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OUTCOMES AND

OBJECTIVES

STATEMENT

AUSTRALIA’S TRADE

© Commonwealth of Australia 2002

This work is copyright. The material contained in this statement may be freely quoted withappropriate acknowledgment.

Includes Index.

ISBN 0-642-99639-3.

1. International trade. 2. Australia – Commerce. 3. Australia – Foreign economic relations. I.Australia. Dept. of Foreign Affairs and Trade.

337.94

Produced by the Trade Development Division of the Department of Foreign Affairs and Trade withinput from Austrade. A number of Commonwealth Government agencies provided assistance,particularly, Agriculture, Fisheries and Forestry – Australia; the Department of Industry, Tourism and Resources and the Department of Transport and Regional Services.

The Department of Foreign Affairs and Trade would like to thank the following for providingphotographs: Austrade (pages 51, 53, 54, 59, 91, 93 and 113); Supermarket to Asia Ltd (pages 8 and 104); Meat and Livestock Australia (page 23); Newspix Photo Service (pages 11, 21 and 31); AAP Photo Service (pages 92 and 117); Reuters Photo Service (page 36); The Gulf Times (page 6); Austal Ships (page 129) and AusAID (page 133).

Edited by Paul Myler, with assistance from Nathan Backhouse, Cynthia Dearin, Alba Salsone, Axel Wabenhorst, DFAT’s Market Information and Analysis Unit, Kelly Ralston and Julie Monson(Austrade), and Jeff Fitzgibbon (external editor).

Design and typeset by Di Walker Design, Canberra.

Printed by National Capital Printing, Canberra.

Unless otherwise specified, all amounts are in Australian dollars.

ii

2001 was a strong yearfor Australian exports,despite the economicdownturn experiencedby most of our majortrading partners. A verycompetitive Australiandollar helped underpinrobust growth in exportvolumes, and strong

prices in key commodity markets also helpedboost Australian dollar prices received for exports.

The value of Australia’s exports of goods andservices increased by 8 per cent to $154 billion in2001. This performance builds on the record 25 percent growth recorded in 2000. Export volumes roseby 1 per cent, while the prices received formerchandise exports rose 7 per cent. Merchandiseexports to all major trading partners grew strongly,with exports to China, the European Union andthe United States experiencing particularly strongrises of 26, 18 and 8 per cent respectively.

Australia’s strong export performance saw it recorda $2.7 billion trade surplus in 2001. This representsa turnaround of $10.1 billion on the $7.4 billiondeficit recorded in 2000.

I commend Australian business for this result. It confirms that Australian firms are respondinginnovatively and successfully to changes in theinternational economy. Several of these successfulfirms are highlighted in this statement, althoughthere are many thousands more that areenergetically and creatively pursuing exports.

Australia will need all this creativity anddedication to maintain our momentum in 2002. It is clear that, with Europe, Japan and the UnitedStates all suffering an economic downturn,

with flow-on effects to ASEAN and other majorcustomers of our goods and services, 2002 will bea challenging year. The pace of our export growthhas already slowed significantly, and will slowfurther if global demand remains suppressed.

The Australian Government stands ready to facethese challenging times, in partnership withbusiness and the community. Australia needsexports and we need more Australian businesses tobecome exporters. Exports are critical to generatingwealth, creating jobs and raising living standardsfor all Australians. The dynamism of our exportsector was a key reason why Australia withstoodthe worst impacts of the Asian financial crisis of1997-98. An entrepreneurial export sector can helpus in the face of the current world slowdown.

The Government expects world growth to return tonear the long-run average of 3-4 per cent by 2003.We want to have a new crop of exporters readyand able to exploit this return to global growth.

The Government has set itself the ambitious goalof doubling the number of Australian businessesexporting by 2006 and is already taking steps,primarily through Austrade, to pursue this by:

• committing $21.55 million over four years to the TradeStart and Export Access initiatives,including funding for ten new offices;

• raising the minimum Export MarketDevelopment Grant (EMDG) from $2 500 to $5 000, at a cost of $1.6 million over four years;

• increasing its trade outreach effort to ensuremore Australians are aware of the role ofexporting and the benefits of trade.

Despite the recent Farm Bill and steel setbacks inthe United States, there is renewed internationalmovement on trade liberalisation. A new World

M i n i s t e r ’s Fo re w o rd iii

MINISTER’S FOREWORD

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Trade Organization (WTO) Round was launchedin Doha and our officials in Geneva are beginningnegotiations that must result in a non-discriminatory approach to agriculture trade. We also hope to make significant gains for ourvibrant and growing services export sector as wellas building on past progress in opening marketsfor industrial products.

For a relatively small trading nation, a universallyrecognised, rules-based system is the best meansof defending our interests and pressing for greateraccess to key markets. But we are not relyingsolely on the WTO. Australia’s trade policy aimsto secure the best possible access to overseasmarkets for Australian exporters – whereveropportunities to do so appear. In these times ofeconomic uncertainty, the Government is – morethan ever – vigorously protecting Australia’sinterests through a multi-faceted trade policy.Multilateral, regional and bilateral strategies allhave an important role in promoting Australia’strading interests.

We have backed this commitment with increasedresources for trade negotiations. The Governmenthas established an Office of Trade Negotiationswithin the Department of Foreign Affairs and Tradeto bring together trade specialists to help Australianexporters open up markets and win trade disputes.The new Office of Trade Negotiations will have 60 per cent more staff than the correspondingdivision at the end of the Uruguay Round ofmultilateral negotiations in 1993. The Office’sleadership team will be supplemented by a SpecialNegotiator with responsibility for free tradenegotiations, a Special Negotiator for Agricultureand an additional senior appointment to Australia’sWTO mission in Geneva to strengthen thenegotiating team in Geneva.

We are establishing new alliances – either throughthe Cairns Group or new issue-specific groups – to secure favourable trade outcomes from themultilateral trading system. As a medium-sizedplayer, Australia needs to be clever in buildingcoalitions. In particular, Australia must continue tobuild stronger relations with developing countries.

Our interests in agricultural reform are closelyaligned and developing countries are playing anincreasingly significant role across the WTO agenda.

Our commitment to APEC is unfaltering. APECsolidarity helped prevent a return to tradeprotectionism, despite the East Asian financialcrisis and the current economic downturn, andcontinues to promote positive approaches to thechallenges of globalisation and trade facilitation.APEC’s cross-section of developed anddeveloping economy membership was useful inbuilding consensus for launch of a new round ofWTO negotiations in Doha.

The commitment made by ASEAN EconomicMinisters and Australian and New Zealand Trade Ministers in September 2001 to endorse a framework for the ASEAN Free TradeArea–Australia–New Zealand Closer EconomicRelations (AFTA-CER) Closer EconomicPartnership (CEP) builds on six years of work on trade facilitation and economic cooperationbetween the two regions. The CEP frameworkprovides, for the first time, a formal and structuredapproach to promoting trade, investment andregional economic integration. And, importantly,this commitment was made against a backdrop of slowing regional and global growth. Theframework will be embodied in an instrument to be signed by Ministers in September 2002 in Brunei.

This Government also recognises that bilateralinitiatives can offer significant benefits. Worktowards open and comprehensive Free TradeAgreements (FTAs) with important neighbourslike Singapore and Thailand contributes to ourbroader strategic objective of achieving an openglobal and regional trading environment that willdeliver benefits to all.

Australia also sees potential for substantial gainsfrom an FTA with the largest and most dynamiceconomy in the world – the United States.Improved access to US markets would have directbenefits for Australian exporters. Economicmodelling has shown that these benefits could addup to $2 billion a year for the Australian economy.

However, a US FTA would deliver more than justdirect trade benefits. It would also be an effectivemeans of attracting US investment at a time ofintense international competition for US businessand investors. And, by closely aligning the twoeconomies, an FTA would facilitate adoption byAustralian companies of US best practice in areassuch as business administration and e-business.

The Government is also constantly looking atfresh ways to inject momentum and growth intoour strongest and most mature tradingrelationships. Under the rubric of ‘strengtheningeconomic relations’, traditional trading partners inJapan, South Korea and China are being exposedto the modern, diverse, innovative Australianeconomy in ways which can promote a broaderrange of commercial interaction.

The world trading environment is undergoingconstant change. In this dynamic environment,governments cannot afford to become lazy orhave all their trade policy eggs in one basket. This Government has the energy, commitmentand vision to pursue an active and diverse tradepolicy, as I am sure you will see from this TradeOutcomes and Objectives Statement.

And, of course, this Government has acontinuing commitment to providing exporterswith a strong economic foundation and flexibleindustrial relations framework on which to buildtheir business.

Our multi-faceted trade policy will deliver forAustralians in the city and the bush. I hopeAustralian business, large and small, urban andregional, will join the Government in our quest todouble the number of exporters.

Mark VaileMinister for Trade

vM i n i s t e r ’s Fo re w o rd

Introduction

Australia’s ambitious trade policy agenda reflectsthe link between trade and the success of thenational economy. Trade has always been good forAustralia, helping maintain its enviable standard ofliving. Exporters generally provide better wages,salaries and conditions for their employees.Australian exporters are also among the fastest-growing companies, providing increasing jobopportunities for Australian workers. Over the pastten years, around 1.7 million Australian jobs a yearon average have been directly or indirectlyconnected to exports. One in five Australian jobsnow relies on the export sector. In rural and regionalAustralia, that figure increases to one in four jobs.

In 2001, the value of Australian exports of goodsand services increased by 8 per cent to $154 billion.This strong performance saw Australia record a$2.7 billion trade surplus, a turnaround of $10.1 billion on the $7.4 billion trade deficit in2000. Merchandise exports to all major tradingpartners grew strongly, with exports to Chinagrowing by 26 per cent, the European Union by 18 per cent, the United States by 8 per cent andJapan by 9 per cent. ASEAN grew by 2 per centand East Asia as a whole by 7.6 per cent. The lowvalue of the Australian dollar and strongfundamentals of the economy have contributed tothe ongoing competitiveness of Australia’s exports,despite the slowing global economy.

Exports of primary products (rural, mineral andenergy) increased by 12 per cent in 2001, butAustralia’s reliance on them has diminished inrecent years such that they constituted only 45 percent of Australian exports in 2001. As tariffs havefallen, the manufacturing sector has increased its

output and diversity, and exports of elaboratelytransformed manufactures have risen dramatically.Exports of manufactures rose by 11 per cent in2001, and now constitute 30 per cent of totalexports. Exports of services fell 1.5 per cent in 2001following the Olympics-related peak in 2000, but now make up 20 per cent of total exports.

The Government’s domestic economic reformagenda has provided a strong and resilienteconomic base for exporters. Sound fiscal policyhas maintained the confidence of financial markets,and has helped keep long-term interest rates low.Australia’s microeconomic reform agenda,including the introduction of a new taxationsystem, labour market reform and privatisation ofpublic utilities, has also generated productivitydividends for exporters. The InternationalMonetary Fund (IMF) forecasts that the Australianeconomy will grow by 3.3 per cent in 2002 – among the highest growth rates in the OECD.

The international tradingenvironment

The international trading environment is enteringa challenging period. Many of Australia’s tradingpartners, including Japan, the United States, theEuropean Union and the countries of South-EastAsia, have been experiencing an economicdownturn, leading to slowing growth in demandfor Australian exports. The global economicdownturn was accentuated by the 11 Septemberterrorist attacks, with world growth for 2001revised down to 2.4 per cent in the second half of2001. World governments responded quickly withfiscal and monetary policy measures designed to

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restore spending and confidence. World interestrates are at 30-year lows, and major economiessuch as the United States and Japan haveannounced fiscal stimulus packages. Worldgrowth for 2002 is forecast to continue at 2.4 percent but is predicted to return to near the long-term average of between 3 and 4 per cent in 2003.World financial markets are now at levelscomparable to those before September 11.

The launch of a new round of global tradenegotiations at the Fourth WTO MinisterialConference in Doha, Qatar, in November 2001 wasa positive outcome for Australia. This had been akey trade policy goal for the Government for anumber of years, and the Government isdetermined that real and substantial market accessgains – particularly in agriculture – will result fromthe Doha Round. Australia remains one of the fewdeveloped countries with significant export markets– primarily in Asia – that still have high tariffs.

The WTO’s rules-based trading system is the bestway for a relatively small trading nation likeAustralia to defend its interests and press forgreater access to key markets. The disputeresolution mechanism ensures that commitmentsand obligations in WTO agreements are respected,guarantees access to overseas markets and protectsagainst unfair trading practices. In 2001, the WTOmade several rulings in Australia’s favour,including in disputes with the United States (lamb)and South Korea (beef). In coming years, globalcommitment to trade liberalisation will depend onleadership from the largest economies, includingtheir compliance with adverse WTO rulings andrestraint on export subsidies, tax breaks forexporters and punitive tariffs.

Implementation of China’s WTO obligations islikely to be the most important trade liberalisinginfluence in the global economy until theconclusion of the Doha Round. The accessions ofChina and Chinese Taipei will create bothopportunities and challenges for Australianbusiness. China is likely to attract furtherinvestment, possibly at the expense of other East

Asian economies, helping China’s exports andexposing domestic firms to greater competition.This opening of China’s economy will boost itsefficiency, including in its manufacturing sector,which will make Australia an important source ofhigh-quality raw materials. Australia’s goodstrade with China should also diversify, asincreasingly affluent Chinese consumers demandhigh-quality foods, manufactures and services.

Globalisation is presenting Australian businesswith exciting new opportunities. It enablesAustralian business to find new markets for itsproducts, attract international capital to develop itseconomic potential, and access better and cheaperbusiness inputs to make domestic enterprisesglobally competitive. Many Australian companieshave successfully integrated into the worldeconomy and are competing with the world’s best.By competing in the global market, Australianfirms become more efficient and innovative,adopting and developing global best practice.

Some Australian industries and communities havefaced difficulties as international competition hasincreased and protection for local industries hasbeen reduced. However, Australia’s future restson its ability to embrace change. The Governmentis committed to helping communities in theprocess of structural adjustment brought on byincreased international competition.

The trade liberalisation track that Australia haschosen is the right one. For some years, the pricesAustralians pay for imports have been fallingrelative to the prices received for exports. Australiahas embarked on a long-term improvement in itsterms of trade. Australia is getting richer.

The new WTO Round

Australia was strongly committed to the launch ofthe new WTO Round in Doha in November 2001.Gains from trade liberalisation since 1986 haveprovided the average Australian family with morethan $1 000 extra a year. It is estimated that a 50

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per cent reduction in protection globally woulddeliver a further economic boost to Australia ofmore than $7 billion a year.

Australia is determined that real and substantialmarket access gains will result from the DohaRound, and hopes to move the negotiationsforward as quickly as possible to secure earlybenefits. The Doha Ministerial Declaration placesthe elimination of agricultural export subsidies onthe agenda for the first time ever. Total subsidiesfor agriculture in OECD countries rose to astaggering US$327 billion in 2000, approximatelysix times the total flow of aid to developingcountries. These subsidies encourage excessproduction, leading to unstable and depressedworld prices. The ambitious agricultural mandatehas significant potential to expand global marketsfor Australian farmers and food producers.

The Doha Declaration also gives a commitment tonegotiate on a wide range of issues, includingservices, industrial products, intellectual property,anti-dumping and other WTO rules issues,dispute settlement, and some trade andenvironment issues. The strong influence ofdeveloping countries is reflected in thedevelopment focus of the Doha Round and willhave an important influence on the futureoperations of the WTO.

The negotiating mandate provides a good basisfor further liberalisation, but the ambitiousrhetoric that accompanied the launch has yet toface the test of negotiations.

Beyond the WTO – Australia’smulti-faceted trade policy

Australia is not relying solely on the WTO forgreater access to overseas markets. Australia isalso pursuing regional and bilateral initiativeswhere the parties are willing to proceed faster andliberalise more profoundly than can be achievedby the entire WTO membership. These strategiesalso build momentum for WTO negotiations and

can create useful templates for dealing with newand complex issues.

Australia places a priority on helping develop aprosperous region – and in the process, creatingcustomers for Australian goods and services.Encouraging trade and investment liberalisation isat the core of Australian efforts, but parallelreforms in areas such as economic and corporategovernance, infrastructure and information andcommunications technology (ICT) development,trade facilitation and capacity-building are alsorequired throughout the Asia Pacific. Australiahas been pursuing these goals through a varietyof regional forums, principally APEC.

Australia led the successful campaign to introduce‘pathfinder’ initiatives at the Shanghai APECLeaders Meeting in October 2001. These initiativeswill enable those APEC economies that can movemore quickly to pursue the Bogor Goal moreaggressively. Many of the pathfinder initiativeswill focus on trade facilitation and reducing thecosts of doing business in the region.

In September 2001, ASEAN Economic Ministersand Australian and New Zealand Trade Ministersendorsed a framework for a Closer EconomicPartnership (CEP), building on the trade facilitationand economic cooperation of recent years. Thisprovides, for the first time, a formal, structuredapproach to promoting trade, investment andeconomic integration between these countries.Ministers agreed to an initial work program inareas including customs, e-commerce and smalland medium enterprises. The framework will beembodied in an instrument to be signed byMinisters in September 2002 in Brunei.

Australia pursues bilateral trade arrangementswhere these can deliver substantial economic gainsmore rapidly than multilateral or regionalapproaches. The Government is committed to freetrade agreements (FTAs) that are comprehensiveand transparent. Australia already has onecomprehensive FTA with New Zealand, commonlyknown as CER (Closer Economic Relations), and isnegotiating an FTA with Singapore. Good progress

has been made on the latter, but provisions onservices and investment liberalisation remaincontentious. Bilateral FTAs are also beingconsidered with Thailand and the United States.

Australia is also pursuing a range of initiatives tostrengthen economic relations with some of itslargest trading partners. In the case of Japan andSouth Korea, the aim is to broaden the relationshipsbeyond their pre-globalisation, commodities-basedstatus. Australia’s China initiative aims to takeadvantage of China’s accession to the WTO,strengthening trade relations in key sectors such asfinancial and legal services, education, socialwelfare, agriculture, the environment and inconnection with the Beijing Olympics.

The Government is also pursuing sectoralinitiatives to facilitate exports. An Action Agendahas been developed to help the freight logisticsindustry meet the challenges of globalisation,environmental sustainability and infrastructurerequirements. Similar efforts are being madethrough APEC and other regional initiatives toimprove transport and logistics throughout theregion. The Government is also pursuing initiativesin paperless trading and e-commerce, biosecurity,and standards and conformance to reduceexporters’ costs of doing business internationally.

Growing the exportercommunity

Although exports grew from $101 billion in 1996to a $154 billion in 2001, less than 4 per cent of theAustralian firms contributed to this result. This isa low proportion of exporters by internationalstandards. There is enormous untapped exportpotential, particularly in the small to mediumenterprise (SME) sector. The Government isworking to encourage more exporters and higherlevels of trade because of the macroeconomicbenefits of exports and the quality of jobsprovided by exporters. The Government has setitself the ambitious target of doubling the numberof Australian businesses exporting by 2006.

To help achieve its goal, the Government willcommit a further $21.6 million over four years toAustrade’s existing TradeStart and Export Accessinitiatives. The TradeStart network of offices inrural and regional Australia helps rural andregional businesses access Austrade’s exportdevelopment opportunities. From 2002–03, tennew TradeStart offices will open. The ExportAccess program helps prepare Australian SMEsfor exporting through a 12-month counselling andtraining program. During 2001, some 568 SMEswere supported under the program. Austrade alsoprovides seminars on e-commerce for exportersand on how to get into export.

The Export Market Development Grant (EMDG)scheme helps small business to develop exportmarkets by reimbursing up to 50 per cent ofcompanies’ overseas promotional expenses. In 2000–01, the scheme distributed grants to thevalue of $134.6 million to 2 886 businesses. The Government is raising the minimum grantfrom $2 500 to $5 000 from 1 July 2002. Austrade’sNew Exporter Development program, beginningin July 2002, will deliver coaching and trainingprograms to SMEs in rural, regional and outermetropolitan areas during the various stages ofpreparation for export.

Key trade objectives for 2002

Trade performance is built by committed,sustainable exporters, not governments.Increasing the pool of successful exporters willstrengthen the Australian economy. That is whythe Government is implementing strategies,primarily through Austrade, designed to doublethe number of sustainable exporters in theAustralian business community by 2006.

The Government is simultaneously pursuing amulti-faceted trade policy, working at multilateral,regional and bilateral levels to capture the benefitsof trade liberalisation and internationalinvestment for Australia – and ensure openmarkets and low-cost trading arrangements forour current and future exporters.

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In the new Doha Round of global tradenegotiations, the Government will work hard forsubstantial reductions in agricultural exportsubsidies and the reform of other trade-distortingmeasures that impede Australian competitivenessand block access to markets. The Government alsoaims to move the negotiations on services andindustrial products forward as quickly as possibleto secure early benefits.

Australia will continue its commitment to APECincluding through the ‘pathfinder’ initiativemechanism. It will also cooperate with ASEANand New Zealand to formalise the AFTA-CERCEP Framework through signature of aministerial declaration expressing the politicalcommitment of members to work towards moreclosely integrated economies.

The Government will push for the completion ofnegotiations for a free trade agreement withSingapore and for the launch of negotiations withThailand and the United States. It will also pursuestrengthened economic relations with Japan andSouth Korea and a framework economicagreement with China.

Through Austrade, the Government has identifiedeight sectors with particularly strongopportunities for export growth in the future:agribusiness, automotive, defence, education,environment, sporting and other infrastructure,knowledge-based industries (business services,ICT and biotechnology) and tourism.

The Market Development Group has identifiedadditional immediate market access objectives for2002. These include the development of a long-term supply and investment partnership forliquefied natural gas (LNG) with China; increasedexports of live animals to Taiwan, Vietnam,Indonesia and Europe; increased exports ofeducation services to Indonesia and Brazil;increased automotive component exports to China;and new markets for Australian information andcommunications technology and biotechnology inJapan and China. A full range of other product ormarket specific access issues are also pursued bythe global network of posts as well as Canberra-based officers as a matter of course.

INCREASED RESOURCES DEDICATED TO TRADE NEGOTIATIONS

The Australian Government has increased resources for trade negotiation in response to its activeand diverse trade agenda. First and foremost, it has established an Office of Trade Negotiationswithin the Department of Foreign Affairs and Trade to bring together trade specialists to helpAustralian exporters open up markets and win trade disputes. The new Office of TradeNegotiations will have 60 per cent more staff than the corresponding division at the end of theUruguay Round of multilateral negotiations in 1993. The Office’s leadership team will besupplemented by a Special Negotiator with responsibility for free trade negotiations and a SpecialNegotiator for Agriculture. The Government has also made an additional senior appointment toAustralia’s WTO mission in Geneva to strengthen the negotiating team in Geneva. Together withthe Ambassador to the WTO, this new senior appointment will be responsible for agriculturenegotiations and coordination of the Cairns Group.

MINISTER’S FOREWORD iii

EXECUTIVE SUMMARY vi

TABLE OF CONTENTS xi

1: THE TRADE POLICY ENVIRONMENT 1

A new WTO round launched 5The development agenda 5

Global enthusiasm for free trade agreements 7

Regional developments 8

Maintaining momentum for liberalisation – the need for leadership 9

2: THE NEW WTO ROUND – AUSTRALIA’S INTERESTS AND STRATEGY 13

Agriculture 16

Industrials 18

Services 19

New issues on the WTO agenda 20Competition policy 20Investment 20Environment 20TRIPS and pharmaceuticals 21Expansion of geographic indications 22

Fighting for a fair go 23

Recent and forthcoming accessions 25

3: BEYOND THE WTO – AUSTRALIA’S MULTI-FACETED TRADE POLICY 27

Enhancing exporters’ competitiveness 30

APEC and other regional initiatives – creating prosperous markets 31APEC 31Australia, New Zealand and ASEAN 33Australia and the Indian Ocean 33

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Bilateral strategies – linking Australia to major markets 35Free Trade Agreements 35

New Zealand 35Singapore 35United States 36Thailand 37

Strengthening economic relations 37Japan 37Republic of Korea 38China 39

Faster, cheaper, safer – trading into the new millennium 40Transport and logistics 40Paperless trading 41E-commerce 41Biosecurity 42International trade rules for biotechnology 43Standards and conformance 44

4: GROWING AUSTRALIA’S EXPORT COMMUNITY 49

Doubling the size of the export community 51

Capturing export opportunities 54Australia’s global network 55

Attracting overseas investment 56

Building commitment to trade and investment 58Exporting for the future 59

Supporting Australian companies and exporters 60TradeStart 60Export Access 61E-commerce for exporters 61Getting into Export seminars 62TradeSat 62Industry specialists 62Export Advisory Service 62

Financing export activity 64Export Market Development Grants 64EFIC credit insurance and trade finance 65

Government and business working as one 68Government–business consultation 68State and territory government trade promotion activities 70Growing international demand for Australian products 71

5: AUSTRALIA’S TRADE PERFORMANCE IN 2001 73

6: THE INTERNATIONAL ECONOMIC OUTLOOK 81

World economic performance 83

Australia’s key markets: outlook and opportunities 85Japan 85United States 88China 92Republic of Korea 95New Zealand 98European Union 100ASEAN 103

Emerging markets 107Middle East 107Latin America 111Central, East and South Europe 114India 117

7: EXPORT OPPORTUNITIES 121

Tourism 123

Agribusiness and Food 124

Automotive 126

Defence 128

Education 130

Environment 131

Infrastructure 132

Knowledge-based products and services 134

Information and communications technology 134Business and professional service 135Biotechnology 135

8: INTERNATIONAL TRADE – GOOD FOR AUSTRALIA 139

Exporting to prosperity 142

Clearing the air – myths and facts about trade, investment and globalisation 144

Good trade policy: delivering for Australians 146

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APPENDIX 1: STATISTICAL TABLES 150

Table 1: Australia’s principal merchandise export destinations 150

Table 2: Australia’s principal merchandise import sources 151

Table 3: Australia’s services exports 152

Table 4: Australia’s services imports 153

Table 5: Foreign investment in Australia 154

Table 6: Australian investment abroad 155

Table 7: Australia’s balance of payments 156

APPENDIX 2: MARKET DEVELOPMENT GROUP PRIORITIES FOR 2002 157

Objectives for Europe, Americas, Middle East, Africa and South Pacific (March 2001 – March 2002) 157Objectives for North Asia, South and South-East Asia (June 2001 – June 2002) 158

APPENDIX 3: PROGRESS AGAINST OBJECTIVES IDENTIFIED IN TRADE OUTCOMES AND OBJECTIVES STATEMENT 2001 159

China 159

India 166

Latin America 171

APPENDIX 4: PROGRESS AGAINST OBJECTIVES IDENTIFIED IN TRADE OUTCOMES AND OBJECTIVES STATEMENT 2000 174

Central and South Eastern Europe 174

European Union 177

Hong Kong 179

Mexico 181

Middle East 182

Papua New Guinea 184

Peru 187

Philippines 189

Singapore 190

South Asia 194

APPENDIX 5: GLOSSARY OF TERMS 196

APPENDIX 6: PUBLICATIONS 198

APPENDIX 7: FOREIGN AFFAIRS AND TRADE PORTFOLIO 201

INDEX 203

THE TRADE POLICYENVIRONMENT 1

THE TRADE POLICY ENVIRONMENT IS

UNDERGOING DYNAMIC CHANGE

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• A new WTO Round was launched in Doha. This was the Government’s primary tradepolicy goal over recent years. A 50 per cent further reduction in protection globallywould deliver an economic boost of more than $7 billion a year to Australia.

• The increase in numbers and growing assertiveness of developing countries in theWTO led to the ‘Doha Development’ Agenda. Developing alliances with thesecountries, through the Cairns Group or new issue-specific alliances, will beimportant for successful promotion of Australia’s interests in the Doha Round.

• The WTO has become more legalistic and both the US and EU have felt unable tocomply with adverse rulings on key policies, with uncertain implications formembers’ acceptance of future rulings.

• China has completed its accession to the WTO. Implementation of China’s WTOaccession obligations is likely to be the major liberalising dynamic within the globaleconomy in forthcoming years – at least until completion of the Doha Round.Australia will be working with China to ensure Australian companies benefit fromthe opportunities deriving from China’s implementation.

• Enthusiasm for FTAs continues unabated, despite the launch of the Doha Round.Comprehensive FTAs can complement multilateral negotiations where parties canliberalise faster and deeper than can be achieved by the whole WTO membership.They are also useful in addressing new issues such as e-commerce.

• It is clear there will be continued efforts over coming years to forge an East Asianregional identity. ASEAN+3 is the primary manifestation of this, but furtherdevelopment will involve a delicate balancing of the strategic interests andambitions of Japan and China.

• Australia and New Zealand are the first ASEAN dialogue partners to agree a formaland structured approach for promoting trade, investment and regional economicintegration. Importantly, this decision to enhance and formalise relations was madeagainst a backdrop of slowing regional and global growth.

• Given the global preponderance of the US economy, US leadership in the WTO andtruly pro-liberalisation policies at home are more important than ever to tradeliberalisation efforts. Australia is closely watching developments in the US on tradepromotion authority, the Farm Bill and the Foreign Sales Corporations ruling. The imposition of a safeguard measure on steel will have global repercussions.

AT A GLANCE

2

The international trade policy environment isentering a challenging period – a new WorldTrade Organization (WTO) Round has beenlaunched, with the active involvement ofdeveloping countries; China has completed itsaccession to the WTO and must now begin todischarge its obligations (under close scrutinyfrom trading partners); and economic downturnhas stimulated continuing challenges toAustralia’s goal of an integrated, liberalisedglobal economy.

The 11 September terrorist attacks have shakenconsumer and business sentiment and accentuatedthe slowdown of the global economy. The attackshave jolted the established order of political andsecurity affairs, but the impact on trade policy isless apparent.

Australia will meet the challenges of the changingtrading environment through a mixture ofmultilateral, regional and bilateral strategies, andwork with major players in the internationalenvironment to take advantage of the changestaking place. Our trade and economic interests arenot constrained by geography. We trade heavilywith Asia; invest predominantly in the US, Europeand New Zealand; and are closely allied withdistant and disparate countries like Chile,Paraguay and South Africa in the Cairns Group.

The launch of the Doha Round has been a keytrade policy goal for the Government for anumber of years. For a medium-sized economylike Australia, the importance of a transparent,predictable, rules-based multilateral tradingsystem should never be underestimated. The Government is determined that real andsubstantial market access gains – particularly inagriculture – will result from the Doha Round.

Australia remains one of the few developedcountries with significant export markets –primarily in Asia – that still have high tariffs.Reducing these barriers will be a challenge, one that will require a wide range of strategies.Fortunately for Australia, some of these countrieshave been reassessing their economic and tradepolicies in the wake of the economic downturn,especially in global demand for information andcommunications technology (ICT) products, andthe sharp reversal of foreign direct investmentflows away from South-East Asia towards China.This has opened up opportunities for Australiaacross our multilateral, regional and bilateral freetrade agreement (FTA) strategies.

Enthusiasm for FTAs continues unabated, despitethe launch of the Doha Round. And there areclearly going to be continued efforts over comingyears to forge an East Asian regional identity, withJapanese Prime Minister Koizumi the latest toespouse such a vision – encompassing North Asia,South-East Asia, Australia and New Zealand.

Membership of the WTO has increased by morethan 50 per cent since the end of the UruguayRound – a sign that the WTO is a club thatcountries want to belong to – but there is agrowing developed/developing country divide.The increase in numbers and the growingassertiveness of developing countries were a newdynamic in Doha, leading to the creation of the‘Doha Development’ Agenda. The implications ofChina’s accession on the functioning of the WTOare uncertain.

At the same time, the WTO has become morelegalistic and, while the legally enforceabledispute settlement system works most of thetime, it can discourage resolution of problems by

3T h e T r a d e P o l i c y E n v i r o n m e n t

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negotiation. Australia has had some notablevictories that have opened significantopportunities for Australian exporters. Exports ofbeef to South Korea and of lamb to the UnitedStates were the most prominent successes in 2001.However, both the United States and theEuropean Union have been unable to complywith adverse rulings on key policies because ofthe perceived political and/or commercial costs

of doing so, with uncertain implications formembers’ acceptance of future rulings. The recentEU victory in the US Foreign Sales Corporationscase is perhaps one of the most challengingrulings, and Australia awaits the US response.Given the global preponderance of the USeconomy, US leadership in the WTO and trulypro-liberalisation policies at home are moreimportant than ever to trade liberalisation efforts.

BENEFITING FROM LIBERALISATION

Australian jobs and living standards are more dependent than ever on how well Australia performsin the global market place. To get the most from international trade, Australia needs a strongrules-based multilateral trading system that guarantees access to overseas markets and providesa predictable international environment for exports to grow. As a medium-sized and broadly-basedeconomy, Australia cannot go it alone.

Full implementation of the Uruguay Round was conservatively estimated to add about $4.4 billiona year to Australia’s real GDP (in 1992 dollars) and boost exports by over $5 billion a year. Gainsfrom trade liberalisation since 1986 have provided the average Australian family with more than$1 000 extra per year. It is estimated that a 50 per cent reduction in protection globally woulddeliver a further economic boost to Australia of more than $7 billion a year. Developing countriesalso stand to benefit, with global gains from a further 50 per cent cut in agricultural support alonelikely to amount to an additional $53 billion in global GDP.

These figures represent real jobs and real incomes for exporting businesses and communitiesthroughout Australia. For these reasons, Australia was a strong supporter of the launch of a newround at the Doha Ministerial Conference.

The new trade round faced numerous obstacles andits launch was uncertain until the closing hours ofthe Doha conference. International trade issues havebecome increasingly complex, particularly now theWTO comprises 144 members, over three-quartersof which are developing countries. With the failureto launch a round in Seattle in 1999, the importanceof a successful meeting in the current climate wasnot lost on members. That a meeting of 142 WTOmembers, together with China and Chinese Taipei,was being held in the Middle East, close to a warzone, against the background of 11 September andsigns of a slowing global economy, sent key signalsto the international economic community on theimportance of continuing multilateral tradenegotiations.

Ending the discrimination against agriculturaltrade is a key priority for Australia in the newround. Australian agriculture has a fundamentaldependence on global markets. Ninety eight percent of wool, 76 per cent of wheat and 63 per centof beef is ultimately exported. Agriculturalsupport in OECD countries rose to a staggeringUS$327 billion in 2000, approaching US$1 billion aday, equivalent to about six times the total flow ofaid to developing countries. The MinisterialDeclaration from Doha places elimination ofexport subsidies on the agenda for the first time ever.

The Doha Declaration also gives a specificcommitment to negotiations on a wide range ofissues, including services, industrial products,intellectual property, WTO rules (including anti-dumping), dispute settlement and some trade andenvironment issues. Further work will also takeplace on a number of the trade-linked or so-called

‘Singapore issues’ (investment, competition policy,transparency in government procurement andtrade facilitation) with a view to a decision onnegotiations at the next Ministerial Conference inMexico in 2003.

The ambitious rhetoric and support for tradeliberalisation that accompanied the launch of theDoha Round has yet to face the test of actualnegotiations. Ministers have set an ambitioustimeframe for the negotiations to be concluded byno later than 1 January 2005. The difficulties inreaching agreement on the negotiating mandate,and the modalities for negotiations since Doha,highlight the task that lies ahead in securingconsensus on issues of substance. In contrast tothe Uruguay Round, there is no simple, over-arching balance between issues this time. This willrequire Australia to participate in or develop avariety of issue-specific alliances.

The development agenda

Developing countries emerged as key players inthe lead-up to the Doha Ministerial Conference,using the preparatory process as an opportunityto establish coalitions and formulate a coordinatedapproach to common concerns, particularlyfundamental agricultural reform.

The strong influence of developing countriesduring the negotiations is reflected in thedevelopment focus of the new round (the DohaDevelopment Agenda) and the increased emphasison integrating developing countries into the WTO system through greater capacity-building,technical assistance and special and differential

T h e T r a d e P o l i c y E n v i r o n m e n t 5

A NEW WTO ROUND LAUNCHED

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treatment. Ministerial agreement to a separateTrade-Related Aspects of Intellectual PropertyRights (TRIPS)/public health declaration at Dohawas another key victory for developing countries.The TRIPS Declaration is a good outcome that willhelp to address public health concerns such asaccess to medicines in the developing world.

This renewed focus on developing countrymembers will affect the future work program ofthe WTO and the resources allocated to theirinvolvement. This changing dynamic, coupledwith the accession of People’s Republic of Chinaand Chinese Taipei and an increasingly diversemembership base, will have an importantinfluence on the future operations of the WTO.

Australia will continue to engage with developingcountry members. Australia is committed toaddressing developing country concerns aboutdifficulties in the implementation of WTOagreements that emerged from the Uruguay Roundand its interests in agricultural reform are similar.Australia provides a program of technicalassistance and policy dialogue with developingcountries in our immediate region and beyond,aimed at strengthening their capacity to participatefully in the new trade negotiations and to takeadvantage of new market access opportunities. Forexample, in 2002, Australia is conducting a tradepolicy training course for African trade negotiators.

HH the Sheikh Hamad bin Khalifa al-Thani of Qatar opening the WTO conference in Doha, Qatar with WTO Director General MikeMoore (left) and HE the Minister of Finance, Economy and Trade Yousuf Hussain Kamal.

The number of countries exploring or enteringinto free trade agreement (FTA) negotiations hasaccelerated in recent years. Among the mostactivist bilateral FTA proponents have been Chile,Singapore, Mexico and New Zealand. However,even stalwart multilateralist countries – such asJapan and South Korea – are increasinglycanvassing potential FTAs. Japanese PrimeMinister Koizumi’s emerging vision for regionalengagement is of particular interest to Australiaand follows China’s agreement to develop an FTAwith ASEAN. The WTO Secretariat has identifiedsome 170 regional trade agreements (RTAs,comprising FTAs and customs unions) andestimates that their number could grow to 250 by2005. About 43 per cent of world trade is intra-RTA trade, and this could rise to over 50 per centby 2005.

Global interest in FTAs has been motivated by a range of factors, including a desire to gainmaximum short-term benefits in advance of theWTO Round, an attempt to capture strategicadvantages by establishing closer links betweenparticular countries, and an interest in triallingliberalisation in a smaller, more comfortableenvironment than the multilateral one.Development of the North American Free TradeAgreement (NAFTA), the potential of the FreeTrade Agreement of the Americas (FTAA) andexpansion of the European Union has influencedcountries outside these regions to explore linksboth with their own neighbours and into theseagreements.

Australia is pursuing a WTO-consistent FTAagenda with major trading partners. Negotiationsare underway with Singapore and Australia isexploring possible FTAs with Thailand and theUnited States. Such bilateral deals can offerAustralia great benefits where the other partiesare willing to proceed faster and undertake moreprofound liberalisation than can be achieved bythe entire WTO membership.

The decision to launch a new WTO Round atDoha is unlikely to have an immediate impact onthe trend towards FTAs. There has been increasingrecognition that FTAs can complement and buildmomentum for multilateral trade liberalisation, aslong as they cover substantially all trade in goodsand substantial sectoral coverage in services. FTAs can also play a particularly useful role indeveloping templates for new and complex issuessuch as competition policy, investment andelectronic commerce, or accelerating liberalisationin areas such as services.

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GLOBAL ENTHUSIASM FOR FREE TRADE AGREEMENTS

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Efforts to forge an East Asian regional identitycontinue. The primary manifestation of this trend –the ASEAN+3 process – has already affectedinternational interaction in the region. Cooperationto date has focused on financial architecture. The pace of diversification into a wider economicand political agenda is difficult to predict.

Australia and New Zealand are the first ASEANdialogue partners to agree to a formal andstructured approach for promoting trade,investment and regional economic integration.Importantly, the September 2001 decision toenhance and formalise relations through theframework for AFTA-CER Closer EconomicPartnership was made against a backdrop ofslowing regional and global growth.

The later agreement in Brunei in November 2001that China and ASEAN should pursue a free tradearea within ten years reflects the growing role thatChina wants to play in Asia. ASEAN is alreadythe most important destination for Chineseexternal investment and accounts for 8 per cent ofChina’s total trade.

The East Asian financial crisis gave China theopportunity to become more involved and opento others within the region. It has prospered whilemany fell on hard times. Chinese confidence hasalso been boosted by the upsurge in foreign directinvestment, the growing competitiveness ofChinese goods on international markets, accessionto the WTO, chairing of APEC, hosting the 2008 Olympic Games and its ability to weatherthe worst effects of the current slowing of theworld economy. In turn, China’s persistently goodeconomic performance generates interest in Chinawithin the region.

REGIONAL DEVELOPMENTS

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Australian food products on sale at the Australian Pavilion ofthe NTUC Fairprice supermarket in Bukit Timah Plaza,Singapore.

International support for trade liberalisation is,in reality, more limited than the ambitiousrhetoric at the launch of the Doha Round andnumerous efforts to negotiate free tradeagreements would indicate.

Implementation of China’s WTO accessionobligations is likely to represent the majorliberalising dynamic within the global economy inforthcoming years – at least until completion ofthe Doha Round.

The close, pragmatic relationship between theEuropean Union and the United Statescontributed to the launch of the new WTO Round,but it is expected to be tested over coming years.In the immediate future, the question of steelsafeguards and the Foreign Sales Corporationsdispute will strain recent goodwill.

Encouraging reform of theEuropean Union’s CommonAgricultural Policy

Enlargement of the European Union in 2004 willplace great pressure on the EU’s CommonAgricultural Policy (CAP) if it is retained in itscurrent form. The European Union’s ‘Agenda 2000’was intended to tackle this issue. However, to date,the European Union has embraced only verymodest reforms and many EU members seeAgenda 2000 as unfinished business.

Rural development and environmental concerns,coupled with a succession of recent high-profilefood safety concerns, including BSE (‘mad cowdisease’), have placed additional pressure on theEuropean Union to shift CAP expenditure awayfrom a focus on quantity towards production ofhigh-quality food and the preservation of the rural

environment. The 2002 mid-term review of theCAP will give Australia an opportunity to press theEuropean Union to make some changes in thisdirection but, with elections due in France andGermany, reforms are only likely to be modest inthe short term.

The Doha Round, with its ambitious agriculturalmandate, presents a real challenge for the EU andCAP reform. It focused on improved marketaccess, phasing out all forms of export subsidies,and substantial reductions in domestic support –three areas of most concern to Australia and theCairns Group of agricultural fair traders. Australiaand other Cairns Group members will work atboth the EU member state and the EuropeanCommission levels to encourage development ofoptions to reform the CAP consistent with theDoha Declaration’s intent.

US leadership is important

For over half a century the United States has playeda leading role in the multilateral trading system inseeking open markets and expanded internationaltrade. The Bush Administration has indicated that itremains committed to these principles. This wasreflected in the Administration’s commitment to thelaunch of a new round of WTO trade negotiationsat Doha in November 2001. But while theAdministration has been talking up free trade, theinternational trade debate has become more difficultand politicised within the United States. Debatesabout Trade Promotion Authority (TPA), the newfarm bill and the announcement of safeguardmeasures on steel imports have been influencedheavily by domestic politics. The WTO’s recentruling in the United States – Foreign Sales Corporationsdispute is also likely to be increasingly contentious.

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MAINTAINING MOMENTUM FOR LIBERALISATION– THE NEED FOR LEADERSHIP

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From Australia’s perspective, the potentialprotectionist and trade distorting impact of thenew farm bill is a matter of serious concern, as isthe imposition of restrictions of Australian steelexports to the US. The Government is alsoconcerned that TPA legislation provides theAdministration with sufficient scope to exercisestrong leadership in the WTO negotiations,especially on agriculture reform.

TRADE PROMOTION AUTHORITY

The Government has welcomed the passage ofTrade Promotion Authority (TPA) by the USHouse of Representatives, and looks forward to itsearly passage by the US Senate. Should the Houseand Senate TPA legislation differ, which is likely, aconference between both chambers will then benecessary to determine the final version of the bill.The granting of TPA will enhance the BushAdministration’s capacity to engage in global andregional trade liberalisation initiatives. Houseconsideration of TPA saw the accommodation ofcongressional views on various trade issues,including steel and agriculture, and caveats suchas requirements for notification to, andconsultations with, the Congress. The AustralianGovernment will closely monitor how the TPAlegislation develops and how its caveats areimplemented by the US Administration.

FARM BILL

The Government has closely followed thedevelopment of the 2002 US Farm Bill, draftedagainst a backdrop of markedly increased USagricultural support. The Bill has the potential tolock in high US farm support until well into thisdecade, adversely affect Australian agricultureand limit the flexibility of the United States toshow strong leadership on agriculture reform inthe WTO.

The Australian Government and industryrepresentatives have made submissions andrepresentations to the United States protesting thecostly protectionist and trade distorting measuresbeing considered in the Bill. The measures have

the potential to destabilise and depress worldagricultural prices, reduce aggregate US andworld incomes and harm overseas producers.Despite the United States’ leading role in the pushfor free agricultural trade, US farm assistancerivals that of the European Union in six keycommodity groups: wheat, coarse grains, rice,oilseeds, sugar and milk. These commodities andcotton, which is also highly assisted, represent justunder 30 per cent of US agricultural production.And the biggest subsidies go to the richest, largestproducers, because payments are based on pastacreages and yields. The losers are the smaller,poorer farmers who could benefit if Congressspent less on subsidising production and more onother forms of farm assistance.

