Annual Report 2007-2008
 

Annual Report home |

Table of Contents |

Userguide |

Download versions

1. Overviews2. Performance3. Corporate4. Appendixes5. Financials6. Glossaries and Compliance Index

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 ::Free trade agreement negotiations :: Implementation of existing free trade agreements :: Outlook

Overview

The department pursued actively Australia’s trade interests through a coordinated strategy involving multilateral, regional and bilateral trade negotiations.

Photo - See caption below for description
Minister for Trade, Mr Simon Crean (left), as a panellist on the OECD Forum 2008 with the theme of ‘Future Challenges for the Multilateral Trading System’ on 4 June 2008 at OECD Headquarters in Paris. © OECD
Enlarge image :: Photo gallery

Our highest trade priority in 2007–08 was to push for a successful conclusion to the World Trade Organization (WTO) Doha Round of multilateral trade negotiations, one that would involve improvements in market access for Australian exporters of agricultural and industrial products and services. We supported the advocacy efforts of the Minister for Trade, Mr Crean, to urge other WTO trade ministers to demonstrate the necessary political will and flexibility to conclude the Round. Australia argued strongly that a successful outcome would boost confidence in the global economy and help address concerns about rising food prices, as well as make an important contribution to development and poverty alleviation.

The department led Australia’s participation in negotiations on regional and bilateral free trade agreements (FTAs) with key trading partners. We brought the FTA negotiations with the Association of Southeast Asian Nations (ASEAN) countries and New Zealand towards their final stage and continued to work on an FTA with the Gulf Cooperation Council member countries. New impetus was injected into the FTA negotiations with China and we made good progress in negotiations with Japan. A comprehensive FTA with Chile was concluded in July 2008. In addition, we led Australia’s involvement in several studies on potential FTAs.

In advancing Australia’s trade policy agenda, the department consulted closely with key stakeholders, including industry, state and territory governments, other federal agencies, the academic community and non-government organisations. Our bulletins on the Doha Round and FTA negotiations, published on the department’s website, provided regular updates on trade policy developments. We posted Australia’s key submissions to WTO dispute settlement proceedings on the department’s website.

The department used its representation to the Organisation for Economic Co-operation and Development (OECD) in Paris to advocate OECD work in support of the Doha Round, as well as enhanced OECD engagement with the Asia-Pacific region, in particular Indonesia and China.

WTO Doha Round negotiations

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

In 2007–08, Australia was at the forefront of efforts to secure a successful conclusion to the Round. This followed a major breakdown of the negotiations in June 2007. Departmental officials led Australia’s participation in this new phase of negotiations. We worked closely with senior officials from major developed and developing countries, including the United States, European Communities, Brazil, India and China, to move the negotiations forward. The chairs of the Round’s negotiating groups issued negotiating texts on agriculture and industrial products in July 2007, a rules text in November 2007, revised agricultural and industrial products texts in March and then May 2008 and a negotiating text on services in May 2008. These texts energised and intensified the Doha negotiations and showed greater convergence on a number of outstanding issues, though significant divergences remained at the end of the reporting year.

FIGURE 13. Direction of Australia’s exports 2007

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

Agriculture

The department played a central role in the agriculture negotiations which were convened at regular intervals in Geneva throughout 2007–08. Agriculture is still the most distorted sector of global trade in goods. Through leadership of the Cairns Group of 19 agricultural exporting countries, we advocated substantial reductions in trade-distorting subsidies and real improvements in market access for Australian agricultural producers.

Our participation in key small group meetings, such as the agriculture G6 (the European Communities, Japan, United States, Canada, Brazil and Australia), contributed to breakthroughs on important market access issues. This included the treatment of ‘Sensitive Products’, which will govern the market access outcomes for Australian agricultural exports such as sheepmeat, beef, sugar and dairy into developed country markets such as the EC, United States and Japan.

Industrials

The department continued to work actively in the Doha Round negotiations for commercially meaningful improvements in market access for industrial products (non-agricultural market access or NAMA), covering minerals, energy, manufactured products, forestry and fisheries. We kept in close contact with industry to ensure our focus remained on products of most interest to Australian exporters.

