Trade negotiations

Overview

The department led whole-of-government efforts in international trade and investment negotiations to advance global trade liberalisation and reform, improve access for Australian exporters and investors and generate new economic opportunities for Australians.

The department drove conclusion of the historic Trans-Pacific Partnership (TPP) in February 2016 and substantially upgraded the Singapore–Australia Free Trade Agreement (SAFTA). We secured the early entry into force of the China–Australia FTA and encouraged business to utilise its provisions.

In 2015–16, the First Protocol amending the ASEAN–Australia–New Zealand FTA (AANZFTA) entered into force for 11 of the 12 parties. The changes assist business by removing burdensome administrative requirements. In March 2016, Australia hosted the 8th AANZFTA Joint Committee meeting, which recommended commencement of the AANZFTA General Review in 2017.

The department spearheaded intensified negotiations in the Regional Comprehensive Economic Partnership (RCEP). We supported ministerial participation in RCEP meetings in July and August 2015 in Malaysia, and hosted the 12th negotiating round in Perth in April 2016. Together with the TPP, RCEP is a potential stepping stone towards a free trade area that includes all the economies of the Asia–Pacific region.

In March 2016, the Minister for Trade and Investment and his Indonesian counterpart agreed to reactivate Indonesia–Australia Comprehensive Economic Partnership Agreement negotiations. We then led the third round of negotiations in Indonesia in May. The department also supported the Indonesia–Australia Business Partnership Group, a platform for businesses to provide recommendations to government on the trade relationship.

We intensified efforts to conclude negotiations on a Comprehensive Economic Cooperation Agreement (CECA) with India but some differences remain. We engaged in two negotiating rounds, 13 intersessional meetings and supported frequent ministerial engagement.

The department co-chaired the inaugural Korea–Australia FTA Joint Committee meeting to review progress on implementation and set a forward work plan. We worked closely with Japanese officials to support smooth implementation of the Japan–Australia Economic Partnership Agreement. We continued an active outreach program to inform business of Australia’s North Asia FTAs and the outcomes of the TPP.

In the World Trade Organization (WTO), the department contributed to the 10th WTO Ministerial Conference (MC10) in Nairobi, which reached an historic agreement both to eliminate agricultural export subsidies and to increase the number of products covered by the plurilateral Information Technology Agreement by a further 201 product lines. Australia’s efforts resulted in further endorsement of aid for trade and inclusion of economic empowerment of women in the WTO’s aid for trade work program.

We consulted with stakeholders to advance the ongoing negotiations to accede to the WTO Government Procurement Agreement, and lobbied other WTO members to take necessary steps to bring the WTO Agreement on Trade Facilitation into force.

As chair and co-chair respectively, the department led plurilateral negotiations on the Environmental Goods Agreement and the Trade in Services Agreement. Participants hope to conclude both negotiations by end-2016.

As chair of the World Wine Trade Group, the department hosted two international meetings and worked with industry to reduce global barriers to trade in wine, including by addressing technical issues.

We continue to protect Australia’s Tobacco Plain Packaging measures against challenges in the WTO dispute settlement system, and successfully defended investor-state arbitration brought by Philip Morris Asia.

Results

Improving market access for Australian goods and services, attracting foreign investment to Australia and supporting Australian business abroad

ChAFTA entry into force

Case Study

The China–Australia Free Trade Agreement (ChAFTA) was signed in June 2015 and entered into force on 20 December 2015, providing significant improvements in market access for Australia in our largest export market.

The department led whole-of-government efforts to secure ChAFTA’s early entry into force before the end of the year, appearing twice with other agencies before the Parliament’s Joint Standing Committee on Treaties (JSCOT). We explained the outcomes of the agreement, answered questions from committee members and responded to stakeholder views. JSCOT subsequently recommended bringing ChAFTA into force. The department then supported the completion of domestic processes, including legislative amendments. We also liaised closely with China on completion of its domestic processes.

Achieving entry into force in December 2015 delivered quick wins for Australian goods exporters through two early tariff cuts: one on entry into force and one on 1 January 2016. It also delivered enhanced access to China’s services sector and improved commitments on two-way investment.

The department released a range of explanatory materials, including a step-by-step Guide to Exporting and Importing under ChAFTA. We responded to a large number of inquiries through the department’s FTA hotline and ChAFTA email inbox. Our outreach efforts helped business take early advantage of the FTA’s outcomes.

We worked closely with Chinese government agencies and Australian business stakeholders to quickly address implementation issues as they have arisen. Early trade data indicates strong uptake by business, with impressive growth in exports of many Australian products where tariffs are being cut. To maintain this positive momentum, we have already started work with China to take forward ChAFTA’s ambitious built-in agenda.