STEEL

This year is likely to be a challenging one for theAustralian steel industry as it faces an uncertainoutlook. In a global industry already experiencingconsiderable problems, the decision by the UnitedStates to impose wide-ranging import restrictionsfor three years with effect from 20 March 2002 islikely to lead to some major disruptions in worldsteel trade. The effects will be exacerbated if othermajor trading nations respond with their ownimport restrictions. The US decision is likely to facea challenge in the WTO, although this processcould take some time. Australia was successful insecuring arrangements that will preserve the bulkof our steel exports to the US, specifically through atariff free quota for slab steel and a product-specificexclusion for certain hot-rolled coil. While this wasa positive outcome, the high US tariffs will stillhave an impact on a number of our steel exportswhich will face a 30% tariff in the US market. TheGovernment is maintaining close consultation withthe steel industry to develop strategies for dealingwith the uncertainties in the global steel market.

FOREIGN SALES CORPORATIONS

Australia was an active third party in the UnitedStates – Foreign Sales Corporations (FSC) dispute inwhich the WTO again ruled against tax subsidiesprovided to United States companies for export.The scheme – which provides United Statescompanies some US$4 billion a year in tax breaks– impacts on the conditions of competition facingAustralian exporters in all markets. The EuropeanUnion has moved to secure WTO retaliation rightswhich, if applied, could result in a damagingtrade war and impede progress in the new roundof WTO negotiations. The Government isencouraging both parties to exercise restraint andfor the United States to comply with the WTOfindings as soon as possible.

M a i n t a i n i n g M o m e n t u m f o r L i b e r a l i s a t i o n – T h e N e e d f o r L e a d e r s h i p

11T h e T r a d e P o l i c y E n v i r o n m e n t

News of China’s accession to the WTO hits the streets in China

CHINA’S ACCESSION TO THE WTO

After 14 years of negotiations, China was accepted as a member of the WTO at the MinisterialMeeting in Doha on 11 November 2001. China formally joined the organisation on 11 December.Accession to the WTO will accelerate the opening of China’s economy and increase businessopportunities for Australia. It should boost the efficiency of the Chinese economy and increase thevolume of goods and services currently traded with China.

The development of competitive manufacturing as a result of economic reform and tradeliberalisation in China will make Australia even more important as a source of high-quality rawmaterials. Industries that are expected to benefit include wool, sugar, wheat, barley, meat,seafood, horticulture, dairy, cotton, rice, oilseeds, wine, processed foods, hides and skins,chemicals, pharmaceuticals, metals, information technology and automotive sectors. Australia’sgoods trade will also diversify as increasingly affluent segments of the Chinese market demandmore sophisticated manufactures and higher-quality foods.

Similarly, increasing demand for sophisticated services and progressive market opening willcontinue to boost opportunities for trade in services. In particular, Australia has been assured thatChina sees no substantive difficulties in granting additional licenses to Australian firms in theinsurance and banking sectors, and for legal and accountancy practices.

The Government is committed to ensuring Australian exporters are made aware of the newopportunities offered by China’s accession. In March 2002 Austrade, in conjunction with stategovernments, delivered a series of briefings around Australia on the regional economic andmarket implications of China and Taiwan joining the World Trade Organisation. The seminars wereaimed at Australian businesses currently engaged in or with an interest in trading with China,Hong Kong and Taiwan.

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NEED TO KNOW MORE?

More information on the WTO Round (including the Doha Declaration), trade and development andAustralia’s position on Free Trade Agreements is available at www.dfat.gov.au/trade/. Alternately,you can subscribe to regular bulletins on progress in the Doha Round negotiations by emailingTrade.Consult@dfat.gov.au.

The WTO website (www.wto.org) contains information about the progress of negotiations, includingthrough its regular newsletter, Focus.

Extensive Austrade briefing sheets on the industry-specific opportunities resulting from China’sWTO Accession can be accessed by searching under China at www.austrade.gov.au .

Department of Foreign Affairs and Trade (1999) Global Trade Reform 2000: Maintaining the Momentum,DFAT, Canberra.

OECD (2001), Agricultural Policies in OECD Countries – Monitoring and Evaluation, Paris.

REFERENCES

THE NEW WTO ROUND –AUSTRALIA’S INTERESTS AND

STRATEGY

THE DOHA ROUND MUST

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• Australia is seeking real and substantial market access gains from the Doha Round. The ambitious rhetoric accompanying the launch has yet to face the test of negotiations.Much hard work remains, but rapid progress will be needed to meet the January 2005timeframe set for conclusion of the negotiations.

• The mandate for phase-out of agricultural export subsidies was an important victory forAustralia. Australia will also seek a comprehensive formula for agricultural tariff cutswhich addresses tariff peaks and tariff escalation.

• Australia will seek to address tariff peaks and escalation, and widespread use of specific,compound and nuisance tariffs in the industrials negotiations. The Government isconsidering whether to pursue across-the-board, sectoral or request-offer formulas, or a combination of these, for industrials’ tariff reductions.

• Australia has tabled negotiating proposals identifying barriers to services trade andrecommendations to overcome them in twelve priority sectors: business services (otherthan professional services), construction, distribution, education, environment, financial,maritime transport, telecommunications, and the professional services of legal,architecture, engineering and accountancy.

• The Government will work for a balanced framework of multilateral rules on competition.Australia has a world-class competition policy regime and would not expect any difficultiesin complying with multilateral rules.

• The Government seeks rules on investment which provide foreign investors with greatercertainty and predictability, while maintaining the integrity of Australia’s foreigninvestment screening regime. Pre-establishment investment commitments should bebased on a positive list approach.

• Australia welcomed negotiations to reduce the harmful impact of fisheries subsidies andthe strong commitment to environmentally sustainable development in Doha. However,negotiations on the relationship between WTO rules and multilateral environmentalagreements should not increase trade protection.

• Access to medicines was addressed in a positive way that takes into account both the needfor incentives to support multi-million dollar research programs and the need foraffordable access to medicines for the world’s poor.

• Australia will oppose extension of the geographic indication protection given to wine andspirits to all foods. This would prevent Australian producers from using terms such as‘basmati rice’ or ‘kalamata olives’ in domestic and export markets.

• The Government will continue to defend vigorously the interests of Australian producersthrough the WTO dispute settlement system. In 2001, Australia won major disputes withthe US (lamb) and South Korea (beef).

• The Government has increased resources dedicated to the Doha Round negotiations

AT A GLANCE

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Launching a new round of trade negotiations atDoha, Qatar, in 2001 was a significant steptowards global trade liberalisation. Much hardwork remains to be done, but rapid progress isneeded to meet the ambitious January 2005timeframe set for the conclusion of thenegotiations. Australia hopes to move thenegotiations forward as quickly as possible tosecure early benefits from liberalisation.

The World Trade Organization (WTO) TradeNegotiations Committee met in Geneva in lateJanuary 2002 to agree the structure, rules andprocedures for the Doha Round negotiations. The WTO Director-General, in an ex-officio capacity,has been appointed chair. Dr Supachai Panichpakdiwill replace Mr Mike Moore from September 2002until 1 January 2005, when the negotiations arescheduled to conclude. Eight negotiating bodieshave been established – agriculture, services,industrial products, a wines and spirits register,WTO rules, dispute settlement, trade andenvironment, and a review of all special anddifferential treatment provisions for developingcountries. The Trade Negotiations Committee alsoagreed on a list of principles and practices coveringtransparency, process and the role of chairpersons.

Pursuing an active multi-faceted trade agendaparallel to the Doha Round of multilateral tradenegotiations is ambitious. To ensure its success,

the Government has increased resources for tradenegotiation. The Government has established anOffice of Trade Negotiations (OTN) within theDepartment of Foreign Affairs and Trade to bringtogether trade specialists to help Australianexporters open up markets and win tradedisputes. The new Office of Trade Negotiationswill have 60 per cent more staff than thecorresponding division at the end of the UruguayRound of multilateral negotiations in 1993. The Office’s leadership team will be supplementedby a Special Negotiator with responsibility for freetrade negotiations, a Special Negotiator forAgriculture and an additional senior appointmentto Australia’s WTO mission in Geneva tostrengthen the negotiating team in Geneva.

T h e N e w W T O R o u n d – A u s t r a l i a ’s I n t e re s t s a n d S t r a t e g y 15

Minister for Trade Mark Vaile with US Trade RepresentativeRobert Zoellick (centre) and David Spencer, AustralianAmbassador and Permanent Respresentative to the WTO(left), in Doha at the WTO Ministerial Meeting

WTO ADVISORY GROUP

In April 2001, the Government established the WTO Advisory Group to provide it with another avenueof expert advice on WTO-related issues. The establishment of the Advisory Group reflects theGovernment’s commitment to consult widely to ensure the views of the Australian community aretaken into account in the development of negotiating positions and proposals in the WTO. The groupcomprises experts drawn from industry, community non-government organisations, trade unionsand academia. It played an important role in helping define Australia’s position for the DohaMinisterial Conference and a number of members joined the official Australian delegation.

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AGRICULTURE

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Australia is determined to establish a fairer andmore market-oriented agricultural trading system.Agriculture accounts for 26 per cent of Australia’stotal merchandise exports so a strong outcomefrom these negotiations is one of theGovernment’s highest priorities.

Agriculture negotiations in the WTO began inMarch 2000, as part of Uruguay Round follow-upknown as the Built-in Agenda. However, the DohaDeclaration’s mandate for agricultural reformrepresent a significant gear change. Importantly,despite EU opposition, members agreed toreduction of all forms of export subsidies inagricultural trade, with a view to phasing them out.

The difficult issues of entrenched agriculturalprotection and broad-based subsidies can only betackled through the WTO. In 2000, total supportto agriculture in OECD countries, including alltransfers from consumers and taxpayers toagricultural producers, was estimated at US$327 billion. Australia’s agricultural producershave done exceptionally well to be competitive insuch a highly distorted world market. It followsthat they are well placed to benefit from anyimprovements in the trading environment.

Australia, with Cairns Group members, hassubmitted four ambitious negotiating proposalsfor the WTO agriculture negotiations, coveringmarket access, export competition, domesticsupport and export restrictions and taxes.

The market access proposal calls for deep cuts intariffs and substantial increases in market accessopportunities. In the Uruguay Round ofnegotiations, developed countries agreed to reducetheir tariffs on agricultural products by 36 per centoverall, with a minimum reduction of 15 per centfor each tariff line. Australia is seeking even more

ambitious tariff reductions and increased marketaccess opportunities from the Doha Round. In particular, Australia will seek a comprehensiveformula for tariff cuts to address tariff peaks andtariff escalation across all agricultural sectors.

The Cairns Group’s proposal on export competitionfocuses on elimination of all forms of exportsubsidies. Export subsidies depress and destabiliseinternational market prices and are the most trade-distorting of agricultural policies. The phase-outand eventual elimination of export subsidiesthrough the Doha Round will relieve Australianexporters of the burden of export subsidy-drivencompetition for the first time in decades.

Although countries agreed to cap and reduce theirexpenditure on trade and production-distortingdomestic support in the Uruguay Round,expenditure levels have remained high and globalexpenditure has actually increased since 1998 inresponse to low commodity prices. The CairnsGroup’s domestic support proposal calls forsubstantial reductions in all forms of trade andproduction-distorting domestic support. It targets,for example, market price support schemes, but not infrastructure development or pest control programs.

Modalities for the agricultural negotiations,including the form of market accessimprovements, steps by which export subsidieswill be phased out, further disciplines fordomestic support, and special measures fordeveloping countries, are to be agreed by 31 March 2003. Following this, WTO Members must determine by the 2003 WTO MinisterialConference how best to apply these modalities to their domestic schedules and must then gainacceptance of their proposal by other WTOMembers by January 2005.

AUSTRALIA, THE CAIRNS GROUP AND DEVELOPINGCOUNTRIES – A NATURAL ALLIANCE ON AGRICULTURE

The Cairns Group is committed to the principle ofspecial and differential treatment for developingcountries, as an integral part of the WTO agriculturenegotiations. The framework for liberalisation mustsupport the economic development and technicalassistance requirements of developing and smallstate members.

The Cairns Group’s program of outreach to otherdeveloping countries – all but three of the CairnsGroup are developing countries – remains a priority.Australia has contributed to this outreach effortthrough visits by senior officials to key developingcountries, publications of major studies on policyissues of interest to developing countries andsponsoring and promoting seminars on these sameissues. Major developing countries, including Egypt,India, Pakistan, Nigeria and Kenya, are now showinginterest in the Cairns Group’s reform agenda and howit would advance their own interests.

A g r i c u l t u r e

17T h e N e w W T O R o u n d – A u s t r a l i a ’s I n t e re s t s a n d S t r a t e g y

Trade Minister Mark Vaile addressing the CairnsGroup Ministerial Meeting held in Punta del Este,Uruguay. The Cairns Group is an important elementof Australia’s trade strategy.

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COALITION-BUILDING IN THE WTO

As a medium-sized player, Australia needs to be clever in building coalitions to secure the bestoutcomes for Australia from the Doha Round. Australia’s priorities include:

• continuing to work closely with Cairns Group members to ensure that the Doha Round succeedsin delivering fundamental agricultural reform;

• building stronger coalitions with other countries on issues such as services, industrials,environment and geographical indications;

• cooperating closely with the United States and engaging strongly with the European Union;

• building stronger relationships with developing countries, whose interests in agricultural reform,for example are closely aligned to those of Australia.

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The reduction of tariff and non-tariff barriersunder the multilateral trading system has createdsignificant market access opportunities forindustrial (or non-agricultural) products. However,significant barriers remain. Tariff reductions arenot evenly spread across products or sectors, andtariff peaks, tariff escalation and widespread use ofspecific and compound tariffs and nuisance tariffsall limit the trade liberalisation process.

Australia is pleased with the broad mandate onindustrials market access negotiations in the DohaDeclaration. It does not exclude any sensitiveproducts, nor does it restrict methods forachieving further reductions in tariff and non-tariff barriers. Industrials negotiators areconsidering whether tariff reductions are to takeplace according to an across-the-board formula,on a sectoral basis, on a request–offer basis, or acombination of these or other arrangements.

The Uruguay Round negotiations on industrialtariffs resulted in:

• an overall cut of 38 per cent in the tariffs ofdeveloped countries;

• a jump from 20 to 43 per cent in the value ofimported industrial products that receive dutyfree treatment in developed countries; and

• a decline from 7 to 5 per cent in the proportion ofimports subject to tariffs of 15 per cent or higher.

In addition, the percentage of bound tariff linesrose from 78 to 99 per cent for developedeconomies, from 22 to 72 per cent for developingeconomies and from 73 to 98 per cent for theformer communist economies in transition.

In the Doha Round, Australian negotiators will bepushing for improvements in market accessopportunities for Australia’s exports of industrialproducts greater than those negotiated in theUruguay Round.

Australia’s first task is identifying market accessbarriers for its industrial goods and determiningthe most effective means of reducing oreliminating these barriers. The Department ofForeign Affairs and Trade is gathering informationfrom a range of sources, including throughconsultation with industry stakeholders, relevantCommonwealth and State Government agenciesand overseas posts as part of this process.Industrials negotiations will need to move quickly,keeping pace with the agriculture and servicesnegotiations that began in 2000, to ensure that allnegotiations are completed by the 1 January 2005deadline for the Doha Round negotiations.

INDUSTRIALS

The services sector in Australia covers a large,diverse and rapidly growing area of economicactivity. Services now constitute around two-thirdsof Australia’s GDP; four in five Australians areemployed in service industries; and servicescurrently constitute around 20 per cent ofAustralia’s rapidly diversifying exports – or $31.2 billion 2001. Australia therefore has astrong national interest in the removal of barriersto greater market access overseas.

Mandated negotiations on services began on1 January 2000, before the launch of the DohaRound, as part of the Uruguay Round’s Built-inAgenda. They received renewed impetus in Dohawhen Ministers agreed on a timeframe for themarket access phase of the negotiations. Membersare expected to submit initial requests for marketaccess improvements by 30 June 2002 and initialoffers by 31 March 2003.

Australia has tabled negotiating proposalsreflecting its priority interests in twelve sectors:business services (other than professional services),construction, distribution, education,environmental services, financial services,maritime transport, telecommunications, and theprofessional service sub-sectors of legal,architecture, engineering and accountancy.Australia has also indicated our strong interests intourism and air transport services.

These negotiating proposals identify barriers totrade in services and make recommendations inbroad, non-country specific terms, on how toovercome them. The negotiating proposals are aprecursor to the request-offer stage of negotiations.Over 100 negotiating proposals are on the table.The majority of them are from developedcountries, although developing country membershave expressed interest in sectors such as tourism,distribution and energy services.

Australia is now preparing initial negotiatingrequests. This involves accumulation of detailedinformation on market barriers facing Australianservice exporters in different countries. The Department of Foreign Affairs and Trade isconsulting industry stakeholders, relevantCommonwealth and State Government agenciesand overseas posts as part of this process. TheDepartment maintains a commercial-in-confidencedatabase of market access barriers, which will alsobe drawn upon to prepare the requests.

The Department is also consulting communitygroups interested in services. The DohaMinisterial Declaration reaffirmed the right ofWTO members to regulate the supply of services,including introducing new regulations on thatsupply. This reinforced the clear expectation thatgovernments will continue to provide and fundservices across a wide range of social policy areasin pursuit of their national objectives.

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SERVICES

Competition policy

At the Doha Conference, Ministers agreed to a two-stage process aimed at identifying core principlesfor competition policy, with a future decision onnegotiations to be taken by explicit consensus at theFifth Ministerial Conference in 2003.

Australia’s priority is to work towards a balancedframework of multilateral rules on competition.Australia has already been involved in negotiationof APEC’s non-binding Principles to EnhanceCompetition and Regulatory Reform, and these willcontribute to the discussion in the WTO. Australiahas a world-class competition policy regime andwould not expect to face any difficulties incomplying with any multilateral rules.

Australia recognises, however, that manydeveloping countries still do not have competitionpolicies in place and are concerned about theimpact of any agreement on national developmentpolicies. As about 60 of the 144 WTO members haveno competition policy, Australia recognises thatthere needs to be a strong emphasis on education,technical assistance and capacity-building. Given itsconsiderable expertise in the area of competitionpolicy, Australia takes every opportunity to raiseawareness of the role of competition policy ineconomic development and the role that amultilateral agreement could play in this process.

Investment

At the Doha Conference, Ministers agreed to two-stage process aimed at identifying core principlesfor investment, with a future decision onnegotiations to be taken by explicit consensus at

the Fifth Ministerial Conference in 2003. Australiais working towards the development of balancedrules on investment, to provide foreign investorswith greater certainty and predictability. Inparticular, the Government will want to see thatpre-establishment commitments are based on apositive list approach such as was adopted for theWTO General Agreement on Trade in Services. Atthe same time, it will ensure the integrity ofAustralia’s foreign investment screening regime.

An earlier attempt in the OECD to developmultilateral investment rules attractedconsiderable opposition within communitygroups across a number of OECD membercountries. The current work in the WTO differssignificantly from this earlier work in that it willinvolve all WTO members, both developed anddeveloping, focus on technical assistance and takeinto account the development policies andobjectives of all WTO members as well as theirright to regulate in the public interest.

Environment

The Doha outcome on trade and environmentpresents a range of opportunities and challengesfor Australia. The Australian environmental goodsand services industry has recognised that gainingaccess to the $1 000 billion global market for theseproducts is crucial to its growth prospects. TheDoha mandate holds out the prospect of significantmarket opening in the future. Australiancompanies stand to benefit, including many small-to-medium sized enterprises (SMEs) providingcleaner technologies, products and services thathelp minimise pollution and resource use.

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NEW ISSUES ON THE WTO AGENDA

Australia’s objective for the fisheries negotiationsis to tighten disciplines on subsidies. EffectiveWTO disciplines in this area would make a realcontribution to sustainable development as wellas promoting trade flows on the basis of efficiencyand comparative advantage.

The negotiations on the relationship between WTO rules and multilateral environmentalagreements (MEAs) will be the first substantiveWTO negotiations on these issues. They will tacklethe complex issue of the status that trade measurestaken under MEAs to advance environmentalobjectives should have under WTO rules. Australiasupports, and reserves for itself, the right of WTOmembers to regulate for environmental purposes.However, such regulations should not undermineWTO obligations.

In addition to these negotiations, the WTOCommittee on Trade and Environment willcontinue its extensive work program. TheCommittee will focus on how the WTO can bestcontribute, through trade liberalisation, to betterenvironmental and developmental outcomes, andlabelling for environmental purposes. TheCommittee will also advise the Fifth WTOMinisterial on the desirability of extendingnegotiations to other topics. The AustralianGovernment will work to ensure that theCommittee focuses on encouraging policies andpractices that support both trade andenvironmental goals.

TRIPS and pharmaceuticals

During 2001, controversy about access tomedicines for developing countries facing theHIV/AIDS and similar epidemics highlighted thecomplex relationship between trade rules andpublic health. The need to both maintainincentives for multi-million dollar research todevelop better medicines and ensure affordableaccess to medicines for the world’s poorest mustbe taken into account. The stand-alone MinisterialDeclaration on this issue at the Doha Conferencedrew attention to the flexibility that already existswithin the WTO Agreement on Trade-RelatedAspects of Intellectual Property Rights (TRIPS) torespond to public health emergencies. Thisexisting flexibility includes compulsory licensing(with compensation) of medical patents, andparallel importation of patent-protected medicinesfrom other countries.

Australian negotiators were instrumental inbringing the key players together to find thecommon ground that sealed the successfulcompromise outcome in Doha.

One complex issue, the so-called ‘flexibility gap’,remains unresolved. This concerns the parameterswithin which WTO members withoutpharmaceutical manufacturing capacity can issuecompulsory licences to importers.

The issue of TRIPS and pharmaceuticals is likelyto remain a serious concern, and potentiallyvolatile. Fortunately, the sensible outcome sets astrong precedent for resolving the ‘flexibility gap’problem and for dealing with other issues wherethe WTO (and TRIPS) is targeted as the cause ofadverse economic and social consequences.

N e w I s s u e s o n t h e W T O A g e n d a

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A meeting with World Trade Organization officials inParliament House on the 27th June 2001.

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Expansion of geographicindications

Geographical indications (GIs) have become acomplex and controversial issue in the WTO. A group of European and developing countries ispressing for a higher level of GI protection to beextended to all other products, including foodsand even handicrafts. If they are successful,Australian producers could be prevented fromusing long-standing generic descriptive termswell established in international commerce. Theseterms would become the exclusive property ofspecific groups of regional producers. Forinstance, if the terms ‘cheddar’ or ‘parmesan’were legally recognised as GIs for cheese,Australian producers could be prevented fromusing these terms, even in situations whereconsumers were unlikely to be deceived – forexample, they would be unable to use the term‘Australian brand parmesan-style cheese, productof Australia’.

Australia has been prominent in opposing thispush for extension of the higher-level GIprotection. Australia is a multicultural society, andso use of terms derived from European names iswidespread. Australian food exporters could alsolose market share in overseas markets if they wererequired to stop using familiar product namessuch as parmesan.

While opposing the extension of GI protection,Australia welcomes detailed consideration byWTO members of the application of existing GIprovisions in TRIPS; the nature and extent of anydeficiencies in them; and whether a newnegotiation on the extension issue is warranted.The costs, implications and implementation issuesthat would result from any changes to the currentGI system need to be taken into account.

Dispute resolution is a cornerstone of the WTO. It ensures the commitments and obligationscontained in the WTO agreements will berespected. Australia has a strong interest in anopen, equitable and enforceable internationaltrading regime and supports the WTO disputesettlement process as central to that goal. The WTO dispute resolution system provides abinding and enforceable mechanism throughwhich member countries can prosecute their traderights. Since 1995, about 250 disputes have beeninitiated, generating an important body ofinternational law.

The Australian meat sector had two importantWTO wins in 2001, with South Korea and theUnited States agreeing to eliminate WTO-illegalrestrictions on beef and lamb:

• In September 2001, South Korea removed thelast of 12 of the WTO-illegal restrictions on thesale of imported beef. Elimination of thosemeasures will increase the number of retailbutcher shops licensed to sell Australian beeffrom 5 000 to 45 000, and boost Australia’s beefexports by an estimated $60 million a year.

• The removal by the United States on 15 November 2001 of a WTO-illegal tariff quotabrought to a satisfactory end a dispute that

began in July 1999 when the United Statesimposed import restrictions on lamb. The restrictions cost Australian exportersapproximately $30 million.

These positive outcomes vindicate the strongstance the Government and industry have takento prosecute Australia’s trade rights in the WTO’sdispute settlement system, and they highlight the value of rules-based international trade forAustralia.

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FIGHTING FOR A FAIR GO

Australian chilled, grain-fed beef promotion at a SamsungTesco store near Seoul.

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AUSTRALIAN APPOINTMENT TO WTO APPELLATE BODY

In 2001, the Hon John Lockhart QC, AO, a former Federal Court Judge, became the first Australian tobe appointed to the WTO Appellate Body, a seven-member panel that acts as the judicial body of lastresort on WTO law. Justice Lockhart will serve initially for a four-year term beginning in early 2002.

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Australia was a third party in several WTOdisputes in 2001, including:

• a dispute concerning a US ban on the import ofshrimp that had not been caught in a way thatthe United States considered protected seaturtles. Australia has both a commercial interestin access for its shrimp to the US market, and asystemic interest relating to the rights of a WTOMember to take unilateral action to enforceconservation measures;

• a dispute concerning export subsidies providedto ‘foreign sales corporations’ under US taxlegislation that provides a competitive taxadvantage to certain US exporters compared toexporters in other WTO Members;

• two disputes (against Brazil and Canada)concerning subsidies for aircraft. Thejurisprudence arising from these disputes hasbeen important in clarifying the definition ofan export subsidy;

• a dispute concerning an exemption to musiccopyright granted by the United States to somesmall retail establishments. The exemptiondenies royalty payments to Australianmusicians. The US and EU have agreed somecompensation arrangements, and Australia ispressing for such compensation to be extended;

• two disputes concerning the use of a safeguardremedy by the United States, for wheat glutenand line pipe. Australia has policy andcommercial interests in the application of

safeguard import restrictions by the United States; and

• a dispute concerning the provision of exportsubsidies to the Canadian dairy industry inexcess of Canada’s WTO export subsidyreduction commitments. The Australian dairyindustry was competitively disadvantaged bythe Canadian export subsidies.

World-class legal advice forAustralian business

The Australian Government aims to deliver aworld-class legal service to Australian industryand businesses either already involved in theWTO dispute settlement process or seeking adviceon how best to resolve specific trade problems. In2001, the Department of Foreign Affairs and Tradeestablished a WTO Trade Law Branch, combininga high level of legal expertise with trade policyknowledge. Increased resources are beingdedicated to monitoring compliance by ourtrading partners of their obligations under theWTO. In 2002, there will be a particular focus oncommitments undertaken by China as part of itsaccession to the WTO. Australian exporters areencouraged to tap into this trade law expertise foradvice on the scope for WTO action to tackleproblems caused by the trade-restrictive actions offoreign governments.

CHALLENGING THE BYRD AMENDMENT

In 2001, Australia and a number of other WTO members initiated a WTO complaint against theUnited States over the so-called ‘Byrd Amendment’, which requires the anti-dumping andcountervailing duties collected by the United States to be paid back to the affected US industries.For example, in 2000-01 the United States distributed US$121 million to producers of steel andsteel products, US$20 million to US producers of pasta, US$1.8 million to a producer of cannedpineapple and US$2.7 million to a producer of magnesium. In effect, this provides a double layer ofremedy over and above the anti-dumping or countervailing duties themselves. As such, it gives theimport-competing industries an unfair advantage over other countries’ exporters. The first panelhearing on the case was held in February 2002. A decision is expected on 10 July 2002.

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RESOLVING YOUR EXPORT ACCESS PROBLEMS THROUGHTHE WTO SYSTEM

• Are you an exporter or intending to export?

• Do you export to one or more of the 144 markets that belong to the World Trade Organization?

• Are you experiencing problems getting your product into one or more of those markets?

• Is the problem caused by a regulation or directive of the importing government (at central, regional or local government level)?

If you have answered “yes” to these questions, the WTO Trade Law Branch of the Department ofForeign Affairs and Trade can assist you in assessing options to resolve your access problem.Exporters can contact WTO legal specialists in the Department through:

• interactive, internet-based briefing and advice at www.dfat.gov.au/trade/

• email: wto.disputes@dfat.gov.au

• fax: 02 6273 1527

• telephone 02 6261 2617 or 02 6261 1890

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China’s entry into the WTO on 11 December 2001will have a major impact on the internationaltrading environment. It is another step towardmaking the WTO a truly universal organisation.Signing on to WTO rules will give real impetus tothe process of economic and regulatory reform inChina, and this will have positive spin-offs for theglobal and regional economy. China’s increasingcompetitiveness in the world trading environmentwill generate new trade and investmentopportunities for Australia but is also likely toconsolidate recent trends in drawing investmentflows away from other East Asian economies.

Chinese Taipei joined China as a new WTOmember on 1 January 2002. The successfulcompletion of both these negotiations has broughtabout significant new market access opportunities

that hold out the prospect of considerable growth inthe future, as concessions agreed in the negotiationsare progressively implemented. Australia will beworking with China and Chinese Taipei so thatAustralian exporters are able to take full advantageof the new market-opening measures.

Membership of the WTO has now reached 144,and a further 28 economies want to join. Australiais involved in all negotiations on newmembership and uses this valuable opportunityto ensure that necessary trade reforms andmarket-opening measures are implemented, andthat key Australian commercial interests areserved. Negotiations for the accessions of Russia,Saudi Arabia and Vietnam are priorities, and thenegotiations with Cambodia, Laos, Lebanon,Ukraine and Yemen also offer potential gains.

RECENT AND FORTHCOMING ACCESSIONS

OECD (2001), Agricultural Policies in OECD Countries – Monitoring and Evaluation, Paris.

NEED TO KNOW MORE?

More information on the WTO Round (including the Doha Declaration), is available atwww.dfat.gov.au/trade/. You can subscribe to regular bulletins on progress in the Doha Roundnegotiations and a monthly newsletter on Australia’s involvement in WTO dispute settlement byemailing Trade.Consult@dfat.gov.au.

Further information on the Cairns Group is available at www.cairnsgroup.org .

The World Trade Organization has a website at www.wto.org , containing information aboutprogress in the new round of negotiations, including through its regular newsletter, Focus. Thewebsite also contains information about the status of trade disputes and accession negotiations.

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REFERENCES

BEYOND THE WTO –AUSTRALIA’S MULTI-FACETED

TRADE POLICY

AUSTRALIA IS ENERGETICALLY PURSUING

TRADE GAINS WHEREVER THEY APPEAR

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• Australia will pursue regional and bilateral trade liberalisation strategies where theparties are willing to proceed faster and undertake more profound liberalisationthan can be achieved by the entire WTO membership. These strategies can buildmomentum for multilateral liberalisation.

• APEC provides a forum for Australia to engage with major trading partners,including through its unique annual gathering of leaders. The 2001 Shanghai Accordagreed on a number of trade facilitation initiatives, including a target of a 5 per centreduction in business transaction costs over the next five years.

• In September 2001, ASEAN, Australian and New Zealand Ministers endorsed aformal framework for Closer Economic Partnership to promote trade, investmentand regional economic integration. Ministers agreed to an initial work program inareas including customs, e-commerce and small and medium enterprises.

• In 2001, Australia and New Zealand agreed on a number of measures, includingregulatory cooperation, science and technology cooperation and streamliningcustoms procedures, to further strengthen one of the world’s most comprehensiveFree Trade Agreements – CER.

• Australia and Singapore are aiming to complete negotiations for a Free TradeAgreement in 2002. A substantial increase in trade, particularly in services, isexpected to result from the Agreement. Free Trade Agreements with Thailand andthe United States are also being considered.

• Australia is strengthening economic relations with two major trading partners,Japan and South Korea, with the aim of modernising and broadening the traderelationship beyond its traditional stereotype.

• A new framework to enhance trade, investment and economic cooperation withChina will be a major priority for Australia in 2002. Key sectors targeted forincreased cooperation include financial, legal, education and social welfare,agriculture, environment and the Beijing Olympics.

• The Government’s domestic economic reform agenda has helped exporters. Soundfiscal policy has maintained the confidence of financial markets and kept interestrates low. Business costs facing exporters have been reduced through tax reform,labour market reform, financial services reform, and fair access to nationallysignificant infrastructure.

• The Government has an ambitious program of trade facilitation to enable exportersto get their goods to market faster, cheaper and safer. Priority areas includetransport and logistics, paperless trading, e-commerce, biosecurity, internationaltrade rules for biotechnology and standards and conformance.

AT A GLANCE

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Australia has a multi-faceted trade policy to securethe best possible access to overseas markets forAustralian exporters wherever and however it isoffered. The Government is pursuing multilateral,regional and bilateral strategies to improve marketaccess. It is also helping to develop a prosperousmarket for Australian goods and services in Asia,and working to ensure Australia is a naturaltrading partner for the strongest global economies.The Government places a high priority on tradefacilitation – our exporters need to be able to gettheir goods to market faster, cheaper and safer. The Government has an ambitious domesticprogram of trade facilitation initiatives and also

works with countries in the region to minimisered-tape and bottlenecks.

Multilateral trade negotiations through the WTOremain the central tenet of Australia’s trade policy.However, regional and bilateral strategies canoffer great benefits where the parties are willing toproceed faster and undertake more profoundliberalisation than can be achieved by the entireWTO membership. These strategies also serve tobuild the momentum for multilateral liberalisationand can create useful templates for dealing withnew and complex issues such as investment,services, competition policy and e-commerce.

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AUSTRALIAN EXPORT AWARDS

For almost 40 years, the Australian Export Awards have been uncovering, recognising and rewardingexcellence in exporting as well as encouraging further overseas trade. The role of the Awards infostering an outward looking, internationally focused Australian business community has never beenmore important than it is today. The Awards, which are presented jointly by Austrade and theAustralian Chamber of Commerce and Industry, also serve to highlight the contribution trade makesto the national economy and the standard of living enjoyed by millions of Australians.

Export Awards finalists and winners are role models whose performance encourage morebusinesses to seek their profits from international markets. The Awards highlight the variety andquality of products Australia now sells to the world, along with the economic and socialcontribution made to local communities by local exporters.

The Australian Export Awards have continued to evolve with the introduction of new categoriessuch as the new Regional Exporter of the Year award. Above all, the Australian Export Awardscontinue to reflect the great depth and diversity of our thriving national export sector.

The continuing popularity and prestige of the awards is such that in 2001 more than 350 entrieswere received from businesses throughout Australia, of which a record number of 69 wereselected as national finalists. The 2002 program will contain a range of activities in severallocations, and will culminate in a presentation dinner to be held in Melbourne on 26 November.

For more information about the awards, contact Austrade on 13 28 78 or view the website onwww.austrade.gov.au/ under the heading “Trade Events”.

The Government’s domestic economic reformagenda has provided a strong and resilienteconomic base for exporters. Sound fiscal policyhas maintained the confidence of financialmarkets, and has helped keep long-term interestrates at historic lows. The International MonetaryFund (IMF) estimates that the Australian economygrew by 2.3 per cent in 2001, and forecasts growthfor 2002 of 3.3 per cent – among the highest in the OECD.

In 1996, the Government laid down a medium-term monetary policy designed to keep inflationwithin a target 2–3 per cent band. Latest forecastsfrom the OECD and the IMF indicate that thistarget is likely to be maintained during the nextsix to twelve months. Low, stable inflation givesbusiness the certainty it needs to make long-terminvestment decisions.

Australia’s microeconomic reform agenda has alsogenerated productivity dividends for exporters. A new taxation system – modern, competitive and fair – has been put in place. The arbitrarywholesale sales tax has been replaced by a goodsand services tax (GST) and lower taxes, includinga reduction in the company tax rate from 36 to 30 per cent, one of the lowest in the region.Exports are exempt from GST, providingAustralian exporters with the same advantagesenjoyed by their overseas competitors.

In its second term, the Government madesignificant progress in the area of labour marketreform. For exporters, waterfront reform has beenparticularly important in lowering costs tobusiness. In March 2001, Deputy Prime MinisterJohn Anderson was able to announce that thenational average crane rate had broken the 25 container per hour benchmark set by the

Government as part of its sweeping reforms. This represented an improvement of close to 40 per cent in just three years. The Government iscommitted to further work in labour marketreform in its third term, including the creation offair dismissal laws and strengthening of the tradepractices law against secondary boycotts.

The Government plans to invest heavily in thephysical infrastructure required by exporters. This includes the Roads to Recovery programworth $1.2 billion, of which $850 million will bespent in rural and regional Australia. Repairingand extending the Australian road network willreduce travel times and costs for exporters,especially for Australia’s many primary producers,who often face significant costs in transportingtheir products to market. Another indication of the significance placed upon infrastructuredevelopment by the Australian Government is itscommitment of $191.4 million to the Alice Springs-Darwin railway. The line will cost $1.3 billion tobuild. It will connect with the new deepwater Port of Darwin, improving Australia’s exportperformance into South-East Asia and stimulatingdevelopment along its route.

ENHANCING EXPORTERS’ COMPETITIVENESS

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The Australian Government places high priority on helping develop a vibrant and increasinglyprosperous region. Sustainable growth is central to improving the well-being of communitiesthroughout the Asia Pacific community. It alsocreates customers for Australian goods and services.

Further regional and global economic integrationcan help deliver this growth and ensure that thebenefits of globalisation and the new economy arefelt throughout the Asia Pacific. Trade andinvestment liberalisation must be at the core ofefforts to improve standards of living, but it isclear that ensuring continued prosperity in theAsia Pacific requires parallel reforms in a range ofareas – economic and corporate governance,infrastructure and ICT development, tradefacilitation and capacity building, for example.Australia has been pursuing these goals with itsneighbours through a variety of regional forums.

APEC

The Australian Government’s commitment toAPEC is unwavering. APEC provides a forum for Australia to engage with its major tradingpartners, including the United States, Japan,China and Korea. It also provides a unique annualgathering of the leaders of the United States,Japan, China and Russia, facilitating discussion of the full spectrum of bilateral issues.

Its membership straddles the developed-developing divide so prominent in manyinternational organisations and allows APEC toplay a significant role in supporting tradeliberalisation. The political commitment of APECeconomies will be key in taking the Doha Roundnegotiations forward. In 2002, APEC will supportthe WTO negotiations through capacity-buildinginitiatives to help developing economies participatein a new round and implement WTO agreements.

The highlight of the 2001 Joint Ministerial andLeaders’ Meetings in Shanghai was the signing ofthe Shanghai Accord, which sets the forwardagenda for APEC’s second decade and aims toaccelerate progress towards the 1994 Bogor Goals.The Accord includes the new pathfinder approach,which will enable those APEC economies in aposition to move quickly towards APEC’s goals tolead the way. Other APEC economies will be freeto join pathfinder initiatives when they are readyto do so. Australia looks forward to promoting anumber of pathfinder initiatives this year toproduce real benefits for Australian business.

In 2002, APEC will begin work on meeting its newfacilitation target of a 5 per cent reduction in tradetransaction costs over the next five years. Many ofthe new pathfinder initiatives will focus on tradefacilitation.

APEC AND OTHER REGIONAL INITIATIVES –CREATING PROSPEROUS MARKETS

Australian Prime Minister John Howard talks with USPresident George W. Bush as Malaysian Prime MinisterMahathir Mohamad and Mexican President Vicente Fox(right) walk by at the Asia Pacific Economic Cooperation(APEC) Leaders Meeting in Shanghai, 21 October 2001.

Other Australian trade facilitation prioritiesinclude further implementation of paperlesstrading and strengthening commercial law indeveloping APEC economies as part of theStrengthening Economic Legal Infrastructure(SELI) initiative. Australia will also use the 2001APEC Economies: Breaking Down the Barriers reportto stimulate further reductions of administrativebarriers to trade, and will continue to enhancebusiness mobility in the region by expanding theAPEC Business Travel Card Scheme and triallingthe Advanced Passenger Processing Scheme.

The so-called ‘new economy’ featured strongly on APEC’s 2001 agenda, culminating in theendorsement of the new e-APEC strategy at theLeaders Summit in Shanghai. The strategy focuseson strengthening market structures andinstitutions, creating a business environment thatmaximises the benefits of the new economy andbuilding human capacity. The strategy also outlinesmeasures to promote investment, infrastructureand technology development to realise APEC’sgoal of tripling Internet access by 2005.

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THE ECONOMICS OF APEC

APEC economies represent a potential market of over 2.5 billion consumers and around 60 per centof global income. In 2000, merchandise exports from APEC members were valued at US$3.1 trillion– 49 per cent of total world merchandise exports. APEC economies absorb 72 per cent ofAustralia’s merchandise exports.

A P E C a n d o t h e r R e g i o n a l I n i t i a t i v e s – C r e a t i n g P r o s p e r o u s M a r k e t s

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Australia, New Zealand andASEAN

In September 2001, ASEAN Economic Ministersand Australian and New Zealand Trade Ministerstook another step towards closer economicintegration among the 12 countries of the ASEANFree Trade Area (AFTA) and the Australia-New Zealand Closer Economic Relations TradeAgreement (CER) by endorsing a framework for theAFTA–CER Closer Economic Partnership (CEP).

The CEP framework builds on six years of workon trade facilitation and economic cooperationbetween the two regions. Ministers agreed to aninitial work program in a broad range of areasincluding customs, e-commerce and small andmedium enterprises. Furthermore, Ministersundertook to develop an instrument to formalisethis framework at the Seventh Ministerial Meetingin 2002.

The CEP framework is a major advance in relationswith ASEAN. For the first time, it provides aformal and structured approach to promotingtrade, investment and regional economicintegration. Significantly, the decision to enhanceand formalise trade and investment relations wasmade despite a backdrop of slowing regional andglobal growth. The Framework will be embodiedin an instrument to be signed by Ministers inSeptember 2002 in Brunei.

Australia and the Indian Ocean

Australia continues to play a key role in ensuringthat the Indian Ocean Rim Association forRegional Cooperation (IOR-ARC) – a grouping ofnineteen Indian Ocean littoral and island states –remains focused on facilitating trade andinvestment in the region.

At the IOR-ARC Council of Ministers Meeting inOman in April 2001, Ministers agreed to establisha high level task force (HLTF) to consider thefuture directions of IOR-ARC and ways toimprove its operations. Through the HLTFprocess, Australia has successfully maintainedthat IOR-ARC must focus on its key objective oftrade and investment facilitation and producesome tangible results of benefit to business beforeconsideration is given to broadening theorganisation’s work agenda. The final HLTFreport will be submitted to the IOR-ARC Councilof Senior Officials in mid-May 2002.

VIRTUAL COLOMBO PLAN

In August 2001, Australia and the World Bank launched the Virtual Colombo Plan – a majorinitiative to use information and communications technology (ICT) to attack global poverty. TheAustralian Government’s $200 million contribution will provide improved education and access toknowledge in developing countries and will build on Australian and World Bank distance learningprograms. The Plan will also help develop Australia’s ICT industry by involving it more in activitiesfunded under the Australian aid program.

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TRADE-RELATED ASSISTANCE FOR DEVELOPING COUNTRIES

Australia has a broad program of cooperation with developing countries to strengthen theircapacity to participate in global and regional trading arrangements. Trade-related assistancethrough Australia’s aid program has increased by more than 40 per cent since 1996–97, to over$27.7 million in 2000–01. This reflects the importance the Government places on multilateral andregional trade liberalisation as a means of reducing poverty.

Multi-year trade-related development assistance projects worth nearly $150 million are under wayin areas such as trade and investment policy development, taxation reform and strengthening ofcustoms and quarantine procedures. For example:

• In China, Australia is implementing a $7 million economic and foreign trade training project tohelp Chinese officials develop an appreciation of the rights and obligations of WTO membershipand the benefits of open trading systems.

• The APEC Support Program funds small-scale, high-impact activities aimed at enhancing policyand regulatory environments, overcoming practical obstacles to economic cooperation andbuilding operational and technical capacities. Since 1995, the program has supported 144 activities worth nearly $16 million.

• Under the Regional Customs Project in the Pacific, Australia is providing more than $7 millionfor a customs information system, the Automated System for Customs Data (ASYCUDA). The project is helping governments improve the efficiency and effectiveness of their customsdepartments, maximise revenue, minimise fraud and provide trade data required for economicpolicy development.

• Several new initiatives are underway in response to the Doha Development Agenda. Australia haspledged $400,000 to the WTO’s Global Trust Fund to finance technical assistance in Southeast Asiaand the Pacific. Australia will also be providing $500,000 to the Agency for International TradeInformation and Cooperation in Geneva to facilitate small states’ representation at the WTO. A WTO capacity building program for Southeast Asia is under consideration, and a trade policytraining course for African trade negotiators will be conducted in May 2002. All of these activitiesare part of Australia’s commitment to ensuring developing countries are able to take advantage ofthe opportunities for economic growth that trade liberalisation offers.

Many other aspects of Australia’s aid program contribute indirectly to strengthening the trade andinvestment prospects of developing countries. These include assistance to improve overallgovernance, enhance infrastructure, and invest in the productivity of people through health andeducation programs. In 2000–01, Australian aid program support for governance activitiesamounted to more than $360 million, infrastructure to more than $223 million, and health andeducation to more than $474 million. In addition, Australia’s $1 billion food security initiative,designed in part to assist developing countries during implementation of agricultural tradeliberalisation measures, is helping improve efficiency, productivity and market potential byproviding support for agricultural research, infrastructure and policy development.

