1.1.8 Trade development and policy coordination
The then Prime Minister, Mr Rudd, and United States President, Mr Barack Obama, at the G20 Leaders’ dinner on 24 September 2009.
Australian exporters faced an extremely difficult international environment in 2009–10. Although the global economy began to recover from the most severe recession since the 1930s, the recovery has been uneven. The value of global trade fell by 23 per cent in 2009 and the risk of a return to protectionism was greater than at any time in a generation. While the growth of Asian economies fuelled an expansion in Australian resources exports, European countries’ debt problems and the continuing turbulence in global financial markets highlighted the fragility of the global recovery and the serious risks that remained for the world economy.
In this challenging environment, the department worked hard with other agencies in 2009–10 to protect and promote Australia’s international trade and economic interests.
We supported the participation of the then Prime Minister, Mr Rudd, and other Australian ministers and officials in multilateral and regional institutions, including the G20, the Asia-Pacific Economic Cooperation (APEC) forum and the Organisation for Economic Co-operation and Development (OECD) to advance the Government’s foreign and trade policy priorities. We maintained our active trade development and policy coordination role, involving extensive liaison with business, community groups and state and territory governments, and continued to support Australian firms’ access to trade finance.
Designation of the G20 as the premier forum for international economic cooperation in September 2009 at the Pittsburgh G20 Leaders’ Summit represented the culmination of a significant whole-of-government effort by Australia. Our inclusion in the G20 marked recognition of the growing importance of Australia in the global system. The department worked closely with the Department of the Prime Minister and Cabinet, the Department of the Treasury and, through our diplomatic network, with other G20 member countries, to secure this outcome.
The G20’s decision to resist protectionist responses to the global economic crisis in 2009–10 was an important factor in avoiding an even deeper downturn in the global economy. WTO and OECD analysis highlighted that the absence of a protectionist response to the crisis contributed to a rebound in global trade volumes and renewed confidence in the global trading system. Australia, among many other countries, benefitted from these outcomes.
We led Australian efforts to build G20 support for a balanced and ambitious conclusion to the WTO Doha Round of negotiations as soon as possible, and promoted leaders’ directives to receive a report on progress at the Seoul Summit. The department also worked to secure agreement that the OECD, International Labour Organization, World Bank and WTO report on the benefits of trade liberalisation for employment and growth at the Seoul Summit. Our efforts ensured that leaders remained committed to aid-for-trade initiatives that aim to develop the trade-related skills and infrastructure that developing economies need to better implement and benefit from WTO agreements and to expand trade.
We played an important role in Australia’s broader participation in the G20. Using our network of missions in G20 partner countries, we supported Mr Rudd and other ministers through advocacy of Australia’s interests with senior policy makers. Our missions in non-G20 countries also undertook extensive G20 outreach, particularly in the Asia-Pacific region, and contributed to our being increasingly viewed as a key interlocutor on G20-related issues.
After returning from a posting in Dili in January 2010, Tim Stapleton joined the G20 and International Economy Branch as an Executive Officer. The Branch coordinates the department’s contributions to whole-of-government G20 policy development, with a particular focus on the G20’s institutionalisation, and on leveraging the G20 in pursuit of a Doha Round outcome.
Tim contributes to strategies to strengthen and advance Australia’s interests in the G20, the premier forum for international economic cooperation. He produces advice to Australia’s Foreign and Trade Ministers, and our overseas missions, to guide their advocacy in support of Australia’s G20 objectives. He also provides briefing that guides engagement by ministers, Australia’s G20 Sherpa and senior officials with G20 counterparts.
“The G20 agenda is dynamic and constantly evolving. Contributing to whole-of-government efforts to cement the G20, and ensure Australia retains a prominent role in it, is very rewarding. Seeing the G20 in action while managing the Australian Delegation Office at the Toronto Summit in June 2010 was a particular highlight.”
APEC makes an important contribution to promoting open trade and investment, economic development and prosperity in the Asia-Pacific region. Total two-way trade between Australia and APEC economies rose from around $82 billion in 1989 to $348 billion in 2009.
The department worked through APEC to bolster the region’s response to the global economic crisis over the reporting period. At the annual APEC Economic Leaders Meeting in Singapore in September 2009, our efforts were instrumental in securing further commitments to implement the G20 structural reform agenda as a critical ingredient for increasing and rebalancing regional growth.
We supported the work of the then Minister for Trade, Mr Crean, at the APEC Ministers Responsible for Trade Meeting in Japan in June 2010, to combat trade protectionism and to garner support for the conclusion of the Doha Round. Our efforts underpinned APEC Trade Ministers’ extension of APEC’s standstill on protectionism until 2011.
