and public interest groups. These consultations helped identify impediments to increasing Australia’s exports to and investment in target markets. The department held detailed consultations on sector-specific issues: agriculture; manufactures including automotives, and textiles, clothing and footwear; services; rules of origin; intellectual property; and government procurement.

Japan Free Trade Agreement

Following the successful conclusion of the joint feasibility study on an Australia–Japan FTA, and the agreement by Prime Minister Howard and Japanese Prime Minister Shinzo Abe in December 2006 to begin FTA negotiations, the department secured a good start to the negotiations at the first meeting in April 2007. At this, Australia and Japan agreed on an overall approach to the negotiations, including that negotiating rounds will be held every two to three months. They also agreed on a comprehensive list of trade issues to be discussed, including goods (agriculture and industrials), services and investment as well as government procurement, electronic commerce and competition.

The FTA negotiations are an important opportunity to build on the excellent economic relationship. With exports of $36 billion in 2006, Japan is Australia’s largest export market, accounting for 17 per cent of Australia’s global exports. Japan is also Australia’s third-largest source of investment. A comprehensive FTA will help create new opportunities, such as in the services sector, which accounts for over two-thirds of our respective economies but is a relatively small part of total trade. Econometric modelling undertaken jointly by the department and the Japanese Government found that the immediate removal of all barriers to trade and investment would boost Australia’s GDP by at least $39 billion over 20 years.

Although Australia’s and Japan’s ambitions are similar in most respects, reaching agreement on agriculture will be difficult. In light of this, the department is pursuing a focused advocacy program to build support in Japan for a comprehensive FTA and address Japanese concerns about agricultural liberalisation. The department hosted visits to Australia by Japan’s consumer organisations and, through the Tokyo embassy, undertook a series of regional visits in Japan.

In Australia, the department conducted over 200 consultations concerning the negotiations with state and territory governments, business and interest groups.

China Free Trade Agreement

The department led Australia’s participation in nine negotiating rounds since the launch of negotiations in April 2005 (four rounds in 2006–07) involving whole of government teams representing 12 Australian agencies. Progress has been incremental. Market access negotiations for goods and services began at the seventh round of negotiations in December 2006 with both sides tabling their requests and offers on goods (including agriculture) and lists of barriers affecting market access requests on a range of services (followed by investment barriers in March 2007). At the ninth round of talks held in Beijing in June 2007 work continued on the full range of issues, including the development of a draft text. Substantial differences remain on market access and a range of other technical issues.

Difficulties reflected the different approaches of both countries to major issues, and that this was China’s first FTA negotiation with a major developed economy. Both countries already share a strong and significant trade relationship—China is Australia’s second-largest export market with exports of $24 billion in 2006. The FTA negotiations aim to build on this and deliver substantial gains for both countries. Australia is seeking removal of barriers facing: Australian exporters of agricultural, mineral, energy and manufacturing products; Australian services providers in sectors such as education, telecommunications, professional and business services, financial services, logistics, and construction; and Australian investors, particularly in mining; and Australian holders of intellectual property rights. It will be important that the negotiations cover increased market access for goods, services and investment, and measures such as intellectual property rights, transparency and government procurement.

The negotiations continued to enjoy high-level political support. Vice-Premier Zeng Peiyan visited Australia in March 2007 and signalled China’s desire to identify breakthroughs in the negotiations in advance of President Hu Jintao’s visit to Australia in September 2007 for APEC. The leaders of both countries have confirmed their commitment to a comprehensive and high-quality FTA.

The department continued to pursue a targeted advocacy program in China to focus key Chinese decision-makers on the positive contribution a high-quality FTA could make to China’s economic development. In 2006–07, the department hosted or facilitated three visits to Australia by over 20 Chinese officials from the mining, telecommunications and agriculture sectors, as well as a media delegation focused on agriculture. The Australian embassy in Beijing held five high-level sectoral seminars for Chinese officials and industry figures on sugar, accountancy, insurance, legal services and competition policy—along with three capacity-building courses to help Chinese officials participate effectively in FTA negotiations. The department organised a ministerial-level agriculture conference in Xian, China, and led Australian industry visits to China representing our sugar industry and in relation to rules of origin matters.

In Australia, the department conducted 380 consultations concerning the negotiations with state and territory governments, business and interest groups.

Malaysia Free Trade Agreement

In the FTA negotiations with Malaysia that began in May 2005, the department has focused on narrowing differences, especially in relation to services and the coverage of government procurement. The Prime Minister’s visit to Malaysia in November 2006 provided an opportunity to advocate the benefits of a comprehensive, high-quality FTA to a wide Malaysian audience and MAFTA negotiations intensified towards the end of 2006.

In the first half of 2007, there was significant slippage in the negotiations as Malaysia sought to manage a heavy trade agenda and changes to its key negotiating personnel. We agreed with Malaysia to hold a number of inter-sessional meetings to advance negotiations in goods, services and investment before convening a full session later in 2007. Some areas of the negotiations, such as goods and rules of origin, are well advanced and agreement has been reached to provide request lists at the next full session.