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Improving market access for Australian goods and services, attracting foreign investment to Australia and supporting Australian business abroad

The Trans-Pacific Partnership

Case Study
DFAT officer Hugh Boylan standing next to boxes containing the final text of the Trans Pacific Partnership agreement. [DFAT]
TPP Legal Counsel Hugh Boylan with final boxed text of the TPP, Auckland, February 2016. [DFAT]

The Trans-Pacific Partnership

The conclusion of the Trans-Pacific Partnership (TPP) Agreement in October 2015 was the culmination of five intensive years in which the department led Australia’s participation in a highly complex process.

The 8,000 page treaty is an ambitious and comprehensive framework that will promote trade, investment and economic growth. On entry into force, the TPP will mark an important step toward the creation of a region-wide free trade area in the future.

Throughout the negotiations and since their conclusion, the department maintained a proactive approach to outreach and consultation with stakeholders, including business representatives, state and territory governments, other federal government agencies and non-government and civil society groups, as well as the general public.

To assist with community understanding of the deal, we published the agreement text and a number of explanatory factsheets on the department’s website.

We have briefed parliamentarians, hosted information sessions for stakeholders across Australia and responded to queries from the general public. We also prepared a detailed National Interest Analysis to accompany the TPP text when it was tabled in Parliament in February 2016.

The department is coordinating the Government’s engagement in the review of the agreement being undertaken by JSCOT. Departmental officers appeared before the committee in February 2016. JSCOT’s recommendations will be considered by the Government before a decision is taken on binding treaty action.

We worked closely with New Zealand (the depositary country) to prepare the TPP text for the signing ceremony held in Auckland in February 2016 and assisted in the legal and technical review of the agreement text.

Strengthening international frameworks and norms that promote human rights, gender equality, democratic principles and the rule of law, international security, and open and transparent global markets

Outcomes of WTO/MC10

Case Study
Former Trade Minister Andrew Robb and members of the Australian delegation to the World Trade Organization ministerial conference in Nairobi. [Will Swanson]
Australian delegation to WTO MC10, Nairobi, December 2015. (L. to R.): Counsellor Geneva WTO Andrew Jory, then First Secretary Nairobi Simon Anderson, Ambassador and Permanent Representative to the WTO Hamish McCormick,then Minister for Trade and Investment Andrew Robb AO, High Commissioner to Kenya John Feakes, and then Acting Deputy Secretary Justin Brown PSM. [Will Swanson]

Outcomes of WTO/MC10

The WTO provides the framework of rules governing international trade and is the world’s primary trade negotiating forum. The conflicting interests of major economies, however, have long prevented conclusion of the Doha Round of negotiations. The year leading up to the 10th WTO Ministerial Conference (MC10) in December 2015 saw growing division among major WTO members and increasing doubts about the long-term viability of the WTO’s negotiating function.

In this challenging environment, the department worked with other WTO members to explore negotiating solutions and prepare for possible outcomes in areas of greatest commercial importance to Australia. Our sustained diplomatic effort and preparatory work helped narrow the focus onto ambitious but achievable goals in a subset of Doha issues—mainly in the area of agricultural export competition. We used Australia’s longstanding leadership role in the Cairns Group of agricultural exporting nations to good effect, shaping the direction of discussions and influencing the views of the major economies.

The key result was agreement at MC10 to eliminate more than $15 billion worth of trade-distorting agricultural export subsidies globally. This was a major win for Australian farmers and fulfilled a long-standing Australian trade policy goal. Export subsidies have been used by European and North American governments on products of major export interest to Australia (including beef, dairy, wine, wheat, and other meat)—making our own farmers less competitive and affecting world commodity prices. Removing export subsidies addresses a significant cause of distortion in global agricultural markets.

The department’s work also contributed to agreement at MC10 to advance WTO negotiations on other unresolved issues in a more flexible way—outside the constraints of the Doha Round. This opens the door to new approaches and also helps rejuvenate the WTO’s negotiating function overall. Building on this outcome will be a key forward priority for the department.

Delivering an innovative aid program, centred on the
Indo–Pacific region, which contributes to sustainable economic growth, poverty reduction and regional stability

Helping the poor achieve food security through improving access to agricultural markets

Case Study
Women sorting and drying apricots in Pakistan. [DFAT]
Women sorting and drying apricots for MDF partner business, Organo Botanica, Gilgit, remote northern Pakistan. [DFAT]

Helping the poor achieve food security through improving access to agricultural markets

The department’s six-year (2011–2017) Market Development Facility (MDF) is an initiative that aims to create jobs and increase incomes for the poor in line with our objective to deliver innovation and quality aid for agricultural development and food security. MDF is a multi-country program which includes Fiji, Timor-Leste, Pakistan, Sri Lanka and Papua New Guinea. As many of the poor live in rural areas, a key focus of MDF’s work is on farmers and rural entrepreneurs.