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As part of Australia’s energetic, multi-facetedpolicy, the Government is pursuing WTO-consistent trade arrangements with major tradingpartners where such bilateral deals can deliversubstantial economic gains more rapidly thanmultilateral or regional mechanisms. These tradearrangements may take the form of Free TradeAgreements (FTAs) or broader agreements onStrengthening Economic Relations (SERs), whichfocus on ways of improving the tradingenvironment for businesses.

Free Trade Agreements

The number of FTA negotiations has increasedsignificantly over the past ten years. Almost allcountries are now members of at least onepreferential agreement. Australia believes theinterests of its traders are best served bycomprehensive, transparent FTAs that apply to allsectors. Comprehensive agreements ensure thatliberalisation is genuine and the risk of tradediversion is minimised.

NEW ZEALAND

The Australia–New Zealand Closer EconomicRelations Trade Agreement (ANZCERTA –commonly known as CER) is one of the world’smost comprehensive free trade agreements – and is twenty years old in 2003. It provides aframework for a range of agreementsstrengthening closer economic relations andfurthering economic integration. Annual averagegrowth of around 9 per cent in trans-Tasman trade over the past decade highlights the benefitsto business.

In 2001, Australia and New Zealand continued tostrengthen trans-Tasman trade and business linksand make tangible improvements to the businessenvironment. At the annual Australia-NewZealand Trade Ministers’ Meeting in August 2001,Trade Ministers Vaile and Sutton welcomed theconclusion of an Australia–New Zealand openskies air services agreement – a first for Australia –which is now in effect on a provisional basis.Progress was also made in regulatory cooperation,science and technology/innovation cooperation,streamlining customs procedures, a comprehensiveapproach to food regulation and proposed jointinitiatives to gain additional overseas markets forsoftwood plantation forestry products.

In 2002, Australia and New Zealand will examinethe issue of triangular taxation, identify furtherareas for work under the MOU on Business LawCoordination and continue development of a jointtherapeutic goods regulatory agency.

SINGAPORE

Australia and Singapore are negotiating a bilateralFree Trade Agreement. Prime Ministers Howardand Goh announced the decision to proceed withan FTA in November 2000, committing theirofficials to negotiate a substantial, comprehensiveand liberalising FTA. Officials conducted fiverounds of formal negotiations in 2001 and aim tocomplete the FTA in 2002.

Australia’s main focus in the negotiations isincreased access to Singapore’s services sectors,however the FTA’s coverage will becomprehensive: tariff-free access for goods,services market access (including specificcommitments on telecommunications, financialservices and professional services markets),

BILATERAL STRATEGIES – LINKING AUSTRALIA TO MAJOR MARKETS

intellectual property rights protection, standardsand SPS/quarantine cooperation, educationcooperation, customs cooperation, electroniccommerce and government procurement.

Good progress has been made in most areas. A number of important outstanding issues remainin relation to services and investment, but theparties have agreed to pursue a negative listingapproach to services trade liberalisation.

Singapore is Australia’s seventh-largestmerchandise trading partner and an FTA shoulddeliver direct economic benefits to both sides,deepening the close trading relationship thatalready exists. An economic study into thebenefits of an FTA with Singapore, completed byAccess Economics, concluded that the directeconomic benefits from increased services marketaccess and other liberalisation would besubstantial. Expected benefits for the Australianfinancial services sector, for example, are between$8 million and $20 million a year (but possibly asmuch as $60 million a year) and around $50million a year in education services exports.

An FTA with Singapore will also deliver ongoing,or ‘dynamic’, benefits for Australia, establishing aplatform for a closer relationship that will developover time. The Access Economics study concluded

that the dynamic benefits of the agreement wouldbe at least as large as, and perhaps significantlygreater than, the direct economic (‘static’) benefitsdelivered.

Singapore shares Australia’s outlook on the valueof trade liberalisation and expanding trade andinvestment links with regional neighbours.Australia believes a substantive, comprehensiveFTA between the two countries will signal strongsupport for multilateral, regional and bilateralinitiatives, help create an open global and regionaltrading environment and promote strength andstability in the region.

UNITED STATES

Negotiation of a bilateral FTA with the USAdministration has been on Australia’s agendasince early 2000. Australia sees potential forsubstantial gains from an FTA with the largest andmost dynamic economy in the world. Improvedaccess to US markets would directly benefitAustralian exporters. Economic modelling hasshown that these benefits could boost theAustralian economy by up to $2 billion a year.

An FTA would also help Australia attract US investment and serve to protect and advanceAustralia’s share in the US market at a time whenthe United States is actively pursuing tradeagreements with some of Australia’s majorcompetitors, including the ambitious proposal fora Free Trade Agreement of the Americas.

In September 2001, Prime Minister Howard andPresident Bush agreed that an FTA could benefitthe bilateral economic and trade relationship.Subsequently, following discussions with Ministerfor Trade Mark Vaile in January 2002, US TradeRepresentative Robert Zoellick testified to theSenate Finance Committee on 6 February that hewanted to work with Congress to pursue abilateral FTA with Australia – the only newpotential FTA partner mentioned in this context.USTR Zoellick is appointing a team to work withAustralia to examine the elements of a possibleFTA. That work is underway, with the resultsexpected to be finalised over the coming months.

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Prime Minister John Howard and Singapore’s Prime MinisterGoh Chok Tong, before announcing the bilateral free tradeagreement negotiations.

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Any move to launch negotiations is still some wayoff and given the range of interests involved onboth sides, negotiations are likely to be complex.However, there is growing support for an FTAfrom business in both countries and frominfluential members of the US Congress. An American Australian Free Trade AgreementCoalition was established in the United States inJuly 2001, and an Australian counterpart body –the Australia–US FTA Business Group – wascreated in September 2001. Both include in theirmembership some of America’s and Australia’smost important corporations and a variety ofprominent peak industry associations.

THAILAND

Australia’s Trade Minister, Mark Vaile, andThailand’s Minister for Commerce, Dr AdisaiBodharamik, announced on 14 November 2001that work was under way on a joint scoping studyon a bilateral FTA. Consultations with interestedmembers of respective business communities andState Governments were commenced in early 2002as part of this process.

The study and consultations will soon becompleted and both governments will be in aposition to decide whether to proceed to formalnegotiations and more detailed consultation withbusiness. The breadth of the study reflects thedesire of both governments for any FTA to becomprehensive in scope and to underpin Australiaand Thailand’s commitment to the WTOmultilateral system. Case studies were preparedon agri-business and processed foods, automobilesand auto parts, textiles and clothing and selectedservices. The study also looked at possible benefitsof closer cooperation on standards, e-commerce,competition policy, intellectual property, jointventures and technology transfer.

The work builds on the strong bilateralrelationship between Australia and Thailand andtheir long tradition of shared objectives in globaland regional trade forums. Bilateral merchandisetrade between Australia and Thailand in 2001

year was valued at $4.9 billion, with Thailandnow Australia’s 14th largest export market and13th largest source of imports.

Strengthening economicrelations

Beyond formal bilateral trade treaties, Australia isalso pursuing a range of initiatives to strengthenand revitalise relations with some of its largesttrading partners. The Government recognised therisks, in a globalising world, of Australia and itsmost important trading partners becoming stuckin pre-globalisation, commodity-basedrelationships, and moved quickly to developstrategies that would reveal the vibrant anddiverse contemporary Australia to its traditionaltrading partners.

JAPAN

In an era of globalisation, an economicrelationship should expand in all sectors, andAustralia’s has – with the rest of the world. Butthe $40 billion trade relationship with Japan is stillabout quarries, farms and beaches for theJapanese, and about steel, power companies andcars for Australians. Just 11 per cent of Australia’sexports to Japan are manufactured goods, yetmanufactured goods make up 30 per cent of totalAustralian exports and this is the fastest-growingsector. The top five exports to Japan are coal, ironore, aluminium, beef and crude petroleum.

In late 2000, the Australian Governmentcommissioned a report to examine Australia’seconomic relationship with Japan. StrengtheningAustralia–Japan Economic Relations was launched bythe Trade Minister at the Australia–JapanConference in April 2001. The report found thatJapan remains an enduring and important economicpartner, despite a decade of economic malaise, andthat changes occurring in both economies offer newopportunities for economic activity.

Deregulation in Japan’s energy sector has thepotential to create additional demand forAustralian energy exports. New opportunitiesalso exist in biotechnology and the ICT sector.Australia has strong research capabilities, one ofthe world’s highest IT literacy rates and worldleadership in biotechnology, but has done lesswell in commercialising research. Japanese firms –with their proven strengths in this area – arepotential collaborators.

The report made a number of recommendationson how economic relations could be strengthened,including through a possible new bilateral tradeand economic agreement. The Australia–JapanConference endorsed and added to theserecommendations. Australian officials have beenpursuing the recommendations actively with theirJapanese counterparts.

REPUBLIC OF KOREA

South Korea is Australia’s fourth-largest tradingpartner and third-largest export market. Mineralsand energy products are the cornerstone of therelationship, although elaborately transformed

manufactures, particularly automotive components,have become important in recent years.

While Australia’s traditional commodity-basedtrade relationship with South Korea has workedwell enough in the past, a major challenge forAustralia and South Korea is to abandonmisperceptions about the relative economicstrengths and weaknesses of the other country.Australia and South Korea are poised to enter anew, exciting phase of their economic partnershipas both countries take advantage of globaleconomic and technological changes.

To meet this challenge, the Australian and SouthKorean Governments commissioned paralleleconomic studies of the bilateral trade andinvestment relationship in 2001. The studiesshowed that significant business opportunities are being opened up by economic reform andderegulation in both countries. Australia seesgreat potential for new commercial cooperation inpublic infrastructure development, IT broadbandaccess and technology-based services. Greatergovernment-private sector cooperation could alsolead to better commercial outcomes in ICT,

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Trade Minister Mark Vaile launching Strengthening Australia-Japan Economic Relations at the Australia-Japan Conference in April 2001.

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WORLD SUMMIT ON SUSTAINABLE DEVELOPMENT

The United Nations World Summit on Sustainable Development (WSSD), also known as Rio+10,will be hosted by South Africa in Johannesburg from 26 August to 4 September 2002. With anestimated attendance of 65 000 people, including Heads of State and Government, the WSSD willhelp guide multilateral cooperation on sustainable development issues for the next decade. Asignificant industry presence is expected, including the World Business Council for SustainableDevelopment.

While the outcomes of the 1992 Rio Conference on Environment and Development focused on theenvironment, the WSSD is expected to focus on links between economic growth, socialdevelopment and environmental quality. Poverty alleviation will be a key issue. Other issues willinclude: the role of trade and investment liberalisation in development; consumption andproduction patterns; globalisation; and the relationship between trade and environment.

The Department of Foreign Affairs and Trade is working closely with Environment Australia andAusAID to prepare Australia’s approach to the Summit and public input is welcome.

biotechnology, environmental technology,education and training. Australian companies,particularly those in business services, venturecapital and IT delivery are proving competitive inSouth Korea as demand for ‘new economy’services expands.

The Australian study’s central recommendation is for negotiation of a Trade and InvestmentFacilitation Agreement (TIFA) reflectingcontemporary global economic realities and thechanging bilateral commercial relationship. Thiswould be a fitting next step to realise the vision ofdeeper integration between the two countries. The Department of Foreign Affairs and Trade isconsulting business, industry associations andgovernment agencies to explore the scope for apossible TIFA.

CHINA

A new framework agreement with China toenhance trade, investment and economiccooperation will be a major priority for theAustralian Government in 2002. This willestablish strategic relations with China in anumber of key sectors, for example, financial,legal, education and social welfare services,agriculture, environment and the BeijingOlympics. It will also complement Australia’snegotiations for improved access in the newmultilateral trade round.

Australian expertise could help China deal with anumber of challenges in the near future, in thefields of energy security, development of intensiveagricultural production and food processing(which could lead to employment growth andnarrow the urban/rural income gap), and thecreation of modern services needed to sustainmoderate to rapid economic growth over themedium to long term.

Simply negotiating market access is not enough inthe current trading environment. Australianexporters need to be able to get their product toconsumers faster, cheaper and more safely. TheGovernment is pursuing a range of initiatives,both domestically and in partnership with AsiaPacific neighbours, to facilitate export.

Transport and logistics

The Australian freight logistics industry wasworth $57 billion in 1999–2000 – or approximately9 per cent of Australia’s gross domestic product.

The Australian Government has developed aFreight Transport Logistics Industry Action Agendato better position the Australian industry to meetthe challenges of globalisation, environmentalsustainability, infrastructure requirements and theevolving roles of government and industryleadership in shaping the new economy. A draft of the Action Agenda was released for publiccomment in October 2001 and the IndustrySteering Committee expects to present its finalreport to Government in April 2002.

These efforts cannot stop at Australia’s borders. The Government is also committed to developing

seamless transport and logistics systems throughoutthe Asia Pacific. The Department of Transport andRegional Services (DOTARS) is pursuing a vigorousprogram of work within the APEC TransportationWorking Group, including projects:

• identifying options for creating electronic portmanifests, which could be combined withharmonised electronic customs declarations;

• streamlining and simplifying customs,immigration, quarantine and port authorityprocedures for vessels in South-East Asia;

• developing a mutual recognition framework fortransport professions to facilitate the mobility ofqualified transport personnel within the APECregion;

• harmonising road transport regulations to helpAPEC economies meet their needs for safetyand emission control while ensuring thatautomotive products can be freely traded;

• analysing sea and air container tracking andtracing technology developments in APECeconomies and their integration acrosssupply/demand chains;

• identifying the existing non-tariff measures andanti-competitive business practices in thetransport sector in APEC economies; and

• improving the perishable goods handling skillsof middle-level managers and handlers in theAPEC region.

Importantly, this work also exposes Australiantransport and logistics industry expertise to the region.

FASTER, CHEAPER, SAFER – TRADING INTOTHE NEW MILLENNIUM

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Paperless trading

Australia leads the way in making cross-bordertrade ‘paperless’. Removing regulatory andinstitutional requirements for paper documentswill streamline trade processes, help Australiantraders access new trading opportunities, andgenerate savings in APEC economies of up toUS$60 billion a year on imported items.

Paperless trading can reduce costs of shippingand communications, cut paper handling andtrade finance charges, quicken receipt ofpayments and minimise administrative errors.Reducing these costs helps small and medium-sized Australian enterprises enter overseasmarkets and enhances opportunities forestablished international traders to increasemarket share.

The SANCRT system, established by theAustralian Quarantine and Inspection Service(AQIS), is an example of leading Australiantechnology. It electronically transmits data for theclearance of animal, agricultural and fishcommodity exports. Australia has beencollaborating with a number of Asia-Pacifictrading partners to promote the use of SANCRTin recent years. The system is currently used tocertify meat for export to Japan. Australia isactively pursuing trials with Singapore, Malaysia,Thailand, Chinese Taipei and the Republic ofKorea and test messages have been transmitted toMexico, Canada and the United States. Electronictransmission of certification offers more secureand timely data transmission, as the data istransmitted in a secure environment directlybetween government agencies, eliminating thepossibility of tampering with or falsification ofdata. The system also offers substantialbiosecurity, public health, food safety and tradefacilitation benefits.

Australia’s EXDOC system also electronicallydelivers export documentation and allows access tothe AQIS and Australian Customs Service computersystems through a single electronic window.

The Australian Government is working to create aregulatory environment that encouragesinnovation and growth in paperless trading.Legislation aimed at boosting confidence in theelectronic market includes the Electronic TransactionsAct 1999, which gives business and the communitythe option of using electronic communicationswhen dealing with government agencies, and theCybercrime Act 2001, which provides penalties forcrimes committed in cyberspace (seewww.law.gov.au/c_legislation.html).

E-commerce

E-commerce is an increasingly important meansof conducting trade and creating exportopportunities. It helps exporters, particularlysmall and medium-sized enterprises, streamlinetheir operations to lower costs. The AllenConsulting Group study Built for Business:Australia’s Internet Economy found that 62 per centof Australian businesses are reporting cost savingsof between 1 and 5 per cent from using theInternet and that, of the Australian firms online,59 per cent use the Internet to receive orders and55 per cent to purchase.

Australia’s rapid adoption of new technology,excellent IT and regulatory infrastructure, andconducive business environment positionAustralian business, particularly small andmedium enterprises (SMEs), to embrace e-commerce. The Economist Intelligence Unitranked Australia second to the United States inproviding a conducive environment for thedevelopment of e-business opportunities. The IT Business Forum and the World Congresson Information Technology 2002, held in Adelaidefrom 25 February to 1 March 2002, showcasedAustralia’s confident, diverse, sophisticated andinnovative IT industry to government andbusiness leaders from over 40 countries.

A recent OECD survey on the knowledgeeconomy found that Australian businesses wereamong the leaders in internet use, with

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penetration of 80 to 90 per cent in businesses of 20 or more employees. The National Office for theInformation Economy (NOIE) study Advancingwith E-Commerce provides case studies of smallbusiness e-commerce ventures and finds that smallbusinesses are using the internet to: expandexisting customer bases locally and internationally;source more competitive suppliers and gain directaccess to customers; and offer online services suchas invoicing and billing. E-commerce forms a keypart of the Government’s strategy for doubling thenumber of Australian exporters by 2006.

Australia is working in international forums, suchas the WTO and APEC, to ensure that the sameprinciples of free and fair trade that apply toconventional commerce apply to e-commerce. E-commerce cooperation is also high on theAFTA-CER Closer Economic Partnership agenda.Bilaterally, Australia is negotiating e-commerceprovisions as part of the Australia–Singapore FreeTrade Agreement, and the Australia-Thailand FreeTrade Agreement Scoping Study advocates closee-commerce cooperation. Australia also hasmemoranda of understanding or joint statementsof cooperation on e-commerce and online issueswith Canada, China, the European Union, India,Ireland, Japan, the Republic of Korea, Taiwan, the United Kingdom and the United States.

Biosecurity

The Australian Government has two biosecuritypriorities: ensuring the integrity of Australia’srelatively pest and disease-free status andtranslating this status into improved access forAustralian exports to international markets.

Australia’s managed risk approach to biosecurityprotects Australia from the entry, establishmentand spread of pests and diseases which may causeharm to human beings, animals, plants, otheraspects of the environment, or economic activities,while being least trade restrictive regarding theentry of animal and plant based commodities. It is based on applying, in a consistent way,

scientifically justified measures. Australian policyreflects the high value of the nation’s agriculturalindustries and its favourable animal and planthealth status. Trade considerations are not part ofthe decision-making process.

During 2002, as part of continuous efforts toimprove the integrity of its managed risk approach,Australia is putting in place a revised import riskanalysis (IRA) process that builds on experience todate with the current process and aims to improveconsultation and further promote the scientificrigour of quarantine decisions. To support thisprocess, Guidelines for Import Risk Analysis has beenwritten as a technical reference document to assistrisk analysts in Biosecurity Australia in the conductof import risk analyses. It is based on the relevantinternational standards for import risk analysis,and provides terminology and methodology thatmeets Australia’s obligations under the WTO SPSAgreement. Australia is one of very few countrieswith such highly developed and clearly articulatedimport risk analysis procedures.

A vital, but perhaps less well-known, part ofAustralia’s biosecurity effort is negotiatingfavourable technical access conditions foragricultural exports. Because of its geographicisolation and effective quarantine policies, manyof the serious pests and diseases found in othercountries are not present in Australia. We are ableto utilise this freedom from diseases such as Footand Mouth disease and Khapra beetle innegotiations to maximise our market access. Wealso have the capacity to sustain area freedomsfrom particular agents. Biosecurity Australia iscurrently negotiating acceptance of area freedomsin Australia for blue tongue viruses with the EU,US and China and fruit flies with North Asia. Thiswill improve access for Australian livestock andhorticultural products to these markets.

Australia also participates actively in internationalstandards setting bodies including the CodexAlimentarius Commission, a body jointlyestablished by the United Nations Food andAgriculture Organization (FAO) and World

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Health Organization (WHO), the relevantinternational and regional organisations operatingwithin the framework of the FAO’s InternationalPlant Protection Convention (IPPC), and theOffice International des Epizooties (OIE) to ensurestandards in relation to food safety and plant andanimal health are based on science and reflectAustralian interests.

Australia expects other governments to also applysimilarly science-based entry conditions toAustralian exports. Given the potential impact onAustralian trade, the Government assists inbuilding biosecurity capacity in developingcountry trading partners in our region to helpthem protect their domestic borders from pestsand diseases. In September 2001, the Governmentannounced its intention to work with ASEANcountries on a new $3.5 million regional initiativeto strengthen their internal and border capacitiesagainst pests and diseases under the CloserEconomic Partnership (CEP). Australia andASEAN also identified a $5.1 million program ofactivities, including strengthening ASEAN plantand animal health management, food safety andquality assurance systems, to begin in late 2002under Australia’s new $45 million ASEAN–Australia Development Cooperation Program(AADCP).

International trade rules forbiotechnology

International regulation of genetically modified(GM) foods is creating commercial complexitiesfor Australia. Biotechnology is beginning tocontribute to Australia’s export competitiveness,and the Government wants to consolidateAustralia’s gains using this new and significanttechnology. However, market access regimes forGM products overseas differ greatly. As Australiais currently producing only one GM agrifoodproduct (cotton), restrictions on trade in GMproducts have, for the most part, not yetadversely affected Australia.

Public acceptance of biotechnology will determineits success. To date, public acceptance ofgenetically modified (GM) products globally hasbeen mixed. Consumer acceptance ofbiotechnology for pharmaceuticals is very high,whereas concern about the safety of GM food hasprompted consumers either to pay premiums fornon-GM foodstuffs (such as non-GM soybeans inJapan) or has prompted countries to imposemoratoriums on import and commercial release ofGM agrifood products (e.g. some Europeancountries). These concerns are influencingdevelopment of GM regimes overseas – althoughthe Australian Government continues to arguethat regimes should be science-based. TheEuropean Union has proposed a toughmandatory labelling regime that is yet to beadopted by member countries. In contrast, theUnited States and Canada (where consumerconcern is less pronounced) have voluntaryindustry labelling schemes. Australia has joinedSwitzerland, New Zealand, Japan, South Korea,China and a growing number of countries inimplementing GM labelling regimes that fall inbetween these two systems.

Australia’s priority, in multilateral negotiationsconcerning biotechnology, is to ensure that therules governing trade in biotechnology aretransparent and WTO-consistent, thatinternational regimes are not more traderestrictive than necessary to protect public healthand the environment, and that the benefits ofbiotechnology can be shared by developed anddeveloping countries.

Australian priorities in international negotiationsin 2002 include establishing transparent andpractical rules on international shippingdocumentation for GM grains under the BiosafetyProtocol and discussions on foods derived frombiotechnology and GM food labelling within theCodex Alimentarius Commission.

Standards and conformance

Australia, through the Department of Industry,Tourism and Resources (ITR) is actively pursuingthe reduction of technical barriers to trade, inrelation to standards and conformance, at themultilateral, bilateral and regional levels.

The Department has negotiated bilateral multi-sector Mutual Recognition Agreements (MRAs)with Europe, Singapore and the member states ofthe European Free Trade Association (Norway,Iceland and Liechtenstein). Australian MRAs onConformity Assessment enable Australianmanufacturers to have their products tested andcertified in Australia for compliance with theregulatory requirements of the importing country,reducing the time and cost for exporters in gettingproducts to market. In 2002, Australian priorities areto monitor and maintain our existing agreementsand to conclude an MRA on ConformityAssessment with Switzerland. This will completecoverage of Western Europe.

The Department, in association with DFAT, is akey contributor to regional APEC processes and inparticular the APEC Sub-Committee on Standardsand Conformance (SCSC). ITR has taken a leadingrole in the development and implementation ofsingle sector voluntary MRAs in APEC. Australiais a party to two of these voluntary MRAs:

• The Electrical and Electronic Equipment MRA,covering new electrical and electronicequipment either directly connected to a lowvoltage power supply or battery operated.

• The Telecommunications MRA, coveringvoluntary recognition of product testing andcertification for telecommunications equipment.

The continued implementation of theseagreements is a priority for 2002, as is the ongoingdevelopment of fundamental technicalinfrastructure among APEC members.

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AUSTRALIA AND NEW ZEALAND’S GM FOOD LABELLING AND STANDARDS

Australia’s revised labelling regime for GM foods came into effect on 7 December 2001. StandardA18 (‘Food Produced using Gene Technology’) prohibits the sale of GM foods that have notundergone pre-market safety assessment to establish that the GM food is as safe as itsconventionally-produced counterpart. A mandatory labelling requirement enables consumers tomake informed choices on the foods they purchase.

Under Standard A18 all food and food ingredients must be labelled where novel DNA or protein arepresent and detectable in the final food, except in the case of:

• unintended presence of a GM ingredient making up less than one percent of the final product.

• Processing aids and additives where there are no novel DNA or protein present in the final food.

• Flavourings where novel DNA or protein are present in a concentration of 0.1 per cent or less inthe final food.

• Highly refined food where the refining process has removed novel DNA or protein in the finalfood (for example, purified oils, starches and sugars).

• Food prepared at point of sale (for example, restaurants, hotels, takeaways).

• Foods in stock, for a grace period of 12 months.

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WINE AGREEMENTS

Australia’s wine exports are worth around $1.9 billion a year. Australia has been pursuing twotreaty-status agreements to promote the growth of this valuable export industry. In December2001, a number of ‘New World’ wine-producing countries signed the treaty on the mutualacceptance of wine-making practices among New World wine producers – the Mutual AcceptanceAgreement on Oenological Practices. This treaty ensures that rapidly growing exports to marketssuch as the United States and New Zealand will not be impeded by unnecessary technicalregulations. Negotiations on the second treaty – a labelling agreement between New World wine-producing countries – are now under way. Australia and the European Union are also continuingnegotiations on outstanding issues in the 1994 Bilateral Agreement on Wine.

TTMRA

The Trans-Tasman Mutual RecognitionArrangement (TTMRA) is a non-treaty agreementbetween the Commonwealth, State and TerritoryGovernments of Australia and the Government ofNew Zealand. It gives effect to mutual recognitionprinciples relating to the sale of goods and theregistration of occupations. These principles, witha few exceptions, state that a good that may belegally sold in Australia may be sold in NewZealand, and a good that may be legally sold in

New Zealand may be sold in Australia, regardlessof differences in standards or other sale-relatedregulatory requirements between Australia andNew Zealand. The key priorities for the TTMRAfor 2002 are:

• The implementation of the Trans-TasmanMutual Recognition Regulations 2002 for therollover of special exemptions; and

• A stocktake of the TTMRA as agreed at theTrade Ministers Meeting of 16 August 2001.

International Monetary Fund, World Economic Outlook December 2001.

International Monetary Fund, Direction of Trade Statistics Yearbook, 2000, October 2000 .

Organisation for Economic Co-operation and Development, Economic Outlook no. 70, November 2001.

P. Costello, Speech to NSW Liberal Party State Council, Sydney, 21 July 2001.

Department of Foreign Affairs and Trade, APEC Economies: Breaking Down the Barriers, November 2001.

Access Economics, The Costs and Benefits of a Free Trade Agreement with Singapore, September 2001.

Centre for International Economics, Economic Impacts of an Australia-United States Free Trade Area, June 2001.

de Brouwer, G. and T. Warren, Strengthening Australia-Japan Economic Relations, April 2001.

Porter, M., Doszpot, S. and R. Maxwell, Australia-Korea: Strengthened Economic Partnership, August 2001.

Bureau of Transport Economics, Logistics in Australia, Working Paper 49, October 2001.

Department of Foreign Affairs and Trade and Ministry of Foreign Trade and Economic Cooperation(People’s Republic of China), Paperless Trading: Benefits to APEC, October 2001.

The Allen Consulting Group, Built for Business: Australia’s Internet Economy, June 2001.

National Office for the Information Economy, Advancing with E-Commerce, October 2001.

The Economist Intelligence Unit and Pyramid Research, e-readiness rankings, May 2001.

Organisation for Economic Cooperation and Development, Science, Technology and Industry Scoreboard:Towards a Knowledge-based Economy, September 2001.

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REFERENCES

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NEED TO KNOW MORE?

More information on Australia’s regional and bilateral trade initiatives is available atwww.dfat.gov.au/trade/. The website has information on APEC, AFTA-CER, IOR-ARC and FreeTrade Agreements, with documents on expanding trade with Singapore, the United States, SouthKorea and Japan available for download.

Further information on APEC can be obtained at www.dfat.gov.au/apec or www.apecsec.org.sg .APEC also provides a service at www.bizapec.com to make business in the Asia Pacific regioncheaper and easier.

The Australian Freight Transport Logistics Industry Action Agenda is described atwww.dotrs.gov.au/logistics . Information on the EXDOC export documentation system, the SANCRTcertification project and biosecurity (including import risk analyses) can be found atwww.affa.gov.au , while information on biotechnology, including genetically modified foods, can befound at www.biotechnology.gov.au . Further, the benefits of paperless trading to APEC isdiscussed at www.dfat.gov.au/publications/paperless/index.html. The website www.noie.gov.auprovides information on e-commerce. The Government’s innovation and standards policies are atwww.industry.gov.au , the latter under the heading “Industry”, subheading “Trade – Technical andRegulatory Barriers”.

Other Australian Government websites provide information on government policies to benefitexporters, including www.taxreform.gov.au on tax reform, www.ncc.gov.au on competition policy,and www.dotrs.gov.au on road and rail infrastructure.

Further information on the World Summit on Sustainable Development is available fromwww.dfat.gov.au/environment/wssd or www.ea.gov.au

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GROWING AUSTRALIA’SEXPORT COMMUNITY

AUSTRALIAN EXPORTERS ARE BUILDING

THE NATION’S FUTURE PROSPERITY

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• Australia has enormous untapped export potential. Its success in the export sectorin 2001 was achieved by less than 4 per cent of Australian companies, a low figureby international standards. The Government has therefore committed itself todoubling the number of exporting companies by 2006.

• The Government will expand its assistance to prospective and existing exportersthrough ten new TradeStart offices in rural and regional Australia, and through theNew Exporter Development program. The Commonwealth Government delivers itsassistance activities to exporters in partnership with state and territorygovernments, chambers of commerce and other industry organisations.

• The Government works closely with industry on many market-based and sectoralinitiatives to develop exports, including through the Industry Action Agenda process.

• The Australian Government’s network of Embassies, High Commissions andAustrade offices help Australian companies overcome hurdles to export, such asinsufficient market information, lack of overseas contacts and unfamiliar foreignbusiness practices.

• A revamped Invest Australia will facilitate the attraction of foreign investment. It willbe more strategic in targeting firms and in using the Commonwealth’s resources todeliver programs.

• To improve the Australian community’s awareness of the importance of the exportsector in creating jobs and raising living standards, the Government launched theExporting for the Future Program and created a new Trade Advocacy and Outreachunit within DFAT in 2001.

• In 2001, the Government extended the successful Export Market DevelopmentGrants (EMDG) scheme, which reimburses up to half of the eligible exportmarketing expenses of successful applicants.

• The Export Finance and Insurance Corporation (EFIC) offers a range of export creditinsurance and export finance services, helping Australian companies to developexport markets and invest overseas.

• The Commonwealth Government consults with state and territory governments,industry associations, major companies and non-government organisations on theWTO and regional and bilateral trade issues.

AT A GLANCE

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Australia’s trade policy aims to increase the wealthand prosperity of all Australians. Australianexports are a crucial means of generating wealth,creating jobs and raising living standards.

Australian exports have grown rapidly in the pastsix years, from $101 billion in 1996 to a record$154 billion in 2001. This trading success wasunderpinned by a strong domestic economy andhelped by the removal of $3.5 billion of taxes fromexporters, a favourable exchange rate and theopening of new markets as a result of theGovernment’s market access efforts.

This stunning success in the export sector wasachieved by less than four per cent of theAustralian business community. Research byAustrade and the Australian Bureau of Statisticshas revealed that only about 25 000 Australiancompanies actually export – a low percentage ofthe total business community by internationalstandards.

The Government has therefore committed itself toan ambitious goal – doubling the number ofexporting companies by 2006.

The Government’s detailed two-year Knowingand Growing the Exporter Community researchproject confirmed there is enormous untappedexport potential in Australia – particularly in thevital small to medium enterprise (SME) sectorwhich makes up 97 per cent of the Australianexport community.

SMEs also accounted for more than 80 per cent ofjobs growth in Australia over the past decade. So more small businesses engaged in exportingmeans greater opportunities for job creation,particularly in regional and rural Australia, whichrelies on small business for the strength of its

economy. A greater export focus by non-metropolitan businesses will bring real benefits tothe regions, where one in four jobs depends directlyon exports. Increasing the export community,especially in regional and rural Australia, willprovide an enormous boost to job opportunities inbusinesses with real growth potential.

Success in reaching the goal of doubling thenumber of exporting companies by 2006 willdepend on the efforts of thousands of individualAustralian companies actively supported byCommonwealth, State and TerritoryGovernments.

The current economic slowdown is not a reasonfor delaying the momentum in the exportcommunity. The dynamism of Australia’s exportsector was a key reason why it withstood theworst impacts of the Asian financial crisis of 1997-98. Australia’s strong export sector is alsohelping it in the face of the current worldslowdown. Increasing the number of successful

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DOUBLING THE SIZE OF THE EXPORT COMMUNITY

Claypave is a paver exporting company with markets inJapan, the United States and the Middle East. Claypave’ssuccess helps to underpin 200-plus jobs at Dinmore, west ofBrisbane. Featured here is Fred Wehl, export manager,Robyn Elford, export marketing assistant and Shigeki Hosoya,Japanese export manager.

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exporters will help the Australian economy’sdynamism and diversity. There are bothmacroeconomic and microeconomic benefits fromexporting and, in terms of growth, employment,productivity and efficiency, continuing themomentum will help the Australian economy nomatter what it confronts in the future.

The Government is working to maintain a healthymacroeconomic and industrial relationsenvironment for business and carefully tailorsassistance to individual companies throughprograms such as those administered byAustrade, the Export Finance and InsuranceCorporation (EFIC), the Department of ForeignAffairs and Trade and other agencies.

The Government will also expand its assistance tonew and existing exporters through the TradeStartnetwork, which assists new and potentialexporters in rural and regional Australia. TheGovernment is committed to opening ten newTradeStart offices to service businesses in rural andregional Australia, including the TradeStart officebased at the Australian Wine Export Council inAdelaide, which was announced in January 2002.

Services for potential exporters will also beboosted through Austrade’s New ExporterDevelopment program, which will be delivered inpartnership with State Governments and privatesector organisations. Beginning in July 2002, the program will focus on delivering tailoredassistance to SMEs in rural, regional and outermetropolitan areas. It will work with potentialexporters in successive stages from provision ofbasic introductory information on theopportunities and challenges of export to the finalstage of successful export.

The New Exporter Development program will relyon referrals and support from local businesssupport organisations, AusIndustry, Chambers ofCommerce, State and Commonwealth departmentsof industry and regional development and otherprofessional service providers.

Austrade will assist these organisations throughincreased access to its services. Significant timewill be devoted to coaching, in small groups or inone-on-one discussion. Austrade’s overseas staffwill play an important role in these discussions,especially given their ability to deliver promptfeedback on products and services from potentialbuyers in overseas markets.

Direct experience of market conditions andcustomer expectations overseas helps potentialexporters move into export. Austrade and theDepartment of Foreign Affairs and Trade areincreasing their efforts to encourage potentialexporters to gain international experience byattending overseas trade fairs and makingexploratory visits to overseas markets.

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Two potential exporters at Austrade’s booth at the Katherine Expo.

KNOWING AND GROWING THE EXPORT COMMUNITY

Austrade’s two-year Knowing and Growing the Exporter Community research project found Australia’scurrent exporter base was around 4 per cent of companies in June 2001 – a low figure byinternational standards. This is based on the latest ABS estimate of 25 000 exporters. Assumingpast trends remain the same, the project forecast that natural growth in the Australian economy,stimulated by existing government business and export assistance programs, would achieve halfthe Government’s target growth, or 12 000 additional exporting firms, by 2006. The remaining 13 000 exporters will need to be ‘created’.

What will this next generation of exporters look like? Austrade’s research found that they will bemicro or small companies, knowledge-based and located in small towns as well as capital cities.They will only have been in business for a few years and will be using new ways of goinginternational. These companies are already beginning to emerge and Austrade is working withthem to unleash their potential.

Creation of these extra 13 000 exporters will require an intensive program of coaching, mentoring,financial assistance and in-market support. Existing efforts will need to be supplemented byadditional export-specific programs. Strategies targeting the following areas will be important:

• boost the number of businesses pursuing opportunistic export – around 50 per cent of initialexports are not planned;

• boost the number of businesses intending to export;

• increase the success rate of these intending exporters;

• increase the number of ‘born globals’ – by working with companies in the start-up phase tomaximise export suitability; and

• increasing the number of regular exporters – coaching and mentoring can be crucial toestablishing ongoing, sustainable exporting.

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The Government’s target of doubling the numberof exporters by 2006 will require intensive effortby thousands of private sector firms, from largemultinationals through to micro-firms. Many ofthese firms are not yet in existence, and otherswill be ‘born global’ – companies established withthe sole purpose of exporting. Some exporters ofthe future are already thriving enterprises, oftenin traditional industry sectors, which break intonew markets offshore either by accident or design.

Creating exporters to capture emerging exportopportunities is a multi-stage process. Raisingawareness about the benefits of export will beessential to entice a larger number of firms tothink about exporting. Working with thesecompanies in the start-up phase to maximiseexport suitability is key to assisting them tobecome ‘export capable’. Through training andbusiness advice, companies move to the ‘export

ready’ stage where offshore assistance is providedto turn these companies into exporters. Continuedcoaching and mentoring is important to improvetheir sustainability.

Export business-assistance programs, at bothfederal and State level, have not sufficientlydelineated responsibility for getting companies tothe ‘export-capable’ and ‘export-ready’ stages. At the National Trade Consultations in 2001, the Minister for Trade, Mark Vaile, and his Stateand Territory counterparts agreed to a range ofmeasures to end this duplication. State agencieswill concentrate on working with export-capablefirms to prepare them for export. Austrade willthen work with these export-ready firms on furtherdevelopment as required. These firms will progressthrough Austrade’s intensive in-market assistanceprograms to market entry and export sales.

CAPTURING EXPORT OPPORTUNITIES

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Austrade staff, Howard Permezel and Des Walsh, promoting the Exporting for the Future message in the NSW Riverina town ofHenty at the Machinery Field Day – one of the many export promotion activities throughout Australia seeking to increase theexport community.

Australia’s Global Network

Australian companies face a range ofimpediments to initiating and expanding exports.These include insufficient market information;lack of overseas contacts; unfamiliar foreignbusiness practices; and high set-up costs forexport markets.

The Australian Government is representedoverseas in 123 locations in 78 countries and helpsAustralian companies overcome these hurdlesthrough its global network of Embassies, HighCommissions, Consulates and Austrade offices.

Australian Ambassadors, High Commissionersand Senior Trade Commissioners share theirknowledge of trends in political and economic

conditions in their host countries by briefingAustralian firms overseas and by returning toAustralia to brief business. The global networkalso works to assist Australian companies throughfacilitating meetings with incoming buyers’missions and attendance at international tradeexhibitions.

Services are tailored to meet the needs of Australianbusiness ranging from first-time exporters to wellestablished exporters, particularly SMEs. Servicesare provided free of charge to companies seekinggeneral information and advice about exporting,but as services need to be tailored to the specificneeds of the business, fees based on cost recoveryare charged at an hourly rate.

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AUSTRADE’S EURO-LINK CENTRE IN MILAN

The Austrade Euro-Link Centre based in Milan, Italy, provides a bridge between Australianexporters and the diverse markets of Europe. Working with Austrade’s European posts, Euro-Linkprovides fast, expert and coordinated export advice to Australian businesses on market prospectsin Europe.

Austrade established the Euro-Link concept in 1998 to break down exporters’ reluctance to tacklecontinental European markets because of perceived obstacles such as distance, time zones,diversity of language and culture, and the size of Europe’s established markets. The establishmentof Euro-Link has been vital in:

• improving client service in Europe, and providing a centre for best practice;

• enabling better market selection that enhances Australian exporters’ chance of success;

• ensuring faster, better quality responses to clients; and

• providing a centre for enquiries about EU issues.

Euro-Link has worked with over 2 000 Australian companies, mostly small to medium-sizedexporters, to sell tree ferns to the United Kingdom, bikinis to Italy and railway equipment to Norway;to fulfil government tenders in Greece; and to make significant investment in Macedonia.

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The ability to attract and retain overseas directinvestment will make or break Australia in the21st century. The new Minister for Industry,Tourism and Resources, Ian Macfarlane, hasmoved quickly to implement the Government’sresponse to Dr Ian Blackburne’s report onattracting overseas direct investment, WinningInvestment – Strategy, People and Partnerships.

The Government’s goal is to ensure thatprospective investors immediately identifyAustralia as a rewarding place to invest. A revamped Invest Australia will fulfil Australia’sneed for a commercially focused investmentattraction and promotion agency that cancommunicate effectively with business, as well asproviding a whole-of-government perspective toensure appropriate coordination and rapidfacilitation of investment activities.

Invest Australia will operate in partnership withthe states and territories. This increasingly closerelationship will be overseen by a newly createdNational Investment Advisory Board. Thereinvigorated Invest Australia is scheduled tocome into operation on 1 July as an autonomousagency in the Industry, Tourism and Resourcesportfolio, reporting to the Employment andInfrastructure Committee of Cabinet. Theinvestment and promotion activities of otherCommonwealth agencies will be incorporatedinto Invest Australia.

Invest Australia will be more strategic in targetingfirms and other potential investors and in usingthe Commonwealth’s resources for maximumexposure. For example, all ministers planning to

travel overseas should now consult InvestAustralia to maximise opportunities to addressappropriate investor audiences and be involved inother promotional activities.

In 2000-01, the Government played a major role inattracting and facilitating 70 new projects toAustralia, leading to a total planned expenditure of$1.57 billion. These were forecast to generate at least4 800 new jobs and $684 million worth of exports.

ATTRACTING OVERSEAS INVESTMENT

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OUTWARD INVESTMENT

An increasingly popular method for Australian firms to enter foreign markets is direct investment.

In certain circumstances, direct investment represents the best strategy for market entry orexpansion. Some companies have no choice – if they want to sell internationally they must invest inoffshore markets. Services companies dominate this category – banks, for example, generally needa physical presence in the market. Services firms (for example, banking, insurance and propertyfirms) are estimated to account for 50 per cent of all Australian outward foreign direct investment.

Other reasons to invest offshore include:

• access to venture capital funds not readily available in Australia;

• difficulties in doing business without some form of joint venture arrangement or incorporationof a company locally (for example, in dealings with China and Vietnam); and

• establishing manufacturing operations close to customers to reduce transport costs (forexample, building materials and access to natural resources not available in Australia at acompetitive cost).

In June 2000, the stock of Australian foreign direct investment overseas was valued at A$174 billion.More than 80 per cent of Australian outward direct investment was in three English-speakingcountries: $89 billion in the United States, $41 billion in the United Kingdom and $11 billion in New Zealand. The remaining $33 billion was mainly spread throughout Asia (predominantly Hong Kong and Singapore), Western Europe, Argentina, Canada and Papua New Guinea.

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Grass-roots education is vital to building anexport culture. Trade Minister Mark Vailelaunched the Exporting for the Future program inFebruary 2001, in response to surveys indicatingthat the Australian community does not fullyappreciate the importance of the export sector increating jobs and raising living standards.

In November 2001, Mr Vaile also announced theestablishment of a new Trade Advocacy andOutreach unit within the Department of ForeignAffairs and Trade to sharpen and strengthen theGovernment’s promotion of the benefits of trade tothe Australian community. The unit isreinvigorating the Department’s advocacy andoutreach efforts by focusing on communicating thebenefits of trade – through publications, media andspeaking engagements – to ordinary Australians.

The Department of Foreign Affairs and Trade’swebsite has been improved significantly with theaddition of a new trade portal, making public

access to a raft of information about Australia’strade policies – as well as developments in theWTO, APEC and other trade bodies and issues –much simpler. Further improvements will be madein the coming year to make the website even moreuser-friendly and the Government approach totrade issues more transparent to the community.

Two publications addressing concerns within thecommunity about aspects of current trade debateswere produced by DFAT in 2001. From Sheep’s Backto Cyberspace allowed exporters to tell their ownstories of success, with a particular emphasis onthe benefits and diversity of trade in regionalAustralia. A more easily digestible brochureentitled Exploding the Myths addressed somecommonly-held misconceptions about trade andinternational investment. Exploding the Myths hasbeen distributed to over 35 000 organisations andindividuals since its launch in July 2001.

BUILDING COMMITMENT TO TRADE AND INVESTMENT

EXPORT AWARENESS

• Less than half the Australian population believe that exports make a major contribution to theirstandard of living.

• Around two-thirds of the population underestimate the number of jobs generated by exporters.

• Fewer than 15 per cent of the population feel well informed about trade issues.

Source: Newspoll Survey prepared for Austrade, May 2001

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Exporting for the Future

The Exporting for the Future Program consists ofan education program for schools, an eventsprogram of speaking engagements and displaysand the Radiowise program that supportsinvolvement in selected regional events.

SCHOOLS PROGRAM

Minister Vaile launched the Exporting for theFuture education program in July 2001 to raisesecondary students’ awareness of the benefits ofoverseas trade for the Australian economy and thecapacity of exports to generate employment andgrowth in local communities.

