1.1.8 Trade development and policy coordination
Australia's economy remains resilient, despite fragile global economic and financial conditions, underpinned by a record pipeline of resources investments and solid growth in commodity exports. Australia outperformed most other advanced economies, growing 2.2 per cent in 2011. But Australia is not immune from events in Europe and elsewhere, and domestic conditions remain uneven with global economic weakness, the strong Australian dollar and cautious household spending weighing on some sectors.
Australia's total goods and services trade reached new highs in 2011, growing 10 per cent to top $600 billion for the first time. Exports expanded, reflecting strong demand for raw materials in developing regional economies.
The department actively pursued Australia's interests in multilateral economic forums, including the G20, APEC and the OECD, supporting the participation of the Prime Minister, the Trade Minister and other ministers in these groupings.
(a) Goods data on a recorded trade basis, services data on a balance of payments basis.
Based on DFAT STARS database and ABS catalogue 5368.0.55.004
Totals may not add due to rounding.
As global economic recovery faltered over the year, largely due to developments in the Euro zone, the department contributed to Australia's efforts to use the G20 to bolster confidence, and strengthen growth and job creation.
At the G20 Leaders' Summit in Cannes in November 2011, Australia played a key role in building support for a new, practical approach to advance the WTO Doha negotiations. Dr Emerson participated in the first-ever G20 trade ministers' meeting in April 2012, which highlighted the positive linkages between trade, growth and jobs, and made important progress in building support for an outcome on trade facilitation in the Doha negotiations. The department supported the Prime Minister's participation at the Los Cabos G20 Summit in June 2012. Leaders agreed to extend to 2014 the standstill commitment to resist protectionism and called for deeper analysis of how trade and investment restrictions affect global supply chains.
Prime Minister Gillard meeting the President of Mexico, Mr Felipe Calderón, at the G20 Leaders Summit, Los Cabos, Mexico, in June 2012.
We supported then Foreign Minister, Mr Rudd, at an informal meeting of G20 foreign ministers in Los Cabos in February 2012. The meeting explored the social and political implications of the global economic downturn, and discussed ways to manage them.
The department worked to advance Australia's G20 agenda and to shore up support for the G20 process. We contributed to work on a number of trade, development and food security issues. Our posts engaged G20 countries to build support for our objectives. We worked closely with France in 2011 and Mexico in 2012 as G20 hosts to help deliver successful Leaders' meetings and practical outcomes. An officer of the department was seconded to the Mexican Ministry of Foreign Affairs in 2012 to assist with G20 issues.
At the Cannes Summit, G20 Leaders agreed that Australia would host the G20 in 2014, following Russia in 2013. Since then, the department has contributed to planning for Australia's year as G20 host.
The Parliamentary Secretary for Trade, Mrs Elliot, discussing study opportunities in Australia with students from the Australian Society at Moscow State University in March 2012.
APEC plays an important role in strengthening practical collaboration on economic and trade issues in the Asia-Pacific. APEC's 21 member economies account for 56 per cent of the world's GDP and over 70 per cent of Australia's trade in goods and services.
Australia made a significant contribution to the positive outcomes achieved at the annual APEC Leaders' Meeting in Honolulu in 2011. These included commitments to liberalise trade in environmental goods, to reduce region-wide energy intensity, to facilitate structural reform, and to lower the transaction costs of doing business in the region. Useful outcomes were also achieved on streamlining regulations and on strengthening supply chains. On services, the department is leading work to develop a database on information needed by companies, especially small and medium-sized enterprises (SMEs), seeking to export to the region. Australia also played a lead role in efforts to strengthen regional financial markets and to develop APEC guidelines that will make it simpler for accountants to work across the region.
The department has also been closely engaged in APEC's work on issues such as disaster management, anti-corruption and illegal logging. We supported Mr Rudd's participation in an APEC meeting on Disaster Resiliency in Hawaii in November 2011. We helped coordinate the work of over 20 government agencies on specific APEC activities in 2011–12 and collaborated with the APEC Business Advisory Council, as well as other stakeholders.
We supported Dr Emerson's participation in the Ministers Responsible for Trade meeting in Kazan, Russia, in June 2012, which delivered a strong signal of support for the Doha negotiations and made useful progress on a number of issues, including higher education, food security, services liberalisation and structural reform.
APEC plays an important role in building capacity in the region and the department worked closely with AusAID and other agencies to deliver assistance. For example, we organised a workshop for 19 APEC economies to identify and implement structural reform priorities. We also facilitated regulatory impact analysis training by the Office of Best Practice Regulation for Russian officials.
The then Minister for Foreign Affairs, Mr Rudd, and Indonesian Foreign Minister, Dr Marty Natalegawa, listen as US Secretary of State Hillary Clinton addresses the Asia-Pacific Economic Cooperation (APEC) Women and the Economy Summit in San Francisco, September 2011. Photo: Justin Sullivan/Getty Images
The OECD helps governments design and implement better policies across a wide range of issues and makes a valuable contribution to the work of the G20, the WTO and other economic forums. The department supported Dr Emerson's participation in the annual OECD Ministerial Council Meeting in Paris in May 2012. Useful outcomes included building a stronger, shared understanding of the contribution trade makes to global economic growth and job creation, as well as agreement that the OECD should continue to monitor the effects of protectionist measures on global trade.
