Trade Strategy Development and Business Liaison: Sub-program 1.6
The Market Development Division administers this sub-program. The division comprises three branches—the APEC and Regional Trade Policy Branch, the Trade and Economic Analysis Branch, and the Trade Development Branch—and four market access facilitation teams covering processed foods; automotive; information industries; and textiles, clothing and footwear. The division’s area of responsibility also includes the seven State and Territory offices.
As part of the machinery-of-government changes instituted by the Government after the October 1998 federal election, the division assumed responsibility for trade finance and insurance. This includes the provision of advice to the Minister for Trade on his obligations under the National Interest Account (administered by the Export Finance and Insurance Corporation), advice that was formerly provided by the Industry, Science and Tourism portfolio.
As well, in February 1999, responsibility for the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) was transferred from Sub-program 1.2, Interests in South and South-East Asia, administered by the South-East Asia Division, to Sub-program 1.6. This transfer reflects IOR-ARC’s focus on a trade and investment agenda.
Note: EFIC was transferred to DFAT under Administrative Arrangements Orders in October 1998. The negative outlays figure reflects higher than average adjustments for EFIC (ie National Interest Recovery and Repayment Interest Subsidy receipts).
n.a.: Not applicable.
Objectives, Performance Indicators and Results
The department negotiated a clear reaffirmation by APEC leaders of the Bogor liberalisation goals in the most difficult economic climate faced by the region in over 50 years. Although APEC was unable to reach consensus on implementing Early Voluntary Sectoral Liberalisation, we negotiated a detailed and balanced package as a building block for broad-based negotiations in the World Trade Organization, and achieved APEC agreement to support the inclusion of industrial products in WTO negotiations. We set benchmarks for improvements in the transparency and specificity of Individual Action Plans during reviews in 1999 of the Australian plan. APEC support was also secured for Australian proposals on international financial reform, improved economic governance in the region, and communicating the benefits of trade and investment liberalisation.
The department achieved strong APEC endorsement of the Australian initiative in 1998 on strengthening public policy, and on financial sector and corporate governance reforms through capacity building. We also achieved APEC endorsement of Australian-led initiatives on electronic commerce in 1998, and secured APEC consensus in 1999 on Australian proposals to strengthen APEC’s business focus on facilitating trade and improving the cross-border business environment.
In conjunction with New Zealand, we continued to participate in a range of activities relating to standards, conformance, customs, transport and tourism, with the aim of facilitating trade and reducing business costs. With the rescheduling of the ministerial-level meeting originally set for October 1998, outcomes will depend on the ASEAN Economic Ministers’–Australia-New Zealand Closer Economic Relations Trade Agreement joint ministerial meeting in October 1999.
The department provided analysis on a comprehensive range of trade aspects of the domestic economic reform agenda. This analysis helped shape final Government positions on issues such as tariff reform, liberalisation of international air services, the national online strategy, reform in the printing and shipbuilding industries, and the promotion of Australia as a centre for global financial services.
Our submissions to inquiries conducted by parliamentary committees and the Productivity Commission analysed relevant trade-related concerns. Our contribution was reflected in the Productivity Commission’s report on air services. Our other submissions—on rail services, rural and regional infrastructure, sustainable development, international telecommunications market regulation, international liner cargo shipping, and broadcasting services—are still being considered by the Productivity Commission, with reports scheduled for release in the next review period.
Opening Markets: The Benefits for Australia (our widely distributed, simple-language brochure) and our work identifying the links between exports and employment, were well received and continue to be widely cited. The monograph, Global Trade Reform: Maintaining Momentum, analysing the potential economic benefits of a new round of multilateral trade negotiations, was highly praised at its launch by Mr Fischer at the OECD Ministerial Council Meeting in Paris in May 1999. Also well received by major business organisations was our analysis of the impact of regional economic developments on Australian trade: Trading with East Asia in Difficult Times: Australia Rises to the Challenge, published as part of the TradeWinds series in November 1998.