The program aims to raise the profile ofinternational business in course work undertakenby secondary students in Years 9–12. The programhighlights the link between exports and jobs andbetween exports and living standards, andexplains the rationale behind the Government’sdrive towards a more open trading environmentand participation in a regulated global tradingcommunity.

The Government, through Austrade, providesteaching materials for use in relevant subjects. The curriculum content is consistent Australia-wide. Secondary school teachers can access arange of curriculum support materials such aslesson notes and exercises, posters and otherreference material, including the Student Centre,on Austrade’s website (www.austrade.gov.au/StudentCentre). The resources, developed withthe support of State and Territory curriculumofficers, provide lesson guides with close links tocourse outcomes.

A comprehensive professional developmentprogram for educators is being conducted inmetropolitan and regional centres to help teachersgain maximum benefits from the program,integrate the resources into lesson plans andhighlight the overseas trade sections of theirexisting curricula. These Austrade trainingworkshops are an extension of a highly successful

seminar program developed in conjunction withteachers’ professional associations for their annualconferences.

Program resources were introduced for use inYears 9 and 10 in the second semester of 2001. The Years 11 and 12 program is expected to startin early 2002.

EVENTS PROGRAM

The Exporting for the Future events program tapsthe expertise of the overseas and domesticnetworks of Austrade and the Department ofForeign Affairs and Trade. It targets audiencesdrawn from outside the exporter community toincrease the number of companies entering theexport sector. It uses a variety of media to promotethe program message, including presentation bydepartmental and Austrade representatives,briefings to chambers of commerce, businesscouncils and industry associations, and purpose-made displays at high-profile events such as theSydney Royal Easter Show, business expos andvarious field days. Since the program waslaunched in February 2001, 150 Exporting for theFuture Program events have taken place.

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Selling the benefits of trade. Trade Minister Mark Vaile andExporting for the Future web quest designer, Lucille Atkin,talk with Lismore High School students.

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Continued Government support for export andinvestment promotion is designed to encouragemore Australian businesses to considerinternational markets and to assist their chance ofsuccess. Exporting is more difficult than domesticbusiness activity. Exporters must deal withinstitutional and administrative barriers in overseascountries, fluctuations in exchange rates, variabilityin prices and incomes and cultural constraints.Exporters do business in a fiercely competitive andrapidly changing global market place. It is,however, potentially rewarding for both exportingfirms and the Australian economy as a whole.

TradeStart

TradeStart operates in 24 rural and regionallocations in Australia, servicing the needs of newexporters and potential exporters. The TradeStartnetwork will grow during 2002-03 with ten newoffices opening in rural and regional Australia,underlining the Government’s commitment to thegrowth of the export sector in those areas.

TradeStart’s growing national network will enablebusiness in the most remote areas of Australia tobreak into potentially lucrative internationalmarkets.

TradeStart is a joint initiative between Austradeand local partners, including regionaldevelopment organisations, State and TerritoryGovernments and industry associations.TradeStart is not a referral service; local clientsreceive Austrade services through the jointventure partners’ staff and resources, and existinginfrastructure and client networks are used toavoid duplication.

The TradeStart network develops local awarenessof the benefits of exporting and the Government’strade and investment activities, provides exportcounselling and training, delivers Austradeservices, and works with local export resourcesand business development programs to deliverseamless service. The program helps localcommunities develop an export focus, and isdelivered at low cost to the taxpayer.

SUPPORTING AUSTRALIAN COMPANIES AND EXPORTERS

TRADESTART – A SNAPSHOT

In 2001, the network assisted 779 new clients, delivered 246 seminars to more than 3 800 attendees and generated 2 715 export enquiries. During 2002, it will:

• handle more than 4 000 trade and export enquiries from regional enterprises;

• conduct more than 300 Getting into Export seminars and briefings on international trade,reaching around 4 500 participants;

• help 200 more firms make their first overseas market visit; and

• deliver services under a range of federal government programs, as well as State-based export programs.

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Export Access

The Export Access program helps suitable smallto medium enterprises (SMEs) begin sustainableexporting. The program is a joint initiativebetween Austrade and 19 local partners includingchambers of commerce, local developmentboards, state government departments andindustry associations. It has project managers in30 locations Australia-wide.

Advisers use one-on-one counselling andcoaching, typically over a 12-month period, toprovide planning and marketing assistance. Firmsin the Export Access program work through aprocess that involves identifying and preparingfor export markets, examining finance options,receiving assistance with overseas market visitsand developing subsequent markets. Althoughmany participants target Asia, firms areincreasingly entering markets in North America,Europe and the Middle East.

The Export Access program has helped firms inindustries ranging from food, informationtechnology and agricultural equipment, toeducation services, Aboriginal artefacts andautomotive parts. Since its creation in 1991,

Export Access has helped launch more than 4 500SMEs into sustainable exporting, and they in turnhave generated export sales worth $300 million. During 2001, over 500 SMEs were supportedunder the program.

E-commerce for exporters

The Government’s Introduction to E-Commercefor Exporters program targets SMEs, providingintroductory information on e-commerce andassisting in decisions on the adoption of e-commerce tools in export marketing, transactionsand business maintenance. Allied organisations inthe TradeStart network play a significant role indelivering this program, and about 2 000participants have already attended 239workshops, 37 per cent of which occurred inregional locations. An updated program named‘an Introduction to E-business for Exporting’ will be delivered in 2002and will be directed at SMEs using the Internet tofacilitate business presentations.

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AUSTRALIAN RAINFOREST HONEY, LONG BEACH(BATEMANS BAY)

When Capilano, a major Australian honey company, moved its factory from western Sydney toQueensland, Pat and Wendy Roberts and their sons faced a major decision. Would they continue tosupply to Capilano, or strike out on their own (with all the commensurate risks)?

With the help of the Nowra TradeStart Office, the Roberts family’s company, Australian RainforestHoney (ARH), decided to research the UK market. A list of UK honey importers was obtained fromthe Internet. ARH contacted each of the companies on the list, sent samples and developed arelationship with one of the companies.

Within two years of commencing exporting, ARH had moved from no exports to 100 per centexports, and in 2001 was awarded a NSW Exporter Award for Excellence in Exporting to the UK.The company has now moved to Junee to be nearer to the processing plant at Temora and isinvestigating the opportunities for exporting in retail packs to other markets.

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Getting into Export seminars

‘Getting into Export’ is a management guide forSMEs considering export for the first time orexporting intermittently. Seminars conducted byAustrade and allied facilitators help intendingexporters understand the skills and resources theyneed to become successful exporters. Workingthrough an eight-step program, participants gain aninsight into a range of issues, including whethertheir product or service is exportable, how to selectand make the most of a market visit, the nuts andbolts of export administration, and how to accessfurther assistance. These issues are considered inthe context of the firm’s own business development,helping the company decide whether export is anappropriate strategy at that time.

TradeSat

During 2001, Austrade completed development ofthe TradeSat video-streaming system that linksTradeStart offices in more than 24 locations withthe Austrade worldwide network. The TradeSatsystem allows Austrade’s international staff towork interactively with Australian exportersacross a broadband internet link, providingexporters, particularly those in regional and ruralAustralia, with significantly upgraded access toinformation on international markets. The video-streaming system will develop in 2002 to helpexporters work with Austrade’s internationaloffices and overseas customers.

Industry Specialists

Austrade’s industry specialists work with itsglobal network and Australian industry to developmarket and sectoral initiatives for emergingbusiness opportunities in overseas markets.

This knowledge of the capabilities of Australianindustry or industry sectors and understanding ofchanging business processes, including global

supply chains, e-business, franchising, outwardinvestment and protection of intellectual property,informs Austrade’s global network as to thepotential of industries or sectors of industries todevelop overseas business opportunities.

Priorities for 2002 include:

• positioning Australian companies foropportunities associated with the BeijingOlympics;

• helping Australian companies understand andaccess global supply chains;

• participation in BioPartnering Europe, incooperation with Invest Australia, Ausbiotechand federal and state agencies;

• high tech missions to Europe including afollow-up e-government mission;

• exploring the potential for Australian foodcompanies to participate in private labelbusiness offshore;

• Australian-based seminars on doing business intarget overseas markets with an emphasis onoutward investment; and

• seminars across Australia on East Timor postindependence and a legal services mission toIndia.

Export Advisory Service

Austrade’s Export Advisory Service providesinitial advice and information to telephone, email,fax and in-person enquirers. In 2002, the ExportAdvisory Service expects to handle approximately42 000 individual phone and email contacts anddeliver over 1 600 market opportunities toAustralian companies. Enquirers can contactAustrade by calling 13 28 78 for the price of a localtelephone call from anywhere in Australia, orthrough Austrade’s website.

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AUSTRALIA’S LARGE COMPANIES

Strategies to grow Australia’s export community will clearly place some emphasis on small andmedium-sized enterprises. This is where the largest source of untapped export potential rests.However, large enterprises – including foreign-owned companies – play an important role in theeconomy. Many have successfully integrated into the global economy and are competing with theworld’s best.

Large businesses (those with 200 or more employees) contribute around half of Australia’s totalexports of merchandise, including more than half of all manufacturing exports and 40 per cent ormore of Australia’s exports of business services. They employ almost half a million people. They are also:

• important for the health of domestic capital markets;

• contributing significantly to the economy’s direct and indirect tax base;

• important sources of income for shareholders, including superannuation funds;

• contributing in a major way to Australia’s research and development effort;

• using their extensive business networks to access world-class expertise and technology, with flow-on benefits to the rest of the economy; and

• a vital part of many local communities.

There is a high level of interdependency between large enterprises and SMEs. Many largebusinesses depend on SMEs for business or as sources of supply for their business inputs, andbig businesses are among SMEs’ core clients.

THE 100 LARGEST

Australia’s 100 largest enterprises are a major force in the economy. They account for around 20 per cent of total on-shore operating income of all business in Australia, 11 per cent of the totalworkforce; and some 70 per cent of the total capitalisation of the Australian Stock Exchange.

They are even more important contributors to Australia’s exports than to the nation’s output. In 2000-01, they underpinned Australia’s trade effort to the tune of almost $50 billion worth ofexport income, representing close to one-third of Australia’s total exports of goods and services.Fifteen of these enterprises had export earnings of $1 billion or more. These 100 enterprises alsoaccount for some 90 per cent of Australia’s foreign direct investment abroad and their offshoreoperations earn them revenue in excess of $100 billion a year.

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Export Market Development Grants

The Export Market Development Grant (EMDG)scheme is funded by the Government andadministered by Austrade. The schemeencourages the creation, development andexpansion of foreign markets for Australianexports. It provides assistance to small andmedium-sized Australian exporters by repayingpart of their overseas promotional expenses.

The scheme targets SMEs, with 66 per cent ofrecipients reporting turnovers of less than $5 million. Applicants may qualify for up to 50 per cent reimbursement of eligible exportmarketing expenses above $15 000 a year, to amaximum of $200 000 a year.

The scheme received 3 400 applications for EMDGgrants in the 2000–01 grant year, a five per centincrease from the previous year, and the highestnumber of applicants since the scheme design waschanged in 1996–97.

FINANCING EXPORT ACTIVITY

A YEAR IN THE LIFE OF EMDG

In 2000–01, the EMDG scheme:

• distributed grants to the value of $134.6 million to 2 886 businesses;

• targeted small business by paying 66 per cent of all grants to businesses with turnovers lessthan $5 million;

• paid 688 new grant recipients;

• paid grants to businesses, which generated assessed exports worth $4.4 billion and employed117 220 Australians;

• paid an average grant of $46 000;

• paid grants to recipients who generated an estimated 52 000 jobs attributable to their exports;

• paid 21 per cent of grants to non-metropolitan businesses; and

• received an 86 per cent satisfaction rating from its clients.

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GOVERNMENT EXTENDS EMDG SCHEME

In the May 2001 Federal Budget, Minister Vaileannounced the extension of the EMDG scheme fora further five years and a number of changesdesigned to improve the operation andaccessibility of the scheme.

The announcement followed a comprehensivereview of the scheme in 1999–2000 by the Board ofAustrade – featuring broad industry consultationand independent analysis by Professor Bewley ofthe University of New South Wales. The reviewreported that the scheme was an effective way toencourage Australia’s smaller businesses intoexport, and recommended the scheme be extendedfor another five years. Professor Bewley concludedthat “in 1997–98, $133.7 million provided in grantsresulted in $135 million in additional exportpromotion and this resulted in an estimated $1.69billion in additional exports for Australia.”

The Government accepted the majority of thereview’s recommendations, and in June 2001,legislation was passed that amended the ExportMarket Development Grants Act. The mainelements of the new EMDG scheme will be:

• extension of EMDG until 2005–06, with areview to be completed by 30 June 2005;

• removal of the restriction that consultants mustbe short-term only, and the merging andcapping of the overseas representation andconsultants categories;

• broadening of the trade fairs category toinclude expenses such as seminar costs and in-store promotions;

• reduction in the period that a family membermust be employed in a business before theirtravel expenses are eligible;

• removal of the requirement that intending first-time claimants must register with Austradebefore applying for a grant;

• provision for the payment of EMDG grants tobusinesses that promote attendance by foreignresidents at conferences, meetings and otherevents held in Australia;

• extension of the range of export promotionalexpenses eligible under EMDG to includetransport, accommodation and meal expensesincurred in relation to the visits of overseasbuyers or potential overseas buyers to Australia;and

• The minimum threshold for companies to accessthe EMDG scheme has been reduced from $20 000 to $15 000.

To assist small business, the Government willcommit a further $1.6 million over four years toincreasing the minimum grant payment, taking itfrom $2 500 to $5 000. More than 250 smallbusinesses will benefit from the increasedminimum grant and the lower threshold each year.

EFIC credit insurance andtrade finance

The Export Finance and Insurance Corporation(EFIC) is Australia’s export credit agency. EFICoffers a range of export credit insurance andexport finance services that help to expand anddiversify Australian exports, develop newmarkets and facilitate investment by Australiancompanies overseas. The ability to offer creditterms can mean the difference between winningand losing a contract, and access to competitivetrade finance services can be especially importantwhen exporting to new buyers and buyers inriskier markets. Export credit insurance can alsobe important for exporters seeking access to bank finance.

The Government seeks to ensure that Australianexporters and investors have access tointernationally competitive export financeservices. Through EFIC, the Government providesexporters with services that may not beconsistently available from commercial markets,and access to official support similar to thatprovided by foreign governments.

Most of EFIC’s financial services are provided onits Commercial Account. In managing this

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business, EFIC operates on commercial principlesand is expected to be financially self-sustaining.EFIC also manages the National Interest Account,where the Minister can direct EFIC to enter intotransactions with the Government assuming therisk of payment default. National Interest supportusually involves transactions where EFIC andother commercial providers consider the risk toohigh or the exposure too large for a company tocarry in the normal course of business.

During 2000–01, EFIC supported exports totalling$6.7 billion on its Commercial Account. EFIC’scredit insurance supported around $6.4 billion,with export finance contributing $341 million ofthis total. During 2000–01, the National InterestAccount supported $116 million worth of exports.Demand for National Interest Account facilitieswas lower in 2000–01, reflecting the increased

willingness of the private sector to covertransactions that have traditionally receivedNational Interest Account support. Most of theNational Interest support provided during theyear was for the export of wheat.

The availability of credit insurance and tradefinance from EFIC will continue to be important toAustralian exporters and investors in increasinglyuncertain economic times. The events of 11 September 2001, coupled with a deterioratinginternational economy, have made a heavy impacton the insurance industry. The heightened riskenvironment could see an increase in claims and asubsequent increase in costs for companies seekingtrade finance services.

MANILA NORTH LUZON TOLLWAY PROJECT – EXPORT FINANCE AT WORK

Leighton Contractors (Asia) Limited was awarded a contract with Manila North TollwayCorporation (MNTC) for upgrading and widening the North Luzon Expressway in the Philippines inJuly 2001. The contract is worth more than US$150 million.

EFIC participated in the extensive financing arrangements for the project. EFIC worked closelywith the Asian Development Bank (ADB), the International Finance Corporation, the MultilateralInvestment Guarantee Agency, French credit insurer Coface (acting on behalf of the FrenchGovernment) and a consortium of commercial banks. The project is being funded by US$117.5 million equity and US$253.5 million debt.

This is the first major project in which EFIC has participated as co-financier with the ADB. It is also the first time that such a diverse group of multilateral lenders, export credit agencies,commercial banks and risk insurance agencies have come together to fund a project in thePhilippines. The sponsors of MNTC include the Lopez Group, Group Egis of France and thePhilippine National Construction Corporation.

According to Leighton Asia CEO John Faulkner, ‘The Tollway financing was never going to be easyto arrange. EFIC was one of the keys in getting the financing in place. This is our largest project todate in the Philippines.’

When completed, the project will significantly boost industrial development in Bulacan andPampanga and the Clark Special Economic Zone by providing a world-class toll road linking theareas to Metro Manila.

A NEW ALLIANCE BETWEEN EFIC &NCM CREDIT INSURANCE

The Government is committed to developing acompetitive trade finance market in Australia toensure that the requirements of Australianexporters are catered for. In early 2001, EFICestablished a credit insurance alliance with aworld-leading export credit insurer, the NCMGroup. The establishment of this allianceimplemented a Government decision arising outof the 2000 Review of Export Credit and Finance Services.

The new NCM/EFIC alliance offers significantbenefits for Australian exporters through strongercredit insurance operations and market intelligenceservices, and represents a major development inthe Australian export credit insurance market.NCM has a worldwide integrated informationtechnology platform that provides sophisticatedglobal underwriting processes and products. In 2000, NCM underwrote shipments of about $300 billion worldwide. It has a buyer database of 30 million buyers and the scale of businessnecessary to generate financial resources neededfor the global networks, IT databases and e-commerce products increasingly characterisingthe export credit insurance industry. The alliancewill enable EFIC clients to access the world-classservices offered by NCM. It will also offer othertrade receivables services such as debt collection,factoring, guarantees, financial solutions (including securitisations) and interim creditmanagement services.

The alliance is expected to operate for two years,during which time NCM will be required todemonstrate its ability to improve credit insuranceservices to Australian exporters in the rapidlyevolving credit insurance market. Once this hasbeen demonstrated to the Government’ssatisfaction, NCM will assume responsibility forthose areas of EFIC’s credit insurance businesswhich it is better placed to provide to Australianexporters.

The National Interest Account and EFIC’s mediumto long-term export finance business will not beaffected by the alliance. EFIC will continue tosupport exporters in times of trading difficultysuch as the 1997 East Asian economic crisis.

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Government–businessconsultation

The Government recognises the value of closeconsultation with the business community, Stateand Territory Governments and communitygroups in coordinating, developing andadvancing Australia’s trade objectives. Advicefrom the business community and other partieson barriers or impediments to accessing new orexisting markets is crucial to the Government’strade negotiating strategy and for building astrong export sector.

Following the launch of the Doha Round, theGovernment is reviewing its consultativeprocesses with industry to ensure that Australia’scommercial interests are fully represented in thosenegotiations. In addition to the measures outlinedin the following box, the Government has decidedto hold a series of business roundtables on tradeand trade policy issues in capital cities in 2002.The decision reflects the importance theGovernment places on business views and willfurther strengthen the consultation process.

FORMAL CONSULTATIVE MECHANISMS

National Trade Consultations

The National Trade Consultations processprovides for consultation, coordination andcollaboration on trade and investment issuesbetween the Commonwealth, State and TerritoryGovernments and major industry associations.The consultations occur in two forums: an annualmeeting, chaired by the Minister for Trade, ofAustralian ministers responsible for trade; andbiannual inter-sessional consultations betweensenior government officials and representatives ofpeak industry associations. At the Ministerialmeeting held in Darwin in June 2001, Ministersdiscussed WTO issues and developments inbilateral negotiations and were addressed by theIndonesian Minister for Trade and Industry.

Trade Policy Advisory Council

The Trade Policy Advisory Council is the TradeMinister’s pre-eminent source of advice from theAustralian business community on trade andinvestment issues. Its membership comprises 13 senior business representatives from major

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The July 2001 National Trade ConsultationsMinisterial Meeting inDarwin. From left to right:The Hon Tom Barton, MP;The Hon Sandra Nori MP;The Hon Daryl Manzie, MLA;The Hon Mark Vaile MP; HE General Luhut, formerIndonesian Minister for Trade and Industry; The Hon John Olsen, MP; The Hon Ken Travers MLC;and Mr Steve Kons, MHA.

Australian companies involved in exportingservices, manufactures, agricultural products andminerals. Members are appointed in a personalcapacity and provide the Minister with advicebased on a unique blend of commercial expertiseand experience. At meetings held in 2001,members discussed a wide range of trade andtrade-related issues including WTO, regional andbilateral developments, information technologyissues and global commercial consolidation.

WTO Advisory Group

The WTO Advisory Group is a formal consultativebody to the Government on multilateral tradepolicy. Its key objectives are to: provide expertviews to the Government on WTO-related issuesof concern to the community; work with businessand the non-government organisation (NGO)community to build appropriate trade policies andshape the direction of Australia’s WTO activities;and access new ideas and approaches toaddressing trade policy issues surroundingAustralia’s involvement with the WTO.

Agricultural Trade Consultative Group

The Agricultural Trade Consultative Group (ATCG)provides a formal high-level government–industrymechanism that consults on a range of agriculturalreform and trade issues, particularly in the contextof WTO agriculture negotiations. ATCG meetingsare chaired jointly by the Minister for Trade and theMinister for Agriculture, Fisheries and Forestry, andits membership comprises senior representativesfrom major agricultural industry organisations. A sub-group of the ATCG met frequently during the second half of 2001 to coordinategovernment–industry activities in relation to the US Farm Bill.

Automotive Trade Council

The Automotive Trade Council, co-chaired byMinister for Trade Mark Vaile and Minister forIndustry, Tourism and Resources Ian Macfarlane,provides a high-level forum for business andgovernment to work together in providingstrategic direction and management of the

Government’s Automotive Trade Strategy –particularly market development and accessissues. The business representatives on theCouncil comprise ten senior executives fromvehicle and component manufacturers.

Electric Energy Industry Export Council

Minister for Trade Mark Vaile and Minister forIndustry, Tourism and Resources Ian Macfarlaneparticipate in meetings of the Electric EnergyIndustry Export Council which is comprised of 12 senior industry representatives. The council usesinformation gathered through the Department’snetwork of overseas posts and other sources todevelop strategies for expanding electric energyexports to target markets, in particular Vietnam,Saudi Arabia, Thailand and Malaysia.

APEC Australian Business Forum

In April 2001, the annual APEC AustralianBusiness Forum was held in Melbourne with thetheme of ‘Business and Policy Strategies in theAsia-Pacific’. The forum brought together 160 leading business people and governmentofficials to discuss how APEC can help lowerbusiness costs in the region. The forum includedindustry-government focus groups on finance,manufacturing and e-commerce, as well as a paneldiscussion involving Minister for Trade Mark Vaile.

Export Advisory Panels

Export Advisory Panels are one of themechanisms that Austrade employs to seek advicefrom key sectors of Australian industry tosupplement the daily contact between Austradeand industry through its advisory service, acrossits global network and through regular contactwith relevant industry associations.

The panels bring together Austrade’s seniorexecutives and senior representatives of keyindustry sectors. They were established to:

• discuss and provide strategic advice on thedirections and priorities for Austrade’s efforts inparticular industry sectors;

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• consider and recommend options for improvingcoordination between Austrade andparticipating industry sectors on internationalmarketing activities;

• recommend avenues for building internationalbusiness linkages;

• provide strategic advice on opportunities forAustrade to add value to the industry’s currentinternational initiatives;

• allow industry to express broader views onGovernment policy as it affects internationalbusiness.

State and territorygovernment trade promotionactivities

State and territory governments offer services tohelp firms based in their states to export.

Their activities include assessing export readiness,helping local firms identify markets and developexport strategies, working with companies toidentify agents, distributors, joint venture partnersand investors, facilitating incoming trade missionsand arranging trade missions to internationalmarkets. State and territory governments alsofacilitate attraction of international investment tosupport local industry. A number of state andterritory governments maintain trade andinvestment offices in key overseas markets.

Federal, state and territory governmentscoordinate their programs, so they support eachother and use trade promotion resources aseffectively as possible. For example, Export Accessand TradeStart programs involve the federal, stateand territory governments combining theirresources to offer services to exporters.

Australian Capital Territory – The ChiefMinister’s Department is the lead agency for allbusiness development and support activities theACT Government undertakes. Key export sectors

include education, information technologyservices and defence technology.

New South Wales – The NSW Department ofState and Regional Development is responsible forpromoting NSW exports and attracting corporateinvestment. NSW is particularly focused onpromoting Sydney to firms interested inexpanding operations in the Asia Pacific.

Northern Territory – The Department ofBusiness, Industry and Resource Developmentincorporates the Government’s Asian relations,trade development, primary industries, fisheries,minerals and energy responsibilities.

Queensland – The Queensland Department ofState Development is the central entry point forQueensland government-to-business services. TheDepartment is leading Queensland’s ExportSolutions strategy, which seeks to boost thenumber of exporters and the value of knowledge-intensive exports over the next five years.

South Australia – The Department of Industryand Trade is South Australia’s prime agencyresponsible for trade and investment attraction, aswell as facilitating reinvestment in the State.

Tasmania – The Trade and Marketing businessunit of the Department of State Development isTasmania’s main trade facilitation agency,focusing on Tasmania’s main export markets inNorth Asia.

Victoria – The Department of State and RegionalDevelopment has a key role in building adevelopment climate that attracts investment andpromotes trade. Victoria has a special focus onhigh-tech manufacturing and knowledge-basedindustries.

Western Australia – The Department of Industryand Technology is responsible for maximising WAindustry development and trade opportunities. Anumber of specialist industry teams have beencreated to develop new and existing sectors.

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Growing international demandfor Australian products

The Government also works closely with industryon many specific market-based and sectoralinitiatives. Alliances between government andprivate sector groups and industry associationswill play an integral role in the Government’sstrategy for doubling the number of exporters by2006. Austrade’s relationship with local chambersof commerce, development boards and industryassociations has, for example, facilitated deliveryof the TradeStart and Export Access programs

direct to local exporting business. The effectivenessof this network reflects the importance of ensuringthat the trade and investment strategies andactivities of Australian governments arecoordinated and reflect the needs and priorities of the business community.

The Government’s Industry Action Agendaprocess provides several examples of industryand government working in partnership toidentify opportunities and examine impedimentsto sustainable industry development and exportgrowth. The National Food Industry Strategy isone example.

NATIONAL FOOD INDUSTRY STRATEGY:GOVERNMENT/INDUSTRY PARTNERSHIP IN ACTION

The processed food and beverages sector is Australia’s largest manufacturing sector, generating agrowing trade surplus now worth $11 billion annually and employing more than 200 000 people.While demand for, and trade in, agrifood products is increasing, Australia must respond to therapid changes now occurring in the global food market.

During 2001, the Government worked with the food industry to develop an action plan to increaseinternational market share, achieve greater profitability and generate increased job opportunities,with a particular focus on rural and regional areas. The key elements of the five-year, $100 millionNational Food Industry Strategy announced by the Government in September 2001 are:

• a high-level, government–industry council to oversee the development of the industry and theimplementation of the strategy;

• a product and service innovation strategy aimed at enabling superior innovation by Australian-based firms;

• an initiative to develop and implement an international food market entry strategy with a focuson market access, trade development and promotion; and

• a strategy to build more competitive supply chains and improve national food safety and quality systems.

The new National Food Industry Council will build on the Prime Minister’s successful Supermarketto Asia Council, but include a more broadly based membership and a global mandate. Achievingincreased exports and greater market access requires an integrated approach to target keymarkets, coordinated Commonwealth and State programs and increased resources for marketaccess and trade development. The National Food Industry Strategy food trade initiative will bedriven by a food export committee of industry and Government representatives, aligned with theState Food Councils. The committee will also play a role in ensuring that Australia’s responses toissues such as quarantine and food safety take appropriate account of the nation’s trade interests.

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Australian Trade Commission, Why Australia Needs Exports: The Economic Case for Exporting, 2000.

Australian Trade Commission, Knowing and Growing the Exporter Community, April 2002.

Australian Bureau of Statistics, Business Longitudinal Study, Confidentialised Unit Record File, 1994-95, 1995-96, 1996-97, 1997-98, 12 June 2000.

PricewaterhouseCoopers, Review of the Export Market Development Grants Scheme – including the econometricanalysis, April 2000.

Department of Foreign Affairs and Trade, The Big End of Town and Australia’s Trading Interests, 2002.

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NEED TO KNOW MORE?

Information on the full range of Austrade programs and services is available atwww.austrade.gov.au or by calling 13 28 78.

The PricewaterhouseCoopers April 2000 report on the EMDG scheme is an appendix to a reportentitled Review of the Export Market Development Grants Scheme prepared by the AustradeBoard. This is publicly accessible at http://www2.austrade.gov.au/toolbar/publication/Clients/EMDG_Scheme_Review_(Summary).pdf

Information on the full range of government trade consultations is available at www.dfat.gov.au/trade

EFIC has a homepage outlining its programs and services at www.efic.gov.au

For more information on the activities of State and Territory Governments see:

ACT www.business.act.gov.au NSW www.smallbiz.nsw.gov.au

NT www.dbird.nt.gov.au QLD www.statedevelopment.qld.gov.au

SA www.dit.sa.gov.au TAS www.dsd.tas.gov.au

VIC www.dsrd.vic.gov.au WA www.indtech.wa.gov.au

More information on the National Food Industry Strategy can be found atwww.affa.gov.au/ministers/truss/releases/01/01269wtj.htm

AUSTRALIA’S TRADEPERFORMANCE IN 2001

A COMPETITIVE EXCHANGE RATE AND STRONG

ECONOMY MEAN AUSTRALIA CONTINUES TO

OUTPERFORM ITS COMPETITORS

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• The value of Australia’s exports of goods and services increased by 8 per cent in2001, aided by a very competitive Australian dollar and strong prices in keycommodity markets.

• Australia’s strong export performance saw it record a $2.7 billion trade surplus in2001, a turnaround of $10.1 billion on the $7.4 billion deficit recorded in 2000.

• Exports to China, the European Union and the United States experienced significantrises of 26 per cent, 18 per cent and 8 per cent respectively. Other stronglyimproving export markets were Saudi Arabia (up 66 per cent), Mexico (up 20 percent) and Egypt (up 34 per cent). Export growth slowed across the board in the lastquarter of 2001, in line with the global slowdown.

• Merchandise exports rose 11 per cent in 2001. Key performers included coal,petroleum, bovine meat and automotive products. Exports of elaboratelytransformed manufactures grew by 10 per cent.

• Following the Sydney Olympic Games peaks of 2000, services exports fell by 1.5 percent in 2001. Services now comprise 20 per cent of total exports.

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2001 was another positive year for Australianexporters, despite the economic downturnexperienced by most major trading partners.

A very competitive Australian dollar helpedunderpin robust growth in export volumes. Strongprices in key commodity markets also helpedboost Australian dollar prices received for exports,contributing significantly to economic growth in2001. However, the pace of export growth has beenslowing. It is likely to slow further into 2002 asglobal demand remains suppressed as a result ofthe world economic downturn.

The value of Australia’s exports of goods andservices increased by 8 per cent to $154 billion in2001. This performance builds on the record 25 percent growth recorded in 2000. Export volumes roseby 1 per cent, while the prices received for exportsrose 7 per cent. Exports to all major tradingpartners grew strongly, with exports to China,

the European Union and the United Statesexperiencing particularly strong rises of 26, 18 and8 per cent respectively. Other strongly improvingexport markets were Saudi Arabia (up 66 per cent),Mexico (up 20 per cent) and Egypt (up 34 percent). Export growth slowed across the board inthe last quarter of 2001, in line with the globalslowdown.

Australia’s strong export performance saw itrecord a $2.7 billion trade surplus in 2001. Thisrepresents a turnaround of $10.1 billion on the$7.4 billion deficit recorded in 2000. The strengthin exports through 2001 has also resulted in anarrowing of the current account deficit to 2.6 percent of GDP from nearly 6 per cent in 1999.

75A u s t r a l i a ’s Tr a d e P e r f o r m a n c e i n 2 0 0 1

AUSTRALIA’S BALANCE OF TRADE 2001

Source: Australian Bureau of Statistics, Cat. No. 5368.0, December 2001

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Export performance –composition

Merchandise exports performed well in 2001. Ona recorded trade basis, primary product exportsgrew most strongly, increasing by 12 per cent to$72.3 billion, underpinned by strong growth inmeat and coal exports. Primary products made up47 per cent of Australian exports in 2001. Exportsin manufactures rose by 8 per cent to $38 billion,which is in line with the average annual growth ofthe past five years. Within this, simplytransformed manufactures (STMs) and elaboratelytransformed manufactures (ETMs) grew by 4 percent and 10 per cent respectively. Manufacturesnow compose 25 per cent of total exports.

Exports of services fell 1.5 per cent to $31 billionin 2001. Service exports now make up 20 per centof total exports. Excluding the impact of theSydney Olympic Games on 2000 figures, servicesexports rose by 3.7 per cent in 2001. A 9 per centincrease in transportation services and a smallincrease in travel services was offset by a 15 percent fall in other service exports in 2001.Reflecting the events of 11 September, short-termoverseas visitor arrivals fell sharply in the lastquarter of 2001. Travel service exports will beweaker as a result.

KEY 2001 TRADE OUTCOMES

GOODS AND SERVICES EXPORTS

Australian goods and services exports totalled $154 billion in 2001.

• Merchandise exports rose 11 per cent to $123 billion. Key performers included coal, petroleum,bovine meat and automotive products.

• Services exports fell by 1.5 per cent, following Sydney Olympics peaks in 2000, to $31 billion.Transportation services continued to grow strongly.

GOODS AND SERVICES IMPORTS

Australia’s goods and services imports totalled $152 billion in 2001.

• Merchandise imports rose by 1 per cent to $119 billion.

• Services imports rose by 4 per cent to $32 billion.

TRADE BALANCE

Australia recorded a trade surplus of $2.7 billion in 2001, a turnaround on the deficit of $7.4 billionrecorded in 2000.

• Merchandise trade recorded a surplus of $4.0 billion.

• Services trade recorded a deficit of $1.2 billion.

Export performance –direction

Exports to most of Australia’s major tradingpartners experienced strong growth in 2001.Merchandise exports grew 18 per cent to theEuropean Union, 8 per cent to the United States,9 per cent to Japan and 2 per cent to South-East Asia.

Total merchandise exports to East Asia grew by7.6 per cent in 2001, though growth began tosoften towards the end of the year as demandweakened in the face of slowing global growth.Exports to major North-East Asian tradingpartners were mostly strong: exports to Chinarose by 26 per cent, with significant increases inwool, iron ore and copper ore; exports to HongKong grew by 17 per cent; and exports to Japan

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EXPORT PERFORMANCE BY CATEGORY

Source: ABS Cat. No. 5368.0, December 2001 and ABS Recorded Trade data on DFAT STARS databse

DIRECTION OF MERCHANDISE EXPORTS

Source: ABS Recorded Trade data in DFAT STARS Database

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rose by 9 per cent, principally in the coal,aluminium and meat sectors. Exports to theRepublic of Korea were a little softer, up 5 percent (mainly coal, cotton and iron ore). Exports toSouth-East Asia were mixed: strong growth inexports to Thailand (up 17 per cent) andIndonesia (up 11 per cent), was partly offset byfalls in exports to Singapore by 9 per cent and thePhilippines by 14 per cent.

Merchandise exports to the United States,Australia’s second-largest individual market afterJapan, increased by 8 per cent, on the back ofhigher beef, medicaments and aluminium exports.

Merchandise exports to the European Union alsorecorded strong growth, increasing 18 per cent in2001. Main contributors underpinning this increaseincluded coal, non-monetary gold and wine.

TRADE WINS IN 2001

Throughout 2001, the Australian Government secured many breakthroughs on the market access front.

UNITED STATES

In November 2001, the United States removed the tariff quota arrangement it imposed in July 1999 torestrict competitive Australian lamb exports, reverting to the previous tariff of 0.7c/kg. This outcomevindicated the strong stance the Government and industry had taken to prosecute Australia’s traderights in the WTO’s dispute settlement system.

POLAND

The Polish Government decision to lower the tariff on non-EU high-quality furniture leather bymore than half from 7 to 3 per cent was welcome news for Australian leather producers andcreated greater opportunities for competitive leather exports to this market. The decision followsintensive lobbying by the Australian Government and removes the unfair advantage enjoyed bytanned cow leather imports from some European countries.

VIETNAM

A consortium of Australian and Chinese companies has signed a contract with the VietnameseGovernment to build a 40 000-seat sports stadium in Hanoi for the 2003 South-East Asian Games.The consortium includes sport infrastructure architectural firm Bligh Voller Neild, one of the chiefdesigners for Stadium Australia, engineers Connell Wagner and Flack & Kurtz Australia and the biddirector, Australian consultancy The Linden Group. The $100 million contract was signed in August2001. The Australian Government assisted the bid through representations to the VietnameseGovernment during the tender process, and through the Government’s Sports Linkages Program,which demonstrated Australia’s expertise in sports and infrastructure to Vietnamese officials.

MEXICO

A contract was signed in May 2001 for the sale of Australian coal to Mexico worth nearly $100 million. The buyer, Mexico’s Federal Electricity Commission, has an annual coal requirementof five million tonnes. This initial contract put the Australian coal industry in a good position to winfuture contracts in Mexico.

ABS Cat. No. 5368.0 International Trade in Goods and Services, Australia, December 2001.

ABS Cat. No. 5302.0 December Quarter 2001.

ABS Cat No. 3401.0. Overseas arrivals and departures, December 2001.

ABS Recorded Trade data on DFAT STARS database. Please note, export composition data is providedon a recorded trade, not balance of payments, basis to facilitate disaggregation of manufactures to STMsand ETMs.

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REFERENCES

NEED TO KNOW MORE?

Access statistical publications from the Department of Foreign Affairs and Trade atwww.dfat.gov.au/publications/statistics.html, including:

• Australia’s Composition of Trade

• Direction of Trade, Time Series 2000-01 One Hundred Years of Trade

• Direction of Trade, Time Series

• Economics and Trade Statistics Card

• Australian Basic Trade Statistics

• Exports of Primary and Manufactured Products

• Trade in Services

• Exports of Major Commodities, Time Series

• The APEC Region, Trade and Investment

• Australia’s Trade with the European Union

• Trade with the Americas.

DFAT also provides a monthly update on Australia’s merchandise trade with East Asia atwww.dfat.gov.au/geo/sea/fin_cri/index.html

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THE INTERNATIONALOUTLOOK

INTERNATIONAL MARKETS ARE OUR MOST

IMPORTANT SOURCE OF NEW GROWTH

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• The three major global economies (the United States, Japan and the EuropeanUnion) remain subdued after a synchronised downturn – making the currentsituation worse in terms of global impact than the East Asian crisis of 1997-98.

• The world economy was already slowing markedly prior to 11 September. The USeconomy officially went into recession from March 2001; Japan continues to beplagued by a bad debt-laden banking sector and the slow pace of reform; and theEuropean Union has suffered from the US slowdown, high oil prices earlier in 2001and a marked drop-off in business investment and consumer spending.

• The terrorist attacks further undermined business and consumer confidence.However, world governments responded quickly with fiscal and monetary policymeasures. World interest rates are at 30-year lows.

• Weak US growth flowed through to the world economy via slowing US imports,particularly in the electronics and technology sectors. This severely affected theexport-dependent economies of East Asia and Latin America. South-East Asia grewat only 1.5 per cent and most Middle Eastern countries also suffered.

• Larger economies such as India and China were cushioned by more resilientdomestic demand and, in the case of China, strong growth in governmentinfrastructure investment. China’s WTO accession should ensure continuing highlevels of FDI and increased efficiency through exposure of domestic Chinese firmsto more intense competition from foreign entrants.

• World growth for 2002 is forecast at 2.4 per cent, down from 4.7 per cent in 2000. It is likely to return to the long-run average of between 3 and 4 per cent in 2003.

• Australia’s strong fundamentals, competitive currency and resilient domesticdemand, position it well to ride out the downturn. The IMF forecasts GDP growth of3.3 per cent for Australia in 2002, the highest for any developed economy.

• Opportunities exist in all Australia’s key markets: United States (ICT and food andbeverage); Japan (clean, green foods and lifestyle products); China (WTO accessionrelated opportunities, financial and social welfare services and the Olympics); Korea(automotive components and professional services); New Zealand (infrastructureand strategic alliances in biotechnology); European Union (automotive components,new economy industries and education) and ASEAN (infrastructure, automotivecomponents and processed food and beverages).

• Emerging opportunities in newer markets include: the Middle East (automobiles,commodities and education and health services); Latin America (mining servicesand equipment); Eastern Europe (processed foods, medical equipment and healthand education services) and India (ICT, fibres and textiles, energy, a range ofservices and film production).

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The world economic performance deterioratedmarkedly in the second half of 2001 and remainssubdued, with estimated world growth reviseddown to 2.4 per cent following growth of 4.7 percent in 2000. While 2001 growth levels were stillabove those recorded in the recession of the early1990s, the current situation is worse than thatexperienced following the East Asian financialcrisis of 1997–98. This is not surprising given thesynchronised downturn in the three major globaleconomies – the United States, Japan and theEuropean Union – which, with the exception ofJapan, were relatively untouched by the 1997–98 crisis.

The world economy was already slowingmarkedly prior to 11 September, however theterrorist attacks further undermined the fragilestate of business and consumer confidence. World governments responded quickly to theseevents with fiscal and monetary policy measuresdesigned to restore spending and confidence.World interest rates are at 30-year lows, and majoreconomies such as the United States and Japanhave announced supplementary fiscal stimuluspackages in addition to looser monetary policystances. The scope and speed of the global policyreaction has mitigated the slowdown, particularlyin the United States where the Federal Reserve hasbeen cutting official interest rates repeatedly sinceearly 2001. World growth for 2002 is also forecast at2.4 per cent and is likely to return to near the long-run average of between 3 and 4 per cent in 2003.

World financial markets fell sharply after theterrorist attacks, but rebounded relatively quicklyand are now at levels comparable to those before 11 September, with the exception of airline,hospitality and insurance stocks which remain

subdued. The bond market surged following theattacks as expectations of growth faltered, but hasmore recently fallen back to pre-September levels.

Weak US growth flowed through to the worldeconomy via slowing US imports, particularly inthe electronics and technology sectors. Falling USdemand for electronics has severely affected theexport-dependent economies of East Asia, withSingapore, Hong Kong and Taiwan experiencingnegative growth in 2001 and growth estimatesrevised down across the region. According toConsensus Economics estimates, non-JapanNorth-East Asia (China, South Korea, Hong Kongand Taiwan), grew at a rate of 3.7 per cent in 2001,well down on the 8.1 per cent growth recorded in2000. South-East Asia (Indonesia, Singapore,Malaysia, Thailand and the Philippines) grew at1.5 per cent in 2001, also well down on 2000growth of 5.8 per cent. Larger economies such asIndia and China have been cushioned from theslowdown by more resilient domestic demand,but were not unaffected. Many Asiangovernments are constrained in their availablepolicy responses, either by pegged currencies(Malaysia) or by high inflation and high levels ofgovernment debt (Indonesia and the Philippines).

The price of oil remains low at around US$18 abarrel, roughly half the November 2000 price. The lower price reflects expectations that slowerglobal growth will reduce the demand for energygenerally; significant decreases in demand foraviation fuel following 11 September (aviationfuel accounts for around 10 per cent of total crudeoil production); and OPEC’s limited success inconvincing Russia and other non-members of thecartel to cut production. Low world oil prices willaid economic growth by reducing costs to

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WORLD ECONOMIC PERFORMANCE

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business and freeing up disposable income forconsumption. However, should the price of oilrise significantly because of either action by OPECor an increase in global tensions, global recoveryin 2002 would be at risk.

In the face of the major global economicslowdown, the Australian economy grew by anexceptionally strong 1.3 per cent in the Decemberquarter and by 4.1 per cent through the year toDecember 2001. By comparison, the OECDaverage growth over the same period was lessthan 0.5 per cent. A fall in net exports subtracted0.7 per cent from growth in 2001 – reflecting bothlower exports (particularly a decline in inboundtourism and some rural exports) and higherimports. Australia’s strong economicfundamentals, extremely competitive currencyand resilient domestic demand mean that it iswell placed to ride out the global downturn. Thisis reflected in the International Monetary Fund’sDecember 2001 World Economic Outlook, whichforecast GDP growth of 3.3 per cent for Australiain 2002, the highest of any developed economy.

Japan

ECONOMIC OUTLOOK

Japan’s economy contracted by 0.4 per cent in2001 and is forecast to contract by a further 1.0 percent in 2002. The global correction in the high-techsector and falling demand from major tradingpartners contributed to this downturn, reducingexports, industrial production and investment.Private consumption also remains weak.Bankruptcies are likely to continue rising, giventhe high proportion of non-performing loans inthe banking sector and rising unemployment. In 2001, some 160 000 bankruptcies were filed –the highest on record and the seventh consecutiveyear of increases.

Policy responses have been limited – the Koizumi administration has announced twosupplementary budgets, only the first of whichcan be funded within the 30 trillion yen ($480 billion) government-imposed limit onborrowing for the Japanese fiscal year to March2002. The second package, valued at 2.5 trillionyen ($40 billion) will instead be financed by thesale of Nippon Telegraph and Telephone (NTT).Monetary easing is not possible, as nominalinterest rates are already close to zero.