Agricultural development contributes to food security and sustainable economic growth in our region by improving food supply and providing an opportunity for the poor, particularly women, to earn income.

Our approach identifies growth opportunities in the economy which have potential to benefit the poor. It then analyses the barriers which prevent the poor accessing these opportunities. Barriers often include a lack of key skills, inputs and information, as well as difficulties in linking to potential buyers. MDF has a particular focus on identifying barriers faced by poor women. As MDF focuses on developing markets, the opportunities are likely to continue beyond the life of the project.

In partnership with the private and public sectors, the department uses MDF to develop new products, services and ways of doing business, which help overcome the barriers to entry faced by poorer populations.

In the agriculture sector, MDF is active in horticulture, livestock and agribusiness (although it also pursues work in other sectors such as tourism, manufacturing and construction). MDF has helped to increase farmer incomes as well as the supply of locally-produced foods, for example fresh fruit and vegetables in Fiji, and meat and dairy products in Pakistan. It also works with local businesses to help them secure export opportunities. Organo Botanica, a dry fruit processing company based in Pakistan, is one example of a local business better able to link to export opportunities through MDF.

Strengthening international frameworks and norms that promote human rights, gender equality, democratic principles and the rule of law, international security, and open and transparent global markets

SAFTA

Case Study

Departmental officials worked intensively with Singaporean counterparts to conclude a substantial upgrade to the Singapore–Australia Free Trade Agreement (SAFTA), one of Australia’s oldest FTAs.

This SAFTA upgrade was an integral part of the Australia–Singapore Comprehensive Strategic Partnership (CSP) jointly announced by the two prime ministers on 6 May 2016.

With tariffs on goods already eliminated between Australia and Singapore, this review provided an opportunity to build on TPP outcomes and address other behind-the-border issues. The department consulted with Commonwealth agencies, states and territories, and external stakeholders, to identify priorities for the negotiations.

The updated SAFTA will provide enhanced opportunities and certainty for Australian legal, financial and education services firms and sole operators, make it easier for Australian business people to work in Singapore, and provide greater certainty for businesses interested in tendering for valuable government procurement contracts.

The outcomes of the SAFTA review will make it simpler for exporters and investors to capture the benefits of Australia’s other trade agreements with Singapore. The best outcomes from our respective FTAs will be contained in SAFTA, including harmonised rules of origin and modern and predictable rules on services and investment.

The department will continue in 2016 to complete text and progress approval by both countries consistent with domestic treaty processes.

Analysis and outlook

Australia’s trade negotiations are taking place against a backdrop of global economic uncertainty, changing patterns of economic competition and the emergence of new strains of anti-globalisation sentiment in many countries. Bilateral and regional trade agreements involve a range of complex issues, such as domestic economic reforms, that can make conclusion difficult. Conveying the implications of agreements to stakeholders and the general public can be challenging.

In multilateral trade negotiations, marked differences between key WTO members have brought the Doha Round to an effective end. It is possible to rejuvenate the WTO negotiating agenda and develop new ways to work around conflicting viewpoints, but progress will be slow and outcomes difficult to reach.

The department’s focus will be to negotiate agreements on remaining Doha round issues, such as domestic support, agricultural and non-agricultural market access, and services, as well as exploring new issues for WTO negotiations.

Sustained and effective whole-of-government coordination remains crucial to our capacity to advance trade negotiations and implement our existing agreements. This was particularly evident in the department helping achieve early entry into force of ChAFTA.

The level of business interest in the outcomes of Australia’s North Asia FTAs was reflected in high participation in the FTA seminar series and usage of the FTA Portal. We were able to leverage our digital platforms, particularly the DFAT website and Twitter, to deliver key messages to stakeholders and the Australian community.

In addition to PACER Plus, priority negotiations in the coming year include the IA-CEPA with Indonesia, RCEP and the CECA with India. We will work towards launching FTA negotiations with the European Union and the United Kingdom, and aim for conclusion of the Environmental Goods Agreement and Trade in Services Agreement in the second half of 2016.

We will continue to actively implement our existing FTAs, with a focus on communicating the benefits to business and taking forward future work and negotiations mandated by those agreements. The department will work to expand the FTA Portal to cover all of Australia’s FTAs. We will continue the FTA information seminar series through 2016–17.

We will work with other agencies to progress domestic ratification of the TPP by engaging with the Joint Standing Committee on Treaties and preparing implementing legislation.

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