Negotiations were difficult for much of 2007–08, although an intensification of discussions in May and June 2008, in which departmental officials played a key role, saw useful progress. A number of developing countries continued to show reluctance to cut industrial tariffs because of sensitivities in a number of sectors and linkages with likely outcomes on agriculture. Three draft texts were circulated by the Chair of the NAMA Negotiating Group, with discussions on these texts showing some areas of convergence but also highlighting differences of view between developed and developing countries on the size of tariff cuts.

Services

Services exports accounted for 21 per cent of Australia’s total exports and recorded strong growth of 9.4 per cent in 2007. The department worked hard to achieve improved access to overseas markets for Australian services exports through the Doha Round. In bilateral and collective services negotiations, departmental officials pressed WTO members to lock in existing levels of market openness in their services sectors. We emphasised that Australia would not accept a minimal outcome for our services suppliers in the Doha services negotiations.

The key elements in the department’s services negotiations were reductions in foreign equity caps on investments, greater regulatory transparency, and improved business mobility (particularly for fly-in fly-out service contractors and professionals) to enable Australian business to pursue opportunities in the region more easily. Our priority sectors for market opening included financial services, telecommunications, professional services, education, mining-related and environmental services.

Maximising outcomes for the financial services sector

Australia plays a leading role in services negotiations in the WTO, working with other members to open markets and remove barriers to trade in services. Services industries provide the backbone for much of Australia’s economic activity. The financial services sector is a case in point. It is a very dynamic area of the Australian economy—finance and insurance services generate around 8 per cent of Australia’s GDP and the sector has seen strong employment growth over the past decade.

Australia’s position as one of the largest and most highly developed markets for financial services in the Asia-Pacific region, with a global reputation for sophisticated and innovative financial services products and exports, makes us well placed to benefit from global opportunities in this sector. In 2007, financial services exports (banking and insurance) were valued at around $1.7 billion.

That is why Australia strongly supports ambitious outcomes for financial services negotiations, multilaterally in the WTO and in our free trade agreement (FTA) negotiations with major trading partners. Key priorities for Australia in this sector are the removal of limits on foreign ownership and restrictions on the form of commercial presence and the removal of quantitative restrictions that limit the way that Australian finance service providers establish and operate businesses overseas.

Australia’s negotiating positions on services across the broader trade agenda are not formulated in isolation. As well as ministerial-level consultative mechanisms, the Government, through the department and our other relevant portfolio agencies consults widely on Australia’s WTO and FTA negotiating positions with industry, other government departments, state and territory governments, civil society and non-government organisations (NGOs). These consultation processes give the wider Australian community the opportunity to keep abreast of trade policy developments and ensure the department is informed of issues of community interest and concern. For example, to assist with the sectoral consultation process, the department has convened a number of reference groups, including a group on financial services, that have proved invaluable in sharing specific information and identifying priorities for WTO and FTA service negotiations.

We worked closely with the Chair of the Services Negotiating Group and other like-minded WTO members to ensure the negotiating text on services provided for an outcome on services commensurate to that finally agreed on agriculture and industrial products. Australia played a lead role in developing proposals to maintain momentum in the services negotiations. A key outcome was WTO members’ broad acceptance of the need for a ministerial signalling conference on services. At this conference, WTO members outlined the new market openings that were forthcoming in the services negotiations that responded directly to members’ specific interests. The conference was held at the same time as the WTO Ministerial Meeting in July 2008.

As coordinator of the sectoral group on air transport services, Australia took the lead in the WTO’s review of air transport services. The department pressed for greater clarity on the making of WTO members’ commitments on ancillary aviation services, such as ground handling and airport operations services. Our WTO mission in Geneva hosted a well-attended industry seminar on developments in the sector, which led to a greater appreciation of commercial interests. We worked closely with the APEC Group on Services to promote the provision of foreign and international law services throughout the APEC region.

Intellectual property

The department pursued Australia’s interests in building a strong, balanced and accessible international intellectual property (IP) system.

The department defended Australia’s interests in WTO discussions of commercially sensitive IP issues, taking a prominent role on geographical indications in particular. Geographical indications (GIs) are signs used on goods—primarily wine and food products—that convey particular qualities or a reputation as a result of their geographical origin. Examples include Bordeaux, Champagne, Parmigiano and Coonawarra.

We worked to provide developing countries greater access to affordable medicines through the successful completion of the treaty-making process for Australia’s accession to the Protocol on Amending the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. Australia became the tenth WTO member to accept the Protocol on 12 September 2007.