2001 saw Japan downgraded by the world’s majorcredit rating agencies, reflecting decreasedconfidence in Japan’s ability to service its publicsector debt, which has risen to 142 per cent ofGDP. In December 2001, Standard & Poors furtherdowngraded Japan’s government debt from AA+to AA, placing it alongside Italy at the bottom ofcredit ratings for the industrialised countries. InNovember, Japanese government bonds were alsodowngraded by the international rating agencyFitch IBCA to AA.

Reform of the Japanese economy remains crucialto Japan’s medium to long-term economicprospects. Addressing the continuing problem ofnon-performing loans in the banking sector willbe key to restoring health to that sector andencouraging further corporate restructuring.There has also been limited progress in theGovernment’s privatisation program to date.Prime Minister Koizumi has expressed hisintention to focus on reform, but progress hasbeen slow. Japanese growth is likely to beconstrained by these structural problems and acontracting working-age population for the shortto medium term.

TRADE AND INVESTMENT WITHAUSTRALIA

Japan remains the second-largest economy in theworld, and Australia’s most important tradingpartner. Australia’s merchandise exports to Japangrew 9 per cent to $23.7 billion in 2001. The growthin Australia’s exports to Japan, despite the Japaneseeconomic downturn, is due mostly to increaseddemand for Australia’s mineral commodities,particularly coal. Japan’s energy demand is

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AUSTRALIA’S KEY MARKETS: OUTLOOK AND OPPORTUNITIES

Minister for Trade Mark Vaile promoting Australian cheese ata Jusco supermarket in Japan in June 2001.

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increasing by about 2 per cent per year. The lowvalue of the Australian dollar against the Japaneseyen and the US dollar was also a contributingfactor to the growth in exports. The largestAustralian merchandise exports to Japan in 2001were coal ($5.7 billion), iron ore ($2.2 billion),aluminium ($1.7 billion) and beef ($1.7 billion).Merchandise imports from Japan were down 0.4 per cent to $15.3 billion.

Japan is Australia’s third-largest market forservices, with $3.5 billion of exports in 2000.Tourism and transport exports dominate thesector. A total of 681 300 Japanese tourists visitedAustralia in 2001. This was a decrease of only 5 per cent on the previous year, despite a sharpfall of almost 20 per cent in October following the11 September terrorist attacks in the United States.

Services imports from Japan were valued at $1.9 billion in 2000 accounting for 6 per cent ofAustralia’s total services imports.

Japanese investment in Australia totalled $49.4 billion in 1999-2000. Japan was Australia’sthird-largest source of foreign investment, withJapanese investments accounting for 6.9 per centof the total. The main sectors attracting Japaneseinvestment in Australia are mining and energy(37.7 per cent), commerce (24.6 per cent),manufacturing (22.9 per cent) and real estate (6.5 per cent).

Japan ranked third as a destination for Australianforeign investment, with outwards investment of$22.8 billion, or 6.1 per cent of the total. Australiawas the sixteenth-largest foreign investor in Japanin 2000-01.

OPPORTUNITIES

Japan continues to be an important market forexports of mineral and agricultural products, andnew opportunities continue to emerge, even aftera decade of economic malaise.

Despite its slow progress, regulatory reform inJapan is strengthening existing markets forAustralian exports, and creating new opportunities.For example, energy reform has increased demandfor Australian coal, LNG and uranium, andreforms in the financial services sector, budget

A GOOD OUTCOME FOR AUSTRALIAN CITRUS EXPORTS

Australia has exported citrus to Japan for more than ten years, but these exports have beensubject to mandatory cold disinfestation treatment (CDT), which eradicates Queensland andMediterranean fruit flies. CDT reduces the temperature of the products to 1.0 degrees Celsius fora period of 16 days (14 days for lemons).

For the past decade CDT has taken place before export. However, in October 2001, followinglengthy negotiations with Japanese authorities and submission of technical data by BiosecurityAustralia, Japan agreed that Australian citrus exports could undergo cold disinfestation in transitto Japan. This will significantly reduce transit time and improve the quality of fruit for sale toJapanese consumers. In-transit disinfestation treatment will begin operation for the 2002 citrusharvest. Product will be shipped to Japan in refrigerated containers and will undergo treatment forthe duration of the journey.

Australia currently exports about 7 500 tonnes of sweet oranges, mandarins and lemons to Japaneach year. Australia exported $18 million worth of citrus to Japan in 2001, up from $4 million a decadeago. Japan is Australia’s fifth-largest market for citrus exports behind Hong Kong, the United States, Malaysia and Singapore. Australia is the fourth-largest supplier of citrus to Japan.

pressures on governments and the aging Japanesepopulation have increased demand for Australianfinancial services. Reform of corporate law, taxationand accounting regulations have also led tosubstantial changes in Japan’s business culture andenvironment, and moves toward the merger,privatisation or abolition of a number of Japan’spublic corporations are also under way.

Australian business is well placed to exploitcontinued reform in areas such as financial,communications, health care and professionalservices and processed food. In May 2001, AMP announced a major investment in Japan totake advantage of the deregulation of the Japanesefinancial services market. AMP entered theJapanese financial services market through a jointventure with NEC, one of Japan’s largesttechnology companies. Total capital invested isexpected to grow to $200 million within five years.

Ongoing efforts to lift Japan’s surprisingly lowlevel of information technology penetrationshould increase opportunities for Australiancompanies in the ICT sector, creating a market forAustralian skills in ICT-related areas such as e-commerce, web design, network design andsupport services.

Many restaurants and fast-food chains arepromoting actively the use of Australian beef ontheir menus following the discovery of BSE (‘mad cow disease’) in Japanese domestic herds.Australian beef sales (valued at $1.73 billion in2001) have held up comparatively well to date andthere may be opportunity for growth on the backof Australia’s clean, green image. Australian GM-free corn and animal and vegetable oils andfats are also preferred over GM products insegments of the market. In 2001, oils and fatsexports grew to $35.4 million, up 35 per cent fromthe previous year. Australian hay exports to Japanreached over 440 000 tonnes, valued at $143 millionin 2001. This further highlights the need forAustralia to maintain and promote its clean, green image in the lucrative Japanese market.

Significant agribusiness opportunities can bedeveloped through close partnership withJapanese investors focused on supplying adiscerning Japanese market. For example, IchigoAustralia recently asked strawberry farmers inHobart to produce a juicier and sweeterstrawberry variety (called ‘Toyonoka’) preferredby Japanese consumers. Leading Japanese hotelsand fruit shops are now stocking the TasmanianToyonoka in preference to other strawberries.Japanese companies have established noodle-making and sake rice production facilities inAustralia to service their customers in Japan.Hokubee Australia will also complete constructionof a meat processing facility in Wauchope, NSWthis year that will produce marbled beef for theJapanese and other export markets.

The Japanese are also developing a more openattitude to foreign consumer products andlifestyles, including a greater awareness of theenvironment, and are increasingly makingconsumer choices based on quality of life andservices for a rapidly aging population. Recentexamples of Australian consumer export successes,which highlight the depth of lifestyle-relatedopportunities that currently exist in Japan, include:

• Australian opal, pearl and diamond exhibitionshave recently increased dramatically, withAustralia becoming the sixth-largest supplier ofjewellery to Japan (approximately $529 million)in 2001.

• Australian personal care products such as bodylotions and cosmetics are selling well in Japan,with exports reaching $9 million in 2001. Alongwith cosmetics and aromatherapy, health foodsuch as propolis products and organic foods arebecoming more popular.

• Australian swimming costumes, hats, workboots, and equestrian goods and clothing aresold in many retail outlets in Japan.

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United States

ECONOMIC OUTLOOK

The US economy has been the primary engine ofworld growth over the past decade. The UnitedStates was slowing from mid-2000 and officiallyentered recession in March 2001 – before theterrible devastations of 11 September. Prior to theattacks most analysts were predicting a relativelyshort lived economic downturn with the economypicking up in the third or fourth quarter of 2001.The downturn was driven largely by a weakeningin consumption and falling business investment,marked by a decline in equipment and softwarepurchases and a sustained reduction in businesscapacity utilisation and inventory liquidation. The events of 11 September and subsequentdevelopments created additional uncertainty andcaused a further decline in consumer and businessconfidence, which delayed the recovery process.

Signals about economic activity in the UnitedStates were unremittingly negative during theAmerican autumn of 2001. But the US economy

has proven to be more resilient and the downturnshallower than initially anticipated. In particular,the household sector has remained a majorstabilising force, despite weakness in the labourmarket. Most analysts have assessed the USeconomy to be at or near its turning point in thefirst quarter of 2002. Nonetheless, the economyfaces significant risks, especially as profits andinvestment remain weak, from possible furtherrises in unemployment and from the effects ofwidespread equity asset price volatility anddeflation over the past two years. US economicactivity is forecast to recover modestly over 2002,with growth likely to be over 1 per cent. However,the United States will not regain its previousmomentum until 2003, when GDP growth of 3 per cent is predicted.

Economic policies are expected to contributestrongly to the anticipated turnaround in the USeconomy. Tax cuts of US$1.35 trillion over tenyears and monetary policy easings, along withhigher public expenditures in the wake of theattacks, have helped to cushion the slowdownand should support activity and confidence.

AUSTRALIA’S TRADE WITH JAPAN

Note: Merchandise trade is measured on a recorded trade basis, while services trade is measured on a balance of payments basis. 2001 service data is not available.

Sources: ABS data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

Additional public spending includes US$15 billionfor airlines, US$40 billion for defence, homelandsecurity and aid for New York, and a stimuluspackage of US$42 billion. The Federal Reserve cutthe indicator federal funds rate from 6.5 per centto 1.75 per cent during 2001 – the lowest rate forsome 40 years. Economic prospects are also beingboosted by low inflation that has been reinforcedby low interest rates and energy prices, althoughproductivity growth is being weighed down byhigher security costs.

TRADE AND INVESTMENT WITHAUSTRALIA

The United States has driven world growththrough its global trade and investment linkages,including with Australia and Australia’s majortrading partners in East Asia. Since the East Asiancurrency crisis and economic slowdown,Australian exports to the United States havegrown faster than to any other major tradingpartner. The United States was Australia’s second-largest trading partner in 2001. It accounts forabout 10 per cent of total Australian exports and isthe source of nearly one-fifth of Australia’simports. The United States will remain a major

market for agriculture and minerals, but will alsobe a growing market for manufactures andservices. However, by the end of 2001, theslowdown in the US economy had begun to bereflected in a fall in Australia’s exports to theUnited States.

Australian merchandise exports to the UnitedStates in 2001 were worth $11.9 billion, 8 per centmore than in 2000, and accounted for nearly one-tenth of Australian merchandise exports.Merchandise imports from the United Stateseased slightly to $21.4 billion in 2001, resulting ina 22 per cent reduction in the merchandise tradedeficit which now stands at $9.5 billion.

Merchandise trade between Australia and theUnited States has become increasingly diversified.Beef, at $1.7 billion in 2001, is Australia’s singlelargest export to the United States, followed by alarge range of manufactured goods, includingwine and motor vehicles and parts. No one sectorof manufactured goods dominates imports fromthe United States.

The United States is Australia’s single mostimportant trading partner for services. WhileAustralia remains a net importer of services from

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GIBBENS PUTS A SPRING INTO EXPORTING

When George Matthew Gibbens established his NSW-based spring-making business, GibbensIndustries (GI), in 1937, he could never have foreseen that 64 years and four generations later thecompany would grow to supply parts for more than 11.5 million vehicles a year in the UnitedStates alone. With George’s grandson, Greg Gibbens, now at the helm, GI exported more than 30 million springs to the United States and across the world in 2000–01.

‘Five years ago I was faced with the most important business decision of my life: expand thebusiness into overseas markets in order to survive, or close shop,’ Mr Gibbens said. Today, GI hasa Detroit office to supply the likes of BMW, Mercedes and Ford in the North American automotiveindustry and has diversified to supply springs for a range of products, including mattresses,electronic components, furniture, white goods and leisure goods.

‘Without exports we couldn’t have invested in the plant equipment needed to keep GibbensIndustries world-competitive.’

‘Today exports are the lifeline of our company and account for approximately 50 per cent of ourrevenue, with export demand increasing by 30 per cent per annum for the last five years,’ he said.

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the United States (with $6.5 billion in servicesimports in 2000), Australia’s services exports wereup 24 per cent in 2000 at $5.7 billion. Transportand travel have been the mainstay of trade inservices, but there has also been a growing tradein finance and computer and information services.

The investment partnership also underpins thelong-term strength of the Australia–US commercialrelationship. The total value of US investment inAustralia amounted to $215 billion in 1999–2000,which represents over one-third of Australia’sinvestment inflow and makes the United StatesAustralia’s second biggest source of investmentafter the European Union. The United States isnow host to over 50 per cent of Australia’s directinvestment overseas, having superseded the UK in1998 as the leading destination for Australian FDI.Australia is the twelfth largest foreign owner of USassets (sixth if the European Union is counted as asingle entity).

OPPORTUNITIES

Market sentiment in the United States hasunderstandably been affected by the events of 11 September. There has been some nationalisticsentiment, including a push to support the localeconomy, but also increased recognition of Australiaas a friend and ally. Visits by Australian suppliershave been well received. However, in the currenteconomic situation, purchasing decisions are beingdriven by cost. Australian suppliers must deliverlow cost, innovative solutions to attract business.

Trade and investment links between the twocountries should be enhanced by a new protocolamending the Australia–United States DoubleTaxation Convention, announced in September2001. The Protocol is a major step in facilitating acompetitive and modern tax treaty network forcompanies located in Australia. Abolishing thewithholding tax on dividends for major Australianpublic companies will benefit the majority ofAustralian corporate groups with US operations.

Austrade has developed pan-American strategiesfocusing on three Australian priorities in the

North and South American markets – food andbeverage, ICT and mining. While the miningstrategy is primarily focused on Latin America,the food and beverage and ICT strategies have astrong emphasis on the US market.

Austrade’s ICT sector strategy identifies particularmarketing opportunities in online tools andcontent management; e-business technologyplatforms and tools; networking technologies; e-government, e-health and e-learning areas;wireless-based applications and data security;security and defence technologies including dataaccess and security, identity verification, andmetal and chemical detection technologies; andopportunities from the outsourcing of corporateR&D processes.

Despite the bursting of the ‘dot com bubble’, theICT sector is still a significant sector in the US economy. The United States remains the keydriver globally behind new ICT trends and take-up. ICT expenditure in the United States in 2000 was around US$444 billion, approximately50 per cent of expected total global ICTexpenditure for the same year. Forty per cent ofUS GDP growth in 2001 came from the high-techsector. The United States and Canada account for35 per cent of the world’s online population (180 million of an estimated 513 millionworldwide), and some 60 per cent of the world’sonline purchases, dominating total dollar value ofonline transactions. North America, and inparticular Silicon Valley, also has the highestglobal concentration of high-tech companies, all rapidly forming alliances with each other togrow and dominate their niche area.

De facto global ICT standards are set in theUnited States. Success in the United States oftensets ICT companies up for global adoption andgrowth. In particular, the credibility of Australiansuppliers in Asian markets is greatly enhanced byprior success in the United States.

Austrade’s food and beverage strategy focuses ongourmet and niche products that can be easilydifferentiated in the competitive North American

market. The success of Australian wine is used asa platform to increase US consumer awareness ofAustralian food products through the dovetailingof food and wine promotions.

The increasingly integrated market of Canada andthe United States spends an estimated total ofUS$900 billion on food. Australia’s presence in themarket has primarily been limited to the steadilygrowing commodities trade, although, increasingly,processed foods and beverages are finding theirway onto US shop shelves. Australia’s alcoholicbeverages, dominated by wine exports, continue tobreak new ground in the US market with exportsales reaching $548 million in 2001 compared tojust $100 million in 1996. Australian suppliers havebenefited from a competitive Australian dollar anda reliable, clean, green image.

Austrade is also implementing specific industrystrategies out of key cities, including:

• film services and entertainment in Los Angeles;

• automotive products and services in Detroitand Los Angeles;

• sports, racing and recreational marine productsand services in Atlanta;

• biotechnology in San Francisco; and

• consultancy services and World Bank and UNprocurement projects in Washington.

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Australian actress Kimberly Davies (left) with Bob Knoter(producer) Andre Greider (Air New Zealand), and David Pratt(Austrade LA Film Advisor), at a reception for over 200 filmindustry executives, part of Austrade’s strategy to promoteAustralia as a key destination for film production.

AUSTRALIA’S TRADE WITH THE UNITED STATES

Note: Merchandise trade is measured on a recorded trade basis, while services trade is measured on a balance of payments basis. 2001 service data is not available.

Sources: ABS data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

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China

ECONOMIC OUTLOOK

The Chinese economy has withstood thedownturn in the global economy reasonably well,despite slowing during 2001. GDP growth for2001, at 7.3 per cent, came in just above theGovernment’s target of 7 per cent, and slightlybelow the 8 per cent growth achieved in 2000.Growth is expected to ease further in 2002 to 6.8 per cent. Export growth slowed sharply duringthe year, but state investment remains theprincipal driving force in the economy. Stronginvestment, strong domestic demand andrelatively low export dependency underpin apositive outlook for the economy in the short term.

High levels of foreign direct investment – whichwill be boosted by China’s WTO accession – areproviding capital, helping exports and exposingdomestic firms to more intense competition fromforeign entrants. China’s accession to the WTO on11 December 2001 will help lock in reforms,provide strong competition for domesticproducers and a wider range of goods andservices for consumers, and broaden exportopportunities for China. Containingunemployment while continuing reform,especially in the financial sector and stateindustry, are essential to the long-term health ofthe Chinese economy, but remain challenges forChinese economic policy-makers.

TRADE AND INVESTMENT WITHAUSTRALIA

The size of and growth of China’s economy ismirrored in the size and growth of trade andinvestment between China and Australia. China isAustralia’s third-largest trading partner, third-largest source of imports, and fourth-largest exportdestination. Adding exports to Hong Kong, asignificant proportion of which enter the Chinamarket, to this total makes the China/Hong Kongmarket Australia’s third-largest. Continuing thestrong growth of recent years, merchandise

exports to China in 2001 totalled $7.6 billion, 26 per cent higher than the same period theprevious year. Merchandise imports from Chinarose by only 14 per cent to $10.3 billion. Australianservices exports to China grew by 26 per cent in2000 reaching $762 million. Services imports fromChina also grew in 2000, reaching $710 million, 19 per cent more than the previous year.

Australian companies are well represented inChina. More than 400 Australian companies areestimated to have invested at least $1.6 billion,many in the burgeoning services sector. Thismakes China Australia’s 15th largest investmentdestination. Chinese investment in Australia stoodat $3.39 billion and China is the 12th largestforeign investor in Australia.

Australian investment is concentrated in China’scoastal regions, particularly in Shanghai and theYangtze River Delta, Guangdong, the Pearl Riverdelta, and the Beijing-Tianjin corridor. As Chinaopens more sectors to the international market,Australian investment is expected to grow.However, Australian business will face fiercecompetition, particularly from the United States,

The Olympic Games being held in Beijing in 2008 should

provide many opportunities for Australian exporters.

the European Union and competitive domesticChinese firms, in the search for new markets inChina. Australian firms will have to work hard totake full advantage of China’s post-WTOaccession environment.

Powerful complementarities will underpincontinuing strong growth in the bilateraleconomic relationship. Australia supplies thehigh-quality industrial raw materials, energy,technology, foodstuffs and services that Chinaneeds for its modernisation. Australian companiesare also supplying smart card technologies,telephone switching systems and fibre-optic cableto the rapidly expanding telephone networks inregional China. Developing a strategic energypartnership, based on liquefied natural gas(LNG), is a key priority for the future.

$200 MILLION IN

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Austrade’s Martin Walsh (right) with Thales Air TrafficManagement chief negotiator in China, J.C. Chen, at thesigning ceremony for the groundbreaking contract

AUSTRALIAN TECHNOLOGY READY FOR TOUCHDOWN INCHINA

The notion that Australian exports to China are dominated by primary products has been quashedwith the signing of a major contract confirming Australia as an important technology supplier tothe growing Chinese market.

Australia’s leading air traffic control system developer – Thales Air Traffic Management (TATM,previously known as Airsys ATM) – outbid a host of international rivals to secure a landmark $200 million contract with the Civil Aviation Administration of China (CAAC) in September 2001.This win – Australia’s largest-ever technology deal with China – could spark an increase intechnology trade between the two countries.

An earlier version of the TATM system has been fully operational in Australia since March 2000,and the ease with which it has controlled air traffic – especially its reliability during the SydneyOlympic Games – was crucial to the company’s successful bid.

The system will include more than 200 new air traffic control workstations and is due to becompleted by 2004. A number of Australian companies will contribute to the project by supplyingconsoles and computer hardware and software.

Most of the training for the controllers and engineers of the new system will be conducted inAustralia. An integral part of the Chinese project will be the transfer of expertise throughinvolvement of CAAC engineers and technicians in the development and implementation teamsfrom the project’s early stages.

The People’s Republic of China has more than 1 150 air routes, including international routes, andair traffic is growing at an annual rate of 10 per cent. The new system will control up to 80 percent of air traffic in China, enhancing safety and allowing China to accommodate more flights.

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OPPORTUNITIES

The development of competitive manufacturingin China as a result of economic reform and tradeliberalisation will make Australia even moreimportant as a source of high-quality rawmaterials. Australia’s trade will also continue todiversify as increasingly affluent segments of theChinese market demand higher-quality foods andmore sophisticated manufactures and services.Progressive market opening will continue to boostopportunities for trade in services.

Australia’s primary focus in the short to mediumterm is to maximise economic and trade benefitsfrom China’s accession to the WTO and to securethe existing strong economic relationship. Thisyear is the 30th anniversary of diplomatic

relations between Australia and China. Australiawill be using the anniversary, China’s recentaccession to the WTO and its winning the 2008Olympics as prominent opportunities to explorenew areas of cooperation. A series of activities –including a number of trade and investmentpromotional events – has been designed toestablish strategic relations with China in keysectors such as agriculture, energy and resources,financial and social welfare services, education,transport, environment and the Olympics. The aim is to increase China’s awareness ofAustralia’s abilities in these areas and facilitateentry to these markets, maximising the spin-offsfrom China’s WTO accession and from thesuccessful Sydney Olympics.

AUSTRALIA’S TRADE WITH CHINA

Note: Merchandise trade is measured on a recorded trade basis, while services trade is measured on a balance of payments basis. 2001 service data is not available.

Sources: ABS data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

Republic of Korea

ECONOMIC OUTLOOK

South Korean growth projections were reviseddown over the course of 2001, with falling demandin the United States and Japan feeding through toweaker export growth. Growth for 2001 was 2.6 per cent – down from 8.8 per cent in 2000. This is a reasonable result given the collapse in US electronics imports that saw other Asianeconomies with a similarly high reliance on the USmarket slide into recession. South Korean exportsaccount for some 45 per cent of GDP – high interms of world export dependency, but relativelylow by East Asian standards – and are morediversified than those of Singapore or Taiwan.

Better than expected industrial production andstrong construction investment and consumptionfigures indicate that recovery is imminent. GDPgrowth in 2002 is now forecast at 4.7 per cent,with 2003 growth rising to 5.3 per cent.

Part of the reason for South Korea’s resilience liesin prompt action by the South Korean Governmentto stimulate the economy. A US$3.9 billion packagewas announced in June 2001, and a further US$1.5 billion in September 2001. In an attempt to avert recession and provide support for thebusiness sector, the Bank of Korea announcedinterest rate cuts in August 2001. Heading into nextyear’s presidential elections, the focus ofgovernment policy will continue to be fiscal support.

Private consumption is expected to be the mostresilient component of domestic demand in 2002 as consumer confidence is positive and growing.Investment will lag as surplus capacity is absorbed.However, loss of confidence in the reform programand the prospects of further layoffs, particularly inthe banking and automotive sectors, could act as abrake on higher levels of consumer confidence,until reforms are implemented.

External pressures exacerbate structuraldeficiencies in the South Korean economy.

In South Korea, the services sector accounts for just53 per cent of GDP, compared with 71 per cent inJapan and even higher levels in other OECDeconomies. The financial sector remainsoverburdened by a high level of non-performingloans. High levels of corporate sector debt continueto make South Korea vulnerable to fluctuations inthe domestic and international economy.

Sustained recovery in South Korea will still bedependent on an upturn in the US economy and,to a lesser degree, the Japanese and Europeaneconomies. Any pick-up will depend on improvedsemiconductor prices, an improved stock marketperformance, improved labour relations and aneasing of bank credit.

TRADE AND INVESTMENT WITHAUSTRALIA

Despite uncertainties in the global economicoutlook and lower South Korean growth,Australia’s trade with South Korea held up well in2001. Australian merchandise exports to SouthKorea grew by 5 per cent in 2001, amounting to$9.5 billion, reflecting Australia’s advantage as ahigh-quality, low-cost supplier, particularly fornon-discretionary items and manufacturinginputs. South Korea has supplanted New Zealandas Australia’s third-largest export destination afterJapan and the United States, and is Australia’sfourth-largest trading partner.

The two economies complement each other, withAustralia supplying the raw materials that SouthKorea uses in the production of final products. In2001, Australia’s major exports to South Korea werepetroleum, wheat, coal, gold, aluminium and ironore. Australia is also a major exporter of foodstuffs,including beef, sugar and dairy products.

South Korea is Australia’s third-largest market forbeef. In January 2001, the WTO upheld Australia’scomplaint against a range of South Koreanmeasures that discriminated against the sale anddistribution of imported beef. These includedminimum wholesale pricing, restrictions on theretail sale of imported beef (the dual retail system)

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and discriminatory labelling and record-keepingrequirements. In September 2001, South Koreaabolished the dual retail system on beef. Industryestimates that WTO-driven liberalisation will leadto an additional $60 million a year in beef exports toSouth Korea. Beef exports are forecast to rise fromaround $250 million in 2001 to $360 million in 2002.

Australia won its first-ever tender (worth around$11 million) to supply 22 500 tonnes of premiumrice to South Korea in the annual rice tenders inSeptember and October 2001. The rice will beused for processing purposes, particularly themanufacture of rice cakes and snacks.

Tourism and education remain important elementsof the bilateral services trade. These sectors havepartially recovered following a slump during the1997 financial crisis and its aftermath. The South Korean student market is Australia’s sixth-largest, and in 2000, some 11 500 South Koreanstudents studied in Australia, contributing over$200 million to export earnings. However, overallstudent numbers have not yet recovered to pre-crisis levels (in excess of 20 000 students in 1996).South Korean tourist numbers to Australia grew to180 600 in 2001, up from 66 600 in 1998 but stillbelow a pre-crisis peak of 230 000 in 1997.

OPPORTUNITIES

The mix of Australia’s exports to South Korea,dominated for decades by primary products andsimply transformed manufactures, is slowlychanging as the economic relationship moves intoa more advanced phase. Australian expertise inelaborately transformed manufactures andservices – including financial, telecommunicationsand information technology – is being sought bythe South Korean market.

Exports of internal combustion piston engines andother automotive parts have shown strong growthover recent years. South Korea is now Australia’ssecond largest market for automotivecomponents. Successful sales by Australiancompanies include car body electronics toHyundai, transmissions to Ssangyong and Holdenengine sales to Daewoo Motors. South Koreanmanufacturers are also interested in high-tech andlight-metal components from Australia.

Australian exports of high-tech goods (includingcomputers, software and photographic supplies)have also grown strongly. Export of Australianprofessional services is on the rise, with a numberof Australian accounting firms, law firms and

$63.5 MILLION SOUTH KOREAN TRIUMPH

Oceanis Australia, the company behind the award-winning redevelopment of the Sunshine Coast’sUnderWater World, has created the $63.5 million Busan Aquarium at Haeundae Beach, SouthKorea, one of the largest and most state-of-the-art aquariums in the world. The Australian teaminvolved in the development provided curatorial, marketing and project management expertise tothe project.

Oceanis Australia brought a wealth of knowledge and first-class technology to the project, which isexpected to attract about 1.5 million people over the next 12 months. The project has paved theway for Australia and Busan City to work together in the trade of other goods and services.

Oceanis Australia will operate and manage the facility for 20 years (with an option for an additional10 years), after which ownership will revert to the Haeundae Ward, Busan City.

banks engaged by South Korean banks andcorporations on a consultancy basis to assist inrestructuring and debt work-out programs and toprovide expertise on financial management tools.

Australian companies can benefit from SouthKorea’s broad-ranging economic reform programand its increasing openness to market forces,deregulation and privatisation of various publicservices, and encouragement of higher levels offoreign investment. Major reform of the financialand corporate sectors is creating opportunities forforeign investors and service providers. However,questions remain about the capacity of marketforces to break-up the chaebols’ empires, despitedraft legislation to weaken controls on chaebolinvestment activity being submitted to theNational Assembly in late 2001.

One Australian firm taking advantage of large-scale infrastructure privatisation in South Korea isthe Macquarie Bank Group. Macquarie Bank’sGlobal Infrastructure Fund announced in mid-

2001 that it would purchase the concessioninterest in the Soojungsan Tunnel project in Busan City for $141 million.

South Korea’s growing energy needs also presentopportunities for Australia. Australian LNGproducers are seeking long-term supply contractsto meet expected shortfalls in South Korea from2004–05. Further opportunities will arise whenexisting long-term gas contracts begin to expirefrom 2007.

Economic development in China and China’saccession to the WTO will provide opportunitiesfor South Korean exporters and investors.However, in the long term, the emergence of Chinaas a global production centre will challenge SouthKorea’s domestic industries. Sales of Australianinputs to South Korean producers may be affectedas South Korean firms change their productionfocus and invest in China. Australian exporters toSouth Korea may also be affected by growing tradepressures on South Korea from China.

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AUSTRALIA’S TRADE WITH SOUTH KOREA

Note: Merchandise trade is measured on a recorded trade basis, while services trade is measured on a balance of payments basis. 2001 service data is not available.

Sources: ABS data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

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New Zealand

ECONOMIC OUTLOOK

The New Zealand economy grew by an estimated2.6 per cent in 2001, down from 3.8 per cent in2000. New Zealand’s small economy is heavilydependent on overseas trade, and the increaseduncertainty caused by the 11 September terroristattacks has reduced growth forecasts to 1.9 percent for 2002.

Australia is New Zealand’s principal exportdestination, taking 18 per cent of New Zealand’sexports in the year to September 2001, followed bythe European Union (16 per cent) and the UnitedStates (15 per cent). Over 60 per cent of NewZealand’s merchandise exports are agriculturaland forest products. Dairy, the highest earner offoreign exchange at around 20 per cent of totalexports, contributes 8 per cent of New Zealand’sGDP. However, heavy reliance on agriculture, lack of investment and a shortage of skilled labourhave inhibited New Zealand from reaching thegrowth levels of other OECD countries, andincreased the economic gap with Australia.

New Zealand aims to develop stronger trade andinvestment relationships with other countriesthrough free trade agreements. In addition to aCloser Economic Partnership agreement withSingapore that took effect in January 2001, New Zealand is exploring free trade agreementswith other trading partners including Hong Kong,Chile, the Republic of Korea, Canada and theUnited States.

TRADE AND INVESTMENT WITHAUSTRALIA

Over the past 10 years, trans-Tasman merchandisetrade has increased annually by 9 per cent onaverage, exceeding the average 8.5 per centgrowth recorded for Australia’s trade with the restof the world and the 6.3 per cent annual growth in New Zealand’s international trade. This largelyreflects the trade liberalisation that has occurred

under the Closer Economic Relations tradeagreement. New Zealand is now Australia’s fifth-largest trading partner, Australia’s fifth-largestmarket taking 5.8 per cent of our total exports,and Australia’s sixth-largest source of importstaking in 4 per cent.

Bilateral merchandise trade grew by 8 per cent in2001 to $11.9 billion, mainly reflecting a rise inAustralian exports to New Zealand (up from $6.6 billion to $7.2 billion). Imports from NewZealand totalled $4.7 billion for the same period.

Australia is the largest investor in New Zealand.New Zealand absorbed five per cent of totaloutward investment, making it Australia’s fourth-largest investment destination. New Zealand wasthe eighth-largest source of foreign investment inAustralia. The creation of the giant Fonterra Dairymega-merger in New Zealand and deregulation ofthe Australian industry provided opportunitiesfor New Zealand investment in the Australiandairy industry. New Zealand dairy companies(including New Zealand Dairy Group, Kiwi Co-operative Dairies and the New Zealand DairyBoard) have already purchased equity inAustralian companies (National Foods, Peter’sand Browne Foods Limited and Bonlac Foodsrespectively). The New Zealand dairy industryranks second behind the European Union in theglobal dairy export market.

OPPORTUNITIES

More than half of Australia’s merchandise exportsto New Zealand are elaborately transformedmanufactures, including computer parts, electricalmachinery and appliances. While the ICT market isvery competitive, especially from European andNorth American companies, New Zealand’s desireto bolster its high-tech capabilities could see furtheropportunities for Australian firms in this sector.

Opportunities also exist for partnerships andstrategic alliances in the biotechnology sector,particularly within the agricultural, bio-medical(human and animal health), bio-equipment andrelated services sectors. New Zealand has recently

undertaken a major review of its science andtechnology activities. The ‘Catching theKnowledge Wave’ conference held in August 2001was co-hosted by the New Zealand Government,demonstrating the high priority it places oninnovation. In 2001, the Government also allowedfield trials for GM crops. Despite strict conditions,including legislating a two-year constraint periodfor the release of GM crops, this more facilitativeapproach to biotechnology is expected to haveflow-on effects for foreign investment andresearch and development in New Zealand.

Major projects in the transport and water/wastewater sectors have resulted in growth ofopportunities within the New Zealandinfrastructure market. These projects, whileconcentrated in the Auckland region, encompassa wide range of specialist areas, from powerstations to motorway construction to wastewatertreatment plants. The New Zealand building andconstruction industry is also heading into abuoyant period, with projected growth of 7 per cent per year for the next three years. This will be mainly concentrated in theresidential building sector.

The low New Zealand dollar and more favourableweather patterns have resulted in a very buoyantyear for New Zealand farmers and theagribusiness sector. This success is now starting tofilter through to the main urban centres withfarmers investing in new capital assets. NewZealand’s premier agricultural trade show, theWaikato Field Days, reflected this success,attracting over 1 000 exhibitors and 115 000visitors in 2001.

The New Zealand food and beverage industry isvalued at approximately $9 billion and createsmany opportunities for Australian suppliers. In May 2002, Austrade will coordinate ‘GroceryShowcase in the Pacific’ which provides anopportunity for companies to have their productsexhibited to potential buyers in New Zealand andthe South Pacific region. Australian exporters offood and beverages will also have the opportunityto exhibit their products to the New Zealand foodservice and hospitality industries at the ‘Taste ofAustralia’ events supported by Austrade in July2002. There are also many opportunities for thewine industry, as 70 per cent of all wine importsare Australian.

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AUSTRALIA’S TRADE WITH NEW ZEALAND

Note: Merchandise trade is measured on a recorded trade basis, while services trade is measured on a balance of payments basis. 2001 service data is not available.

Sources: ABS data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

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European Union

ECONOMIC OUTLOOK

European Union economies have generally notbeen growing as strongly as the United States overthe last decade. European Union economic growthof 1.7 per cent in 2001 represents a marked declineon the previous year (3.4 per cent), due in largemeasure to the slowdown in the US economy.High oil prices earlier in 2001, a marked drop-offin business investment and consumer spendingand the events of 11 September also contributed toslow growth. The European Commission expectsEU growth to gather momentum over the courseof 2002, but full-year growth is forecast to be arelatively modest 1.3 per cent.

The European Central Bank (ECB), despite initialreluctance to act aggressively, eased interest ratesfour times during 2001 – from 4.75 per cent to 3.25 per cent – in an effort to stimulate EU growth.Driven mainly by oil prices, inflation in the Euro-zone was above the ECB’s target ceiling of 2 per cent for most of the year, but declined in thesecond half to finish the year at 2.64 per cent.Unemployment began to rise in the second half of2001. The Commission estimated the EU averageunemployment rate to be 7.7 per cent in 2001 withan increase to 8 per cent forecast for 2002, beforedeclining again to 7.6 per cent in 2003.

The introduction of Euro currency (notes andcoins) on 1 January 2002 among 12 of the 15 EUmember states (all except the United Kingdom,Sweden and Denmark) marked the last stage inthe move to an Economic and Monetary Unionamong these countries.

The restructuring activities in most CentralEuropean countries as part of the drive to join theEuropean Union are a stimulant for WesternEuropean economies, particularly with regard toinvestment activity. European economies need toembrace change brought on by globalisation toremain competitive, not only in a global economybut also in an economy facing increased

transparency and competition through theintroduction of the Euro.

Economic growth in the United Kingdom isforecast to outpace most industrial economies in2002. Both retail sales and the service sector haveheld up well despite the downturn ininternational economic conditions. Althoughexport-oriented manufacturing was hindered by astrong currency and continued to weaken in linewith the global downturn, economic growth ispredicted to reach 1.8 per cent in 2002.

Germany’s economy contracted marginally in thesecond half of 2001. The global downturn loweredmanufacturing exports, as well as reducing jobsecurity, in turn causing business and consumerconfidence to fall sharply. After achievingestimated growth of 0.5 per cent in 2001, theeconomy is predicted to perform only marginallybetter in 2002, with growth of 0.7 per cent.

The French economy, although also suffering fromthe global downturn, performed better than mostEU economies in 2001, with strong consumerspending partly offsetting weakening investmentspending and net exports. Business confidencedeclined noticeably towards the end of 2001, and could herald weaker consumption this year.Unemployment is around 9 per cent, and appearsset to worsen in 2002 as firms postponeinvestment and cut jobs.

Although Italy’s exports weakened, domesticdemand, particularly investment, is expected tohold up, thanks largely to a range of business-oriented reforms providing investment and taxincentives, as well as improved public financialmanagement.

TRADE AND INVESTMENT WITHAUSTRALIA

The European Union is Australia’s largest tradingpartner when viewed as a single entity. In 2001,Australian exports were valued at $14.7 billion, up 18 per cent on the previous year and accountingfor 12 per cent of Australia’s total exports, despitethe slowdown in EU growth. Coal, ores, wool and

wine were Australia’s largest exports to theEuropean Union. Agricultural exports continued tobe constrained by tariff restrictions and subsidies toEU farmers under the Common AgriculturalPolicy. Merchandise imports from the EU were up4 per cent to $26.5 billion.

Although exports of primary products to theEuropean Union have grown over the past decade,the proportion of primary products in Australia’stotal exports to the European Union has declined.In 2001, ETMs made up 22 per cent of exports tothe European Union. Products that have seensignificant export growth in recent years includeships, medical instruments, measuring andcontrolling instruments, electrical equipment forcircuits, electrical machinery and appliances, and machinery and transport equipment.

The European Union is Australia’s largest overseasmarket for services, accounting for 19.4 per cent ofAustralia’s total services exports in 2000. Whileimports of services from the European Union havealso grown, the gap between services exports andimports has narrowed over recent years. Servicesexports to the European Union reached $6.1 billionin 2000 while imports were worth $7.2 billion.Major services exports were travel andtransportation services.

Australia’s investment relationship with theEuropean Union is a dynamic one. In 1999–2000,investment in Australia from EU countries wasworth $235.3 billion, making the European UnionAustralia’s largest source of foreign investment(33 per cent of total inwards foreign directinvestment). The European Union is the second-largest foreign destination for Australianinvestment, with total investment amounting to$101.8 billion in 1999–2000 (27 per cent of totaloutwards foreign direct investment).

Australia’s exports to the United Kingdomreached $5.2 billion in 2001, up 38 per cent fromthe previous year. Contributing factors includedthe strong pound and weak Australian dollar.Imports from the United Kingdom were down 10 per cent at $6.3 billion in 2001. The United

Kingdom is Australia’s largest market for wine,accounting for 43 per cent of Australia’s wineexport orders, and wine export growth is expectedto remain firm. The signing of a memorandum ofunderstanding (MOU) in November 2000concerning e-commerce, e-government andcooperation in the information technologyindustries is expected to facilitate greater access tothe British IT market (the fourth-largest in theworld), with contracts worth over $50 millionalready flowing from the MOU.

Australia’s exports to Germany reached $1.5 billion in 2001, up 12 per cent from theprevious year, despite the low growth in theGerman economy. The strongest rises were in oilseeds, copper, measuring and controllinginstruments, non-ferrous metals and meat.Imports from Germany reached $6.7 billion in2001. The EU Coal Conference in Aachen,Germany, in September 2001 identified ways toincrease coal trade between Germany andAustralia and improve cooperation between theircoal industries. Exports of coal are anticipated toperform well in 2002, as are exports ofpharmaceutical and other biotechnology products.

Australia’s exports to France rose to $1.2 billion in2001, up 33 per cent from 2000. Export growth wasparticularly strong in coal, copper, wool and meat.Australia’s imports from France were $2.6 billion.Exports of wine, jumped 113 per cent in 2001, aftera rise of 34 per cent the previous year. Wine exportsappear set to continue this upward trend, as doother consumables such as fruit, vegetables andmeat, including live animals and seafood. Coalexports are also set to perform strongly in 2002.

Australia’s exports to Italy jumped 19 per cent in2001 to reach $2.2 billion. Exports of wool, coal,aluminium and cotton were particularly strong.Imports rose 9 per cent to $3.4 billion. Italy isAustralia’s second-largest market for woolexports, and its largest market for fine wool. Non-traditional exports such as fast ferries, motorvehicle parts, fresh fruit and vegetables, processedfood, wine and defence materiel are also expectedto continue to perform well in 2002.

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OPPORTUNITIES

Europe is a co-driver, with the United States, of the‘new economy’ industries. It has leading edgetechnology in areas as diverse as mobile telephony,food processing and biotechnology. The currenteconomic climate in Europe has slowed, notstopped, development and expansion of thoseindustries. Innovative Australian companies arealready finding markets in many of these newindustries, particularly information andcommunications technology. Biotechnology isstrongly increasing in importance in Europe andwill also be a focus of attention for theGovernment in 2002.

The market for educational services in Europecontinues to exceed expectations. Austrade andAustralian Education International (AEI) agreedan objective of doubling student numbers to 16000 through a three-year marketing partnershipagreement. Currently in the second year of theagreement, student numbers have alreadyexceeded 17 000. Regular student seminars andagent workshops in the eleven primary focusmarkets of Europe will continue during 2002. Thistrade in educational services brings significantbenefits in terms of improved cultural awareness,understanding of business potential and future

international linkages, in addition to the tangiblefinancial rewards.

The downturn in the US and European economieswill be reflected in European automotivemanufacturers’ bottom lines in 2002. This shouldforce a re-assessment of current suppliers andallow an opportunity for Australian companies topromote themselves as high quality, low costalternatives. More rationalisation of the Europeanautomotive industry is also expected. This couldfurther disturb established supply lines andprovide openings for Australian companies. A significant Australian presence is expected atthe Automechanika exhibition in Frankfurt inSeptember 2002.

The Australian Government hopes to resolveoutstanding issues in the Australia–EU WineAgreement in order to consolidate the largeinroads that Australian wine producers havemade into Europe.

The Athens Olympics is also generating stronginterest from a range of Australian companies.Many companies have entered into strategicpartnerships with Greek companies to promotetheir products and services to the OrganisingCommittee.

AUSTRALIA’S TRADE WITH THE EUROPEAN UNION

Note: Merchandise trade is measured on a recorded trade basis, while services trade is measured on a balance of payments basis. 2001 service data is not available.

Sources: ABS data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

ASEAN

ECONOMIC OUTLOOK

ASEAN economies’ growth rates declinedthroughout 2001, and they face further economicchallenges this year. ASEAN countries such asThailand, Malaysia and Singapore that are heavilyreliant on export-driven growth were affected byweaker demand from the United States and Japan.In particular, the fall in IT and telecommunicationscapital expenditure, especially in the United States,continues to reduce demand significantly forSouth-East Asia’s electronics exports, a key factorbehind the region’s downturn. The 11 Septemberterrorist attacks in the United States exacerbatedthe effects of the existing global economicslowdown, and ASEAN recovery is now notexpected until at least the middle of 2002.

Slower global economic growth emerged just asmany ASEAN members were starting toconsolidate their recovery from the 1997–98 East Asian financial crisis. The Asian DevelopmentBank (ADB) revised GDP growth forecasts forSouth-East Asia downwards from 4 per cent to 2.4 per cent in 2001 and from 4.8 per cent to 3.3 per cent in 2002. This downturn follows growthin South-East Asia in 2000 of 5.2 per cent – thehighest since 1996.

Strong competition from China for FDI andconcerns over corporate governance and slowprogress in the implementation of economic andfinancial market reforms mean ASEAN economiesare finding it more difficult to attract FDI.

Post-crisis reform has progressed in a number ofimportant areas, including exchange rateflexibility, the creation of asset managementcompanies and some reduction in non-performingloans (NPLs). However, there continues to be aneed for progress in restructuring the financialand corporate sectors in a number of ASEANeconomies, particularly as weaker growth isexacerbating many structural problems, includingthe still-high level of NPLs and the capacity fordebt servicing in both public and corporate

sectors. Weaker growth is also accentuating thesignificant social impacts caused by the region’sfinancial crisis. Recovery in living standards haslagged behind the post-crisis recovery ineconomic output, with social dislocation amongthe poor still substantial.

Recognising the need for reform, ASEAN EconomicMinisters recently agreed to commission an ASEANcompetitiveness study to help accelerate regionaleconomic integration and strengthen ASEAN’scompetitiveness. ASEAN Leaders have alsoendorsed a Chinese proposal to develop anASEAN–China free trade agreement over ten years.

