Seventh Trade Policy Review of Australia – April 2015
Opening Statement by Australia
Mr Chairman, Australia welcomes this seventh Trade Policy Review by the WTO.
We remain a strong proponent of the Trade Policy Review Mechanism as an effective means of ensuring transparency and maintaining confidence in the global trading system.
Australia warmly thanks the Secretariat for its comprehensive report on our trade and economic policies. It provides the basis for a rich discussion over the coming two days of our TPR.
Australia also thanks the WTO Members who posed in excess of 400 questions to Australia, the quality of which highlights the value of this process. Answers to your questions, which were distributed last week, were crafted thoughtfully and with transparency foremost in mind. And can I add that we have now responded to almost all of the questions that were received after the deadline. We will do our best to meet the same standard when answering the questions you put to us during the review.
May I express our appreciation to Ambassador Young from Hong Kong, China, for her enthusiasm in approaching the role of Discussant for our TPR.
Mr Chairman, the report by the Secretariat on Australia’s trade policies makes clear that Australia is in the midst of challenging economic times.
The tapering of the resources boom constitutes a significant challenge. Since our last review the spot-price of iron ore is roughly one-third its high of 2011 and less than half its market price during 2013. The resultant fall in mining investment combined with a still recovering international environment means that economic growth is expected to remain below its trend rate in the near term.
While recognising these challenges we also have cause to be optimistic. The Australian economy is in its 24th year of uninterrupted annual growth. It is rated triple ‘A’ by all three global rating agencies. It is forecast to have average annual real GDP growth of 3.0 per cent between 2015 and 2020, maintaining a relatively low unemployment rate. And it is increasingly tied to fast-growing economies in the Indo-Pacific region.
Moreover, historically low interest rates combined with a fall in the Australian dollar and significantly lower oil prices should encourage an increase in household and business activity over time.
The Government is also proactively confronting the economic headwinds with an Economic Action Strategy, which aims to reduce regulatory burdens, promote investment, encourage employment and foster productivity to fortify the Australia economy.
Since the 2013 election, the Government has announced more than A$2.45 billion in red tape savings for businesses, individuals and community organisations. These include several key reforms to alleviate compliance costs for small business, who often feel a disproportionate impact of regulation.
The Government has commissioned reviews of Australia’s tax system, competition policies and financial system, to identify areas for reform. These reviews will help to identify regulations and other impediments across the economy, which restrict competition and hinder business productivity.
The Government’s Industry Innovation and Competitiveness Agenda will lift the competitiveness and productivity of Australian industry by focusing on areas of our competitive strength and will help the transition from a reliance on mining to other smart, high-value, export-focused industries towards broader-based drivers of growth in other words.
Australia's economic strength has been underpinned by investment and foreign investment in particular, and the Government supports continued high levels of foreign investment. In our view, foreign investment stimulates innovation and contributes to the prosperity of businesses, communities and the broader Australian society. Proposed changes to Australia’s foreign investment regime are designed to strike the right balance between supporting foreign investment, while also reassuring the community that appropriate safeguards are in place to ensure foreign investment is in Australia’s national interest.
For example, the Government is currently seeking foreign investment to fund national infrastructure and has implemented a number of infrastructure investment reforms, including a A$50 billion investment in major infrastructure projects between 2013-14 to 2019-20 – referred to as the Infrastructure Investment Programme. As part of this programme, Australia considers a range of funding and financing mechanisms on a project-by-project basis, designed to help facilitate greater private sector involvement in public infrastructure provision.
The Government is also considering ways to capitalise on Australia’s great northern expanse. Ideas for developing Northern Australia were articulated in a Green Paper, published in 2014, and include trade and investment facilitation and non-tariff liberalisation reforms and deregulation in key sectors such as land, water and infrastructure.
In Agriculture, the forthcoming Agricultural Competitiveness White Paper will outline a clear strategy to improve the competitiveness and profitability of the Australian agriculture sector, boosting its contribution to trade and economic growth, and building capacity to drive greater productivity through innovation.