On 1 February 2008, the Minister for Trade, Mr Crean, announced Australia would participate in negotiations for a plurilateral Anti-Counterfeiting Trade Agreement. To complement the existing international IP architecture, Australia is seeking an enhanced, practical international standard on IP rights enforcement with broad international support. The decision to participate in negotiations does not bind Australia to join any subsequent treaty.

We protected and promoted Australia’s IP interests in other multilateral and plurilateral forums, including the World Intellectual Property Organization (WIPO). We provided extensive support for Dr Francis Gurry’s successful selection as nominee for the position of WIPO Director General. The department also worked in the APEC Intellectual Property Experts Group to promote Australia’s IP interests.

WTO rules, including trade facilitation

The department led Australia’s participation with other agencies in the rules negotiations particularly following the revised text issued in November 2007. We intensified our consultations with industry stakeholders to ensure proposals on trade remedies had positive impacts on the competitiveness of Australian exporters and protected the rights of Australian industry.

To address the negative trade effects of overfishing and over-capacity in the fisheries sector, Australia has been a driving force behind ambitious outcomes on fisheries subsidies. Our efforts have resulted in a Chair’s text which places fisheries management as a core prerequisite to fisheries subsidies in line with Australia’s objective of ensuring sustainable fisheries.

The department continued to advocate strong WTO disciplines on free trade agreements (FTAs). The examination of a growing number of FTAs under the WTO transparency mechanism increased the scrutiny of these agreements and was an important contribution to efforts to ensure that FTAs are trade liberalising and WTO-consistent. The Australia–United States FTA was reviewed in September 2007, and Australia has also played an active role in the examination of numerous other FTAs including several involving our existing and prospective FTA partners. The department will continue to push for a positive outcome in the WTO’s negotiations on rules governing regional trade agreements.

The Doha negotiations on trade facilitation focused on further developing proposals to reduce costs associated with the import, export and transit of goods. Departmental officials concentrated on developing commitments that would reduce business costs by making customs procedures simpler, more transparent and predictable.

WTO development agenda

A more open international trading system is one of the best means to promote sustainable development and help alleviate poverty. We continued to advocate the need for trade reform in core negotiating areas, particularly the highly distorted agricultural sector, in order to deliver on the Doha Round’s development mandate. Furthermore, we encouraged other countries to follow Australia’s lead by providing tariff-free, quota-free access for all products from least-developed countries.

The department supported trade-related technical assistance projects to help developing countries participate in and reap the full benefits of the multilateral trading system, including the Doha Round. The Government, through AusAID, doubled its annual contribution to the WTO’s Doha Development Agenda Global Trust Fund to $1 million. The fund helps developing countries take part in and benefit from the Doha Round negotiations.

Photo - See caption below for description
Cathy Raper
Enlarge image :: Photo gallery

PERSONAL PROFILE:

Cathy Raper

Cathy Raper is a trade specialist: she has worked extensively to advance Australia’s trade policy agenda, including in the World Trade Organization (WTO) and on bilateral free trade agreements (FTAs). For three years, Cathy was based in Australia’s Mission to the WTO in Geneva. The highlight of her time there was working on Australia’s successful WTO challenge, with Brazil and Thailand, to the EU’s sugar export subsidies.

More recently, Cathy worked on the implementation of Australia’s existing FTAs and was a member of the team that negotiated Australia’s FTA with Chile, concluded in July 2008. She has enjoyed the experience of coordinating a whole-of-government effort to implement Australia’s FTA with the United States.

Cathy joined the department in 1994 and has served overseas at Australia’s embassy in The Hague and worked in Canberra on international climate change negotiations.

In Geneva, I enjoyed formulating approaches to legal, procedural and strategic issues in the EU sugar dispute and coordinating Australian efforts with my Brazilian and Thai colleagues for the benefit of our sugar growers.

The department worked with AusAID to ensure that the UN system, particularly the United Nations Conference on Trade and Development (UNCTAD), sent strong messages in support of concluding the Doha Round and highlighted the benefits that would accrue to developing countries. We coordinated the Government’s participation in the 12th Session of UNCTAD in Accra, Ghana in April 2008. The Australian delegation, led by the Parliamentary Secretary to the Minister for Trade, Mr Murphy, was involved in negotiation of the Accra Accord which will guide UNCTAD’s work for the next four years. The Accord addresses the streamlining of UNCTAD’s structure, while also directing UNCTAD to increase its work on commodities and to expand its focus to deal with emerging issues such as climate change.