In Singapore, an improvement in the fourthquarter of 2001, with the economy growing by 5.6per cent on an annualised quarter-on-quarter basis,signalled the country had emerged from its worstrecession since 1965. With electronics accountingfor almost 60 per cent of Singapore’s exports, thecontraction in US electronics demand hadadversely impacted Singapore’s growth during2001. Weak household consumption and businessinvestment also contributed to the economiccontraction. Recent data released by theGovernment of Singapore indicates the economycontracted by 2 per cent in 2001, down from 9.9 percent growth in 2000. The Singapore Governmentforecast for 2002, revised in light of an improvedglobal outlook, is for growth of 1 to 3 per cent.

Indonesia’s economy grew by 3.2 per cent in2001, down from 4.8 per cent in 2000, reflectingweakening consumer sentiment, lack of investorconfidence and weaker external demand.Economic growth is forecast to improvemarginally to 3.5 per cent in 2002. Internationalinvestor sentiment towards Indonesia remainscautious. The Government’s significant debt-servicing burden will bring pressure onIndonesia’s budget position. There has been someprogress on bank restructuring; however, non-performing loans still remain very high ataround 30 per cent of total loans.

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Thailand’s economy grew by 1.5 per cent in 2001,down from 4.4 per cent in 2000. Growth is forecastat 2.0 per cent for 2002. Exports have been animportant factor driving Thailand’s post-crisiseconomic recovery, but have weakened sharplysince mid-2000, in line with the slowing of theglobal economy. With electronics exportscontributing approximately 30 per cent ofThailand’s export revenue and the United Statesaccounting for 20.6 per cent of Thailand’sagricultural exports, Thailand’s economy isvulnerable to the negative external environment.Inwards tourism is also suffering in the currentenvironment.

Malaysia was one of the strongest East Asianeconomies in 2000, growing by 8.3 per cent,despite its vulnerability to the electronics industrydownturn. However, the export-dependent natureof the economy meant it was hit by the globalslowdown, with growth of 0.3 per cent recordedin 2001. The Government’s efforts to weather theglobal downturn have centred on supportingdomestic demand through increased publicspending. Deteriorating export demand has alsobeen reflected in falling manufacturingproduction, which contracted by 5.8 per cent in2001, after an unsustainable increase of 23 per centin 2000. The economy is forecast to stage a modestrecovery during 2002.

SINGAPORE SUPERMARKET SUCCESS

Singapore’s leading supermarket retailer, NTUC FairPrice, opened an Australian-themed storewithin its existing supermarket at Bukit Timah Plaza in September 2001. The Australian Pavilion isa major initiative to create a platform for Australian produce, led by Supermarket to Asia andsupported by Austrade and several State governments.

The Australian Pavilion carries about 2 000 new Australian products, including beverages andfresh, frozen and dry goods, and will include promotional areas for cooking and displays. Theproducts must be new to the NTUC FairPrice chain, but will be exposed and tested in-storewithout incurring listing or new line fees. Products that are well received in the market could thenbecome part of FairPrice’s normal purchasing program across its 95 stores.

The Philippine economy achieved growth of 2.9per cent in 2001, but is not expected to improvesignificantly on this in 2002, with growth of 3.2per cent being predicted. With the United Statesaccounting for 30 per cent of Philippine exports,the US recession will further depress exportperformance in the immediate future. TheGovernment’s ability to stimulate the economythrough fiscal measures is constrained by the sizeof the budget deficit. Business confidence is weakand the domestic economy is unlikely to offsetlow external demand. Major structural problemssuch as high non-performing loans need to beaddressed before the Philippines can be confidentof any return to sustained strong growth.

The Bruneian economy is expected to suffer in2002 as a result of lower world oil prices. However,economic growth in the other ASEAN countries(Vietnam, Laos, Cambodia and Burma) appears tohave been affected less by the downturn in globalgrowth, partly because of the lesser role of marketforces and exports in their economies, and thestrong role of foreign aid. Vietnam’s economicgrowth, for example, slowed only marginally from5.5 per cent in 2000 to 4.7 per cent in 2001, and isexpected to remain around this level in 2002.

TRADE AND INVESTMENT WITHAUSTRALIA

Merchandise exports to ASEAN in 2001 totalled$15.4 billion or 12.5 per cent of Australia’s totalgoods exports, up slightly from $15.1 billion in2000, and higher than pre-crisis levels. The smallincrease in exports defies the ASEAN economicdownturn. Imports from ASEAN have more thandoubled from $7.9 billion in 1996 to $17.5 billionin 2001, leaving Australia with a merchandisetrade deficit of $2.1 billion in 2001.

Australia’s largest exports to the region are crudepetroleum, non-monetary gold, aluminium, milkand cream and cotton. Largest imports are crudepetroleum, computers, refined petroleum, non-monetary gold and telecommunicationsequipment.

In 2000, total two-way trade in services was $8.9 billion, with a deficit to Australia of $362 million. In 2001, 653 100 ASEAN touristsvisited Australia and in 2000, 68 754 ASEANstudents studied in Australia – an increase of 26per cent since 1996.

Australian foreign investment in ASEAN countrieshas doubled over the past five years, from $7.1 billion in 1994–95 to $14.7 billion in 1999–2000,with Singapore accounting for $9.7 billion of thetotal. Investment by ASEAN countries in Australiaover the same period was 2.5 times greater, upfrom $9.5 billion in 1994–95 to $23.7 billion in1999–2000, with Singapore accounting for 83.7 per cent of the total.

Barriers to Australian exports to ASEAN remainconsiderable, notably in automotive products,food products (including fresh fruit andvegetables, fish, dairy, wine, corn, coffee, rice andsugar), industrial goods and chemical and sheet-metal products. For example, Indonesia currentlyimposes local content requirements and restrictivelicensing arrangements on dairy products andautomotive products and minimum accessvolume quotas restrict Australian exports ofcoffee, corn, rice and sugar to the Philippines.

OPPORTUNITIES

In the short term, the sharp slowdown in worldgrowth, weak investor confidence in some ASEANeconomies and slow progress on structuralreforms will lower ASEAN economic performanceand hamper Australia’s trade. However, over themedium term, these economies have stronggrowth prospects, with excellent opportunities forAustralian firms in a range of sectors, includingagribusiness, knowledge-based services, wirelesscommunications, infrastructure, IT outsourcingand financial IT services, automotive componentsand services, and the oil and gas sector.

The sharp contraction in the global electronicssector is expected to ease, leading to an improvedoutlook in the ICT sector. This will be especiallyfavourable to Singapore and Malaysia which bothhave high exports of electronic products.

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Economic stimulus packages are likely to drivedevelopments in infrastructure across the region.Major projects in road, rail, airports and theenvironment are likely to go ahead and createsignificant opportunities for Australian firms ableto meet demand at various stages in theimplementation of the projects. Austrade is alsoidentifying opportunities likely to arise from thenew Bangkok International Airport. The role ofmultilateral procurement agencies in providingfunding for many of these infrastructure projectswill continue to be important.

The outlook for the automotive sector was reviseddownwards during 2001, but is expected toimprove through 2002. ASEAN is expected tocontinue to attract investment from automotivemajors, particularly from Japan. Production in theregion will be based on Light CommercialVehicles and there is potential for South-East Asiato become a global hub for these. Opportunitiesexist for supply of components, technology andservices from Australia and export of differentcapacity vehicles should tariff barriers be eased.

Return to higher growth rates, combined withgrowing affluence and urbanisation throughoutthe region will underline strong prospects forAustralian agribusiness exporters. In addition to a

wide range of processed foods and beverages forsale into the retailing and food service areas, thereis also potential for food processing equipmentand new technology.

Whilst each market in ASEAN has uniquefeatures, they are gradually becoming more inter-related. Globalisation and the new economy arealso driving change in the region. Many emergingopportunities are being affected by decisions made outside the region, global supply chainmanagement and distribution systems, andincreasing use of e-commerce solutions. Austrade is responding to these trends throughimplementation of regional strategies for ICT,automotives and agribusiness.

In 2002, Austrade will assist Australian exportersthrough a number of events, including majorregional trade shows such as Asian Aerospace andFood and Hotel Asia to be held in Singapore, andby bringing automotive, environment and othertrade missions to Australia.

Greater regional economic integration – throughthe AFTA-CER Closer Economic Partnership,Singapore FTA and possibly a Thai FTA – shouldassist Australian exporters to exploit theseopportunities.

AUSTRALIA’S TRADE WITH ASEAN

Note: Merchandise trade is measured on a recorded trade basis, while services trade is measured on a balance of payments basis. 2001 service data is not available.

Sources: ABS data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

Middle East

ECONOMIC OUTLOOK

Lower world oil prices – and corresponding cuts inOPEC production – saw a sharp decline in realeconomic growth for most countries in the regionin 2001. OPEC production quotas fell by 3.5 millionbarrels per day (or 18.7 per cent) during 2001. The impact of the weakening oil market onregional economies was compounded by a fall inglobal tourism and air travel following the 11 September terrorist attacks in the United States.This had a major impact on Egypt and the UnitedArab Emirates, which have significant exposure tothe travel industry, but the full impact of 11 September on Middle Eastern economies is notyet clear. The severe regional drought, now in itsfourth year, has adversely affected agriculturalproduction across the region. Any easing indrought conditions in coming months would have a positive impact on regional growth.

Saudi Arabia’s GDP growth fell to 2.3 per cent in2001, from 4.5 per cent in 2000. Saudi oilproduction has fallen from 8.25 million barrels perday in the fourth quarter of 2000, to 7.9 millionbarrels per day in the fourth quarter of 2001, andthis has had sharp knock-on effects for the rest ofthe economy. Lower oil revenues will see thebudget deteriorate from a surplus of SR22.9 billionin 2001 to an expected deficit of SR45 billion (over 7 per cent of GDP) in 2002, despite a 20 per cent cutin expenditure. With a continued weak oil marketoutlook, Saudi GDP growth is expected to fallbelow 1 per cent in 2002, but recover to around 4 per cent in 2003 as a stronger world economyboosts the oil market and foreign investmentbegins to flow into Saudi Arabia’s gas industry.

GDP growth in the United Arab Emirates (UAE)is estimated by the Economist Intelligence Unit tohave fallen from 6.9 per cent in 2000 to 2.9 percent in 2001 in the face of a weakening global oilmarket. Although the UAE tourism industrysuffered in the immediate wake of the 11 September terrorist attacks, there is evidencethat a recovery is under way. This should helpoffset some of the negative impact of the weakeroil market. Nevertheless, further decline in GDPgrowth (to 1.1 per cent) is expected in 2002 beforean increase to around 3.1 per cent in 2003 as theglobal economy – and particularly the oil market– recovers.

The outlook for Iran will be strongly influenced bythe state of the world oil market and its ability toattract more foreign investment. Recent domesticpolitical wrangles over Iran’s new foreigninvestment laws have done little to improveinternational investor confidence, and the extensionby the United States of the Iran and Libya SanctionsAct will continue to inhibit US investment in Iran’soil industry. Iran’s GDP growth fell from 5.8 percent in 2000 to 5.0 per cent in 2001 and is forecast tofall further to 4.8 per cent in 2002.

Iraq is highly dependent on the oil market,although its lack of an OPEC quota gives it moreflexibility than other OPEC members. Politicallymotivated cuts in Iraqi oil output during 2001 sawits GDP fall sharply (-6.0 per cent) but, in theabsence of further cuts, a strong rebound ingrowth is expected in 2002. Assuming the worldoil market recovers in 2003 and Iraq continues toexpand its oil output capacity, further buoyantgrowth is likely.

Egypt’s economy has suffered from lower oilprices, reduced fees from the Suez Canal due to

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the slowing in world trade, and a downturn in itssubstantial tourism industry in the wake of the 11 September terrorist attacks. Authorities reactedwith a 7.8 per cent devaluation of the Egyptianpound in mid-December 2001. It remains to beseen whether the more competitive currency willimprove Egypt’s short-term outlook. TheInternational Monetary Fund (IMF) forecasts GDPgrowth in 2002 will remain at 3.3 per cent, as theworld economy begins to recover and confidencereturns to Egypt’s international tourism industry.

Israel’s economy was badly affected in 2001 by 12 months of regional unrest and the effects of theNASDAQ crisis. This instability resulted in asignificant loss of revenue from tourism and anerosion of business confidence, which in turnreduced inwards investment, particularly in theventure capital market. Forecast growth for 2002has been revised down by the IMF to 1.7 per centfrom 5.4 per cent forecast in September 2001.

TRADE AND INVESTMENT WITHAUSTRALIA

Australia has established its reputation as areliable supplier of quality products atcompetitive prices. However the expansion oftrade relationships through higher levels ofinvestment and people-to-people contacts willneed to continue. The Government is activelycampaigning to improve access to regionalmarkets and remove barriers to Australianproducts.

Australia’s trade with the Middle East remainedstrong in 2001. Total exports to countries of theMiddle East were valued at $7.9 billion, anincrease of 39 per cent over the previous year. The region accounted for 6.4 per cent of totalAustralian exports and Australia maintained asignificant trade surplus with it.

The composition of Australia’s trade variedsignificantly across the Middle East region.Passenger motor vehicles constituted more thanhalf of total exports to Saudi Arabia and almost aquarter of exports to the UAE and have

demonstrated that Australia is a reliable supplierof sophisticated manufactured products.Commodity exports, principally wheat, meat andlive animals, continued to dominate Australia’strade with other countries in the region. Exportsof dairy products to the Gulf countries increasedsignificantly.

Australian exports to Saudi Arabia grew by 66 per cent to $2.6 billion in 2001. Saudi Arabia isnow Australia’s largest market for motor vehicles(exports increased by 54 per cent to reach $1.4 billion in 2001) and dairy products (exportsincreased by 24 per cent to reach $198 million in2001). The resumption of the live sheep tradeadded $139 million to exports to Saudi Arabia in2001. Saudi Arabia is also a growing market forICT products ($4 million in 2001) and a broadrange of manufactures, such as scientific testingequipment, electrical machinery and appliances.The Government of Saudi Arabia continues topursue a range of economic reforms includinglaws on foreign investment and the decision tolower tariffs significantly on 5 500 items.

The United Arab Emirates remains one ofAustralia’s largest trading partners in the MiddleEast. Exports to the United Arab Emirates in 2001were $1.3 billion, an increase of 26 per cent overthe 2000 total of $1.0 billion. Motor vehicles, dairyproducts and live animals were the main items.Two-way investment flows are significant,although real estate and portfolio investmentfeature more highly than direct equity investment.A bilateral Investment Promotion and ProtectionAgreement text was initialled in August 2001 andconsultations continue on double taxation issues.

Iran continues to offer trade and investmentopportunities for a wide range of Australiancompanies, although companies approaching themarket must be persistent. Australia recorded asubstantial increase in exports to Iran in 2001. Thelong-running regional drought has seen increaseddemand for food imports, particularly wheat, anda growing requirement for water management andagricultural equipment and technology. Iran

continues to seek foreign assistance in thedevelopment of its substantial oil and gas reserves.

Iraq remains a substantial market for Australianwheat – exports grew by around 40 per cent in2001. Australian companies have also beensuccessful in gaining contracts for the supply ofother humanitarian goods through the UN-controlled Oil-for-Food program. New proceduresfor administration of the sanctions on Iraq,expected to be implemented in May 2002, shouldbenefit Australian exporters by allowing fasterapproval of applications to export to Iraq andaccess to a wider range of markets within Iraq.

Australia’s exports to Egypt in 2001 were valued at$740 million, a rise of 34 per cent on 2000.Australia enjoys a long-standing tradingrelationship with Egypt, based primarily oncommodities, although Egypt has also developedimportance as a value-adding processor ofAustralian commodities, such as pulses, and for

transit trade to neighbouring Libya. Australia’stransit trade to Libya – mainly live animals, wheatand milk powder – was valued at $57 million in2001. Major project developments such as theSouthern Valley offer important opportunities forAustralian investment. Egypt allows almost allfood and beverage commodities to be imported,subject to the meeting of Egypt’s complexstandards regime. Australia’s disease-freeenvironment assists in meeting these requirements.

Australia’s commercial relationship with Israelcontinues to develop far beyond its traditionalgoods-based trade. The relationship nowencompasses the transfer of technology and jointapproaches to challenges in irrigation,telecommunications and agriculture. Australiaalso maintained a limited but valuable market inthe Palestinian Territories, principally comprisinglive animals. Australian exports to Israel totalled$278 million in 2001.

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THE MIDDLE EAST HAS EMERGED AS THE MAJOR MARKETFOR AUSTRALIAN MOTOR VEHICLE AND SPARE PARTS

Australian-made cars have become a common sight on roads in the Middle East. Over a period ofsix years, the Middle Eastern market has emerged as the major market for Australian vehicles andcomponents, worth $2.0 billion in 2001. Six of the top ten export destinations for Australian carsare now Middle Eastern countries.

Holden, Mitsubishi Australia and Toyota Australia are selling cars to Saudi Arabia, the United ArabEmirates, Kuwait, Oman, Qatar, Bahrain, Yemen, Lebanon, Syria, and Jordan.

Saudi Arabia is by far the biggest market, accounting for 42 per cent of exports in 2001. Australiancars are seen by Saudi Arabians as ideal for their needs. They are roomy, powerful and reliable inthe hot and dusty conditions that prevail in Saudi Arabia for much of the year. Because of thecompetitive Australian dollar, they are keenly priced. In addition to being ideally suited for personaluse, they are also being used by the police for street security and pursuit and by the taxi industry.

An increasingly important benefit from this new trade is the enhanced prospects for Australianspare parts and after-market products in the Middle East, particularly in the four-wheel-drivemarket. Exports of Australian components to Saudi Arabia alone reached over $25 million in 2001,compared with $19 million in the previous year.

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OPPORTUNITIES

Forecasts of lower world economic growth in 2002have significant implications for the region, wherereduced revenues could lead to a softening ofdemand for consumer goods and services. Such adevelopment would have most impact onAustralia’s trade with the Gulf countries, whereimpressive gains were made in the export of bothmanufactures and services in 2001.

Australian commodities exports should be largelyprotected from any downturn in economic activity.Most Australian commodity exports are viewed asnon-discretionary purchases by governments andAustralia has a well-deserved reputation forquality. That said, reduced foreign incomeearnings and pressure on regional currencies couldact as an incentive for import substitution, or ashift to cheaper, lower quality suppliers.

The demographics of the region have moveddramatically. A younger population has highexpectations, reinforced by the oil boominheritance. The younger population is exerting

strong pressure on social services, which, in turn,offers potential opportunities for Australia in areassuch as education and health services. There is alsoa strong shift from neighbourhood stores tosupermarkets and hypermarkets in Dubai, andmore direct procurement by major supermarkets.Austrade has developed a strategy to introducenew food and beverage consumer products,targeting the growth in the retail sector. The MiddleEast will continue to be an important growingmarket for Australian motor vehicles and parts.

With the expected development of new gas fieldsin a number of countries in the Middle East,opportunities exist for Australian companies in allfacets of the oil and gas and petrochemicalssectors. Australia made good progress in 2001 inexpanding its involvement in the oil and gassector in Algeria, Iran, Jordan, Qatar, Kuwait andthe United Arab Emirates. This sector willcontinue to provide investment and developmentopportunities for Australian companies,particularly as more countries in the region easeaccess requirements.

AUSTRALIA’S TRADE WITH THE MIDDLE EAST

Note: Services data is not available for the Middle East

Sources: ABS data on the DFAT STARS database.

Latin America

ECONOMIC OUTLOOK

Latin American economies have been affectedadversely by slowing US demand for their exportsand falling world commodity prices. The majoreconomies of Argentina, Chile, Brazil andparticularly Mexico, are highly dependent on ahealthy US economy to absorb their imports. The performance of Latin American economiessteadily deteriorated through 2001. After rising byclose to 4 per cent in 2000, growth in Latin Americaslowed to less than 1 per cent in 2001 and isexpected to remain flat in 2002. Argentina enteredits fourth consecutive year of recession, and Mexicois expected to come close to, if not actuallyexperience, negative growth.

Mexico became the largest economy in LatinAmerica during 2001. However, growth sloweddramatically during the year, due to a slump indemand from the United States and theconsequent impact on manufacturing andindustrial production. After rising by close to 7 per cent in 2000, output was flat in 2001 withmoderate improvement expected in 2002. Thedecline in growth has placed pressure on publicfinances, and the Government’s commitment tomaintaining fiscal prudence will be tested furtherif the economy continues to worsen.

Economic and social conditions deterioratedsharply in Argentina throughout 2001. In itsfourth year of recession, Argentina defaulted onits public debt and abandoned convertibility,which had pegged the value of the peso to the USdollar for more than a decade. A raft of bankingrestrictions and other measures has severelystrained the financial sector. The Government willneed to put in place a credible economic plan andbudget for the remainder of 2002 in order toobtain the international assistance it requires.Events over recent months have lead ConsensusEconomics to predict that the Argentine economywill contract by 8.4 per cent in 2002, beforestabilising in 2003. Inflation is expected to rise

sharply during this period, due largely to a sharpand ongoing devaluation of the peso.

The risk of financial contagion following theArgentine Government’s decision to devalue thepeso and declare a moratorium on its debtobligations appears to have been lessened by thegradual de-coupling of the Argentine economyfrom others in the region.

The global slowdown and developments inArgentina, plus an electricity crisis and thecontinued high value of the Brazilian real,negatively impacted on Brazil. A sharp drop inforeign direct investment inflows raised concernsabout Brazil’s capacity to finance its currentaccount deficit and continued to place downwardpressure on the real. After solid growth of 4.4 percent in 2000, the economy expanded by 1.7 per centin 2001, with slightly higher growth of 2.1 per centforecast for 2002.

Chile appears to have weathered the sharpdeterioration in the global environment relativelywell in comparison with the region’s other majoreconomies. Nevertheless, the economy weakenedin 2001. It is expected to grow by around 3.0 percent in 2002.

With oil accounting for 80 per cent of exportincome and 50 per cent of public revenue,Venezuela’s growth slowed to 2.7 per cent in2001. Low oil prices, the decision in February tofully float the Bolivar and recent political unrestall mean the economy is widely expected to be inrecession in 2002.

Ongoing weakness in the industrial sector, apersistently high unemployment rate and politicaluncertainty have continued to be a drag on growthin Colombia. After rising 1.6 per cent in 2001, thepace of growth in Colombia is expected to rise onlymarginally in 2002. Despite Government efforts tostimulate the economy and quell growing publicunrest, economic growth in Peru was flat in 2001.The announcement of a stimulatory 2002 budget isexpected to improve growth prospects; however,the external climate will moderate such growth.

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TRADE AND INVESTMENT WITHAUSTRALIA

The marginal fall in Australia’s exports to LatinAmerica in 2001 reflects the slowdown in LatinAmerican economies. Exports to three ofAustralia’s four largest Latin American tradingpartners, Brazil, Chile and Argentina declined, in line with their slow growth. Australia’smerchandise exports to Latin America were $1.3 billion in 2001, down 1.4 per cent on 2000 levels. Coal was again the largest singleexport commodity, comprising a little over one-third of total exports. Other significantexports included meat (including beef), dairyproducts (including milk, cream, butter andcheese), wool and live animals. Significantprocessed and manufactured exports includedpassenger motor vehicles and parts, a range ofchemicals, steel, medicines, specialised machinery,transport and civil engineering equipment andmeasuring instruments.

Australia’s merchandise imports from LatinAmerica rose by 6 per cent in 2001 to $1.5 billion,building on 48 per cent growth in 2000. As a result,Australia recorded its second merchandise tradedeficit with Latin America since 1995. The largestincrease was in imports of food products(principally preparations for non-alcoholicbeverages) from Brazil. Other imports that rose

strongly were telecommunications equipment fromMexico, fertilizers from Mexico, leather mainlyfrom Argentina and motor vehicles from Mexico.

Exports of services displayed promising growth in2000, rising 26 per cent to $701 million. Imports ofservices from Latin America also rose strongly, by 19 per cent to $694 million.

In June 2000, the stock of Australian investment inLatin America (excluding Central America) wasvalued at over $2.5 billion, the majority of whichwas direct investment in equities. Although stillconcentrated in mining, Australian investment inLatin America is gradually diversifying into othersectors.

OPPORTUNITIES

Latin America remains a prospective market forAustralia. Australian exporters are hampered by alack of profile, as Latin America’s traditionalsuppliers are either based in the region, in NorthAmerica or in Europe. Equally, Australianperceptions of Latin America do not accuratelyreflect the sophistication and strength of many ofthe Latin American economies and politicalstructures. In March 2001, the Minister for ForeignAffairs Alexander Downer and the Minister for Trade Mark Vaile established a Council onAustralia–Latin America Relations (COALAR) toaddress this. The Council’s aim is to enhanceAustralia’s economic, political and culturalrelations with Latin America, to raise profiles ineach other’s regions and to support Australia’sbroader diplomatic objectives in Latin America.The Council includes representatives frombusiness, academia, non-governmentorganisations (NGO) and government.

Australia’s exports to the region are dominated by commodities, although its expertise inagribusiness technology, mining supplies andservices, education, motor vehicles and marinetransport in particular are opening up nichemarket opportunities. Austrade is also planning aRenewable Energy trade mission to Chile, Braziland Mexico in April 2002 and conducted a series

Minister for Trade Mark Vaile visiting the La QuerenciaRanch, managed by Fares Rural, a Fremantle-basedcompany, where Australian sheep are being bred for theMexican market.

of seminars on Australia’s capabilities in theenvironmental industry in Brazil in March 2002with a view to capturing opportunities in thesesectors.

Australia’s investment in the region, while smalloverall, does enjoy some profile in the miningsector. The world’s major mining companies rankthe countries of Latin America as offering the bestopportunities within the next five years for thedevelopment of profitable mines. Latin America isexpected to attract 32 per cent of total worldmining investments between 1999 and 2007. LatinAmerica also attracts between 25 and 30 per centof world mineral exploration expenditure, makingit the fastest-growing mining region in the world.Yet, some Australian suppliers of miningequipment and services have been slow to takeadvantage of the opportunities in Latin America.

Chile is the beachhead for Australian companiesin Latin America with a sizeable Australianpresence in mining and mining services inparticular. Austrade’s Americas Mining IndustryTeam promotes Australian mining capability to

Latin America and Canada and profilesopportunities in these markets. A major initiativeis the ‘Australia’ pavilion at Latin America’spremier mining show EXPOMIN, which will beheld in Chile in May 2002.

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Anthony Fernando, Austrade Commissioner in Santiago,addresses the audience at the Latin American Seminarsabout opportunities in the region.

AN AUSTRALIAN COMPANY MINES OPPORTUNITIES IN LATIN AMERICA.

Brisbane-based Ludowici Mineral Processing Equipment Pty Ltd plans to double exports of theirmineral processing equipment after securing three export orders in Latin America worth A$3million. Ludowici is wholly Australian-owned. Its mining arm currently turns over A$40 million ayear. Its main focus is the manufacture and supply of mineral processing equipment.

Ludowici’s Export Manager, Jim Cronin, said the company won the orders for their vibratingscreens ahead of fierce international competition.

‘The reputation of our product in the Australian market certainly gave us the edge in securing therecent deals,’ Mr Cronin said.

‘We’ve also appointed an agent in Chile who’s well connected in the mining industry and he’sworked with Austrade in Peru at the last EXPOMIN 2001 mining exhibition,’ he added.

Latin America is the next booming market for Australian mining equipment and services, believedto be worth around A$34 billion over the next six years. It is a very competitive market, with manymajor international players pitching their products. However, Australian companies like Ludowicihave the capacity to establish an edge with quality products and services at competitive prices.

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Central, East and South Europe

ECONOMIC OUTLOOK

The key Central, East and South European marketsfor Australia include Poland, Hungary, the CzechRepublic, Russia, Romania and Turkey. The smallereconomies of Bulgaria, Slovenia and the SlovakRepublic also offer opportunities. Together, thisregion represents a market of about 310 millionpeople and a total GDP in 2000 of US$795 billion,including Russia (US$251 billion), Turkey (US$203billion) and Poland (US$157 billion). With recentprogress on structural reform, stabilising ofeconomies and increasing domestic demand, this region is an attractive trading and investmentmarket for Australia in the medium to long term.

Economic growth and investment throughout theregion has strengthened in recent years andremained positive through 2001. The highestlevels of growth were in Russia (5.8 per cent),Romania (4.8 per cent), Bulgaria (4.5 per cent) andHungary (3.7 per cent). The European Bank for

Reconstruction and Development considers thisregion ‘one of the few bright spots in an otherwisedim global economic landscape’ and projectsgrowth of about 3 per cent in 2002.

TRADE AND INVESTMENT WITHAUSTRALIA

Australian merchandise exports have risen fromtheir low levels of the late 1990s as the Central, Eastand South European economies have undertakenthe transformation from planned to market-basedeconomies. In 2001, the value of Australia’s totalmerchandise trade with these key economies ofCentral, East and South Europe was $1.2 billion.Australia’s exports to the region for 2001 wereworth $730 million, and imports $485 million.

Major merchandise exports to the region in 2001were: wool – $151.5 million (the largest sales, at$82.5 million, to the Czech Republic); raw hidesand skins to Turkey – $72.6 million; coal to Turkey– $99.8 million; iron ore to Turkey – $20.9 million;meat to Russia – $28 million; and confidentialitems to Russia – $76 million.

AUSTRALIA’S TRADE WITH LATIN AMERICA

Note: Services data is available only for Chile and South America. 2001 service data is not available.

Sources: ABS Recorded Trade data on the DFAT STARS database; ABS, International Trade in Goods and Services (Cat. No. 5368.0).

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OPPORTUNITIES

All of the countries in this region, except Russia,are candidates for EU membership, and many ofthem are aiming for accession by 2004. Russia isseeking to join the WTO, and negotiations on theterms of its membership are well under way.Meaningful market access commitments for theproducts and services of other members, as wellas market-oriented reforms and institutionalstrengthening in commercially important policyareas, are required before any new member maybe admitted to these organisations. Australian

companies should monitor these accessionprocesses closely to anticipate trade andinvestment opportunities.

Progress with economic transition varies acrossthese economies. Some have successfullyestablished functioning market economies withthriving private sectors and supporting legal andinstitutional frameworks. Others have some way togo in this process. Increased Australian trade andinvestment activity in the region reflects optimismabout the direction of changes taking place.

RED MEAT EXPORTS JUMP INTO CENTRAL AND EAST EUROPE

The ‘mad cow disease’ (BSE) and foot and mouthdisease crises that swept across the United Kingdomand Europe opened a number of markets forAustralian exporters. In Central and Eastern Europe,the opportunity arose to market Australia as a safe,cheap alternative meat supplier – particularly giventhe low Australian dollar, the exclusion of EuropeanUnion products from those countries, the recovery ofthe Russian market and the upswing in theeconomies of Central Europe.

Game meat exports of kangaroo, beef hearts, livers and tripe, and manufacturing beef trimmingsare now experiencing high demand in these growth markets. Kangaroo meat sales are up 527 percent on 2001, following aggressive marketing promoting the product as a healthy, low-fat, low-cholesterol alternative to other meats. Australia has been exporting kangaroo meat to Europe for35 years, but it is only in the past few years that there have been significant increases in exports toEastern Europe. Countries such as Bulgaria and the Czech Republic are outstripping moretraditional markets for kangaroo meat, such as France, Germany and Belgium.

In the Czech Republic, sales of tripe, lamb and kangaroo meat continue to increase with exports of$1.1 million in 2001 and similar levels expected again this year. Kangaroo meat, which is used insausages, salami, pâté and other gourmet-processed foods, is so popular that supply could notkeep up with demand, as restaurants in Prague increasingly include kangaroo meat on theirmenus.

In Bosnia Herzegovina and the Former Yugoslav Republic of Macedonia, substantial amounts ofbeef trimmings and some higher-quality beef are being sourced from Australia. The decidingfactors in the purchase of meat and offal in most of Central Europe are price and availability,which are currently in Australia’s favour.

As several Central European countries prepare for EU accession, Australian exporters must gettheir foot in the door to avoid being cut off from sales through the EU meat quota system.

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The region offers significant attractions forAustralian traders. It is close to Australia’s third-largest market, the European Union, whichrepresents a large and accessible market for theregion’s products. The region is already relativelywealthy, and EU membership can be expected toboost economic growth and increase domesticconsumer demand.

Many countries in the region have voiced concernabout EU domination of their markets, andAustralia is well placed to market itself as analternative trading partner. Australia can benefitfrom its cultural, historical and people-to-peoplelinks with the region and is well placed torespond to the concerns of countries that wish todiversify their energy and resource supplies.

While the region’s markets remain attractive fortraditional commodity exports, Australia’s tradehas diversified and more value-added products,including processed foods and medical equipment,are penetrating the markets. A Space CooperationAgreement signed with Russia in May 2001 mayboost high-technology trade with Russia.

Services trade with the region has also increasedand now encompasses education, health, tourism,telecommunications and government services.Australian suppliers are well placed to meetregional demand for modern government servicesinfrastructure.

AUSTRALIA’S TRADE WITH CENTRAL, EAST AND SOUTH EUROPE

Note: Services data is not available for Central, East and South Europe.

Sources: ABS Recorded Trade data on the DFAT STARS database.

India

ECONOMIC OUTLOOK

After recording economic growth in excess of 7 percent in the mid-1990s, the Indian economy hasslowed more recently. Annual growth fell to anestimated 4.4 per cent in 2001. This is partlyattributable to the slowing of India’s economicreform process, but was exacerbated by higher oilprices, the early 2001 earthquake in the heavilyindustrialised state of Gujarat, a moderateagricultural performance and the slowing of theglobal economy. India’s terms of trade haveimproved, with exports continuing to performstrongly. However, India’s fiscal position at bothnational and state levels continues to be of concern.

The Indian Government has announced itsintention to advance its privatisation program,and hopes that economic liberalisation willaccelerate economic growth. Consumer pricegrowth has been subdued over the past two yearsand domestic interest rates are at their lowestlevels in almost 30 years. Other policies recentlyimplemented to stimulate the economy include areduction in the cash reserve ratio that banks musthold with the Reserve Bank of India, a relaxationof the rules restricting cross-investment betweenfirms, and further liberalisation of the regulationsgoverning foreign investment.

Growth in the Indian economy is expected toimprove in 2002 due to a better monsoon andconsequent gains in agricultural output and ruralincomes. Global recovery in trade will also help,although India’s low exposure to the globaleconomy will limit any gains from this source.Growth is forecast to improve marginally in 2002 to 5.2 per cent.

TRADE AND INVESTMENT WITHAUSTRALIA

The bilateral trade relationship with India ishealthy. Over the past decade, Australia’s exportsto India have been expanding 60 per cent fasterthan overall exports, in line with India’ssubstantial economic growth and reform in thesame period. India is now Australia’s thirteenth-largest export destination. Australian exports in2001 exceeded $2.4 billion, a record, withindications that this growth is likely to besustained well into 2002. Sectors showingparticular strength included coal, whereAustralian exports exceeded $960 million in 2001(up from $740 million in 2000). Exports of copperores have grown steadily from $28 million onlyfive years ago to $284 million in 2001. India is thefourth-largest market for Australian wool, withexports of almost $176 million in 2001. Cottonexports reached almost $158 million in 2001, againrepresenting dramatic growth over a five-yearperiod from a base of $14 million. Agribusinessexports, including pulses, other vegetables andapples, have also grown substantially.

Services exports have performed well, mostnotably with the emergence of Australia as apreferred destination for Indian students studyingabroad. Estimates of Indian students undertakingvocational, tertiary or post-graduate study inAustralia exceed 10 000. The Government willwork with the education sector to promoteAustralia as a high-quality, low-cost provider ofeducational services.

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The film industry in India, known as “Bollywood”, offerssignificant opportunities for Australian exporters.

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OPPORTUNITIES

As liberalisation of the Indian economy continues,India is increasingly viewed by the internationalcommunity as a lucrative market. As a result,Australian companies face increased competitionacross all economic sectors. Australia currentlyenjoys a good reputation in India as a cost-competitive and reliable source of imports, butwill need to work hard to maintain and build onthis reputation.

The removal of quantitative restrictions and thesubsequent tariffication of trade barriers by theIndian Government have led to greater certaintyfor Australian exporters. The general downwardtrend in tariffs has led to increased opportunitiesfor Australian exporters, although the process ofreduction has slowed, and in some cases beenreversed, as a temporary measure to allow Indianindustry a period in which to adjust to increasedcompetition from imports.

Complementarities between the Australian andIndian economies present many opportunities,which the Government is exploring through theJoint Working Group on Energy and Minerals, the Joint Business Group on Natural Fibres andTextiles and the Australia–India InformationIndustries Business Network.

Priorities for the Australian Government in 2002reflect its ongoing strategy to secure improvedmarket access conditions for Australian exporters.Australia is particularly keen to secure furtherreductions in tariffs on coal and wool, bothimportant factors of production for Indianindustry. In addition, the Government willcontinue to promote lower tariffs on Australianagribusiness exports, including on apples, and theintroduction of a separate tariff line formacadamia nuts.

The Australian Government’s trade promotionefforts in 2002 will continue to focus on promisinggrowth sectors, including ICT, financial services,tourism, health, education and environmentalservices. The conclusion of negotiations on anMOU on Tourism Cooperation should see greatergrowth in this sector.

Australia is fast becoming a preferred destinationfor Indian film, TV commercials and music videoproducers, offering attractive locations as well ashighly skilled and experienced crews, qualityproduction, post-production, animation andspecial effects, and an extremely competitive coststructure. Some 40 Indian films have been shot onlocation in Australia since 1998.

AN AUSTRALIAN VOICE ON INDIAN CULTURE

Sydney company, Narrowcasters, has taken innovative export to another level. Narrowcastersprovides audio tours and other visitor services to major tourist and commercial sites includingheritage sites, nature parks, trade fairs and conferences, and corporate plants. Narrowcasters has clients in cultural and commercial sites throughout India, South Asia and New Zealand.

Its fully-owned subsidiary in Delhi, Narrowcasters India Pvt Ltd, has worked with the ChhatrapatiShivaji Maharaj Vastu Sanghralaya (formerly the Prince of Wales Museum) in Mumbai to producean audio tour covering the main highlights of the Museum. Available in Hindi, English, Marathi,French, German and Japanese, the audio tour incorporates 38 stops in the Museum’s collection ofminiature paintings, ancient sculptures, manuscripts and models. State-of-the-art digital MP3players are used to deliver the tour, which is particularly valuable for foreign visitors.

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AUSTRALIA’S TRADE WITH INDIA

Note: Services data is not available for India.

Sources: ABS Recorded Trade data on the DFAT STARS database.

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International Monetary Fund, World Economic Outlook December 2001. Unless stated otherwise, all forecasts are from this publication.

Consensus Economics, Asia Pacific Consensus Forecasts, January 2002.

Consensus Economics, Latin America Consensus Forecasts, January 2002.

Economist Intelligence Unit, Country Report: UAE, January 2002.

European Bank for Reconstruction and Development, Eastern Europe resists the global slowdown, press release, November 2001.

REFERENCES

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NEED TO KNOW MORE?

DFAT provides Country Fact Sheets and other economic briefing for individual countries atwww.dfat.gov.au/geo/index.html.

Austrade provides briefing on opportunities in all major markets at www.austrade.gov.au.

The IMF’s World Economic Outlook can be downloaded from its website, www.imf.org, which alsocontains economic information on individual countries.

The WTO’s website, www.wto.org contains international trade statistics as does the OECD website,www.oecd.org. The latter also offers country-specific information under the Documentation heading.

The Treasury, www.treasury.gov.au, provides links to APEC member economies ‘Finance Ministries’home pages.

A fortnightly economic bulletin emailed free to subscribers is available at EFIC’s website,www.efic.gov.au.

EXPORT OPPORTUNITIES

OPPORTUNITIES ABOUND FOR

AUSTRALIA’S DIVERSIFYING ECONOMY

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• Australia’s competitive exchange rate, productivity growth and diversifying exportmix provide a wide range of opportunities in many markets. Through Austrade, theGovernment has identified eight sectors with particularly strong opportunities forexport growth in 2002 and beyond.

• The Government is committed to a strong tourism sector. In addition to assistanceprovided following the collapse of Ansett and 11 September, the Government hasprovided $16 million to develop regional tourism, and an extra $24 million over fiveyears to protect Australia’s market share of international travel.

• Opportunities exist for Australian agribusiness to supply product to the ‘home’brands of overseas retail chains and to benefit from China’s accession to the WTO.Demonstrable food safety frameworks are essential to capitalise on and maintainAustralia’s reputation as a clean, green supplier.

• Australia’s innovative automotive component suppliers can take advantage ofgrowing production in China and ASEAN and the trend in Europe towards smaller,lighter weight, less polluting vehicles. Vehicle manufacturers are having greatsuccess in the Middle East and are expanding into Latin America.

• The Government is promoting Australian aerospace technologies to major aircraftmanufacturers. Prospects are bright for exports of Australia’s fast ferries and high-speed patrol boats to be used for troop movement and law enforcement activities.

• Australian institutions are increasingly attractive as providers of English languageeducation to international students, both in Australia and offshore. Our educationsector is experiencing growth far exceeding our two main competitors (the US andUK). This reflects recognition of the quality and value of an Australian education andour world-leading legislation to protect the interests of international students.

• Increasing investment in environmental protection, China’s accession to the WTOand the Beijing Olympics will provide opportunities for Australian exporters ofenvironmental goods and services. As will the environmental consequences of rapideconomic growth, urbanisation and industrialisation in South-East Asia.

• In 2002, the Government will target major overseas sporting events, such as theBeijing Olympics, for involvement by Australian infrastructure companies. Otheropportunities will depend on increased public sector financing of infrastructurefollowing the recovery of Asian economies from the current downturn.

• Austrade plans to increase the number of companies exporting in Australia’sinnovative ICT, biotechnology and business and professional services sectors byadvising on e-business, intellectual property protection, and alternative ways tointernationalise.

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Tourism is a key growth industry for Australia andcontributes significantly to job creation, exportearnings and regional development. Inboundtourism is Australia’s largest export, generatingaround $16 billion in 2001. By 2009–10, inboundtourism will generate around $30 billion in exportearnings for the Australian economy and attract 9million overseas visitors. Australia’s top tourismmarkets include New Zealand, Japan, the UnitedKingdom, the United States and Singapore. Stronggrowth is also being shown in a number ofemerging markets such as China, which is forecastto generate over 1 million visitors a year by 2010.

The collapse of Ansett and the 11 Septemberterrorist attacks on the United States had asignificant impact on Australia’s tourism industryand the broader economy. These events affectedvisitor arrivals in the months immediatelyfollowing, particularly in major markets such asthe United States, Europe and Japan. However,revised forecasts for inbound tourism arrivalspredict the downturn to be relatively short-term,with 4.3 per cent growth forecast for 2002.

The Tourism Industry Working Group wasestablished by the Prime Minister to assess theeffects of these events on the tourism industry andidentify possible options for Government assistance.The Government acted quickly to implement theWorking Group’s key recommendations to help themost severely affected tourism operators andrestore airline capacity.

Notwithstanding the recent domestic andinternational events, tourism offers enormousopportunities in the medium to longer term foreconomic growth, the creation of new jobs and thereinvigoration of regional Australia. TheGovernment is committed to a strong and vibranttourism sector.

To help the tourism industry reach its fullpotential and for the benefits to be shared by allAustralians, the Government has provided $16 million to the Regional Tourism Program,which aims to help regional businesses to deliverquality tourism attractions, products and services.

The Australian Tourism Commission (ATC) willalso be given an extra $24 million over five yearsto implement a new business and leisure tourismmarket redevelopment package. The packageaims to protect Australia’s market share ofinternational travel and restore and increasevisitor numbers to regional areas hardest hit bythe recent domestic and international events.

Austrade supports the tourism industry throughthe Export Market Development Grants (EMDG).In 1999–2000, 518 EMDG recipients were from thetourism sector and claimed 18 per cent of allgrants paid (by number and by value ofpayments). These recipients received $23 millionin grants and generated exports valued at $840million. Two measures introduced in the ExportMarket Development Grants Amendment Act 2001were directly relevant to the tourism sector – the inclusion in the EMDG scheme of professionalconference organisers and possible reimbursementof the costs of travel to Australia by overseasbuyers.

In recognition of the trade importance of tourism,a twice-yearly meeting between the Minister forTrade and the Minister for Industry, Tourism andResources and industry representatives wasinitiated in 2001. The major industry umbrellagroup, representing the inbound tourism industry,has recently changed its name to the AustralianTourism Export Council to reflect the importanceof exporting to their industry and the nation.

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The Australian Bureau of Agricultural andResource Economics (ABARE) has forecast exportearnings from the Australian farm sector(covering unprocessed and lightly processedcommodities such as meat, fibre, grain, seafood,dairy products, horticultural products, forestproducts, live animals and wine) to increase from$29.2 billion in 2000–01 to $30.4 billion in 2001–02.Processed food exports are also expected tofurther build on the 21 per cent increase in valueover the past year.

Australian agricultural products now have afundamental dependence on overseas markets,with 98 per cent of wool, 76 per cent of wheat and63 per cent of beef ultimately exported.Importantly, there is also a general shift toincreased value adding of commodities.