We also published two major studies examining the development of e-commerce in Australia: Driving Forces on the New Silk Road: The Use of Electronic Commerce by Australian Business, and Creating a Clearway on the New Silk Road: International Business and Policy Trends in Internet Commerce. These studies focused on the opportunities created by e-commerce and the strategies that business and Government might adopt to realise them. They attracted favourable responses. We also contributed to Government assessments of the possible trade impact of the Y2K millennium bug.
The Export Finance and Insurance Corporation (EFIC) produces a separate annual report, which is available by telephoning 1800 685 109 (freecall). EFIC also maintains a website at http://www.efic.gov.au.
Responsibility for trade finance policy, including policy aspects of the operation of the Export Finance and Insurance Corporation, was transferred from the Industry, Science and Tourism portfolio as part of the machinery-of-government changes after the October 1998 federal election. The full resources of the Export Credit Section were transferred to the department in November 1998; the section quickly achieved full operational status while continuing to consult widely intra-departmentally on the implications of policy and transactional issues.
Following this transfer, the department advised the Minister for Trade on his responsibilities under the EFIC Act and implemented the Government’s decisions in relation to the application of competitive neutrality policy to EFIC, including the introduction of amending legislation. We also provided advice on the Government’s management of EFIC National Interest Account cover to assist Australian exporters in trade and investment activity. The Secretary attends EFIC board meetings as the Government member.
In the 1998–99 financial year, $1 088 million of exports were supported by EFIC National Interest credit insurance. In response to the East Asian economic crisis, National Interest Account arrangements (established in early 1998) were extended for a further period and provided short-term credit insurance for exports of essential goods to both the Republic of Korea and Indonesia. The Government initially approved a $500 million credit insurance facility for the Republic of Korea; this was later decreased to $300 million, demonstrating the private sector’s more recent willingness to accept the Republic of Korea’s corporate risk as that market recovers. Exporters to the Republic of Korea of major commodities such as sugar, coal, iron ore and other minerals, together with semi-manufactured goods, benefited from the National Interest Account arrangements. The Indonesian arrangement is on a case-by-case basis. The Government has indicated a willingness to cover essential exports to Indonesia, including up to US$327 million for wheat and US$250 million for cotton. Government action in these two countries’ cases has been instrumental in helping to restore confidence and maintain the level of trade.
Ministers expressed satisfaction with the department’s analysis and advice on global economic developments and the impact of these on Australia’s interests, with a particular focus on the aftermath of the East Asian economic crisis and work on trade aspects of proposed reform of the international financial system.
The Secretary participated as a member of the Prime Minister’s Task Force on International Financial Reform, which released its report in December 1998. Using our overseas network and working with other Australian economic departments, we promoted the task force’s report and recommendations, which included the need for broader representation in international forums. Following the meeting of G7 financial ministers in June 1999, Australia was one of only four countries outside the G7 invited to participate in its Financial Stability Forum.
We also played a significant role in the International Economic Policy Group, a high-level interdepartmental group responsible for providing whole-of-government analysis and assessments of key economic issues. Within this group, we made particular contributions on the economic outlook in Japan, China and Papua New Guinea. This participation strengthened Australia’s capacity to respond effectively to global developments in relation to economic, financial and foreign policy matters.
Through the National Trade Consultation process, we kept representatives of relevant State and Territory government departments and peak industry organisations informed about initiatives. We also invited input in key areas, including Australia’s response to economic instability in East Asia, support for a new round of multilateral trade negotiations, the Trade Outcomes and Objectives Statement, the work of the Market Development Task Force, and development of an integrated approach to an online trade strategy to facilitate e-commerce.
In consultation with Austrade, we achieved positive outcomes from National Trade Consultation working groups on overseas representation, export culture and international trade exhibitions. These outcomes include more effective overseas representation through co-location, and improved means of identifying Australian companies and business representatives in Frankfurt, Hong Kong, Jakarta, London, Seoul and Shanghai. Also, the Commonwealth Government, State and Territory governments, the Australian Chamber of Commerce and Industry, and the Australian Industry Group reached an agreement on a Memorandum of Understanding for Improving Coordination of International Trade Exhibitions.