WTO trade and environment

The department led participation by Australia’s officials in the Doha negotiations on trade and environment. Australia remains strongly committed to the liberalisation of trade in environmental goods and services, as this is an integral part of addressing pressing environmental concerns. We also tabled a proposal underlining the mutually supportive nature of trade and environment policies, which has been well received by WTO members. We are working for an outcome that reinforces the right of WTO members to apply trade measures to address environmental concerns, but which does not allow them to use environmental measures for trade protectionist purposes.

Supporting the WTO and trade liberalisation in other international trade bodies

The department used its participation in the Asia-Pacific Economic Cooperation (APEC) forum and the Organisation for Economic Co-operation and Development (OECD) to strengthen international support for a successful conclusion to the Doha negotiations.

In May 2008, Australia was instrumental in securing a statement by APEC Ministers Responsible for Trade in Arequipa, Peru on the importance of bringing the Doha Round to a successful conclusion in 2008. APEC ministers indicated they were ready to engage to deliver expeditiously a modalities agreement and urged other WTO members to do the same.

The department supported Mr Crean’s participation in the OECD Ministerial Council Meeting in Paris on 4–5 June 2008 at which the Minister underlined the need for urgent progress to conclude the Round in 2008. We organised an informal gathering of key WTO trade ministers and WTO Director-General Lamy hosted by Mr Crean in the margins of the OECD meeting. Ministers agreed at the informal meeting to instruct their senior officials to intensify their efforts to narrow remaining differences in the Doha Round.

Australia’s permanent delegation to the OECD helped direct the OECD’s technical work on the benefits of trade liberalisation. The department advocated successfully for the OECD’s 2009–10 work program to analyse the impact of the Doha Round after its conclusion, the effect of regional free trade agreements on the multilateral system, the links between trade and climate change, and services trade issues.

The OECD continues to be a key forum for the development of good public policy. Throughout the year, the OECD delegation was actively involved in the full range of work undertaken by the organisation, playing a key role in efforts to enhance engagement with major developing countries such as China, India and Indonesia, as well as on issues such as trade and agriculture, environment, economic reform and development assistance. The delegation also helped secure reform of the OECD’s audit structure, rules of procedure and a financial reform outcome that will establish a stable financial base for the organisation in the coming years.

WTO compliance and dispute settlement

The department continued its active involvement in WTO trade law issues in 2007–08. In August 2007, New Zealand initiated a dispute against Australia in relation to quarantine measures affecting the importation of apples from New Zealand. The department led a whole-of-government task force to prepare Australia’s defence in this dispute. The other agencies involved were the Attorney-General’s Department, the Department of Agriculture, Fisheries and Forestry, Biosecurity Australia and the Australian Quarantine and Inspection Service.

The department also managed Australia’s involvement as a third party in 11 other disputes involving issues important to our commercial and legal interests. These included two significant civil aircraft cases (Airbus and Boeing) and new cases on China’s protection and enforcement of intellectual property rights and its regime for trading rights and distribution services for publications and audiovisual products.

Australia continued its third party involvement in disputes concerning US cotton subsidies and US domestic support for agricultural products, as well as in the US and Canada (hormones retaliation) disputes brought by the EU. The department led the first round of discussions with the Philippines in pursuit of a negotiated solution to challenges to Australia’s quarantine regime. We continued to monitor a WTO ruling on EU sugar export subsidies following Australia’s successful WTO challenge, with Brazil and Thailand.

The department liaised extensively with other agencies and state and territory governments to ensure WTO compliance of Australia’s industry assistance and on global safeguards issues. Similarly, we provided guidance to Australian exporters facing trade remedy actions by other WTO Members. We worked with Australian industry to ensure that Australia was positioned to commence WTO action, where necessary, to protect our commercial and legal interests. For example, we conducted bilateral meetings with India in relation to its sugar subsidies to domestic producers.

The department encouraged the study of WTO trade law at Australia’s universities. Departmental officials gave lectures on WTO dispute settlement and supported conferences on trade law and WTO trade law moot competitions.