Private label branding

Private label branding has grown strongly aroundthe world in the past decade, with the trend set tocontinue. A private label is a retailer orwholesaler’s ‘home’ brand covering a range ofproducts, such as the Marks and Spencer label inthe United Kingdom or the Coles Farmland brandin Australia. In Europe, unlike in Australia, privatelabel branding includes budget, premium andluxury ranges, and has become very important inboth volume and value terms. In the UnitedKingdom, over 45 per cent of retail sales volumecan be attributed to private label branding.

The private label trend is set to continue, so thereare significant opportunities for Australianexporters to supply large European companieswith ‘home’ brand products. Private label

business was a significant item of interest at theAustrade Global Food Seminars held aroundAustralia in October 2001. Austrade is nowworking with interested Australian suppliers topursue these opportunities in Europe and NorthAmerica.

China’s accession to the WTO

China is Australia’s third-largest trading partnerand fourth-largest export market. Its food andbeverage market size was estimated at $150 billionin 2000. The accession of China to the WTO hasthe potential to expand trading opportunities formany industries within the food and agribusinesssectors in Australia.

Food safety

Following the recent ‘mad cow disease’ (BSE) andfoot and mouth disease (FMD) scares in Europeand Asia, food safety and quality have emerged asimportant issues affecting global consumerspending. To ensure future competitiveness,Australian exporters must develop a food safetyframework and demonstrate product integrity byimplementing externally audited quality assurancesystems throughout the supply chain. Within thisfood safety framework, state-of-the-art operatingsystems and manufacturer compliance with foodsafety guidelines can combine with a perception ofAustralia as a clean, green supplier to giveexporters opportunities to expand their businesses.

AGRIBUSINESS AND FOOD

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AGRIFOOD GLOBALISATION AND ASIA

Over $12 billion worth of Australian unprocessed and processed foods are exported to Asia – more than 50 per cent of total agrifood exports. Understanding changes in Asian markets istherefore crucial to capitalising on the opportunities offered by a globalising agrifood sector.

Asia’s agrifood sector is transforming rapidly from a predominantly subsistence system to a modernsystem of agrifood production, processing and distribution. Far from slowing down the modernisationof Asia’s agrifood demand and supply patterns, the East Asian crisis of 1997–98 actually acceleratedit. Leading North American and European agrifood multinationals quickly grasped the uniqueopportunity of cheaper asset prices to strengthen their long-term positions in the region’s agrifoodsector and accelerated their strategies for incorporating Asia into their global operations. As a result,between 1995 and 2001, most leading North American and European agrifood multinationals nearlydoubled their operational presence in Asia. The majority now have at least one manufacturingoperation in China and Thailand, and many in India. Almost all now have substantial distributionarrangements in Japan.

These agrifood multinationals are now pursuing a number of common strategies that will affectthe development of agrifood systems in Asia and globally, including:

• global and regional rationalisation of production facilities, distribution systems and sourcing ofraw materials and finished products;

• global rationalisation of business segments, product lines and brands;

• development of global umbrella brands;

• strengthening control of supply chains; and

• growth in contract manufacturing.

Australian agrifood companies need to develop strategies to meet these challenges. DFAT hasundertaken a major, six-volume study on agrifood globalisation and Asia to ensure such planning isbased on comprehensive information on the changing contours and forces of the global agrifoodlandscape. The first volumes, titled Agrifood Multinational Corporations in Asia was launched in December2001. Subsequent volumes – Changing Agrifood Distribution in Asia, Asia’s Agrifood Demand Trends and

Outlook 2001-2010 and Asia and the Agrifood Trade Framework – will be released in the first half of 2002.

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The Australian automotive industry producesinternationally competitive, high-qualityautomotive products. However, domestic demandfor locally made cars is stable, so Australianenterprises must export in order to grow.Technological innovation, cost-effectivemanufacturing and a commitment to productivityimprovement programs are the industry’s keyexport strengths.

In 2001, Australia exported automotive products tothe value of $4.9 billion, continuing an extendedtrend of international growth. The success ofAustralian companies in promoting theircompetitive advantages to key decision-makers andprocurement managers within global supply chainshas driven this growth, resulting in significantlevels of original equipment component exports tomanufacturers in the United States, Europe and

Japan. Australia’s vehicle manufacturers are alsoextending their reach into new internationalmarkets in the Middle East and Latin America.

Australia’s world-competitive tooling industrycontinues to grow in importance, offering high-precision, cost-effective solutions to many markets,particularly in Asia. Sales of aftermarket products(that is, spare parts and automotive accessories)are also growing as Australian capability andingenuity are recognised around the globe.

Because of its proximity, growth and manageableproduction volumes, the ASEAN automotiveindustry remains a primary target for Australiansuppliers. Growth in both passenger and lightcommercial vehicles will be significant, presentingopportunities for Australian component suppliersto establish a foothold in the market. There willalso be opportunities for aftermarket products and

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Minister for Trade Mark Vaile tries out the new Harley V Rod in Detroit. Adelaide based company, Castalloy has supplied all thewheels and hubs to Harley Davidson motorcycles in the US for the last ten years, with annual growth averaging 10 per cent.

tooling services. If the ASEAN Free Trade Area(AFTA) eventually delivers more volumeconcentration to the region, Australian supplierswill be well positioned to respond to South-EastAsian companies’ search for new, low-cost supplylines, as an alternative to Japan.

In North-East Asia, and especially in Japan, carmakers are seeking new ways to reduce costs, andAustralian component suppliers who can meetJapanese global procurement requirements arebenefiting. Australian companies that can offermodularised components are well placed tosupply to North-East Asian manufacturers.

Although Chinese vehicle output volumes arerelatively small by world standards, Chineseautomotive production will continue to expanddramatically to meet increasing domestic demandand develop export volumes. This expansion,coupled with the Chinese Government’s policy ofencouraging foreign investment, will suitstrategically minded Australian componentsuppliers aiming to establish a longer termposition in the market.

Cost pressures are driving current procurementdecisions by North American equipmentmanufacturers and suppliers. This presentssignificant short-term business opportunities forcapable and credible Australian suppliers withcost-effective solutions and a strong promotionprogram. In the longer term, profitability shouldimprove and innovation will resume itsimportance as the major demand factor. A range

of opportunities are available to suppliers ofcomponents, tooling and other services, followingstrong growth in vehicle assembly in LatinAmerican markets, particularly Mexico.

The trend in Europe is for smaller, less pollutingand lighter weight vehicles. Australian companiesthat can achieve weight savings throughaluminium, steel and magnesium castingtechnology will find a growing market. Otherfuel-saving and emission-reducing technologieswill also be in demand.

In 2000–01, Austrade’s program of outwardmissions and inward buyer visits helped Australianautomotive exporters gain around $70.5 million innew long-term export contracts and inwardinvestments.

DFAT’s Automotive Taskforce continues itsparallel work on market access issues in theindustry. It provides a ‘one-stop shop’ forautomotive and component businesses withmarket access and other trade-related concerns.The Taskforce also provides strategic direction forAustralia’s chairmanship of the APECAutomotive Dialogue, a senior government-industry forum established to address issues ofkey concern to the automotive sector and facilitategreater regional integration in the automotivesector.

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PRESIDENT BUSH RELIES ON AUSSIE BRAKES

PBR, a Melbourne-based company, currently supplies the brake callipers for US President George W. Bush’s limousine.

PBR International has entered into an exclusive supply agreement with Robert Bosch Corporationto supply brake products for the North American market. PBR currently supplies brakecomponents and technology for 60 per cent of all General Motor’s vehicles in North America. Thecompany is also supplying brake products to the Ford Motor Company. PBR suppliesmanufacturers in Australia, North America, Malaysia and Thailand. It also licenses itstechnologies to manufacturers in Japan and Korea.

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In 2001, Australia exported an estimated $300 million in defence-related goods. Some 90 per cent of these goods were dual-usetechnologies such as software, computer andcommunications equipment and training services.Australia also exported large capital items such aspatrol boats to the Philippines and armouredvehicles to Kuwait and Belgium.

The Australian Government has indicated that itwill increase spending on defence aerospaceprojects over the next five to ten years. To maximise leverage from these acquisitions,Austrade and the Department of Defence areworking together to promote Australian aerospacetechnologies to key managers of major aircraftmanufacturers around the world. Other areas forstrong growth include the Middle East market forelectronic systems and niche product clusters suchas underwater defence technologies.

After the success of the Australian-built wave-piercing catamaran in ferry operations betweenDarwin and East Timor, many navies around theworld are looking seriously at high-speed ferriesfor transporting soldiers and materiel over longdistances as an alternative to air or slower seatransport. The US military trialled an Australian-built high-speed catamaran for troop movementsin Asia and the Pacific, eventually awarding the$80 million contract to the WA-based company,Austal. The prospects for these types of vesselsare very good, not just in the United States, but globally.

Australia is continuing to develop its expertise inthe design and manufacture of patrol vessels, with a number of Australian-designed high-speedpatrol boats being built for military and lawenforcement agencies in the Asia-Pacific region.For example, Tenix Defence has now receivedorders for an additional six vessels after thesuccessful sale of two Australian-designed andbuilt search and rescue vessels to the Philippines.

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MARINE MOVES AHEAD

Australian ferries are noted for their high performance,low operating costs, innovative designs and high-qualityfit outs and finish. Over half the world’s high-speed carand passenger ferries are made in Australia. Usingaluminium as the preferred construction material,Australian shipyards now occupy a very visible niche in aworld shipping industry formerly dominated by steelbuilds. A small number of Australian builders of largercar and passenger ferries – for example, Austal Ships andIncat – focus on wave-piercing catamaran designs. In 2001, Australian boat builders received fastferry orders from Venezuela, Portugal, the United States, Egypt and Northern Ireland.

A number of other Australian companies can build passenger-only ferries suited to servicingshorter coastal routes, which include catamarans, trimarans and monohull ferries. For example,North West Bay Ships, a Tasmanian builder, recently supplied a fast passenger trimaran to servicethe South Korea-Japan ferry route, and SBF from Western Australia has supplied many monohulland catamaran ferries to South-East Asia and the South Pacific.

Australia is also building a strong reputation in the design and construction of high-qualityfibreglass, composite and aluminium recreational vessels and large luxury motor yachts.

Austal Ships’ commissioning jetty in Henderson, Western Australia. C

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International education is Australia’s third-largestservice export behind tourism and transportation.In 2001, it was valued at $4.1 billion, placing it onpar with wheat and wool exports.

In 2000, the number of international studentsstudying in Australia and in Australian studyprograms overseas grew by 16 per cent, from 162 865 to 188 277. Figures released by theAustralian Bureau of Statistics in December 2001indicate a continuing upward trend, witheducation services recording 11 per cent growthover the previous 12 months. This far exceededthe growth rates of Australia’s two maincompetitors – the United States and the UnitedKingdom – in the provision of English language-based education to international students.

Over the past year, Australia has built on itssuccess in traditional Asian markets by expandinginto many emerging markets, including Northand South America, Africa, Europe, Bangladeshand the Philippines. This reflects a growingworldwide recognition of the quality and value ofan Australian education. Given the uncertaintycreated by the events of 11 September in theUnited States, safety has become a key decision-making factor for international students and hasalready produced an increased interest inAustralia as a safe study destination.

Australia leads the world in legislation to protectthe interests of international students and inregulations that protect the reputation of theeducation and training industry through theEducation Services to Overseas Students (ESOS) Act2000. This is critical to the success of Australia’sinternational education and training sector.

There has also been substantial growth in thedelivery of Australian programs offshore, throughoffshore campuses, twinning arrangements within-country partners, online and distance educationprograms and franchise arrangements. This is inresponse to increasing global demand forcustomised learning programs with flexibledelivery options. It also reflects the high regard inwhich the world holds Australian education andtraining generally.

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The University of Wollongong campus in Dubai

The environment industry provides the goods,services, technologies, infrastructure and systemsthat reduce human impact on the environmentwhile enabling mainstream industry to increaseefficiency and maintain competitiveness in anincreasingly demanding and sophisticated globalmarketplace. Sustainable production andmanagement practices are becoming increasinglyinfluential among risk assessors, analysts,investors, insurers and procurers. Key industrysub-sectors include air pollution control, water andwastewater management, waste management, soiland groundwater remediation, noise and vibrationcontrol, energy management, and environmentalcontracting and engineering services.

The value of the global market for environmentalgoods and services is estimated at around $1 000 billion a year. In 1999–00, Australianexports of environmental goods were estimated tobe $1.3 billion. An Environment Industry ActionAgenda, developed jointly by government andindustry and launched in September 2001,outlines strategies to drive the industry’s growthto over $40 billion by the end of the decade.

The United States, New Zealand, Japan andSouth-East Asia are currently the principal exportmarkets for Australian environmental goods andservices. However, increasing investment inenvironmental protection, China’s accession to theWTO and the Beijing Olympics will provide arange of opportunities for Australian companies –as will the Hong Kong Government’s majorinitiative to develop ‘green buildings’ usingenvironmentally friendly products inconstruction. The environmental consequences ofrecent rapid economic growth, together with

increased urbanisation and industrialisation inmarkets such as Malaysia, Thailand andIndonesia, will also provide opportunities forAustralian exporters.

Enviro 2002, a world-class environmentconference and trade exhibition to be held inMelbourne from 7–12 April 2002, will be a keyevent for developing new environment industryopportunities. The event takes on extrasignificance as the International Water Associationhas decided to hold its next annual meeting inMelbourne at the same time. Austrade’s offshoreoffices will continue to work to attract overseasbuyers to the exhibition, which will showcaseAustralia’s supply capability to an expected 5 000 visitors. Business matching programs arealso being organised.

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ENVIRONMENT

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The global infrastructure business – coveringbuilding and engineering infrastructure – is worthabout $US3 400 billion a year. Major sectors aregeneral buildings, transportation, manufacturing,industrial process, petroleum, power,telecommunications, water and waste watertreatment and sport and leisure facilities. Key areasfor development in 2002 include sport/Olympicbusiness, green/clean/smart buildings, renewableenergy business, railways/airport business and theoil and gas business. Australian companies earnedabout $3.2 billion from overseas construction andinfrastructure business in 2000-01 and this isexpected to be higher in 2001-02.

The engineering construction industry isexperiencing an increased demand for packagedor full service solutions and this will put pressureon Australian companies to understand thesetrends and adapt to the changing businesspractices.

The need to access the global supply chains ofinternational developers and contractors will alsobe important to companies developing businessfrom within the engineering infrastructure sectors.Austrade is working with government andindustry allies to help companies access thesesupply chains and to market industry andcompany capabilities to specific projects underdevelopment by these international companies.

Increased interest in environmental protection andsustainable development will see increasedbusiness opportunities in these areas. The need forinfrastructure development will see the continuedefforts towards the private sector financing ofsocial infrastructure. Australian experience in thisarea will provide business opportunities forAustralian companies active in Asia.

The Australian railway industry currently has alarge number of international opportunities.China, Hong Kong, Singapore, Taiwan, thePhilippines, Chile and Peru have all announcedvery aggressive investment programmes aimed toimprove their rail capabilities in both passengerand freight transportation and infrastructure.

This industry is also aware that there are asignificant number of possibilities in equipmentmaintenance and support services (e.g. ticketing,resource management, training and equipmentrostering and maintenance). Australian capabilityis well recognised in these areas and Australiancompanies have been very successful in tappinginto these markets.

The Government continues to exploit the successof the Sydney 2000 Olympic Games to boostAustralia’s international profile. Australian sportsinfrastructure know-how, technology and servicesexpertise are vigorously promoted to high-prioritysports events.

Australia’s sports infrastructure strategy focuseson winning contracts in areas such as engineeringand architectural design, construction, facilitymanagement, event management, transportplanning, logistics, land reclamation, sportsreclamation, sports education, sport technologiesand sustainable building products and systems.

Austrade is working with Australia SportInternational and other key industry groups totarget future sports events, including the 2003South Pacific Games in Suva, the 2004 AthensOlympics, the 2006 Asian Games in Doha, the2006 World Cup Soccer in Germany, the 2006Winter Olympics in Turin, and the 2008 BeijingOlympics to encourage an industry-wide

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approach to export promotion of the Australiansports industry. A Beijing Olympic CoordinatingCommittee, comprising Federal, State andTerritory governments and the Australia-ChinaBusiness Council has been established to helpcoordinate trade promotion and businessdevelopment activities.

Business opportunities in 2002 will largely dependon the speed and extent to which the Asianeconomies bounce back from the currenteconomic downturn and the extent to whichSouth-East Asian markets increase public sectorfinancing of infrastructure. Tracking foreign directinvestment into manufacturing, mining andmineral processing will also form an importantpart of Austrade’s strategy of positioningAustralian companies for growth areas ininfrastructure over 2002.

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The My Thuan Bridge project – a 1.5 km cable-stayedbridge over the Mekong River – is Australia’s largestdevelopment assistance project in Vietnam.

Knowledge-based companies not only includetraditional companies providing professional andeducational services, but also companies in theexpanding areas of information andcommunications technology and biotechnology.Knowledge-based companies exist across allindustry sectors and are the high value-addedareas that rely on the innovative skills andknowledge of a highly-educated workforce.

Australian industry encompasses an increasingnumber of knowledge-based companies. Theysometimes do not have a tangible product, areoften one or two-person businesses, and dependhighly on their intellectual property. Knowledgebased companies can be at all stages of thebusiness life cycle, from basic research anddevelopment to fully mature exporting companies.

Austrade’s global network provides advice to knowledge-based companies on a broad range ofinternational issues, including:

• identifying other entities that conduct similaror complementary work to allow, for example,strategic partnering at a base level throughcooperative research and other researchinstitutes;

• supporting services such as those delivered byresearch organisations;

• development of marketable products, includingintellectual property management and strategicuse of knowledge or tangible items;

• creating new business entities through inwardand outward investment, including seedfunding, venture capital, angel funding, or jointventures and strategic alliances; and

• technology transfer.

Austrade is devising new strategies tosubstantially increase the number of knowledge-based companies that export their products. Thiswill require a particular focus on strategic use andmanagement of intellectual property, advice ondifferent ways to internationalise (e.g. jointventures, sourcing capital, alliances andpartnering, integration of investment and export),e-business options and global strategies for ‘bornglobal’ companies.

Information andCommunication Technology

Australia’s ICT industry is confident, diverse,sophisticated and innovative. The value ofAustralian exports for ICT goods and services wasestimated to be $5.8 billion in 2001. Key industrysub-sectors include telecommunications, systemsintegrations, consultancy services, wirelesssolutions, software, e-security, digital services andcontent and value-added hardware manufacturing.

The breadth and depth of Australia’s industry andresearch base is reflected in the leading workbeing conducted in fields like quantumcomputing, software development, e-security,wireless networks, photonics and nanotechnology.

Australia is widely recognised as a provider ofspecialised photonics technology and componentsolutions, with over 25 years of investment in R&D.The sector has grown rapidly, and is anticipated togrow further at an average 29 per cent per annumto 2010.

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Australia’s software sector consistently producesleading edge solutions and applications fordiverse markets with no less than 33 of Australia’s39 universities engaged in software R&D.

While Australia is a ‘smart’ country in terms ofInternet penetration and adoption of mobiletelephony, its international profile as an intelligentproducer is constrained by risk adversity, corporateimmaturity and scalability of innovative firms.

Business and professionalservices

The business and professional services sector isone of the most rapidly growing knowledge-based industries in Australia. This sector includesa varied range of services – from the relativelytraditional accounting, legal, architecture andengineering professions to ‘cutting edge’ marketresearch, business management and IT services.

There are now over 114 000 business andprofessional service firms in Australia. Between1994 and 1998, the number of firms increased by67 per cent, double the average growth for theservices sector (33 per cent) and more than doublethe average rate of increase for all industries. Thesector is dominated by small firms, with 97 percent of firms employing fewer than 20 people.This sector has a dynamic relationship withmanufacturing and merchandise trade, addingvalue to these other sectors. It has also driven asignificant increase in full-time employment in the sector, which grew by 64 per cent between1990 and 2000.

Total exports by the sector in 2001 wereapproximately $2.9 billion, but there has been alow propensity to export. A survey carried out by

the Allen Consulting Group for Austrade and theDepartment of Industry, Tourism and Resourcesindicated that the large firms in the sector havethe ability to develop international marketsthemselves, but small and medium companies arelikely to need government assistance.

Biotechnology

Biotechnology, a vital technology for the 21st century, includes the application of biologicalprocesses in medicine, agriculture, foodprocessing, manufacturing and environmentalmanagement. By providing new approaches tokey social objectives and development constraints,biotechnology has the potential to transformmany industries, enable sustained improvementsin productivity, deliver previously unachievableor unaffordable health benefits and openopportunities for far more environmentallysustainable approaches to agricultural andindustrial production.

As a user of biotechnology products andprocesses as well as a significant developer ofproducts, Australia has an interest in capturing ashare of this growing global market, alreadyestimated to exceed US$50 billion. Australian

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WORLD CONGRESS ON IT

The World Congress on Information Technology (WCIT), the main global forum for discussion ofthe economic and social impact of IT, was held in Adelaide from Wednesday 27 February to Friday1 March 2002. The WCIT is held every two years in a different location. The event in Adelaide waspreceded by a two day IT Business Forum, organised by the South Australian government with thesupport of all State and Federal government agencies, including Austrade.

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firms developing platform technologies and drugtargets, and performing early trials of promisingnew compounds, are increasingly seekingopportunities to export their services, as well asthe results of their research and development.

To support this growth, the AustralianGovernment, under its National BiotechnologyStrategy, has launched a range of programs aimedat helping companies commercialise theirresearch. The Government wishes to facilitate thegrowth and success of biotechnology companiesand the uptake of biotechnology to improveefficiency and yields in industry. It fully supportsthe industry with initiatives aimed at building afavourable environment for trade inbiotechnology-related products and services,including living modified organisms.

Commercialisation and internationalisation arecrucial to the development and long-termsustainability of the Australian biotechnologysector. Austrade has worked with industry andCommonwealth and State Government agenciesto ensure a collaborative approach to positioningAustralia internationally. In 2001, the USBiopartnering and Investment Roadshow was effective in highlighting Australia’sbiotechnology capabilities, using successfulcompanies able to build partnerships and sustaina market presence in the United States. Elevenbiotechnology companies were selected toparticipate in a mentoring and business matchingexercise. They were given the opportunity topresent their capabilities at events on the east andwest coasts of the United States, followed bytargeted meetings with potential clients.

A record Australian contingent of 44 exhibitorsand 349 delegates representing 130 companiesand organisations participated in BIO 2001International Biotechnology Conference &Exhibition, held in June 2001 in San Diego,California. The conference attracted almost 14 000 participants. Australia launched the‘Destination Australia’ initiative, which will brand all international biotechnology marketingmaterial, symbolising Australia’s status as a centreof excellence in biotechnology. To overcomedifficulties in finding and approachingprospective partners during a conference of thissize, a parallel, inaugural bio-partnering meetingwas arranged between Australia, Canada andNew Zealand. Bio 2002 will take place in Toronto,Canada from 9-12 June 2002.

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TAKING AUSTRALIAN MEDICAL RESEARCH TO THE WORLD

PEPTECH LIMITED

Peptech Limited is an R&D-based biotechnology company that has matured into an internationalplayer. Peptech focuses on the research and development of protein and peptide-based humanand veterinary pharmaceuticals for the treatment of cancer, inflammation and infection withselectivity of action, achieved by modifying peptide structures and delivery characteristics. Itscurrent human strategy involves the development of single domains for use as therapies fordiseases within the above fields.

Peptech Animal Health is developing veterinary pharmaceutical products for managing animalhealth and fertility. Peptech has developed extensive intellectual property relating to theproduction and delivery of peptides with a central role in the control of animal fertility, andcurrently has one product (Ovuplant™) on the market and another (for control of dog fertility)about to enter the registration process in Australia.

Peptech recently entered into international licensing agreements and research collaborations withKnoll AG, Centocor (licensing use of Peptech’s anti-TNF patents) and Diversys (for production ofsingle domains against nominated targets).

PANBIO LIMITED

PANBIO Limited is a globally-focused Australian biotechnology company specialising in thedevelopment, manufacturing and marketing of diagnostic kits for a range of infectious, vector- andanimal-borne diseases. The company is a world leader with its broad range of diagnostic kits formosquito-borne viral diseases, including Ross River virus, and yellow and dengue fevers.

Their product list includes more than 60 diagnostic tests covering more than 27 diseases,including chickenpox, mononucleosis, typhus, Q fever, leptospirosis, brucellosis, rickettsia,measles, rubella and whooping cough. Most of PANBIO Limited’s product range is developed andmanufactured at its headquarters in Brisbane and at its facility in Columbia, Maryland, in theUnited States. PANBIO Limited’s products are used by hospitals, pathology laboratories, researchinstitutions and physicians in over 60 countries.

In November 2001, PANBIO Limited announced a new diagnostic test platform allowing patients tobe diagnosed and treated in one visit to the doctor. The point-of-care device is a small plasticcassette providing cost-effective detection of a wide range of pathogens and infectious diseases inless than five minutes using a small sample of blood from the patient.

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Department of Foreign Affairs and Trade, Agrifood Globalisation and Asia – Volume 1 Agrifood MultinationalCorporations in Asia, December 2001

Allen Consulting Group, Creating Value by Transforming Knowledge: Australia’s Business and ProfessionalServices Sector, April 2001

Tourism Forecasting Council, October 2001

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NEED TO KNOW MORE?

More information about opportunities in particular sectors can be found by calling Austrade on 13 28 78 or at www.austrade.gov.au. Australian businesses wishing to promote their goods andservices to prospective international customers or partners should register on the ‘Australia onDisplay page of the Austrade website.

Statistics on education exports are available athttp://www.idp.edu.au/services/marketing/research_consult/industry/exports.asp)

Details on the environment industry action agenda and other industry action agendas are availableat www.industry.gov.au

INTERNATIONAL TRADE – GOOD FOR AUSTRALIA

TRADE WORKS FOR A

PROSPEROUS AUSTRALIA

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• Trade has always been good for Australia, helping to maintain and grow its highstandard of living.

• International trade presents Australian consumers with the freedom to choosefrom a wide range of high quality imports at affordable prices.

• Progressive opening of of global markets enables Australian business to find newexport markets for its products. Diversification of export markets has providedAustralia with protection against regional economic downturns and allowedexpansion beyond supplying the small domestic market.

• International trade allows access to better and cheaper business inputs, makingAustralian enterprises globally competitive.

• Exporting puts Australian businesses in competition with the best companies in theworld, providing an extra incentive for innovation and the adoption of best practice.This knowledge is often transferred to other Australian firms, lifting theircompetitive performance.

• Exporters are among Australia’s best employers, creating more new jobs, providinghigher wages and salaries, and offering better training. One in five Australian jobs nowrelies on exports. For rural and regional Australia, that increases to one in four jobs.

• International economic intergration enables Australia to attract foreign investment,which brings new technologies and management skills and establishes industriesand jobs. It also enables Australian business to invest offshore to access markets,earn larger profits and sustain Australian operations.

• Australia’s future rests on its ability to embrace change. While Australian companiesstrive to predict and lead changes in consumer trends, product innovation andproduction practices, some industries will struggle against more competitive foreignproducts. Australia benefits enormously from higher levels of trade in an integratedglobal economy, but some Australian industries will face difficulties. TheGovernment is committed to helping communities through the process of structuraladjustment that results from increased international competition.

• Protection is not a long-term solution. Tariffs are little more than taxes. One sectorof the economy is protected, while the rest pay more for their daily goods.

• For some years, the prices Australians pay for imports have been falling relative tothe prices received for exports. As each year passes the same quantity of exportsbuys more imports, with the result that Australia is getting richer.

AT A GLANCE

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Australia’s ambitious, comprehensive trade policyagenda reflects the inextricable link between tradeand the success of its economy. Trading – on thesheep’s back or in cyberspace – has always beengood for Australia and has helped maintain andgrow its high standard of living.

The impact of accelerating globalisation oninternational trade and commerce has highlightedthe importance of trade to Australia. Internationalflows of people, capital, goods and services haveexpanded, providing Australian business withnew markets and new opportunities.Communication between peoples andorganisations has also intensified, exposingAustralia’s potential to the world and generatinga wealth of information about its place in theglobal economy.

For a medium-sized economy like Australia,which has long relied on overseas markets buyingits commodities and which now produces a hugerange of world-class goods and services – frommining and environmental technology to legal andaccounting services – increasing globalisationaugurs well for a promising future. It enablesAustralian business to find new markets for itsproducts, attract international capital to develop itseconomic potential, and access better and cheaperbusiness inputs to make domestic enterprisesglobally competitive. More importantly, it enablesAustralia to consolidate its place among theworld’s great trading nations and build a solideconomic future.

The Government is committed to maximising thebenefits of globalisation. It is working to improveAustralian access to global export markets,pursuing real economic benefits for Australianbusinesses, workers, consumers and communities.

141I n t e r n a t i o n a l Tr a d e – G o o d f o r A u s t r a l i a

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Export is the boom sector of the Australiaeconomy. During the 1990s, exports grew at 8.1 percent, almost double the rate of the 1970s and 50 per cent higher than the 1980s, despite relativelyconsistent GDP growth rates throughout the threedecades (3.8 per cent for the 1990s, 3.5 per cent inthe 1980s and 3 per cent in the 1970s). In addition,exporters provide 16 per cent of total employmentfrom just 4 per cent of all businesses.

Globalisation has enabled Australia to diversify themarkets to which it exports goods and services,reinforcing the export sector against economicdownturns in particular countries or regions. Salesto Europe, Latin America and the Middle Easthelped Australian exporters ride out the East Asianfinancial crisis during 1997–98. The low Australiandollar and continuing diversification have helpedstave off the worst of the current downturn.

Australia’s reliance on primary products,including both agricultural and mining products,has also diminished in recent years. As tariffs havefallen, the manufacturing sector has increased itsoutput and diversity, and exports of sophisticatedmanufactures have risen dramatically. Primaryproducts are still important, but manufacturingindustries are increasingly exporting first-classproducts to the world. Services have also made astrong impact on Australia’s export figures,reflecting Australia’s increasing integration withthe world economy across a wide range ofindustries and the expansion of potential marketsfor Australian goods and services.

Exporting puts Australian businesses incompetition with the best companies in the worldand provides extra incentive for innovation andthe adoption of modern technology andmanagement practices. Exporting businesses alsobenefit from exposure to international trends in

technology, product design and consumerbehaviour. This knowledge flows into the rest ofthe economy, lifting the competitive performanceof other Australian firms.

For Australian workers, the net effects of exportsand trade liberalisation have been positive. Ofcourse, workers benefit as consumers when theycan choose from a wider range of products at lowerprices. However, Australian exporters are alsoamong the fastest-growing companies, providingthe best job opportunities for Australian workers.Over the past 10 years, around 1.7 millionAustralian jobs have become directly or indirectlyconnected to exports and one in five Australian jobsnow relies on the export sector. In regional and ruralAustralia, that figure increases to one in four jobs.

Exporting companies are among Australia’s bestemployers. Because exporters often invest inadvanced technology and managementtechniques, these employers enjoy higher levels ofproductivity and are able to provide better wages,salaries and conditions for their employees.Australian Bureau of Statistics data indicate thatexporters have been paying each of their full-timeemployees an average of $46 000 a year comparedto $28 600 being paid on average by non-exporters.Statistics also clearly show that exportingcompanies are committed to education, trainingand workplace safety and that, on average, theyprovide more full-time and permanent jobs thantheir non-exporting counterparts.

For all of these reasons, the Government isworking to encourage more exporters and higherlevels of trade. Trade not only improves thecountry’s macroeconomic position, it directlyraises the standard of living of Australian familiesand workers.

EXPORTING TO PROSPERITY

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E x p o r t i n g t o P r o s p e r i t y

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AUSTRALIA’S AVERAGE APPLIED TARIFFS AND EMPLOYMENT

Source: ABS, DFAT & Economic Planning Advisory Commission

As average applied tariffs fell in Australia over the 1980s and 1990s, employment increased significantly.

EXPORT AND LOCAL COMMUNITIES

Exporting companies of all sizes contribute significantly to their local economies andcommunities:

• Forbes NSW beef processor Lachley Meats employs nearly 280 people and exports 95 per centof its product. The company estimates it provides $200 000 a day to local farmers and over $300 000 a day to the local economy.

• Busselton WA family-owned farm Protea Pride air freights 125 tonnes of proteas to Japanannually. The farm employs 15 staff and injects $500 000 into the local economy each year.

• Launceston’s ACL Bearing Company is Australia’s sole manufacturer of precision enginebearings, employing 460 staff. ACL ranks third by market share in all sales of replacementengine bearings in North America.

• Australian Vintage of Loxton SA is a division of Simeon Wines Limited and exports around $30 million of products annually. Australian Vintage employs around 100 people in the Riverlandarea directly and is supplied by over 100 growers, returning nearly $8 million to the region inwages and $15 million in grape payments annually.

• The Murray Goulburn Cooperative of Rochester Victoria employs 280 people and exports 70 percent of its dairy products. Export growth has enabled the cooperative to significantly expandproduction. Murray Goulburn estimates that it provides over $1.3 billion a year to regional Victoriathrough wages and income payments to farmers.

• Travel North, based in Katherine NT, operates tours in and around the Top End. Overseas touristsgenerate around $4 million worth of business annually. The company employs around 130 staff.

• Maryborough Queensland heavy engineering company Walkers Pty Ltd, whose products includerailway rolling-stock, mine equipment parts and consumables, and sugar processing machinery,has found export success in the Middle East, Mexico, North Africa and Malaysia. Walkersemploys 600 people, contributing about $20 million to the local economy in wages alone.

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Although Australia benefits enormously fromhigher levels of trade in an integrated globaleconomy, some Australian industries andcommunities have faced difficulties asinternational competition has increased. Demand for some Australian products has fallenas consumer trends change, new products areinvented or cheaper production practices aredeveloped. While Australian companies strive topredict and lead these changes, some industrieswill struggle against more competitive foreignproducts. There will be short-term winners andlosers among companies and communities in thiscontinuous evolution.

The Government is committed to helpingcommunities in the process of structuraladjustment. Australia’s future will rest on itsability to embrace change. Australian prosperitywill be safeguarded when the pool of capital

available for investment in Australia is put towork in the most efficient and productive way.

These points need to be reinforced in light of thecriticisms often made of trade and internationalinvestment liberalisation. Clear information abouttrade and globalisation is essential in respondingappropriately to Australians’ legitimate concerns,as well as concerns created by misinformation.

Community concern often focuses on the leveland effect of imports on the economy. But thesuggestion that imports are bad for Australia’seconomy ignores the fact that imports giveAustralian consumers freedom to choose from awide range of high quality imports at affordableprices. Imports also provide local producers withbetter business supplies, enabling them to maketheir business more efficient and competitive, andcontributing to economic growth and job creation.The Government recognises that competitiveimports can put pressure on local industries,causing difficulties for local communities. Incooperation with the affected industries, localcommunities and State and Territorygovernments, the Government is providingvarious forms of financial assistance to helpindividuals, families and communities. But re-erecting protectionist barriers is not an answer.

Another misperception is that foreign investmentis bad for Australia because foreigners control toomany Australian assets and threaten Australianjobs. It is important to remember thatinternational investment has always played asignificant role in Australia’s development,particularly some of its largest and most profitableindustries. Foreign investment has brought, andcontinues to bring, new technologies andmanagement skills to Australia and it has

CLEARING THE AIR – MYTHS AND FACTS ABOUTTRADE, INVESTMENT AND GLOBALISATION

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DFAT’s enormously successful ‘Exploding the Myths’pamphlet is now in 35 000 Australian homes and businesses– providing Australians with an accessible, balancedperspective on globalisation

permitted Australia to enjoy a higher standard ofliving and higher rates of economic growth thanotherwise would have been possible.

Foreign investors do not actually control a greatdeal of Australia’s assets and enterprises. BetweenJune 1991 and June 2000, the level of foreign directinvestment in Australia rose from 5 per cent oftotal assets to 6 per cent – a 1 per cent increase inten years. Moreover, far from threateningAustralian jobs, more than half a million people inmetropolitan and regional Australia work in firmswith majority foreign ownership, and many morework in firms relying on foreign-ownedcompanies as customers and suppliers of goodsand services. Foreign investors have helpedestablish industries and jobs in many cities andregions and improved the performance ofestablished companies. In doing so, they provide

jobs and opportunities for Australians to developtheir skills and pursue rewarding careers.

That said, the Government reserves the right tocontrol foreign investment in certain industries,notably the media, broadcasting, residentialhousing and other real estate. It also has the powerto block investment proposals that are determinedto be contrary to the national interest. The ForeignInvestment Review Board is responsible forscreening large foreign investment proposals.

Foreign investment by Australian companiesoverseas is also good for Australia. In 2001,Australian companies became net acquirers of $29 billion of foreign assets through mergers andacquisitions. Far from exporting jobs, thesecompanies are building global networks andincome streams from an Australian base.

Clearing the Air – Myths and facts about trade, investment and global isat ion

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GLOBALISATION AND POVERTY: TURNING THE CORNER

Poverty remains one of the most serious international challenges.Up to 1.2 billion of the world’s 4.8 billion people still live inextreme poverty.

Globalisation has proven a powerful tool in the fight againstpoverty, particularly when economic integration is accompaniedby sound domestic policy choices and measures to reduceinequality, well-targeted development assistance and globalaction to reduce trade barriers.

International inequality has fallen over the past 30 years – thevery poorest countries now represent less than 8 per cent ofthe world’s population compared with just over 45 per cent in1970. The proportion of the world population living in poverty hasalso been steadily declining since 1980, despite strong population growth in poor countries.

Those developing economies that managed to open their markets to the world achievedunprecedented income growth and poverty reduction in the second half of the 20th century.Developing countries that have not joined this process of economic integration have suffered.Often experiencing internal conflict and poor governance, anti-business policies and lowparticipation in international trade, these countries must also shoulder the burden of slowlygrowing – or even declining – incomes and rising poverty.

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Sound decisions about domestic industryprotection and how international goods andservices are sold in Australia are crucial to reapingthe benefits of economic globalisation andmaximising the potential of Australian business toexpand and flourish beyond our borders.

That is why the Australian Government iscommitted to seeking further trade andinvestment liberalisation among the members ofthe WTO, in other international forums, such asAPEC, and bilaterally with major tradingpartners.

Tariffs are little more than a tax. One sector of theeconomy is protected while the rest pay more fortheir daily goods. If 1988 tariff levels were appliedtoday, cars would cost over 25 per cent more andclothing the average family would cost at least anextra $300 a year. Lowering trade and investmentbarriers enables governments to maximise thebenefits of international economic integration forall citizens.

For some years, the prices Australians pay forimports have been falling relative to the pricesreceived for exports. According to the ReserveBank of Australia, over the past five years theworld price, measured in SDR terms, has fallenfor 26 of the 29 categories of goods imported intoAustralia. The world price of household electricalitems has been falling at an average of 4.3 per centa year, cars at 2.4 per cent and textiles, clothingand footwear at 1.3 per cent. Even moreimpressively, the world price of computers andcomputer parts has been falling by 20 per centeach year for five years. Overall, the price ofimports has been falling by 3.5 per cent a year.Australia has embarked on a long-term

improvement in its terms of trade. As each yearpasses, the same quantity of exports buys moreimports. Australia is gradually getting richer.

The Australian Government will continue to workat multilateral, regional and bilateral levels tocapture the benefits of trade liberalisation andinternational investment for Australia. It willpursue a positive outcome from the new WTORound, but it will also work regionally andbilaterally to ensure no avenue is left unexploredin its efforts to secure and improve Australia’senviable standard of living.

GOOD TRADE POLICY: DELIVERING FOR AUSTRALIANS

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T. Harcourt, Why Australia Needs Exports: The Economic Case for Exporting, discussion paper of theAustralian Trade Commission and the Centre for Applied Economic Research (CAER) at the Universityof New South Wales, November 2000.

The Economist, Globalisation and its critics: A survey of globalisation, supplement, 29 September 2001.

Department of Foreign Affairs and Trade, Exploding the Myths: Facts about Trade and InternationalInvestment, brochure, July 2001.

Centre for International Economics, Globalisation and Poverty: Turning the Corner, report with the assistanceof the Australian Agency for International Development, the Department of Foreign Affairs and Tradeand the Department of the Treasury, October 2001.

I. Macfarlane, Australia and the International Cycle, Speech to the Australian BusinessEconomists/Economic Society of Australia (New South Wales Branch) Forecasting Conference Dinner,Sydney, 6 December 2001.

Australian Bureau of Statistics and Austrade, A Portrait of Australian Exporters, August 2000.

Department of Foreign Affairs and Trade, The Big End of Town and Australia’s Trading Interests, 2002.

I n t e r n a t i o n a l Tr a d e – G o o d f o r A u s t r a l i a 147

REFERENCES

NEED TO KNOW MORE?

Further resources on globalisation and the benefits of trade liberalisation are available atwww.dfat.gov.au/trade/australia_trade_policy.html.

Austrade’s Why exports matter paper is available through the Economist’s Corner atwww.austrade.gov.au. Austrade also maintains an online brochure, Exporting for the Future.

Two APEC reports, Globalisation and poverty: Turning the corner (available atwww.dfat.gov.au/publications/globe_poverty/index.html) and Open economies delivering to people:APEC’s decade of progress (available at www.dfat.gov.au/apec/reports/open_economies_2000.pdf)discuss globalisation in an Asia-Pacific context. A study guide for students, Investigatingglobalisation through the APEC experience, is also available atwww.dfat.gov.au/apec/reports/open_economies_2001.pdf

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APPENDICES

APPENDIX 1: STATISTICAL TABLES

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TABLE 1: AUSTRALIA'S PRINCIPAL MERCHANDISE EXPORT DESTINATIONS

Rank Market Exports % growth GDP Population2001 ($m) from 2000 2000 ($m) 2000 (m)

1 Japan 23,703 8.7 8,032,112 1272 US 11,904 8.4 16,972,080 2823 Korea 9,538 5.4 785,195 474 China 7,587 26.3 1,854,635 1,2615 New Zealand 7,152 8.9 85,837 46 Taiwan 5,356 -3.6 531,302 227 Singapore 5,354 -8.6 158,427 48 UK 5,192 38.4 2,427,326 609 Hong Kong 4,184 17.0 280,373 710 Indonesia 3,215 11.1 263,189 21011 Saudi Arabia 2,631 65.8 239,366 2112 Malaysia 2,597 9.9 153,393 2313 India 2,423 32.3 823,294 1,01614 Thailand 2,288 16.8 209,389 6115 Italy 2,199 19.3 1,834,996 5816 Canada 1,814 25.2 1,184,182 3117 Netherlands 1,642 -7.8 626,735 1618 Germany 1,472 12.2 3,211,637 8219 Philippines 1,319 -13.5 129,119 7620 South Africa 1,303 3.2 216,189 4321 United Arab Emirates 1,270 25.7 113,172 322 France 1,205 32.5 2,208,916 5923 Papua New Guinea 1,031 4.8 6,888 524 Belgium-Luxembourg 903 -10.8 396,730 1025 Spain 843 18.1 953,124 3926 Iraq 829 40.5 54,611 2327 Iran 752 24.5 169,998 6428 Egypt (a) 740 33.5 168,870 6429 Fiji 590 -0.2 2,489 130 Vietnam 499 9.1 53,828 7931 Kuwait 485 50.9 50,960 232 Brazil 473 -17.2 1,009,021 17033 Pakistan 433 14.0 105,913 13834 Finland 412 -7.7 205,775 535 Mexico 409 20.5 986,625 9836 Bangladesh 351 8.7 82,198 13037 Sri Lanka 345 19.3 28,168 1938 Ireland 312 115.0 162,095 439 Turkey 302 2.6 343,297 6540 Switzerland 280 41.4 412,713 7

Notes: (a) Excludes exports of alumina.Sources: ABS data on the DFAT STARS database; International Financial Statistics; Central Bank of China, Financial Statistics – TaiwanDistrict; Economic Intelligence Unit, ViewsWire service; World Bank, World Development Report 2002.

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TABLE 2: AUSTRALIA'S PRINCIPAL MERCHANDISE IMPORT SOURCES

Rank Country Imports % growth2001 ($m) from 2000

1 US 21,413 -7.42 Japan 15,260 -0.43 China 10,314 13.74 Germany 6,666 13.35 UK 6,279 -9.86 New Zealand 4,741 5.77 Korea 4,635 -3.58 Singapore 3,968 6.99 Indonesia 3,905 44.710 Malaysia 3,899 -8.611 Italy 3,434 9.412 Taiwan 3,026 -14.113 Thailand 2,673 -5.114 France 2,578 10.515 Vietnam 2,100 -1.916 Canada 1,744 -7.317 Sweden 1,531 -5.718 Hong Kong 1,418 10.719 Switzerland 1,284 2.720 Saudi Arabia 1,278 -11.921 Ireland 1,278 25.522 Papua New Guinea 1,244 -13.123 Netherlands 1,016 5.924 United Arab Emirates 930 -1.125 South Africa 859 0.826 Belgium-Luxembourg 835 5.727 India 808 10.428 Finland 752 4.529 Spain 750 14.230 Mexico 614 35.031 Denmark 560 -1.432 Brazil 522 -20.333 Philippines 507 -4.734 Austria 504 -5.735 Israel 448 7.436 Brunei 406 51.537 Qatar 385 240.238 Fiji 240 -19.339 Norway 225 62.340 Pakistan 186 0.0

Source: ABS Data on the DFAT STARS database.