The department has five market access facilitation teams; the achievements of the four teams that fall under Sub-program 1.6 are set out below. Information on the newly created position of Trade Facilitator for Agricultural Products—the head of the fifth team—is in Sub-program 1.5.
Processed Food and Beverages: The department worked closely with industry in Australia and overseas to encourage a specific focus on processed foods in the forthcoming WTO negotiations, including developing processed food interests as a counterweight to traditional rural lobbies. We also led efforts that resulted in the Japanese Government amending regulations that affected Australian exports of orange juice, and coordinated government–industry activity to prevent Japan from changing the tariff classification of high-fat cream cheese and thereby restricting Australian exports.
Information Industries: As a result of our efforts in collaboration with other agencies and portfolios, Mr Fischer signed an agreement with the Singaporean Government in February 1999 for collaboration on information and communications. This agreement focuses strongly on trade and investment. Five business-to-business agreements between Australian and Singaporean companies were also signed, and an Australia–Singapore Joint Information Technology Council was established to encourage closer business relationships.
Throughout the year in review, we led a push in the WTO for members of the Information Technology Agreement to commence a work program to address non-tariff measures that impede trade in information technology goods. We are working with Australian industry in this forum to address a range of issues relating to international standards and conformity assessment regimes.
Automotive: Together with the Department of Industry, Science and Resources, and with Austrade and the Federal Office of Road Safety, we developed a comprehensive Automotive Trade Strategy. Outcomes of this strategy include new contracts in India, the Republic of Korea, Thailand and the United States for Australian automotive products.
We intensified our efforts to reduce automotive trade barriers significantly in key markets. Outcomes include an expectation of increased access to China and Taiwan once they join the WTO, and a commitment by Thailand to facilitate increased imports of Australian components. We also assisted several companies with specific market access issues, and achieved progress in fostering regional cooperation, including through the APEC Automotive Dialogue which Australia chairs.
Textiles, Clothing and Footwear: The department achieved its goal of having a Natural Fibres, Textiles and Clothing Trade Facilitation Committee established within the Asia-Pacific Textiles and Clothing Forum—an Australian initiative. We lobbied successfully for reduction of the Indian tariff on raw wool from 20 per cent (ad valorem plus additional) to 15 per cent, and a reduction of Canada’s preferential tariff rate on denim from 14.2 per cent to 13 per cent. We also facilitated exports of Australian fabric to Indonesia by providing information on, and clarification of, Indonesian customs requirements.
During the year in review, the Market Development Task Force, chaired by the Secretary, pursued 110 priority trade and investment objectives in 27 markets. Success or substantial progress was achieved for 55 of these objectives, with some progress on a further 42. Through this activity, we supported Australian business by helping secure increased access to overseas markets, including India, the Gulf States, Japan, the Republic of Korea, Taiwan, the Philippines and Poland, in areas such as agrifood products and industrial goods.
The department published two major studies examining the development of e-commerce in Australia, Driving Forces on the New Silk Road, and Creating a Clearway on the New Silk Road. These focused on the opportunities created by e-commerce and the strategies that business and Government might adopt to realise them. As well as distributing complimentary copies, we sold over 550 hard copies of each report, and the online versions are currently being accessed more than 1 000 times weekly through the Internet. The studies have also been drawn on extensively by ministers, other government departments and business. In addition, we supported follow-up work by Mr Fischer and the Parliamentary Secretary for Trade, Mr Larry Anthony, by promoting the reports within the business community, and contributing to broader work by the Government to develop online strategies for Australia.
The department developed a portfolio Y2K website—online from 14 May 1999—providing the public with access to detailed information on international Y2K issues. This site is updated regularly in the lead-up to critical dates for possible computer and processor failures in 1999 and 2000.