WTO accessions

The department participated in WTO accession negotiations to assist the commercial interests of Australian exporters and to ensure that WTO rules and obligations were met. Two accessions were completed—Tonga in July 2007 and Ukraine in May 2008. With Ukraine we achieved positive outcomes on agriculture by limiting its agricultural subsidy levels. The department continued to work to advance Russia’s WTO accession in a way that will assist Australian exporters’ interests when Russia becomes a WTO Member. We also engaged in a range of other accession negotiations, including Iraq (which commenced its accession negotiations in 2007), Laos and Samoa.

Free trade agreement negotiations

Australia’s efforts to strengthen the multilateral trading system are supported by a focused free trade agreement (FTA) agenda. Australia seeks to negotiate FTAs that produce commercially meaningful improvements in market access for Australian industries, add to WTO disciplines and are fully consistent with the spirit and letter of WTO rules.

Australia currently has FTAs with New Zealand, the United States, Singapore and Thailand and has concluded an FTA with Chile. It is negotiating a further five FTAs—with China, Japan, ASEAN, Malaysia and the Gulf Cooperation Council, and is examining the merits of entering into FTA negotiations with the Republic of Korea, India, Indonesia, Mexico and Pacific island countries. Almost 60 per cent of Australia’s trade would be covered by preferential trade arrangements if all these FTAs were concluded successfully.

The department is responsible for progressing Australia’s FTA agenda, including leading whole of government negotiating processes. During 2007–08, we made positive progress in Australia’s FTA negotiations, successfully concluding an agreement with Chile, bringing negotiations with ASEAN to the final stage and reinvigorating stalled negotiations with China.

Trade policy and FTA negotiations are part of the department’s core business and require input across the department’s operations. Australia’s commitment to negotiating comprehensive and liberal FTAs also requires close consultation with key external stakeholders, including industry, state and local governments and public interest groups.

China Free Trade Agreement

The department worked hard during the year to reinvigorate FTA negotiations with China, our largest trade partner. The Prime Minister and his Chinese counterpart agreed in April 2008 to ‘unfreeze’ negotiations, and the Minister for Trade and China’s Commerce Minister further agreed to establish a work program. This new impetus to FTA negotiations with China paved the way for the eleventh round of negotiations in June 2008—the first since October 2007. The department led Australia’s participation at the negotiations, which made solid progress, with negotiations resuming across all areas. Both sides have agreed that two additional rounds will be held before the end of 2008, which indicates good prospects for progress over the coming year.

In light of the significant potential offered by China’s services market, the department, together with other relevant agencies, has been working to secure enhanced market access for Australian services suppliers through the FTA. Discussions to date have been difficult in view of China’s reluctance to move beyond its commitments in the WTO. The agreement by the Prime Minister and Premier Wen Jiabao in April 2008 that both sides should work toward early outcomes is likely to provide greater impetus to the services negotiations. Australia is using these discussions to seek removal of Chinese barriers in financial and education services. For its part, China has requested outcomes in the areas of quarantine and investment, and has also raised temporary entry of skilled workers. The discussions are expected to intensify over the second half of 2008, and to include sectors such as legal and telecommunications issues.

China submitted a revised tariff offer on goods in June 2008, restarting the market access negotiations on goods after a year and a half hiatus. More work will be needed to improve the quality of the offer, especially on agriculture where China is reluctant to reduce its tariffs further. However, both sides have now agreed on an approach to discussing sensitive products in the second half of 2008. Australia has also highlighted non-tariff barriers of concern to Australia industry in the negotiations.

The department has been working with other agencies to secure commercially meaningful outcomes in other areas of the FTA, such as access to China’s government procurement market and improved intellectual property rights protection.

Negotiations will continue to be challenging because of China’s sensitivities about addressing all of our trade and investment interests, including services and agriculture. In addition, given the competitive strength of China’s manufacturing sector, there are also sensitivities on the Australian side that will need to be addressed.

The department has continued its active consultation program through 2007–08. Since negotiations began in May 2005, we have held over 600 meetings with state governments, industry associations, individual companies and other stakeholders such as unions. We have received more than 150 submissions on the FTA.

Japan Free Trade Agreement

The department made useful progress in FTA negotiations with Japan, leading Australia’s participation in four negotiating rounds during the year, following the first round of negotiations in April 2007. The negotiations involve whole-of-government teams, with 17 agencies represented at the most recent round.