These initiatives I’ve briefly outlined demonstrate how Australia’s Economic Action Strategy represents an unwavering commitment to liberalisation and broader trade reform.
To give a concrete illustration of this, from 1 January 2015, our Textiles, Clothing and Footwear tariffs were at a maximum of 5 per cent after a phased reduction process over a number of years, and in specific cases these tariffs will effectively reduce to zero under a number of recently announced trade agreements. The value of Australia’s TCF imports is now around 20 times the value of our TCF exports.
Australia already has a strong, globally integrated services sector contributing over 70 per cent of output and accounting for more than three quarters of total employment.
Our domestic support for agriculture remains the second lowest amongst OECD countries, keeping Australian farmers among the most efficient in the world.
Our prudent Sanitary and Phytosanitary measures are well-known and are designed to protect our unique environment. In principle, our approach to these issues will not change, but like many other aspects of Australia’s trade-related policy, they will be subjected to ongoing reform.
For example, on 7 July 2014, the Biosecurity Bill 2014 was introduced to the Australian Parliament. If passed, the Bill will update and improve the way Australia regulates people and goods coming into the country in a manner consistent with our WTO obligations. The Bill will achieve this by focusing our risk management efforts within 12 nautical miles of the Australian coastline – where the risk is greatest.
We are also undertaking an examination of our Import Risk Analysis processes to identify improvements to administrative and regulatory aspects of IRA processes. These outcomes will inform the regulations and policies that underpin IRA processes in the context of the newly proposed biosecurity legislation.
Mr Chairman, as I mentioned, Australia has benefitted greatly from maintaining an open economy with imports and exports driving our prosperity. We continue to look to increase trade and open markets wherever possible.
Since the Trade Policy Review of Australia in 2011, Australia has concluded ambitious FTAs with Malaysia, Japan, Korea and China. These agreements helped to strengthen our trade and investment relationships with these economies to the benefit of both countries.
In addition, the Protocol on Investment to the Australia-New Zealand Closer Economic Relations Trade Agreement entered into force on 1 March 2013.
Australia is now engaged in bilateral FTA negotiations with India and Indonesia and three regional FTA negotiations – the Trans-Pacific Partnership, Regional Comprehensive Economic Partnership, and Pacific Agreement on Closer Economic Relations. We are also seeking to resume FTA negotiations with the Gulf Cooperation Council.
Australia has been an active participant in negotiations on the WTO's rules for FTAs, so as to help ensure that all bilateral and plurilateral FTAs are comprehensive, genuinely liberalising, and enhance efforts for global liberalisation in the WTO.
We continue also to look for ways to make progress in the WTO in negotiations with other reform-minded WTO Members.
As one of the co-Chairs of the Trade in Services Agreement (TiSA) along with the US and EU, we are pursuing progress on services trade liberalisation which we see as a mechanism with the potential to multilateralise discussions on services trade.
Australia, as Chair, has encouraged broad participation in the negotiations for an Environmental Goods Agreement. The EGA will contribute to a cleaner environment and better access to safe water, sanitation and clean energy.
We are committed to partnerships to help promote implementation of the WTO’s TRIPS Agreement. We support the entry into force of the Protocol amending the TRIPS Agreement to promote access to medicines.
Australia highly values the effective WTO dispute settlement system. We make a tangible contribution to the efficacy of the system as a third party in a range of disputes and we are engaged actively in the review of the dispute settlement system.
Moreover, Australia is currently the respondent in the Tobacco Plain Packaging dispute. With 41 third parties, this is the largest dispute in the history of the WTO. Its significance goes to the rights of WTO Members to implement measures aimed at protecting the health of their citizens. Australia is confident its tobacco plain packaging measure is fully consistent with its trade and investment international obligations, including under the WTO agreements.
Multilateral negotiations in the WTO are also a crucial component of Australia’s approach to trade and so to economic growth. The global character of the WTO means it can protect and promote interests in a way that bilateral or regional arrangements cannot. Disciplines on domestic support and export competition are prime examples of the WTO’s reach.