The department was active in encouraging the development of a trade policy agenda in the Indian Ocean Rim Association for Regional Cooperation through convening a meeting of IOR-ARC senior officials in Perth in December 1998. The recommendations of this meeting were subsequently endorsed by the biennial IOR-ARC Council of Ministers meeting in Mozambique in March 1999, where we secured agreement to our proposal to implement a trade and investment policy agenda for the association. This agenda aims to increase the transparency of members’ trade and investment regimes, to the benefit of business.
The Trade Policy Advisory Council, supported by the department’s secretariat, is a consultative forum for the Minister for Trade. During the year in review, council meetings continued to provide an important source of high-level business advice to the minister and the department on a range of international and domestic issues affecting trade and trade competitiveness. Significant issues included the impact of financial and economic developments in Asia, ways in which Government and business might work together to address the Y2K problem, and preparation for the new round of multilateral trade negotiations. A list of council members is provided at Appendix 12.
The Business Relations Program operated by the department’s State and Territory offices has also resulted in stronger links with business through regular consultations, briefings by heads of missions and policy seminars.
In collaboration with Austrade and AusAID, the department produced a booklet—Multilateral Procurement: A Guide to Winning Contracts—to raise business awareness of multilateral procurement opportunities. This effort was reinforced through links with State and Territory governments and peak industry associations under the National Trade Consultation process. Also important was the work of the department’s Victoria office in liaising with the Committee for Melbourne and with business on opportunities arising from the meeting of the heads of procurement for all UN agencies in April 1999.
We worked closely with the private sector to organise the highly successful Australia Reception at the World Economic Forum in Davos, Switzerland, in January 1999. The reception, co-hosted by Mr Downer, attracted some two thousand global business and political leaders. It provided a unique opportunity to present Australia as a modern, dynamic and culturally diverse country, as well as to highlight Australia’s experience in weathering the regional economic downturn. World Economic Forum members were encouraged to visit Australia and to participate in the East Asia–Pacific Economic Summit 2000, which will be held in Melbourne immediately prior to the Sydney Olympics.
Successful cooperation with the private sector to design, manage and stage on a commercial basis the international business forum, the Australia Summit.
The last Australia Summit, held in Melbourne in June 1998, provided Australian business with a valuable forum in which to discuss future trade and investment opportunities in the context of regional economic renewal.
During the year in review, Mr Fischer determined that the scope future Australia Summit business forums should be smaller and more targeted. Accordingly, in conjunction with other Commonwealth and Victorian departments and agencies and the private sector, we commenced planning the next event, entitled the Australia–China Trade and Investment Summit. This forum will involve high-level Australian and Chinese business people, and will be linked to the expected visit of the Chinese President, Mr Jiang Zemin, in September 1999.
As part of our efforts to satisfy the needs of the business community for relevant commercial information, we produce a number of statistical publications that contain comprehensive details about the composition, size and direction of Australia’s trade with the rest of the world (details in Appendix 6). These are supplemented by a market information service for the general community. We also maintain sites on the departmental website that provide current data on Australia’s trade with East Asia (http://www.dfat.gov.au/hot/index.html), and a series of Country Fact Sheets (http://www.dfat.gov.au/publications/stats.html).
During the year we distributed over 3 500 publications, and handled around 1 200 general inquiries. Our 35 public presentations on the impact of the East Asian crisis, Australia’s trade policy approach, e-commerce, and benefits of more open markets, were also well received. The value placed on these information sources and analytical briefings was reflected in highly complimentary feedback on their relevance and timeliness from portfolio ministers, other departments, the business community and the general public.
Mr Fischer released the Trade Outcomes and Objectives Statement 1999 on 10 February 1999. Business reacted positively to the document, welcoming the frank analysis of regional and global economic and trading conditions, and the clear explanation of the Government’s trade strategies for the coming year. Detailed coverage of 16 key markets and a range of industry sectors and emerging issues provided an important point of reference for business. As well as making it available through the departmental website (http://www.dfat.gov.au/toos), we distributed 5 400 printed copies of the report.