To mark the OECD's 50th anniversary in 2011, the department organised an exhibition highlighting Australia's engagement with the Organisation over the 40 years since we joined, particularly in the areas of economic reform, trade, agriculture, education, social policy, tax and anti-bribery.
The department coordinates policy advice relating to the Export Finance and Insurance Corporation (EFIC), a statutory corporation that provides trade finance and insurance services to support Australian exports. EFIC's mandate is to provide such services where the private sector does not.
We made a submission to a Productivity Commission inquiry into Australia's export credit arrangements in the second half of 2011. The Commission's report was tabled in Parliament in June 2012. The report makes a number of recommendations aimed at reorienting EFIC's focus to addressing information-related financial market failures affecting newly exporting small and medium-sized enterprises and improving the transparency of its activities and performance. The department is coordinating, with other agencies, a draft response to the report for the Government's consideration.
The department represented Australia in the OECD's Working Party on Export Credits and Credit Guarantees. The group recently finalised an agreement to improve environmental outcomes by allowing more favourable terms and conditions for export credits related to renewable energy, climate change mitigation and water projects. The group also agreed that infrastructure projects supported by OECD members' export credit agencies should meet established international standards for evaluating environmental impacts.
Enhancing trade competitiveness
The department—supporting Dr Emerson in his role as Minister for Competitiveness—contributed to the development of a range of policies aimed at enhancing Australia's economic performance. We provided assistance to the Prime Minister's Manufacturing Task Force, and advised portfolio ministers on a range of issues, including tax, international education, carbon pricing and foreign investment issues. The department also continued to work closely with the Department of Resources, Energy and Tourism on energy security issues.
Sustainable mining and conflict diamonds
The department played an active role on sustainable mining issues. We led work on the current review of the Kimberley Process, which is designed to prevent diamonds from conflict zones being used to fund armed rebel groups. We also supported the Extractive Industries Transparency Initiative, which aims to reduce corruption associated with resources projects, particularly in developing countries where government structures and regulatory systems could be enhanced.
Australia's current resources boom has been accompanied by a rapid expansion of Australia's mining, oil and gas companies internationally. The department's role in assisting business and addressing resources policy issues has grown accordingly.
Minerals and energy comprised 61 per cent of Australia's merchandise exports in 2011, while Australian mining companies held assets overseas worth $158 billion. Nearly 600 Australian mining, oil and gas companies now operate or have interests in projects in some 120 countries, spread across all regions of the world.
The department and its overseas network helps Australian mining companies through advice on local economic and political conditions; making representations on policy and regulatory issues; facilitating access to decision-makers; and providing consular support to Australians working overseas.
We work with other agencies at international mining events to strengthen contact between Australian industry and other governments and to promote Australia's mining credentials. These events include the Africa Down Under Conference in Perth, the Mining Indaba in South Africa, and the Latin America Down Under Conference, held for the first time in Sydney in May 2012.
The department is also engaged in international initiatives to promote corporate responsibility and sustainable mining, which have become integral to many Australian companies' business practices.
The Kimberley Process, which works to eliminate trade in conflict diamonds, and the Extractives Industry Transparency Initiative (EITI), which promotes transparency in revenues received by government from mining and oil companies, are two initiatives on which the department takes an active role internationally, in close collaboration with the Department of Resources, Energy and Tourism. We also liaise closely with AusAID in relation to its Mining for Development program, which seeks to help developing countries to maximise benefits and opportunities of mining.
Ambassador to Mexico, Ms Katrina Cooper, addresses the Latin America Down Under Conference in Sydney in May 2012.
The department supported the Parliamentary Secretary for Pacific Island Affairs and Parliamentary Secretary for Foreign Affairs, Mr Marles, in leading Australia's delegation to the Ministerial meeting of the United Nations Conference on Trade and Development (UNCTAD) in April 2012. Mr Marles highlighted the importance of open markets for economic development. He encouraged UNCTAD to cooperate with other international organisations including the WTO, OECD and G20, and to work on the linkages between trade, employment, innovation and growth.
The global economic outlook continues to be marked by uncertainty, particularly regarding the situation in the Euro zone, and slowing activity in key economies. Against this backdrop, the department will continue to play an active role in multilateral economic forums to resist protectionism as a serious risk to growth, and to maximise market access and trade competitiveness gains for Australia. In the lead-up to hosting the G20 leaders' summit in 2014, we will work closely with the Department of the Prime Minister and Cabinet and the Treasury to make a strong contribution to global economic and financial reform and economic growth.
In our region, we will continue to work with APEC economies to promote trade and investment openness, including through collaboration on structural reform, services liberalisation, regulatory coherence and stronger supply chains. We will support the Government's competitiveness agenda and position Australia as a global leader in sustainable mining.