We continued to spearhead Australia’s broader engagement in APEC, leading efforts to advance APEC’s core work streams of regional economic integration, structural reform and targeted capacity building. These efforts helped to consolidate the region’s recovery despite the ongoing fragility of the global economy. We coordinated the involvement of 15 Australian government agencies across more than 30 APEC forums.
The then Minister for Trade, Mr Crean, and the Minister for Foreign Affairs, Mr Smith, with their counterparts at the APEC Ministerial Meeting in Singapore on 11 November 2009.
Photo: Courtesy of the APEC Secretariat
2010 is a significant year for APEC, with its industrialised economies (including Australia) committed to achieve the Bogor Goals of ‘free and open trade and investment’, as agreed by APEC leaders in 1994. The department worked closely with Japan, the 2010 APEC host, to prepare a transparent and rigorous analysis of industrialised economies’ progress towards the Bogor Goals.
The department pursued an ambitious regional economic integration agenda in APEC. It worked to reduce the regulatory burden on exporters from rules-of-origin requirements, and to boost access to Asia-Pacific free trade agreements. It led efforts in APEC to promote sustainable economic development, and to address climate change by liberalising trade in environmental goods and services.
The department is driving APEC’s efforts to enhance regional supply chains and the investment environment. In May 2009, Australia committed $2 million to assist Australian agencies identify and address bottlenecks in regional supply chains, including reform and harmonisation of regulations and developing regional human and infrastructure capabilities.
In collaboration with the Asian Development Bank (ADB), the OECD, the World Bank and the WTO, we identified several practical activities through which APEC can improve development assistance for trade within the region, including joint training activities related to negotiating regional free trade agreements (FTAs), trade facilitation and trade logistics, and to developing good practices in trade-related technical assistance.
Human security cooperation remained strong. The department continued to work with Australian agencies to help APEC economies better prepare for, respond to and recover from emergencies.
The department led efforts to better utilise APEC’s resources. Our efforts resulted in professionalising the APEC Secretariat, based in Singapore, boosting capacity-building resources, and securing continued funding for the APEC Secretariat’s Policy Support Unit, greatly enhancing the Secretariat’s policy and analytical capability.
The then Minister for Trade, Mr Crean, and the WTO Director-General, Mr Pascal Lamy, at the OECD Trade, Jobs and Innovation Panel in Paris on 27 May 2010.
Photo: Courtesy of Natali Wilson/OECD
The department supported Mr Crean in his role as Vice-Chair of the OECD Ministerial Council Meeting (MCM) in Paris in June 2010. He led a series of meetings at and associated with the MCM to support efforts to conclude the Doha Round. Trade research and analysis material developed by the department and the OECD underpinned Mr Crean’s efforts to promote a better understanding of the positive economic impact of trade on prosperity, and to engender commitment to further trade liberalisation. The MCM also adopted a Declaration on Propriety, Integrity and Transparency in Business that underlined the importance of restoring public confidence in businesses after the global economic crisis.
As chair of the OECD External Relations Committee, the department led Australian efforts to strengthen engagement between the OECD and the key non-member emerging economies of Brazil, China, India, Indonesia and South Africa. Australia joined other OECD members in welcoming Chile, Estonia, Israel and Slovenia, and encouraged further progress on accession talks with Russia.
In 2009–10, the department continued its work to assess and address the impact of the global economic crisis on trade finance conditions, both locally and globally. We hosted the Second East Asia Summit Trade Finance Workshop, bringing together delegates from the private sector, regulators, multilateral development banks and export credit agencies. This helped establish a regional network of contacts to share information on trade finance developments, with the objective of promoting better access to trade finance for exports.
The Parliamentary Secretary for Trade, Mr Byrne, at the third Ministerial Council on International Trade (MCIT) meeting in Sydney on 30 June 2010.
L–R: Mr Tim Groser, Minister of Trade, New Zealand; Mr Bill Marmion MLA, Minister for Commerce, Science and Innovation, Housing and Minister Assisting the Treasurer, Western Australia; Ms Jaala Pulford, Parliamentary Secretary for Industry and Trade, Victoria; Mr Byrne, Parliamentary Secretary for Trade and Chair of the third MCIT meeting; Ms Lara Giddings, Minister for Economic Development, Tasmania; Mr Rob Knight, Minister for Trade, Northern Territory; Mr Michael Choi, Parliamentary Secretary for Natural Resources, Mines and Energy and Trade, Queensland.
