2015 WTO Trade Policy Review of Australia
Australian Responding Statement
Mr Chairman, in this second session of Australia’s 7th Trade Policy Review, let me start by again thanking the WTO Secretariat for their comprehensive report on Australia’s trade and economic policies and expressing our sincere appreciation to the Discussant, the Permanent Representative of Hong Kong, China, for her insightful and thoughtful analysis.
Let me also convey our thanks to the WTO members who posed written questions and made statements on the first day of our TRP.
Perhaps if the Secretariat and Ms Young had not undertaken their tasks with such skill and dedication, and Members had not focused so seriously on the task, I and my delegation may have been free to enjoy more of the beautiful Geneva sunshine over the past two days!
But tempting as this thought may be, we have greatly appreciated the opportunity to discuss in detail Australia’s trade and economic policies, the positive elements – of which members acknowledged there are many – the areas where more reform may be worthwhile and the challenges ahead.
This has underscored again the value of this process as a broad and comprehensive transparency exercise. And, as a result of our efforts, I am pleased to report that we provided written answers to all Members’ questions – totalling some 600 – including all of those submitted after the 24 March deadline.
Of particular note to me personally, having spent many years living in the Pacific, is that we have responded to questions posed by Fiji, which has participated for the first time in our TPR, following the establishment of Fiji’s Mission to the WTO since our last review in 2011.
Mr Chairman, several recurrent themes were evident in the questions from Members and in the prepared statements delivered during the first Review session. I cannot promise to respond to everything mentioned by Members, but I will now seek to respond directly to many of the issues raised. And where I do not answer Members’ queries, we undertake to respond directly.
Many members welcomed Australia’s decision last year to consider accession to the WTO Government Procurement Agreement, a decision included in Australia’s G20 Growth Strategy. This also sparked interest in our existing framework around government procurement, both at the Federal and State level. Canada and the European Union, in particular, questioned Australia’s government procurement methodologies, including the divergent policies within the federation.
Let me reassure Members that Australia’s government procurement framework is based on the principles of value for money, non-discrimination and is open to competition from foreign suppliers. Foreign suppliers are very active in the Australian GP market, particularly in major construction projects.
We can give a strong assurance that at the Commonwealth level, our government procurement regime is non-discriminatory, including in relation to procurement-related policies. Federal, state and territory governments do have exclusions in their government procurement policies to support social objectives in education, health and welfare, including for our indigenous people, and for small and medium-sized enterprises given their contribution to Australia’s economic prosperity.
State and Territory Governments have given assurances that those measures are not discriminatory and are maintained only to ensure that Australian firms have equal opportunities to access government contracts.
We do recognise that the Secretariat report raises a number of issues around procurement related policies at State and Territory level which would need to be considered further in an accession negotiation, should Australia decide to accede to the GPA. We undertake to keep Members informed of developments in this area.
We know that many members have questions about Australia’s strict biosecurity regime. We understand the interest, at both a general level and for specific products, a number of which were raised on Tuesday.
We do not seek to downplay the critical importance of Australia’s scientifically-based biosecurity measures and we make no apology for those measures. They are demonstrably designed to protected Australia’s unique flora and fauna and guard against potentially devastating economic damage to Australia’s agriculture sector should an exotic disease or pest be introduced. For example, controlling the imported red fire ant has already collectively cost Australian Governments 411 million dollars between 2001 and 2012. The benefit of eradication is estimated to be in excess of 5.3 billion dollars over 20 years.
Australia is reforming its biosecurity regime with the introduction of the Biosecurity Bill in 2014. The Government consulted widely in developing the Bill, including with other nations’ international industry bodies. The proposed legislation will enshrine a risk management framework for assessing goods entering Australia and it is consistent with our WTO rights and obligations.