Against that background, Australia has supported extending the reach and effectiveness of the multilateral trading system by upholding and further liberalising trade rules through the WTO.
As Coordinator of the Cairns Group, Australia has for nearly 30 years championed the need for global liberalisation of trade in agriculture – the sector of international trade which has long been blighted by the greatest tariff barriers and other distortions. And our commitment will remain strong. Liberalisation of agricultural trade will not only benefit agricultural exporting countries like Australia but also importing countries through the creation of stable markets for consumers.
Mr Chair, WTO Members, it has to be admitted that multilateral trade negotiations are at a critical juncture in the WTO.
The agreement by Members on a package of outcomes at MC9 in Bali was a very significant breakthrough. It demonstrated that the WTO can deliver meaningful outcomes, notably the Trade Facilitation Agreement – the first new multilateral trade agreement in the WTO. The challenge we now face as Members is to build upon that success.
Members can do this by working constructively together in implementing the other elements of the Bali package, including the development outcomes.
We encourage all WTO Members to employ their best efforts to meet the July deadline for development of a post-Bali work program. For our part, we want to work closely with other WTO Members to agree on the work program.
Australia strongly supports the conclusion of the Doha Round as soon as possible. We want to ensure success in Nairobi, which is our best opportunity in years to advance the WTO membership towards conclusion of the Doha negotiations.
In addition to MC10, the 5th Global Aid for Trade Review Conference represents another important occasion for the WTO in 2015. Australia’s participation in this forum will build on our contribution in 2013, which included efforts to secure an Aid for Trade commitment from the G20 and the inclusion of trade targets in the post-2015 development goals.
Australia has a longstanding commitment to Aid for Trade and the development dimension of trade. The Australian Government firmly believes trade and investment are crucial to development and has committed to helping Members at all levels of development; bilaterally, regionally and multilaterally.
Our Generalised System of Preferences Scheme has been in operation since 1976, when we unilaterally extended preferential rates to developing countries under the Australian System of Tariff Preferences. And we have offered full duty-free, quota-free access for more than a decade to all LDCs.
More recently, the Government set a target of increasing Australia’s Aid for Trade investments to 20 per cent of the total aid budget by 2020.
And since MC9, Australia has been exploring ways to give effect to the LDC services waiver and has worked closely with other WTO Members to deliver on this commitment to LDCs.
We have also demonstrated our commitment to ensuring developing countries and LDCs reap the benefits of the Trade Facilitation Agreement by contributing A$6 million over three years to the World Bank’s Trade Facilitation Support Program and through a commitment of A$1 million to the WTO to help developing nations implement the Agreement, contingent upon its adoption.
In May 2014, Australia also co-funded a workshop for Pacific Islands WTO Members on ATF implementation.
Mr Chairman, I spoke of the challenges currently facing the Australian economy at the beginning of this statement. I went on to outline some of the strategies being employed by the Government to shore up and build upon Australia’s economic achievements in recent decades. And Australia’s Economic Action Strategy will continue to evolve. Our future prosperity will depend on our ongoing commitment to micro and macro-economic reforms, difficult though that can be. In implementing these policies we do not aim to 'pick winners'; we aim to create a flexible economy, a flexible exchange rate, a flexible workforce and regulation that generates a competitive economy.
Australia’s national interest is served unambiguously by an effective rules-based multilateral trading system under the auspices of the WTO.
We will continue to work towards genuine trade liberalisation, seeking an appropriate balance between bilateral, regional, plurilateral and multilateral initiatives.
Our most pressing task here remains conclusion of the Doha Round, and Australia will continue to work with other Members to turn that long-held aspiration to reality.
In conclusion, Mr Chairman, may I say that our delegation anticipates engaging in a constructive and informative dialogue with our Discussant, Ambassador Young, and other WTO Members during the course of our TPR.
Thank you, Chair.