Photo: Courtesy of MCIT Secretariat
We worked closely with Australia’s Export Finance and Insurance Corporation (EFIC), a statutory corporation that provides trade finance in support of Australian business in market segments where private sector financiers or insurers lack the capacity or willingness to assist. In 2009–10, EFIC signed 54 new facilities that supported 42 clients. These transactions had an aggregate value of $971.3 million and supported exports and overseas investments with an aggregate value of $5.97 billion. Key among these was the Australian Government’s decision to support the Papua New Guinea Liquefied Natural Gas (LNG) project through a loan of up to US$500 million and through collaboration with the PNG Government on the design of sovereign wealth funds to manage project revenues in a transparent and sustainable way.
We also progressed a Debt-to-Health Swap agreement with the Indonesian Government, in conjunction with AusAID and EFIC. A significant innovation, this will see the cancellation of up to $75 million worth of debt repayments owed by Indonesia in exchange for their investing $37.5 million in the Global Fund to Fight AIDS, Tuberculosis and Malaria, for programs in Indonesia.
In August 2009, the department supported Mr Crean in his role as chair of the second meeting of the Ministerial Council on International Trade (MCIT) in Brisbane. The MCIT was established in 2008 as the primary ministerial-level mechanism for consultation between the Australian Government and state and territory governments on international trade issues. The department, along with Austrade, provided the Secretariat for the MCIT.
The forum has played a valuable role in sharing information and coordinating policy between governments on measures to enhance Australia’s international competitiveness and export performance. In particular, the MCIT welcomed the decisive and coordinated response of G20 countries to the global economic crisis, including their commitment to promote trade and investment and resist protectionism. While noting the pressure on governments to protect jobs, ministers agreed on the need to refrain from introducing protectionist measures and to avoid exposing Australia to retaliation or legal challenge by trading partners.
In June 2010, the department supported the participation of Mr Smith and Parliamentary Secretary for Trade, Mr Byrne, in the third meeting of the MCIT in Sydney. The New Zealand Minister for Trade, Mr Tim Groser, joined the forum for the first time, marking a significant milestone in the Australia–New Zealand trade and investment relationship. The meeting focused on infrastructure projects that would enhance Australia’s trade competitiveness, and on measures to promote Australia’s trade and investment, such as Brand Australia.
Enhancing trade competitiveness
Submissions to policy reviews
The department contributed to the Government’s National Ports Strategy and the Energy White Paper, two key reviews designed to boost Australia’s trade competitiveness and efficiency. In addition to outlining Australia’s obligations under international trade agreements, our contributions highlighted the implications of the policies under consideration for Australia’s trade performance.
We also worked closely with the Department of Resources, Energy and Tourism to promote Australia’s interests in the Energy Charter Treaty. This included identifying the need for a transparent and rules-based approach to trade and investment in the global energy and resource markets, and for greater representation in the treaty by our trading partners in the Asia-Pacific region.
The department also participated in a range of other Government policy development processes, aimed at enhancing Australia’s economic performance, including the National Broadband Network and the Carbon Pollution Reduction Scheme. The focus of our contribution to these processes was to highlight their potential impact on the international competitiveness of exporters.
Food security remained an issue of increasing global debate, with varying views on the optimum ways to improve food security for all. The Government continued to advocate that improving food security required a long-term integrated and comprehensive approach, including through increased development assistance for agriculture and rural development, investment in agricultural research and development, reform of international agricultural and food markets, and improved economic governance in developing countries. The department consistently advanced this approach through multilateral, regional and bilateral forums, including the Food and Agriculture Organization (FAO) of the United Nations, the G20, APEC and the WTO.
In collaboration with the Department of Resources, Energy and Tourism and the Australian Customs and Border Protection Service, we represented Australia at meetings of the UN-sanctioned Kimberley Process Certification Scheme for Rough Diamonds in Namibia and Israel. Through our participation in these meetings, we contributed to efforts to block international trade in rough diamonds mined and sold by rebel groups to fund war and civil conflict.
In particular, we worked jointly with other Kimberley Process members to reform diamond production in the Marange area of Zimbabwe to address human rights abuses—including unlawful killings, forced labour and beatings by the armed forces—stemming from illicit diamond trade in the region. We continued to work with the Kimberley Process members and Zimbabwe to ensure that Zimbabwe exports only diamonds certified as conflict-free.
Around the world there are encouraging signs of economic recovery. The IMF forecasts global output growth of 4.6 per cent in 2010, (IMF World Economic Outlook, July 2010 Update), with Asia growing strongly. While the outlook for the global economy has improved, risks to global financial stability remain and could undermine the recovery.
Given ongoing uncertainties in the global economy, the department will continue efforts in the G20, APEC and the OECD to encourage policies that promote sustainable economic development and resist protectionism globally. This will require increased trade advocacy to promote a positive understanding of Australia’s trade policy agenda, and efforts to ensure Australian exporters and investors maintain access to trade finance in turbulent times.