Reference was made by the United States and Switzerland to Australia’s non-alignment with the World Organisation for Animal Health’s standards for BSE. Consistent with the SPS Agreement, Australia reserves the right to conduct its own assessment of any other Member’s animal health systems and status in relation to diseases of biosecurity concern. Australia takes into account the World Organisation for Animal Health classification of a country’s BSE status, and also conducts its own evaluation because of the severe consequences that could result from a BSE outbreak in Australia.
Australia’s use of trade remedies, including anti-dumping and countervailing duties, was also raised by Members. Australia’s anti-dumping system is undergoing considerable reforms to improve administration, due process and transparency. Australia’s trade remedies underpin its open market and enable ongoing liberalisation to allow increased market access. They provide a more level playing field for domestic producers in the face of injuriously dumped and subsidised imports. The capacity to respond to anti-competitive pricing practices by overseas suppliers is an important element in the Government’s capacity to maintain community support for Australia’s open trade policies.
Australia’s ongoing reforms to its anti-dumping system have allowed the government to look at its policy settings in light of evolving trade flows, including issues such as the emerging significance of regional and global value chains – a point raised by one Member at the first meeting.
And I would note that we have not resorted to blunt instruments, such as global safeguards.
Australia’s tariff schedule was rightly acknowledged by many as among the most liberal in the world, however Mexico, Indonesia and Hong Kong, China, remarked that tariffs on non-agricultural products, and TCF and automobiles in particular, were relatively high or escalating.
I would like to take this opportunity to update Members on Australia’s progressive tariff liberalisation on these product lines. Since the 1st of January 2015, Australia’s highest tariffs on Textiles, Clothing and Footwear products has been five per cent. This follows a phased reduction process over a number of years. Tariffs on Australian made cars have been reduced steadily since the late 1980s to sit at just five per cent since 2010, and lower for some countries under bilateral or regional trade agreements.
Australia does not believe even its highest tariff of five per cent acts as a barrier to imported products.
Australia’s approach to regional trade negotiations was highlighted by the Discussant and some Members. Ms Young asked whether Australia looked at the impact of our preferential agreements on regional economic integration. This is an excellent question, and touches on one of the cornerstones of Australia’s approach to RTAs. Australia seeks to ensure its FTAs and RTAs contribute as much as possible to the ongoing integration of the economies of the parties
In our bilateral agreement with New Zealand, we have achieved deep integration across the economy, among the deepest of all the FTAs notified to the WTO. And we continue to explore opportunities for further integration. In the Australia-New Zealand ASEAN FTA, the parties established a vibrant mechanism for dialogue and review. This includes regular exchanges among policy makers from a wide range of economic sectors, aimed at ensuring that the FTA is operating in a way that promotes deep integration of our economies.
Our desire for genuine economic integration is behind Australia’s insistence on high levels of tariff elimination in all our FTAs - a point was raised on this issue by one Member. Australia remains committed to genuinely liberalising FTAs, and that commitment will be clear from any examination of the outcomes we have achieved – which are invariably among the most liberalising our partners have entered into – especially in the often sensitive area of agriculture.
Trade facilitation is an important part of Australia’s competitiveness agenda. It is a complement to Australia’s trade liberalisation efforts. Australia has recently introduced an authorised economic operator scheme, to facilitate procedures for regular importers and exporters. And we are of course moving towards ratification of the Agreement on Trade Facilitation.
We also appreciated the recognition from the discussant and several Members for Australia’s strong record on WTO notifications. Australia considers the notification process to be fundamental to transparency within the WTO. We will continue to strive to provide full and timely notification of any trade related measures. And indeed only last week we provided updated notifications to the Committee on Agriculture
In relation to Australia’s tax regime, a number of members mentioned specific tax measures, including the luxury car tax. This measure is fully compliant with WTO rules. It does not discriminate against imports as it is applied equally to all cars meeting the criteria, whether manufactured in or imported to Australia.
