Opening Remarks - Launch of Asian Development Bank’s Aid for Trade in Asia and the Pacific Report

Speech

Speaker: Secretary of the Department of Foreign Affairs and Trade, Frances Adamson

Australian National University

12 February 2018

Check against delivery

Distinguished guests, ladies and gentlemen, good afternoon.

I acknowledge the traditional custodians of the land on which we meet and pay my respects to their Elders past and present.  I extend that respect to Aboriginal and Torres Strait Islander people with us today.

It is a pleasure to be here and be part of the launch of the Asian Development Bank’s Aid for Trade in Asia and the Pacific 2017 report, which Australia is proud to have co-financed. This report is a useful contribution to discussions on trade and development.  I thank the ADB for its work. I am pleased that Dr Yasuyuki Sawada and Dr Cyn-Young Park are here for the launch.

I am also pleased that many of my DFAT colleagues will be participating in the wider 2018 Australasian Aid Conference, which commences formally tomorrow.

Many of you will be aware that in November last year, the Australian Government published its Foreign Policy White Paper. 

Promoting sustainable development, especially through sustained and inclusive economic growth, is a key theme underpinning the White Paper.

The White Paper notes that, as a prosperous country, Australia has a responsibility to contribute to global efforts to reduce poverty.  

We are doing this by aligning our development assistance, foreign policy and trade policy in an integrated Department of Foreign Affairs and Trade to maximise our resources for full effect.

To respond to this challenge, Australia has joined all other United Nations member states in committing to the 2030 Agenda for Sustainable Development and the 17 Sustainable Development Goals (SDGs).

In working with partners to achieve the SDGs, Australia will use its overseas development assistance, including through aid for trade, to catalyse sustained and inclusive economic growth to help reduce poverty. The 2030 Agenda provides an opportunity for Australia to share its experience at home with partners around the world.

Aid for Trade

Australia has increased its focus on aid for trade in order to boost economic growth and trade of developing countries.  In 2015, the Government committed to increasing aid for trade to 20 per cent of the total aid budget by 2020. 

We are on track to meet this target, and expect that by the end of this financial year, our aid for trade expenditure will reach $771 million or 19.7 per cent of Australia’s total aid budget.

Our focus and approach has enhanced Australia’s reputation as a global leader in aid for trade, with other donors seeking our partnership and advice on aid for trade initiatives.

Today, I would like to take the opportunity to speak about our aid for trade efforts in relation to two particular issues:

  • Firstly, why assistance for economic reform is important to development; and
  • Secondly, how we intend to make aid for trade more inclusive.

The ADB report of course addresses similar themes, highlighting the integral role of aid for trade in development assistance efforts, as well as the opportunities aid for trade opens for socially vulnerable groups.

Liberalisation and economic reform

A key component of a well-balanced portfolio of aid for trade investment is support for developing countries’ efforts to liberalise and undertake broader economic reform.  Such efforts are crucial to achieving sustainable economic development.

Our own experience is instructive. Australia has been a strong advocate of open markets, recognising that high and lasting growth can only be achieved by participating in international trade.  The evolution of Australia’s trade policy, and shift away from protectionism, over the past 40 years has helped to deliver a record breaking 26 years of economic growth.

Trade is a major contributor to the Australian economy, with trade in goods and services equivalent to more than 40 per cent of Australia’s GDP, and one in five jobs involving trade-related activities.

Drawing on this experience, we advocate the benefits of openness and trade orientation as being essential to sustained growth and poverty reduction.  We support this advocacy through trade policy and development assistance, including our commitment to the aid for trade target.

We are helping developing countries implement customs reforms in line with the World Trade Organization’s Trade Facilitation Agreement. For example, in 2016, Timor Leste reduced border-processing time at Dili Port from sixteen to nine days. 

Similarly, our wider trade policy takes account of developing countries’ needs and situations.  This is reflected in Australia’s approach to providing complete duty-free quota-free (or DFQF) for imports from Least Developed Countries.  Some LDCs, such as Bangladesh and Cambodia, have seen increases in their exports to Australia since the introduction of the DFQF preferences.  In trade agreements with developing countries, such as the ASEAN-Australia-New Zealand Free Trade Agreement, and the Pacific Agreement on Closer Economic Relations Plus (or PACER Plus), Australia has proactively incorporated development cooperation and capacity-building assistance.  Such ongoing support enhances developing country partners’ ability to maximise the benefits from these trade agreements.

We are supporting banks in developing countries to make trade finance more readily available to small businesses.  In 2016, our financial reform efforts in partnership with the ADB backed $3.1 billion in trade transactions.

We are also considering how new technologies could complement reform.  In partnership with CSIRO, we are working with developing countries to test the value of blockchain technology to facilitate trade. 

Results from reform typically take time, sometimes a long time, to materialise.  But the benefits can be considerable.

For example, the recent rise in the use of mobile banking in the Pacific has allowed remote communities to access and manage their finances.  However, this would not have occurred in the absence of deregulation of the telecommunications sector in the Pacific over a decade ago, supported by appropriate development assistance. 

Reform efforts by developing countries, accompanied by aid for trade, were crucial to making the market work for the poor.  The impacts for consumers have been remarkable, including in empowering women, by providing them with lower costs and greater access to mobile banking services.

Making Aid for Trade More Inclusive

On the second point, while aid for trade delivers results, a key theme of the ADB report is how we can make it even more inclusive. 

My Department’s aid for trade team has taken on the challenge of building on our efforts with more innovative and better-targeted aid for trade investments, to ensure that there is greater and more widespread benefit from these investments.  I am pleased to highlight some early results from this work.

We are investing considerably in boosting private sector skills in developing countries to take advantage of the opportunities in international trade.  Australia will provide initial seed funding of $2.5 million to the Global Trade Professionals Alliance.

The Alliance is a new international consortium that will help build support services for small businesses in developing countries to trade, and to understand and engage with domestic reforms that support trade.

Late last year, in partnership with the Export Council of Australia, we developed and delivered a short course for women entrepreneurs from the Pacific on how to undertake international business.  The course was highly over-subscribed. 

The women entrepreneurs from the Pacific built new networks, visited innovation hubs in New South Wales and Queensland, and they will receive ongoing coaching back home.

Conclusion

To summarise and conclude, efforts to boost engagement by developing countries with the global economy are crucial to job creation and poverty reduction.  Australia has a lot to offer in this area because of our own experience.  While aid for trade efforts are not the only solution, they are an essential part of the overall mix. 

Australia’s aid for trade efforts to date have delivered useful results, including streamlining trade processes, modernising infrastructure and empowering entrepreneurs, in particular women.

We will continue to undertake aid for trade investments that are more directly targeted and responsive to the needs of the poor and disadvantaged. 

Making aid for trade even more inclusive will help ensure that the benefits of trade are more widely spread, reaching groups such as small businesses and women.

I thank the Asian Development Bank for its valuable report, and thank the Australian National University, especially Shiro Armstrong, for hosting and organising this forum.

Thank you very much.

Last Updated: 12 February 2018