The department held about 60 MAFTA-specific stakeholder consultations with state and territory governments, business and other interested stakeholders over the past year.

Australia–ASEAN–New Zealand Free Trade Agreement (AANZFTA)

ASEAN, as a group, is a larger trading partner for Australia than any single country. Australia’s trade with ASEAN has grown faster than with any of our other major trading partners over the past five years, except China and India. By contrast, Australia’s investment links are small with ASEAN, attracting only 3 per cent of Australia’s foreign direct investment.

The AANZFTA negotiations are the first time ASEAN has agreed to negotiate a comprehensive FTA and to engage in simultaneous negotiations on trade in goods, services and investment. The negotiations are aimed at producing an FTA that consolidates Australia’s links with the ASEAN region and contributes to a strengthening of the trade and investment relationship.

Australia aims through AANZFTA to maintain its competitiveness in ASEAN markets and secure improved market access. In goods, Australia’s priorities include passenger motor vehicles and automotive parts, metals and a range of agricultural products. In services, Australia is seeking outcomes that improve substantially on most ASEAN countries’ WTO commitments. Sectors of specific interest include professional and financial services, telecommunications and education.

In 2006–07 the department led a whole of government negotiating team to four full negotiating rounds and a number of inter-sessional meetings. In line with the negotiating timetable set by leaders, the department has been working to conclude substantive negotiations by May 2008. Guided by the principles and objectives set by leaders from Australia, New Zealand and the ten ASEAN countries at the launch of FTA negotiations in November 2004, the negotiations resulted in agreement that the FTA would be considered as a package, covering goods, services, investment, economic cooperation, dispute settlement and other institutional issues. By the end of June 2007, however, agreement had yet to be reached on the inclusion of other trade-related issues, such as intellectual property and government procurement.

In 2006–07, the department continued to provide technical assistance to build ASEAN’s negotiating capacity. The department led workshops on issues such as tariff and trade data analysis and scheduling of investment commitments.

In Australia, the department held around 140 stakeholder consultations on the AANZFTA processes with state and territory governments, business and interest groups.

Gulf Cooperation Council (GCC) Free Trade Agreement

In December 2006, the Government decided to commence FTA negotiations with the Gulf Cooperation Council (GCC)—a regional customs union and regulatory body comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). This followed the cessation of bilateral negotiations with the UAE in June 2006 at the GCC’s request. The GCC is Australia’s largest market for passenger motor vehicle exports, accounting for 69 per cent of Australia’s total vehicle exports by value, and is Australia’s tenth-largest export market overall (exports of $5.9 billion in 2006).

The department sought a quick start to and early progress in the negotiations. Building on meetings between Mr Truss and GCC leaders, Australian and GCC FTA chief negotiators met in February 2007, and negotiating teams met in Riyadh (Saudi Arabia) on 2 May 2007 for preparatory talks. This resulted in agreement on comprehensive negotiations to be concluded as a single undertaking, and the tabling of offers by both sides on goods, services and investment at the first negotiating round (30 July – 1 August 2007 in Canberra). A second round is planned before the end of 2007.

In Australia, the department conducted over 130 consultations with domestic stakeholders in 2006–07 on the GCC FTA.

Chile Free Trade Agreement

On 8 December 2006, the Government agreed in principle to commence a bilateral negotiation process with Chile with a view to developing a comprehensive FTA. As well as its potential to deliver significant commercial benefits to Australian exporters and investors, an FTA could strengthen Australia’s efforts to promote economic integration and trade liberalisation in the Asia-Pacific region and could help project Australia’s interests in Latin America more widely.

Australia is the fourth-largest foreign direct investor in Chile with investments—concentrated mainly in the mining sector—amounting to approximately US$2.78 billion in 2006 according to Chilean Government statistics. Bilateral trade in goods and services was A$574 million in 2006.

The initial stage of the negotiation process was undertaken in the first half of 2007. The department called for public submissions and undertook consultations with stakeholders throughout Australia, including state and territory governments, industry groups, businesses and federal government agencies. Domestic consultations were held in parallel with preliminary meetings with Chile’s FTA team in Santiago, on 22 February and 25-29 April 2007, where good progress was made in establishing the feasibility of a comprehensive agreement. The Government announced the formal commencement of FTA negotiations with Chile in mid-July 2007.

The department held 76 consultations with domestic stakeholders in 2007, as well as with some Australian companies operating in Chile.

Potential FTA partners

In 2006, Australia and the Republic of Korea agreed to undertake a joint non-government FTA study, with the study outcome to serve as the basis for recommendations to both governments on next steps. The Australia–Mexico Joint Experts’ Group on Strengthening Bilateral Relations (JEG), established in 2006, is developing a report for both governments outlining practical ways to enhance the economic relationship, including the feasibility of a possible FTA in the future.