Foreign investment regulation was another theme touched-on by Members including the EU, China, Norway, Indonesia, Colombia and Hong Kong, China. As I highlighted in my opening address, Australia welcomes foreign investment and works to create an environment which will attract investment which is in the national interest. Out of thousands of business proposals, Australia’s Foreign Investment Review Board has only rejected three since 2001.
The Russian Federation and Indonesia expressed concern that the activities of Australia’s official export credit agency – the Export Finance and Insurance Corporation – may contravene our WTO obligations by supporting 0.1 per cent of Australian agricultural exports. Australia does not agree with the premise of those concerns. We support the elimination of all export subsidies, and disciplines on all measures with equivalent effect, including export financial support in agricultural trade as part of a broader outcome for the Export Competition pillar.
The NSW Rice Marketing Board received attention from Thailand, Chinese Taipei, Columbia and Uruguay. On state trading enterprises generally, Australia has progressively reduced the number of STEs with export monopoly powers from seven in 2004 to one in 2015. In response to Members’ specific concerns be assured there are no tariffs or quantitative restrictions on rice imports into Australia.
Canada sought clarification on Australia’s country of origin labelling framework. Australia’s country of origin labelling framework prohibits false, misleading or deceptive origin representations; provides that country of origin representations are not false, misleading or deceptive where certain criteria are met, that is provides safe harbours, and requires most food to be labelled with its country of origin.
The Government is consulting widely in considering changes to the Country of Origin Labelling framework and any changes will improve transparency and be consistent with Australia’s international trade obligations.
On a positive note, Australia welcomed feedback from Chile, the United States, Argentina and New Zealand on Australia’s efforts to curb fisheries subsidies. Australia continues to attach the highest importance to reducing incentives that contribute to overfishing and overcapacity. In the Post-Bali environment, Australia is genuinely looking at fresh and creative approaches to fisheries subsidies that would set out general principles within the context of the Subsidies Agreement.
Brazil raised education services – And I must admit that when they talked about people-to-people links I thought they were referring to the many Australians who travelled to Brazil for the World Cup – a not altogether successful experience for us but enjoyable nonetheless!
Trade services, including education services, is an increasingly important part of Australia’s trade profile and offers the potential for growth to offset the challenge presented by the tapering of growth in the resources sector. Services have for some time been the mainstay of Australia’s economy, and now contribute over 70 per cent of output and account for more than three quarters of total employment.
Por último, quisiera decir algunas palabras en español. Este año, recibimos una cantidad sin precedentes de preguntas en español, ¡lo que supuso un desafío para mis colegas y para mí, en cuanto a nuestra capacidad como traductores! Pero creo que esto demuestra una mayor interacción entre la región de América Latina y Australia, tanto en comercio e inversiones como en los lazos de persona a persona.
También quisiera mencionar la controversia sobre el empaquetado genérico del tabaco, y aprovechar esta oportunidad para agradecerles a Uruguay y Noruega su apoyo a Australia al responder a esta acción.
To conclude, Mr Chairman, at the beginning of this Trade Policy Review I acknowledged the challenges facing the Australian economy. Looking ahead, navigating the transition to broader-based growth is not the only challenge we face. Pressures are expected to continue into the medium-term as population ageing weighs on workforce participation, and declining global commodity prices lead to further falls in our terms of trade. To sustain improvements in living standards similar to those we have enjoyed over the last two decades, improvements in productivity growth will need to increase.
And, Mr Chairman, let me assure members that the Australian Government is focused on these challenges. As I discussed in my opening statement, we have in place a comprehensive Economic Action strategy, we are actively reviewing our competition and tax policies and a recently released Intergenerational Report focused squarely on issues surrounding our aging population.
We are very aware, as a nation, that we cannot simply assume that the next 23 years will be as successful as the last. But we are definitely up to the challenge.
And finally, can I take this opportunity commend you all for the work you do in the WTO on a daily basis. While the TPRs may be the highlight, we in Australia very much want to see you doing all you can to finish the Doha negotiations. I wish you all the best in the lead up to MC10.
Thank you Mr Chair.