Market access negotiations on goods commenced at the fourth round in February 2008 with an initial exchange of offers and requests. Japan’s offer was disappointing in that it contained many exclusions, including many agricultural items of strong commercial interest to Australia. Japan’s negotiating approach is consistent with its public position that beef, dairy, wheat, sugar and rice should all be excluded from the FTA. Reaching agreement on agriculture will be difficult given Australia’s and Japan’s very different levels of ambition in this sector.

Australia and Japan exchanged initial offers on services and investment at the fifth round in April 2008. Japan’s offer was consistent with its best offers on services and investment in other FTAs, which was encouraging. However Australia will seek greater access in the financial, education, telecommunications and professional services sectors, in order to create conditions favourable to the growth of the relatively small and narrow services trade between Australia and Japan.

Once completed, the FTA will help secure and improve Australia’s access to its largest export market. 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.

Photo - See caption below for description
Minister for Trade, Mr Simon Crean, with New Zealand Minister for Trade, Mr Phil Goff, at the ASEAN Economic Ministers – Closer Economic Relations consultations, in Bali on 3 May 2008.
Enlarge image :: Photo gallery

ASEAN–Australia–New Zealand Free Trade Agreement

During the year, the department brought Australia’s FTA negotiations with ASEAN and New Zealand on the ASEAN–Australia–New Zealand Free Trade Agreement (AANZFTA) towards their final stage. The Minister for Trade, Mr Crean, and his ASEAN and New Zealand counterparts concluded substantive negotiations at the ASEAN Economic Ministers–Closer Economic Relations meeting held in Singapore in August 2008.

The department led a whole of government negotiating team to six full negotiating rounds in 2007–08 and a number of inter-sessional meetings. Substantial progress was made on the text of the agreement, including chapters on goods, services, investment, economic cooperation and dispute settlement. Ongoing engagement with ASEAN and New Zealand to settle the remaining differences, including on market access commitments, will continue.

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. 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. Services sectors of specific interest include professional services, financial services, telecommunications and education.

ASEAN, as a group, is a larger trading partner for Australia (16 per cent of total trade) than any single country, including China (13 per cent), Japan (12 per cent), or the United States (11 per cent). In contrast, Australia’s investment links are small with ASEAN attracting only 5.1 per cent of Australia’s foreign direct investment as at December 2007.

Malaysia–Australia Free Trade Agreement (MAFTA)

Australia and Malaysia engaged in informal consultations on the Malaysia–Australia Free Trade Agreement (MAFTA) negotiations in 2007–08, but no formal meetings were held. Instead, Australia pursued its trade interests in the Malaysian market through the FTA negotiations with ASEAN and New Zealand. A successful conclusion to the AANZFTA negotiations will provide a basis for reviewing progress with Malaysia on the MAFTA negotiations over the coming year.

Gulf Cooperation Council Free Trade Agreement

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)—were launched in February 2007. The GCC as a group is Australia’s largest market for passenger motor vehicle exports, accounting for 74 per cent of Australia’s total passenger motor vehicle exports by value, and represents a substantial trading partner.

The first negotiating round was held from 30 July–1 August 2007 in Canberra. Solid progress was made at the first round, with detailed talks held on likely components of the FTA—including chapter texts and on the process for negotiating market access schedules for goods and services.

The second round was held in November 2007 in Riyadh and, once again, useful progress was made in a number of important areas of goods and services/investment. Although the GCC undertook in November to provide us with its formal tariff offer early in 2008, this did not eventuate and the third negotiating round was delayed until the second half of 2008.

The GCC is currently engaged in FTA negotiations with a number of our competitors, including Japan, China, New Zealand and the EU. These parallel negotiations increase the urgency of concluding our own negotiations to ensure our commercial interests are advanced and protected in this rapidly growing economic region. Australia will continue to work with the GCC on market access for goods to ensure the best possible outcome for Australia.

The department conducted 130 consultations with domestic stakeholders in 2007–08 on the GCC FTA.

Chile Free Trade Agreement

Free trade agreement negotiations with Chile were launched in July 2007. Between August 2007 and May 2008 four full rounds of negotiations and two inter-sessional meetings were held. On 27 May 2008, the Minister for Trade, Mr Crean, and the Chilean Foreign Minister, Mr Alejandro Foxley, concluded Australia–Chile Free Trade Agreement negotiations.