Australia’s FTA agenda

Photo - See caption below for description
Minister for Trade, Mr Warren Truss, and Indonesia’s Minister for Trade, Dr Mari Pangestu (right), meeting in Jakarta on 25 June 2007 for the Seventh Bilateral Trade Ministers’ Meeting.
Enlarge image :: Photo gallery

In June 2007, Mr Truss announced Australia’s interest in Indonesia and the Pacific islands as potential FTA partners in the region. The Australia–Indonesia Trade Ministers’ Meeting held in Jakarta on 25 June recommended the preparation of a joint feasibility study for a bilateral FTA. Pacific island countries are obliged under the 2001 Pacific Agreement on Closer Economic Relations (PACER) to negotiate trade arrangements with Australia (and New Zealand) if they enter into such discussions with another developed country (currently the EU).

Implementation of existing free trade agreements

The Australia–United States Free Trade Agreement (AUSFTA) is now in its third year. The department worked with representatives of the legal, accounting and engineering professions to secure access for Australian professionals to the United States market. Delaware, an important centre for corporate law in the US, agreed to adopt rules allowing Australian lawyers to practise there for the first time. Also, all but two US states now provide access for Australian accountants. Jointly with DAFF, the department sought to expand market access for Australian agricultural products. The government procurement provisions of the AUSFTA were reviewed and efforts made to sign on remaining US states. In close cooperation with other agencies, we continued negotiations on improved information sharing arrangements on competition matters (see sub-output 1.1.3 for more information on AUSFTA).

The Singapore–Australia Free Trade Agreement (SAFTA) continued to deliver benefits to Australian businesses. In February 2007, a second set of amendments involving further trade liberalisation came into force. Preparations for the second review of SAFTA are ongoing (see sub-output 1.1.2).

On 1 January 2007, new rules of origin came into force under the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), based on a change of tariff classification approach similar to that adopted by Australia in other recent FTAs such as AUSFTA and TAFTA. The new rules of origin will facilitate bilateral trade by simplifying administration and reducing business compliance costs. In addition, negotiations commenced in 2006 on an ANZCERTA Investment Protocol (see sub-output 1.1.6).

The department’s efforts to advance the Thailand–Australia Free Trade Agreement (TAFTA’s) in-built agenda (regarding services, investment, government procurement, competition and business mobility) were affected by Thailand’s political situation. We continue to press Thailand to commence negotiations in these areas (see sub-output 1.1 2).

Outlook

Australia has a major stake in maintaining a healthy and open multilateral trading system. To maximise economic opportunities for Australian businesses and investors, the department will continue to work hard for genuine trade liberalisation, through multilateral outcomes, as well as regional and bilateral initiatives.

A successful outcome from the Doha negotiations would be the most effective way to open up world markets and address the significant distortions remaining in the global trading system. Concluding the Doha Round and maintaining a strong multilateral trading system will remain the department’s highest trade priority. We will continue to strive for a Doha outcome that delivers commercially meaningful results on agriculture, industrial products and services.

Should the Doha negotiations fail or be put on hold in the coming year, the department will work closely with like-minded WTO Members to minimise the damage to the multilateral trading system and to develop options for advancing our trade interests. We will continue to use the WTO dispute settlement system to pursue and defend Australian trade and economic interests.

The department, through its permanent delegation to the OECD in Paris, will continue to promote Australia’s core interests across the OECD’s program of work, particularly providing input on trade issues and key governance issues such as enlargement and enhanced engagement.

Japan and Australia have agreed to progress FTA negotiations as quickly as feasible. However, there will be some difficult market access issues to resolve, in particular Japan’s sensitivities on agriculture.

The China FTA negotiations involve a range of difficult issues and will have to address sensitivities on both sides. The department will focus on obtaining an improved tariff offer from China (while protecting Australia’s automotive and textiles, clothing and footwear industry plans), and on obtaining concessions from China on services and investment. The Prime Minister has said Australia will continue to negotiate for as long as it takes to agree to an FTA that delivers commercially meaningful outcomes for Australia.

We will be seeking to progress FTA negotiations with Malaysia through inter-sessional meetings before convening a full negotiating round in late 2007.

Much work remains to be done to secure a comprehensive ASEAN–Australia–New Zealand FTA. Negotiations at the first round for 2007–08 will focus on principles to guide the preparation of tariff offers and the exchange of services offers, with work to be progressed on investment, economic cooperation and other issues. We will be seeking to provide for meaningful coverage of intellectual property, competition policy and government procurement. Mr Truss will meet his ASEAN and New Zealand counterparts in late August to assess progress and prospects for concluding negotiations by the end of 2007.

We plan to engage the GCC in an ambitious negotiating schedule over the course of 2007–08. Both sides have agreed in principle to hold three rounds in 2008 and aim to conclude negotiations by the end of that year. An ambitious negotiating schedule is also being developed for Chile with a first round taking place in August 2007.

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