Australia is the fourth largest source of foreign direct investment in Chile with investments amounting to approximately US$3 billion in 2007 according to Chilean Government statistics. Although bilateral trade with Chile is modest at $856 million in 2007, it is growing rapidly (up from $574 million in 2006). Under the FTA, merchandise trade will be tariff-free by 2015. Both Chile and Australia have bound their current liberal services and investment regimes for each other and any subsequent liberalisation will also flow on.

The Australia–Chile FTA was signed in late July 2008. Both sides are aiming for entry into force of the FTA on 1 January 2009. As part of the domestic processes to ratify the FTA, the text was tabled in Parliament on 17 June 2008 to facilitate consideration by the Joint Standing Committee on Treaties.

Prior to, and during the course of, the FTA negotiations, the department called for public submissions and conducted stakeholder consultations. In total 18 written submissions were received and 116 stakeholders consulted.

Australia–Chile FTA in focus

The Australia–Chile FTA is a WTO-plus, comprehensive FTA which is consistent with Australia’s goal of concluding bilateral FTAs that comply with WTO rules and guidelines and that complement and reinforce the multilateral trading system.

Some key benefits of the agreement for Australian business include:

Possible Free Trade Area of the Asia-Pacific

As the lead policy agency during Australia’s hosting of APEC in 2007, the department contributed to important progress on APEC’s work on regional economic integration in 2007, including the development of Leaders’ agreement to explore a possible Free Trade Area of the Asia-Pacific (FTAAP). In support of this objective, the department led an examination on the feasibility of enlargement, docking and/or merging of existing free trade agreements within the APEC region.

Implementation of existing free trade agreements

Australian businesses continued to benefit from the trade liberalisation achieved under Australia’s four bilateral free trade agreements. The department has sought to build on existing gains under each of these agreements.

The Australia–United States Free Trade Agreement (AUSFTA) provides the framework for ongoing engagement with the United States in support of Australia’s trade and economic interests. A key focus of future activity remains working with the legal, engineering and accounting professions on improved access to the US market for Australian professionals. The US state of Delaware, an important corporate law centre, put in place rules enabling Australian lawyers to practise there for the first time. Discussions are well advanced on mutual recognition between Australian and Texan engineers. By 30 June 2008, Australian CPAs and Chartered Accountants had access to all but two US jurisdictions. The department worked with the Department of Agriculture, Fisheries and Forestry to improve agricultural market access under the AUSFTA, with access to the United States granted for Australian cherries in January 2008. We continued our efforts to have the remaining US states join the AUSFTA provisions under which Australian goods and services have access to the US government procurement market.

The department continued discussions with Singapore on the timing of and our objectives for the second review of the Singapore–Australia Free Trade Agreement (SAFTA). Further liberalisation of Singapore’s services sector, particularly in legal services, is a key objective.

The Thailand–Australia Free Trade Agreement (TAFTA) contains provisions for further negotiations on services, investment, business mobility, government procurement and competition. Further consultations on enhanced goods market access have also been agreed. The department discussed with Thailand the commencement of these negotiations, which we are keen to progress.

The Australia–New Zealand Closer Economic Relations Agreement (ANZCERTA) has been at the centre of Australia and New Zealand’s economic relationship for 25 years. The department continued to explore the prospect of adding investment provisions to the Agreement. The Australia–New Zealand Government Procurement Agreement was updated in September 2007.

Outlook

The department will continue to maximise economic opportunities for Australian businesses and investors through genuine trade liberalisation involving multilateral outcomes as well as regional and bilateral initiatives. Australia has vital interests in ensuring that the multilateral trading system administered by the WTO remains healthy, open and transparent.

A successful outcome from the Doha negotiations would be the most effective way to reduce barriers to trade. Concluding the Round and maintaining a strong multilateral trading system will remain the department’s highest trade priority, and we will continue to strive for commercially meaningful results on agriculture, industrial products and services.

The WTO Ministerial Meeting on 21 July 2008 made important progress in narrowing the differences in the negotiations but some issues remained unresolved. The department will continue to support Mr Crean in his efforts to advocate WTO members’ early re-engagement to conclude the Round as soon as possible. We will also continue to use the WTO dispute settlement system to pursue and defend Australian 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 and governance.

Return to top of page