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TABLE 3: AUSTRALIA'S SERVICES EXPORTS (a)

Total Exports excludingExports travel and education services

% growthRank* Country 2000 ($m) 2000 ($m) 2001 ($m) from 2000

1 United States of America 5,740 4,278 3,492 -18.4%2 United Kingdom 3,420 1,702 1,654 -2.8%3 Japan 3,543 1,543 1,562 1.2%4 Singapore 1,891 1,127 1,348 19.6%5 New Zealand 2,211 1,003 917 -8.6%6 Hong Kong (SAR of China) 1,053 523 838 60.2%7 Germany 834 320 306 -4.4%8 Malaysia 811 258 221 -14.3%9 China, Peoples Republic of 761 240 249 3.8%10 Indonesia 847 287 294 2.4%11 Thailand 478 186 155 -16.7%12 Switzerland 362 174 185 6.3%13 Korea, republic of 665 169 220 30.2%14 Netherlands 326 128 84 -34.4%15 Canada 430 146 98 -32.9%16 France 303 97 81 -16.5%17 Italy 238 36 12 -66.7%18 Taiwan 441 71 60 -15.5%19 Papua New Guinea 391 266 226 -15.0%20 Fiji 192 125 59 -52.8%21 India 373 np np ..22 Ireland 189 34 51 50.0%23 Phillipines 145 62 63 1.6%24 Greece 40 6 6 0.0%25 South Africa 126 25 26 4.0%26 Sweden 199 60 40 -33.3%27 Russian Federation 57 12 19 58.3%28 Belgium and Luxembourg 62 21 34 61.9%29 Chile 7 0 4 ..30 Mexico 9 4 1 -75.0%

Total all countries 31,638 17,119 16,330 -4.6%

Travel and education services (a) .. 14,519 14,822 2.1%

Total Services 31,638 31,638 31,152 -1.5%

*Ranks are based on total exports of services in calendar year 2000Source: ABS, unpublished preliminary estimates (a) Due to the delay in the processing by DIMIA of international airline passenger cards, the ABS is currently unable to produce estimates of Australia's international trade in travel and education services by partner country.

np – Not published

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TABLE 4: AUSTRALIA'S SERVICES IMPORTS (a)

Total Imports excludingImports travel and education services

% growthRank* Country 2000 ($m) 2000 ($m) 2001 ($m) from 2000

1 United States of America 6,460 4,805 4,656 -3.1%2 United Kingdom 3,785 2,151 1,961 -8.8%3 Japan 1,916 1,649 1,814 10.0%4 Singapore 2,131 1,774 1,915 8.0%5 New Zealand 1,620 848 803 -5.3%6 Hong Kong (SAR of China) 1,410 904 1,486 64.4%7 Germany 1,014 834 1,003 20.3%8 Malaysia 839 551 573 3.9%9 China, Peoples Republic of 710 458 392 -14.4%10 Indonesia 546 294 322 9.5%11 Thailand 694 261 299 14.4%12 Switzerland 752 690 897 30.0%13 Korea, republic of 268 208 274 31.7%14 Netherlands 554 474 433 -8.7%15 Canada 387 162 142 -12.6%16 France 406 141 127 -10.3%17 Italy 430 78 62 -20.2%18 Taiwan 129 38 38 0.0%19 Papua New Guinea 177 74 45 -38.7%20 Fiji 346 178 128 -28.3%21 India 130 np np ..22 Ireland 205 51 94 84.3%23 Phillipines 179 58 42 -27.1%24 Greece 273 94 114 20.8%25 South Africa 175 61 83 36.2%26 Sweden 91 59 37 -37.2%27 Russian Federation 88 60 127 111.0%28 Belgium and Luxembourg 67 46 24 -47.8%29 Chile 35 20 22 10.4%30 Mexico 27 1 1 7.3%

Total all countries 20,625 21,157 2.6%

Travel and education services (a) .. 10,532 11,226 6.6%

Total Services 31,157 31,157 32,383 3.9%

*Ranks are based on total imports of services in calendar year 2000Source: ABS, unpublished preliminary estimates (a) Due to the delay in the processing by DIMIA of international airline passenger cards, the ABS is currently unable to produce estimates ofAustralia's international trade in travel and education services by partner country.np – Not published

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TABLE 5: FOREIGN INVESTMENT IN AUSTRALIA*

Rank Country Level of Investment % share as % share asas at 30 June 2000 ($m) at 30 June 2000 at 30 June 1999

1 USA 214,985 30.0 28.82 UK 177,876 24.8 22.83 Japan 49,410 6.9 7.04 Hong Kong 24,584 3.4 2.95 Singapore 19,800 2.8 2.96 Netherlands 16,035 2.2 2.47 Germany 13,067 1.8 2.18 New Zealand 12,831 1.8 1.79 Belgium-Luxembourg 9,295 1.3 1.510 France 8,824 1.2 1.111 Switzerland 8,808 1.2 1.212 China 3,387 0.5 0.413 Canada 1,895 0.3 0.314 Malaysia 1,731 0.2 0.215 Philippines 1,431 0.2 0.316 Taiwan 1,226 0.2 0.117 Sweden 1,180 0.2 0.218 Ireland 1,175 0.2 0.119 South Africa 957 0.1 0.120 Republic of Korea 770 0.1 0.121 Italy 731 0.1 0.122 Indonesia 543 0.1 0.123 Papua New Guinea 167 0.0 0.024 Fiji 118 0.0 0.025 Thailand 115 0.0 0.0

Total all countries 716,959

* Latest available data.Source: ABS, International Investment Position, Australia 1999-2000 (Cat no. 5352.0)

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TABLE 6: AUSTRALIAN INVESTMENT ABROAD*

Rank Country Level of Investment % share as % share asas at 30 June 2000 ($m) at 30 June 2000 at 30 June 1999

1 US 156,672 41.7 37.22 UK 65,046 17.3 17.53 Japan 22,773 6.1 5.24 NewZealand 19,815 5.3 5.65 Singapore 9,676 2.6 1.66 Hong Kong 8,400 2.2 2.77 Germany 7,604 2.0 1.78 France 5,928 1.6 1.39 Netherlands 4,602 1.2 1.510 Canada 3,665 1.0 0.711 Papua New Guinea 3,520 0.9 0.912 Indonesia 2,619 0.7 0.813 Switzerland 2,516 0.7 0.714 Italy 2,433 0.6 0.615 China 1,571 0.4 0.716 Republic of Korea 1,519 0.4 0.517 Argentina 1,496 0.4 0.418 Sweden 1,288 0.3 0.319 Belgium-Luxembourg 831 0.2 0.320 Malaysia 671 0.2 0.321 Taiwan 659 0.2 0.122 Philippines 642 0.2 0.223 Ireland 502 0.1 0.124 South Africa 484 0.1 0.125 Thailand 482 0.1 0.2

Total 375,891 100.0

* Latest available data.Source: ABS, International Investment Position, Australia 1999-2000 (Cat no. 5352.0)

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TABLE 7: AUSTRALIA'S BALANCE OF PAYMENTS

1999 ($m) 2000 ($m) 2001 ($m)

Current Account -35,615 -26,281 -17,907

Goods and services -16,510 -7,395 2,720Credits 113,835 142,356 154,435Debits -130,345 -149,751 -151,715

Goods -15,063 -7,876 3,951Credits 86,925 110,718 123,283Debits -101,988 -118,594 -119,332

Services -1,447 481 -1,231Credits 26,910 31,638 31,152Debits -28,357 -31,157 -32,383

Income -19,060 -18,804 -20,665Credits 10,705 14,795 14,894Debits -29,765 -33,599 -35,559

Current Transfers -45 -82 38Credits 4,654 4,500 4,333Debits -4,699 -4,582 -4,295

Capital and Financial Account 34,165 27,736 18,458

Capital Account 1,270 1,065 1,142

Capital transfers 1,305 1,160 1,212Credits 2,342 2,407 2,535Debits -1,037 -1,247 -1,323

Net acquisition/disposal ofnon-produced, non-financial assets -35 -95 -70

Financial Account 32,895 26,671 17,316

Direct Investment 13,453 11,872 -12,134Abroad 4,643 -8,729 -22,044In Australia 8,810 20,601 9,910

Portfolio investment 16,926 17,015 19,691

Financial Derivatives 2,020 -953 439

Other investment 10,919 -2,415 11,472

Reserve assets -10,423 1,152 -2,152

Net errors and omissions 1,450 -1,455 -551

Source: ABS Balance of Payments and International Investment Position, December quarter 2001 (Cat. No. 5302.0)

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APPENDIX 2: MARKET DEVELOPMENT GROUPPRIORITIES FOR 2002

OBJECTIVES FOR EUROPE, AMERICAS, MIDDLE EAST, AFRICA AND SOUTHPACIFIC (MARCH 2001 – MARCH 2002)

Sector Priority

Meat and meat products Increased sales of meat and meat products to Central Europe in light of increased interest for meat sourced from countries free of BSE.

Live animals Access for Australian exporters of live animals to the European Union and Central and Eastern European countries, assuming Office Internationale des Epizooties (OIE – World Organisation of Animal Health) approval of a revised chapter dealing with the regionalisation of arboviruses (bluetongue) is accepted in May 2001

Mining Uranium exports begun to Hungary and the Czech Republic

Manufactures Increased exports of furniture to the United States by working with Australian companies and the Furniture Industry Association of Australia (FIAA) to raise awareness of the potential of the US market

Dairy Access to the United States for Australian milk protein concentrates

Marine products Increased exports of marine products and services, particularly fast ferries, to Latin America

Sanitary and Issues resolved about access to Brazil for sanitary and phytosanitaryphytosanitary issues (SPS) products

Improved cooperation with Mexico

Education Increased export of education services to Brazil, building on post-Olympic interest in Australia as a tourist destination and a relatively low-cost option for English language studies

Information technology Increased ICT exports to the Middle East, including through a business mission and follow-up activities associated with Minister Alston’s visit to the United Arab Emirates, Saudi Arabia, Egypt, Kuwait and Turkey in April/May 2001

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OBJECTIVES FOR NORTH ASIA, SOUTH AND SOUTH-EAST ASIA (JUNE 2001 – JUNE 2002)

Sector Priority

Liquefied natural gas (LNG) A long-term LNG supply and investment partnership with China

Automotive Increased automotive component exports to China

Information technology New markets for Australian information and communications and biotechnology technology (ICT) and biotechnology products in Japan and China

Agriculture Australian organic food sales to Japan

Mining Uranium sales to Taiwan

Live animals Increased exports of live cattle to Taiwan, Vietnam and Indonesia

All Successful completion of negotiations on a Free Trade Agreement with Singapore

Wool Increased exports of wool to Vietnam

Education Greater numbers of students coming to Australia from Indonesia to study at Australian education institutions

CHINA’S WTO ACCESSION

Support the earliest possibleconclusion of China’s negotiations toaccede to the WTO, but ensure theterms cover Australia’s commercialinterests

Facilitate industry exploitation ofmarket access opportunities forAustralian goods and services exportsfollowing China’s accession, andincrease China’s awareness ofAustralia’s ability to providetechnologically advanced goods andservices

Assist and monitor China’simplementation of its WTO accessioncommitments to realise fully newmarket access opportunities

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APPENDIX 3: PROGRESS AGAINSTOBJECTIVES IDENTIFIED IN TRADE OUTCOMESAND OBJECTIVES STATEMENT 2001

ChinaDesired outcomes Outcome/progress achieved

China joined the WTO on 11 December 2001. It will undertake aseries of important commitments to open and liberalise its tradeand investment regime to integrate better into the world economyand offer a more predictable environment for trade and foreigninvestment in accordance with WTO rules. This will provideimproved market access for Australian exporters through thelowering or removal of tariffs and other barriers affecting a widerange of Australian exports of goods and services.

A number of trade and investment promotional activities areplanned for 2002, now that China’s accession is complete. Thesewill be an integral part of a framework for enhanced trade andeconomic cooperation being developed with China.

Austrade’s Global Markets ‘reality check’ business briefingsdelivered around Australia to Australian exporters inDecember 2001 included advice on opportunities followingChina’s WTO entry.

In March 2002, Austrade, in conjunction with state governments,delivered a series of briefings around Australia on the regionaleconomic and market implications of China and Chinese Taipeijoining the World Trade Organisation. The seminars were aimedat Australian businesses currently engaged in or with an interestin trading with China, Hong Kong and Chinese Taipei.

DFAT will continue to monitor closely China’s implementationof its WTO commitments.

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LIQUEFIED NATURAL GAS (LNG)

Secure Chinese agreement topurchase supplies of Australian LNG

SERVICES

Increase participation in the Chineseservices market, particularly helpingAustralian banks, fund managers,insurance, information andcommunications technology, and legalfirms to secure licences

Desired outcomes Outcome/progress achieved

Australia LNG (ALNG) /North West Shelf (NWS) was amongseven LNG suppliers invited in November 2001 to bid forsupply to China’s first LNG project in Guangdong, and wasselected for the shortlist in January 2002. The successfulsupplier(s) are expected to be chosen by mid-2002.

The invitation to ALNG came after strong support from theGovernment – including the visit to China of Deputy PrimeMinister Anderson in April 2001. Leaders of Australia’s LNGcompanies accompanied Mr Anderson on all his calls, includingon Chinese Premier Zhu Rongji. The Prime Minister andTreasurer supported the ALNG bid during their visits to Shanghaifor APEC. Austrade Beijing’s Senior Business DevelopmentManager is on secondment to ALNG’s Beijing office.

In November 2001, NWS partners signed a Heads of Agreementwith Chinese resources company and key stakeholder in theGuangdong project, the China National Offshore Oil Corporation(CNOOC), on Chinese equity in the NWS resource shouldAustralia be the chosen supplier. Equity negotiations continue.

In August 2001, Chevron Australia Pty Ltd and CNOOC signedan MOU to initiate exploration of an equity deal in Australiangas field Gorgon for LNG supply beyond China’s first project.

The list of foreign firms licensed to provide financial services inChina has grown. As part of its WTO commitments, China willphase in greater international competition in its banking,insurance and securities sectors over the coming years.

To date, only one Australian insurance firm and one bank havereceived licences to operate in China – Colonial Mutual in 1997and ANZ in 1993 (also granted a Renminbi [RMB] licence fromthe People’s Bank of China in 2000). The Government iscontinuing its efforts to secure additional insurance licenses.

Austrade is helping the Beijing Planning and DevelopmentCommission and the Beijing Organising Committee for theOlympic Games (BOCOG) organise a financial seminar on

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QUARANTINE

Resolve current sanitary andphytosanitary issues, and quicklyrespond to future issues as they arise,to minimise market access limitationson Australian food exports

WOOL

Improve market access conditions forAustralian wool, especially bysecuring greater transparency andpredictability of China’sadministration of tariff quotas

Desired outcomes Outcome/progress achieved

funding of projects for the Beijing Olympics to promoteAustralian banks and financial institutions to relevantgovernment organisations.

Austrade is also closely working with the Tianjin municipalgovernment in promoting the capabilities of Australian banksand other financial institutions, and organised the visit of aTianjin Municipal Government delegation led by the Mayor torelevant financial institutions in Australia early in 2002.

Twenty-nine Australian architectural design firms participatedin Austrade’s Beijing Olympics networking workshops inSeptember 2001 and promoted their architectural services to therelevant government bodies, design institutes and potentialpartners. The workshops and concurrent Architecture Showcase(featuring eight architecture firms) generated considerableinterest and enquiries from all over China. Australianarchitecture firms have a very good presence in the Chinesemarket across a range of fields, including hotels, real estatedevelopments, factories, airports and specialty plants.

Three protocols were concluded, defining the quarantine andhealth requirements for export to China of bovine embryos,semen and camelids (alpacas).

Pest risk assessment (PRA) for export of mango and citrus toChina is under way.

A technical submission was made to China for Australian meatexports which will establish the necessary quarantinerequirements for access to the Chinese market.

Australia achieved a significant improvement in wool quotaallocation and timely quota release in 2001. Wool exports haveincreased by 24 per cent on 2000 figures.

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ENVIRONMENTAL TECHNOLOGYAND SERVICES

Expand Australia’s presence in theenvironmental technology andservices market

TELECOMMUNICATION ANDINFORMATION TECHNOLOGY

Help Australian exporters identifyand take up opportunities in China’stelecommunications and informationtechnology markets

Desired outcomes Outcome/progress achieved

Eleven Australian environment technology and servicescompanies participated in Austrade’s Beijing OlympicsNetworking Workshops and promoted their capabilities toChinese businesses and government officials involved inBeijing’s preparations for the 2008 Olympic Games.

Environment Australia led a business mission to China in May2001 and included four government officials and four companyrepresentatives.

In November 2001, Environment Australia and China’s StateEnvironment Protection Agency convened the inaugural HighLevel Joint Committee Meeting under the EnvironmentalProtection Action Plan signed in May 2000. The meetingdiscussed cooperation areas, including joint research projects,close liaison between the two nations, transfer of pollutioncontrol expertise and the possibility of a demonstration projectto showcase Australian pollution control technology.

Austrade plans to bring a Chinese buyers mission (of about 10–12 members) to attend Enviro2002 in Melbourne in April 2002.

Austrade led a mission of Chinese ICT companies to Australiain September 2001.

Austrade organised a number of ICT delegations from China tovisit the World Congress on Information Technology 2002(WCIT 2002) in Adelaide in February 2002 for networking andbusiness matching with Australian ICT exporters.

Austrade plans to organise a mission of Australian ICTcompanies to China in May 2002 to visit the Beijing Hi-TechWeek and undertake a separate program of business meetings.A number of State Governments plan to participate.

French-Australian company Thales/Airsys ATM won a $200million contract to supply and install an integrated Air Traffic

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INFRASTRUCTURE,TRANSPORT, BUILDING ANDCONSTRUCTION

Improve Australia’s reputation andsecure more exports in theinfrastructure, transport, building andconstruction sectors

Desired outcomes Outcome/progress achieved

Management system for the Civil Aviation Administration ofChina, covering China’s major air routes.

CI Technologies won a $3 million contract for an industrialcontrol system for southern China.

Australian broadband-related technology companiessuccessfully expanded their market share in Guangdong, with exports now valued at $11 million.

Business Networking workshops and an architecture designshowcase held in Beijing, briefings delivered around Australia,and the establishment of a federal-state coordinating body, havesupported efforts by Australian companies to secure businessarising from the Beijing Olympics.

Austrade is also working closely with Beijing authoritiesresponsible for infrastructure, transport, building andconstruction for the 2008 Olympics to obtain early intelligenceon opportunities including project tenders.After more than two years of hard work, Bytecraft, anAustralian company, has won the $5 million contract for thesupply of stage equipment and technology for the ChinaNational Grand Theatre against fierce competition.

An Australian company won contracts for the supply of anintelligent lighting system.

Another exporter has sold $10 million worth of curtain walls,flooring and glass doors and other building materials toShenzhen and Beijing.

Austrade has assisted a paint company with their strategy formarket entry and distribution. Projects won are valued at over$13 million.

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EDUCATION AND TRAININGSERVICES

Encourage increased exports ofAustralian education and trainingservices

CHINA’S WESTERNDEVELOPMENT STRATEGY

Identify Australian businessopportunities as China’s WesternDevelopment Strategy is implemented

Desired outcomes Outcome/progress achieved

Austrade organised two major education shows in China in2001. One was in April in five cities: Beijing (48 exhibitors),Shanghai (57), Chengdu (25), Qingdao (23). The other was inthree cities: Guangzhou (38 exhibitors), Kunming (15) andShenzhen (21). Another education show is planned for April2002 in four cities: Guangzhou, Shanghai, Wuhan and Beijing.

It is expected that 12 000 student visas will be issued to Chinesestudents for 2001.

A directory of Australian alumni in China was published in2001 at http://www.austchamalumni.org/

Australian Education International (AEI) has increased itsactivities in promoting Australia as a desirable destination foroverseas students. AEI played a pivotal role in managing theexponential growth in interest in Australia as a destination forChinese students. AEI’s reputation for providing objectiveadvice about education in Australia is appreciated and valuedin overseas markets.

Following a conference in Chengdu on the opportunitiespresented by China’s implementation of its WesternDevelopment Strategy, embassy officials have identifiedopportunities in agriculture (livestock, dairy and fruitproduction), energy (gas and coal technology) and environmentaltechnology (waste water and vehicle emission reduction).

DFAT hosted the Party Secretary of the Qinghai Province inWestern China to build stronger commercial and governmentlinks between Australia and Western China. Mr Bai Enpei wasintroduced to senior Australian business and governmentrepresentatives across a range of economic sectors.

Austrade and the Australia-China Chamber of Commerce(AustCham) organised a business mission to western China inSeptember 2001 to improve understanding of the Western

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MINING

Facilitate access to the mining sectorby seeking a stronger legal and policyframework for investors

INWARD INVESTMENT INAUSTRALIA

Seek greater Chinese investment inAustralia

Desired outcomes Outcome/progress achieved

Development Strategy and to look for business opportunities.The delegation included representatives of leading Australianbuilding materials, financial services, commodities, media, legalservices and architectural services firms.

Austrade Chengdu assisted an Australian company with thesale of Compressed Natural Gas (CNG) Compressor Packages(stations and conversion kit) worth $4 million and a secondAustralian company to win a contract worth $2.5 million for thesupply of water heaters.

Austrade plans to support a number of western Chineseprovinces to promote western region opportunities through twoevents in Australia in 2002.

Austrade Chengdu has identified, and is currently helpingAustralian companies with, a number of other opportunities,including for pumping equipment and tunnelling forChengdu’s Underground Metro System project.

In its tenth five-year plan for national economic and socialdevelopment (released in 2001), China has committed to lift thestandards of its mining sector. It plans to strengthen theeconomic, legal and administrative regime governing minesand allow inefficient domestic mines to fail.

Total investments from China assisted by Invest Australia for2001 amounted to $33.5 million and included the followingsectors: media, IT, bottling of refrigerants, waste tyre recycling,pharmaceuticals and wool products.

Chinese investment projects under consideration include thosein milk powder processing, coal and nickel mining,biotechnology and Chinese medicine.

Invest Australia is holding promotional seminars throughoutChina – in Beijing, Shanghai, Guangzhou, Shenzhen, Panyu and

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COMMERCIAL DISPUTESETTLEMENT

Encourage the adoption of a systemof commercial law to settlecommercial disputes satisfactorily

WOOL

Encourage further reductions in tariffson greasy wool and wool tops

Desired outcomes Outcome/progress achieved

Qingdao – from September 2001 to March 2002, in closecollaboration with the Chinese Government.

The Australian Government held an Australian Trade andInvestment Seminar on 21 February 2001 in Chengdu. Morethan 50 Chinese entrepreneurs attended the event, some ofwhom have proposals to invest in Australia. Invest Australia isfollowing up these projects.

Chinese ICT companies are interested in the possibility of tappinginto and customising Australian technology for the China market.Recently, a major Chinese IT group with companies listed on theHong Kong and Shanghai Stock Exchanges has established a salesand technical support office in Sydney (with a total plannedinvestment of $4.5 million). The company is now seeking to investin an Australian software house to customise software systems forthe banking and finance industry in China.

Also see LNG above.

Improved access for legal firms arising from China joining theWTO will bring opportunities for China to raise accountingstandards and corporate governance. Foreign investors inChina will benefit from better quality and more comprehensivelegal services, as foreign law firms obtain greater scope toprovide advice on China’s legal environment.

Some progress has been made in reducing Indian wool tariffs,although they remain at unacceptably high levels (basic duty ongreasy wool is 15 per cent and on wool tops is 20 per cent).

The Joint Business Group on Natural Fibres and Textiles hascontinued its efforts to integrate the use of Australian wool intoIndia’s textiles industry.

IndiaDesired outcomes Outcome/progress achieved

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COAL

Pursue tariff reductions on coal,particularly coking coal with an ashcontent greater than 12 per cent andsteaming coal

WHEAT

Pursue lower wheat tariffs

APPLES

Pursue lower tariffs for Australianapples, either across the board orthrough a ‘split tariff’ which recognisesthat Australian suppliers are active insouthern India largely during the off-season for domestic production

MACADAMIA NUTS

Pursue a separate tariff line, andaccompanying low tariff rate, formacadamia nuts

SULTANAS

Pursue a reduction in the peak tariffrate on dried grapes (sultanas)

INFORMATION ANDCOMMUNICATIONSTECHNOLOGY

Pursue commercial opportunities forAustralian information technologycompanies

Desired outcomes Outcome/progress achieved

India has emerged as one of the fastest-growing markets forAustralian coal, with annual exports now approaching $1 billion.However, prospects for further tariff reductions on coal, in theshort term, remain uncertain. Australia continues to argue thattariffs at existing levels impede the competitiveness of Indianindustry.

No reductions have been achieved to date.

No reductions have been achieved to date.

A marginal reduction in tariff levels was achieved with theelimination of Special Additional Duty. A further reduction,from 35 per cent to 30 per cent, was delivered in the 2002 Indian Budget.

A marginal reduction in tariff levels was achieved, with thebasic duty on dried grapes falling by 10 per cent.

ICT exports to India have grown rapidly over the past twoyears, albeit from a very low base.

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SOLAR WATER HEATERS

Pursue lower tariffs on solar waterheaters, as current high tariffs impedeexports

ENVIRONMENTALTECHNOLOGY AND SERVICES

Facilitate the sale of environmentaltechnology and services

Desired outcomes Outcome/progress achieved

Signing of the Australia–India MOU on information industriescooperation and the establishment of the Australia–IndiaInformation Industries Business Network significantlystrengthened relations with senior Indian ICT industryrepresentatives.

The Australian Information Industry Association (AIIA) and theNational Association of Software and Services Companies(NASSCOM) signed an MOU in April 2001, and a state-to-stateICT link has been forged between Victoria and Karnataka.

India’s Minister for Information Technology andCommunications, Pramod Mahajan, visited Australia in April2001. There are promising signs of increased bilateralinvestment, including through the recent opening of anAustralian office by Indian software giant, Infosys.

There is potential for broader Australia–India trade andinvestment cooperation in the areas of e-government, distanceeducation, medicine and film, capitalising on the increasedautonomy granted to Indian State Governments and the hugedemand for education services, IT-enabled services (such as callcentres and financial services) and the major fibre cable networkexpansion in India.

No reductions have been achieved to date.

Australian companies have been successful in sellingenvironmental technology, equipment and consultancy servicesto India. This success was supported by a visit to India in 2001by a delegation of Australian environmental technology andservices companies. Austrade continues to work closely withthe Indian Federal and State Governments to identify furtheropportunities in this area.

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HEALTH

Facilitate further expansion ofopportunities in the health sector

EDUCATION

Continue to promote Australia as asource of high quality educationservices

PRIVATISATION

Ensure Australian firms are wellplaced to maximise benefits fromIndia’s ongoing privatisationprocesses

Desired outcomes Outcome/progress achieved

Australian companies have had success in selling managementsystems, pathology services, medical and rescue systems andclinical waste systems to the Indian Government and Indianhospitals. A number of Australian organisations are activelyoperating in India, and MOUs have been signed for thedevelopment of research and training programs with Indianhealth organisations.

Indian applications for student visas declined in the wake ofnew regulations in July 2001. Numbers of applications are nowincreasing again, reflecting continued strong interest in theAustralian education sector among potential Indian students.

Australia is the third most popular destination for Indianstudents, with over 10 000 Indian students currently studyingin Australia. The Indian market has great potential.

Australian Education International in New Delhi has continuedits promotional activities with key Indian educationassociations and the public to increase Australia’s reputation asa destination for international students. Austrade will establishcloser links with the National Association of Software andServices Companies (NASSCOM) to identify opportunities forthe delivery of ICT training by Australian providers.

India’s privatisation program has slowed considerably as aresult of the global economic downtown and domesticopposition. The Indian Government has, however, expressed itscommitment to redoubling its efforts to reinvigorate the process.

The Australian Government actively promotes opportunities forAustralian companies seeking to benefit from the privatisationprocess.

Austrade has expanded its network in India to capture thegrowth areas of Hyderabad, Bangalore, Haryana, Punjab, Pune

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INFRASTRUCTURE

Secure an increased share of India’sinfrastructure market

REGULATORY REFORM

Continue to encourage Indianregulatory reform, including byproviding commercially-basedtechnical assistance

LNG

Continue to promote the benefits ofAustralian LNG to India’s powersector

Desired outcomes Outcome/progress achieved

and Ahmedabad and take advantage of the increasedautonomy granted to the Indian State Governments looking toattract foreign investment.

Austrade India is monitoring tender projects and maintainingrelationships with the Government of India for the ongoingprivatisation projects in the power sector, airports, ports, roadsand the development of Free Trade Zones.

Potential for securing infrastructure contracts remains promising.The recent Indian Budget highlighted corporatisation of portsand private sector participation in greenfield airports whichshould deliver further opportunities for Australian companies.

Australian companies have undertaken invaluable preparatorywork in this sector. Austrade is working to identify opportunitiesin the infrastructure restoration in Gujarat, following last year’searthquake.

Significant progress has been made by India in the area ofregulatory reform.

The Indian LNG market holds significant medium-termprospects for Australian companies. Reform of India’s powersector will be a necessary precursor for these opportunities tobe realised. Austrade continues to monitor developments inpipeline and power plant projects offering opportunities forAustralian companies.

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PUBLICATIONS

Raise awareness of Latin Americanmarkets through publishing a majorreport by the Department of ForeignAffairs and Trade’s East AsiaAnalytical Unit

QUARANTINE

Improve market access conditions forAustralian agricultural exportsthrough appropriate sanitary andphytosanitary arrangements

MARKET ACCESS

Protect the interests of Australianfirms through appropriate and timelyresponses to market access difficultiesas they arise, particularly in light ofgrowing protectionist sentiment inparts of the region

REGIONAL INTEGRATION

Promote and protect Australia’s tradeand investment interests as regionalcountries continue a comprehensiveprogram of preferential tradingarrangements, and as the wholeregion moves toward negotiation ofthe Free Trade Area of the Americas

The publication Investing in Latin American Growth: unlockingopportunities in Brazil, Mexico, Argentina and Chile was launchedin August 2001 by the Minister for Foreign Affairs, Mr Downer,and is available at http://www.dfat.gov.au/publications/la/index.html

Mexico has agreed to consider removing, in the medium term,the requirement for Mexican vets to travel on board livestockvessels from Australia and to review, as expediently as possible,data that will be provided by the Australian Quarantine andInspection Service (AQIS) on a feeder cattle protocol.

Brazilian quarantine authorities have approved 14 Australiandairy establishments for export to Brazil.

A separate delegation of Brazilian quarantine officials visitedAustralia as a guest of the ostrich industry to review ostrichchick facilities for export.

A protocol for the import of lamb by Argentina was negotiatedin May 2001.

In Brazil, Australian interests have been assisted in dairy andmeat products, as well as grains, particularly in relation toquarantine regulations. Assistance and advice in dealing withlocal authorities on taxation and other issues has been providedto several companies in Argentina.

Developments in regional integration have been closelymonitored and reported in several publications, includingInvesting in Latin American Growth: unlocking opportunities inBrazil, Mexico, Argentina and Chile; Doing Business in Brazil: anintroductory guide; and Australia’s Trade: Influences into the NewMillennium. The implications for Australia will only becomeclear as negotiations become more advanced.

Latin AmericaDesired outcomes Outcome/progress achieved

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BILATERAL AGREEMENTS

Improve the bilateral investmentenvironment by concludingInvestment Promotion and ProtectionAgreements, and Double TaxationAgreements where appropriate

PUBLIC DIPLOMACY

Increase Australia’s exports andinvestment in Latin America throughan ongoing program of publicdiplomacy in conjunction with relevantbusiness associations, particularlytargeting the Brazilian market throughpublishing Doing Business in Brazil – anIntroductory Guide in 2001

EDUCATION

Increase exports of Australianeducation services, capitalising on thepositive coverage of Australia duringthe Sydney 2000 Olympic andParalympic Games

FAST FERRIES

Increase exports of marine goods andservices, particularly fast ferries

AIR SERVICES AGREEMENTS

Conclude Air Services Agreementswith Brazil and Chile

Desired outcomes Outcome/progress achieved

Double Taxation Agreement negotiations with Mexico arepending fiscal reform in Mexico. Australia has agreed tonegotiate an Investment Promotion and Protection Agreementwith Colombia based on an Australian model text, and isawaiting a response on the text from the ColombianGovernment. An Investment Promotion and ProtectionAgreement with Uruguay was signed in September 2001.

Doing Business in Brazil was published in June 2001 and waslaunched at seminars in Melbourne, Sydney and Perth(available at http://www.dfat.gov.au/publications/brazil_business/index.html). Support was provided to asuccessful Australia Festival in Brazil, attended by five thousand people.

Student numbers from Brazil, Australia’s largest Latin Americansource, have increased 44 per cent over the past two years.Colombia is now the second-largest Latin American source ofstudents. Austrade, in partnership with Australian EducationInternational, is continuing promotional activity in Brazil.

Venezuela’s Conferry commissioned a second Austal fast ferry inAugust 2001, to be delivered during the second quarter of 2002.

An Air Services Agreement with Chile was signed in September2001. There has been little movement on an agreement withBrazil. The Brazilian aviation sector is facing difficulties andprogress on this issue is unlikely in the near future.

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ENERGY

Help Australian firms enter Mexico’senergy sector, particularly asopportunities arise from the anticipatedmulti-billion dollar restructure of theMexican electricity sector

MINING

Promote opportunities for Australia’smining sector in Venezuela as theVenezuelan Government diversifiesits oil-dependent economy

INFORMATION ANDCOMMUNICATIONSTECHNOLOGY

Help Australian information andcommunications technology firmstake advantage oftelecommunications deregulation incountries including Brazil, Argentinaand Venezuela

POLYMER BANK NOTES

Promote Australian polymer banknote technology, building on itssuccessful introduction in Brazil

MARINE

Help Australian manufacturersrespond to the opportunity for thedesign and construction of ten rapidpatrol boats in partnership withDianca, Venezuela’s state-ownedshipbuilders

Desired outcomes Outcome/progress achieved

Support has been provided for BHP Billiton’s involvement inthe Mexican gas sector. Mexico has recognised the quality ofAustralian coal and the continued interest of Australiancompanies in tendering bids for the Petacalco plant.

Assistance was provided to Australian participants inExpomineria 2001, organised by the Venezuelan MiningChamber and the Ministry of Energy and Mines.

With a drop in activity in the telecommunications sector inBrazil in 2001, focus is now on IT particularly as it applies toairports, mining and the environment. The telecommunicationssector is also suffering from the recession in Argentina, butthere is potential in Internet services, broadband, interactivecable systems and the roll out of a Universal Service in regionalArgentina.

Representatives from Austrade’s Latin America ICT teamaccompanied four senior company executives from keytelecommunications companies on a seminar series held inAustralia in February and March 2002.

Australian polymer bank note technology will be trialled by theBank of Mexico in March 2002.

Venezuelan national shipyard, Dianca, contracted the designand procurement management of its aluminium hull buildingshed to an Australian firm and placed a large order withWelding Industries of Australia for state of the art aluminiumwelding equipment.

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APPENDIX 4: PROGRESS AGAINSTOBJECTIVES IDENTIFIED IN TRADE OUTCOMESAND OBJECTIVES STATEMENT 2000

COAL

Progress in securing new marketaccess

EDUCATION SERVICES

Expanded in-country services andincreased numbers studying inAustralian educational institutions

Central and South Eastern EuropeDesired outcomes Outcome/progress achieved

Polish mining companies have shown interest in purchasingAustralian technology for waste treatment and environmentalrehabilitation of their aging coal mines.

Strong participation by the Czech and Polish coal industries atthe Aachen Coal Conference attended by Australian producersin October 2001 has helped to raise interest in sourcingAustralian coal and coal sector-related technologies for Polandand the Czech Republic.

Strong promotion of Australian coal led to the signing of amajor contract in 2001 with Hungary.

Exports to Bulgaria are expected to increase in 2001–02 and2002–03 with signed contracts for coking coal valued at over$120 million. The first two shipments of 70 000 tonnes eacharrived in 2001.

The number of student visa applicants in Central Europecontinues to rise. In 2000, enrolments in Australian educationalinstitutions from Central and South Eastern Europe reached3013, a 46 per cent increase on 1999. Of these students, 2 194came from the Czech and Slovak Republics, 560 came fromPoland, and 259 came from Hungary.

The Australian visa requirements in place since 1 July 2001 havecontributed to Australia’s competitive position by bringing agreater degree of transparency and consistency into the process.

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HEALTH

Increased Australian health servicesand product providers in Bulgarian,Czech, Hungarian and Polish markets

INFORMATION TECHNOLOGYAND TELECOMMUNICATIONS

Increased application of Australianexpertise in Poland, Hungary,Slovenia and the Slovak Republic

Increased access fortelecommunications equipment,computers and software technology –for example, for land titling and landregistration in Slovenia and Bulgaria

INFRASTRUCTUREDEVELOPMENT

Through joint ventures with Romaniancompanies, increased access toreconstruction projects under theSouth Eastern Europe Stability Pact

Increased involvement of Australiancompanies in infrastructuredevelopment in Constanta (Romania)

Desired outcomes Outcome/progress achieved

Melbourne firm, Health Care International (HCI), has workedtowards establishing a private hospital in Poznan, Poland, overthe past several years. If successful, this project could be a pilotfor further investment by HCI in Poland.

Cochlear is well established in the Czech Republic, Poland andHungary and has developed excellent working relations withlocal clinics. Cochlear is actively pursuing market entrystrategies in a number of other Central and South EasternEuropean markets.

The Australian Health Insurance Commission (HIC) is active intendering for health reform projects in Croatia, funded byEuropean Bank for Reconstruction and Development (EBRD)loans. Since 1999, HIC has been successful in winning a numberof World Bank health insurance reform projects in Bulgaria.

One Australian company is managing a successful Cadastralcomputerisation project in Bytom, Poland.

Mincom’s Prague office is successfully supplying IT solutions tothe European mining industry, and more recently, public utilities.

An Australian company is tendering for a World Bank landtitling systems project in Romania.

Joint ventures with Romanian construction companies for thereconstruction of Yugoslavia and Kosovo did not eventuatebecause anticipated bilateral and multilateral funds were notadvanced.

Australian companies are pursuing opportunities in Central andSouth Eastern Europe to provide IT and management servicesrelated to road construction, traffic and vehicle registration.

C e n t r a l a n d S o u t h E a s t e r n E u r o p e

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and Gdynia (Poland). Involvement inthe Port of Koper (Slovenia)development

MEAT

Abolition or lowering of import tariffson Australian meat exports

Increased Australian meat exports

WOOL

Abolition or continued waiver ofPolish wool tariffs

Implementation of a bilateral public/private sector project aimed atdeveloping new wool opportunitiesin Poland

Desired outcomes Outcome/progress achieved

Australian companies have demonstrated interest ininfrastructure development projects in Poland.

Currently, there is no Australian interest in Constanta(Romania) projects.

No outcomes were achieved, as the countries in question havefocused on European Union accession and have not beenprepared to lower tariffs.There has been a drop in demand for beef following the ‘madcow disease’ (BSE) and foot-and-mouth disease crises in 2001.

Polish dairy farmers have shown interest in importing pregnantheifers and genetic material from Australia. Associated healthcertificates were approved by the Polish Government in June 2001.

Niche markets exist for quality Australian beef and lamb in Poland and kangaroo meat in Central and South Eastern Europe.Kangaroo and emu exports to the Czech Republic and the Balkansare increasing and suppliers have difficulty meeting demand.

Australia’s first meat exports to Romania for five years tookplace in 2001 with sales of tripe to a local meat processor.

Regular veterinary talks have been held with the CzechGovernment to raise awareness of Australian meat exports.

Negotiations with Hungary in 2001 led to changes in legislationand opened an avenue for possible commencement of livesheep exports to Hungary.

Poland agreed to maintain its waiver of a 30 per cent tariff oncoarse wool. However, the 3 per cent tariff on scoured andcarbonised wool and wool tops remains.

The ‘Poland Wool Development Project’ has attracted interestfrom Australian wool producers. The project is under reviewdue to funding issues.

ANIMAL BY-PRODUCTS

EU acknowledgement of Australia’sTSE/BSE-free status

Contribute, through the EU debate, toensuring that EU legislation on use ofanimal by-products does not gobeyond internationally agreed,science-based standards

AUTOMOTIVE PRODUCTS

Increased automotive componentexports to EU manufacturers andfirst-tier suppliers

CEREALS

Tighter disciplines on and/orreduction of export subsidies.

Increased access, including throughWTO agriculture negotiations

The European Union acknowledged Australia’s TSE/BSE-freestatus, granting Australia a Geographical BSE Risk Level I –‘highly unlikely that the disease exists in a clinical or pre-clinical form in cattle in Australia’.

The European Union has recently introduced an overarching TSElegislation that correlates closely with international standards.

Exports of automotive components to the European Union fellby 34 per cent in 2000 and fell a further 11 per cent in 2001. Thismarked decline resulted from a number of factors, including anEU company sourcing locally produced automotivecomponents in preference to Australian products and thetemporary closure of a UK firm’s production line.

Tighter disciplines and reductions on export subsidies will beaddressed in WTO agriculture negotiations. Increased accesswill be sought through WTO negotiations. EU export subsidieshave reduced on some cereals through reductions in the valueof the euro against the US dollar. The European Union reducedmalt export restitutions to zero in April 2000, although the levelremains subject to periodic review of international markets.

E u r o p e a n U n i o n

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Desired outcomes Outcome/progress achieved

Increased wool top and other woolproduct exports to Hungary, Sloveniaand the Slovak Republic

Australia’s wool exports to Central Europe increased by 28 percent to $104 million in 2001 compared with 2000. Over 70 percent of the increase came from stronger demand in the CzechRepublic, with Hungary and the Slovak Republic also showingstrong gains.

European UnionDesired outcomes Outcome/progress achieved

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DAIRY PRODUCTS

Maintain current market access levelsand seek to increase access throughWTO agricultural negotiations

EDUCATION

Increased number of EU studentsstudying in Australian educationalinstitutions

HEAVY METALS

Ensure EU legislation includesrestrictions on the use of heavy metalsonly on scientific grounds

MEAT

Maintain current market access levels,including through WTO agriculturalnegotiations

Progress towards finalisation of anAustralia–EU Veterinary Agreementthat recognises the equivalence ofAustralia’s meat safety standards andpractices

Desired outcomes Outcome/progress achieved

Current market access levels have been maintained and thevalue of exports has increased. Further access will be soughtthrough WTO agricultural negotiations.

In the period 1999–2001, a total of 13 653 student visas weregranted (offshore) to EU citizens. This is a 37 per cent increaseon the previous two financial years. Some 20 Austrade staff in 10 overseas offices and in Australia form part of the AustradeEducation team. Austrade organised 108 seminars attracting 3 820 students, while 315 agents attended 38 educationworkshops.

Austrade participated in the Education Focus Day at WorldExpo 2000 in Hanover, Germany, where 70 German institutionsand agents attended. Austrade also took part in 11 educationtrade fairs across Europe.

Discussions have begun between Australia and the EuropeanCommission about the feasibility of a pilot program on credittransfers.

Australian concerns were raised with the European Union bothbilaterally and through multilateral forums.

Current market access levels have been maintained. Furtheraccess will be sought through WTO agricultural negotiations.

Consultations have been held between Australian and EUofficials to advance meat safety standards and to ensurepractices for particular products will be covered under aVeterinary Agreement.

H o n g K o n g

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SEAFOOD

Suspension or reduction of tariff onpenaeidae prawns in the short termand a lowering of the tariff in themedium and longer term

THIRD COUNTRY SUB-CONTRACTING PROJECTS

Increased Australian penetration ofproject markets in targeted regions assub-contractors to EU contractors

WINE

Conclude outstanding issues in theAustralia–EU Wine Agreement

AVIATION

More flexibility for international airservices under the Australia–HongKong Air Services Agreement, togetherwith additional capacity and flights

BUILDING MATERIALS ANDHOUSING

Increased Australian involvement inbuilding and housing projects

Desired outcomes Outcome/progress achieved

The European Union introduced a temporary autonomoustariff quota (ATQ) in November 2000 valid for five months andset at 3.6 per cent for 10 000 tonnes of penaeidae prawns (atariff reduction from the normally applicable rate of 12 percent). Improved long-term access will be negotiated in the newWTO Round.

Discussions were held with major engineering companies toraise awareness of Australian industry capability and discussthe potential visit of two to three purchasing managers toAustralia in 2002.

A range of complex issues, largely relating to technicalstandards and intellectual property, still need to be settledbefore the Australia–EU wine agreement can be concluded.Proposals from both sides are under consideration.

Increased freight capacity for Australian airlines and additionalpassenger services between Melbourne and Hong Kong wereagreed; however, Ansett’s withdrawal of services hascomplicated the situation.

Annual ‘Building with Australia’ trade shows have introducednew Australian building materials and technology into themarket.

Hong KongDesired outcomes Outcome/progress achieved

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EDUCATION

Increased number of Hong Kongstudents studying in Australianeducation institutions, particularly forspecialised education and training

ENVIRONMENTAL PROTECTION

Increased Australian participation infuture Hong Kong environmentprojects

FOOD AND BEVERAGES

Increased sales of Australian food andbeverages to Hong Kongsupermarkets

Desired outcomes Outcome/progress achieved

The Hong Kong Government Construction Industry ReviewCommittee visited Sydney and Melbourne with the result thatAustralian building codes and practices were incorporated intosome of the Committee’s recommendations.

Student numbers increased by 10 per cent between 1999 and2000 to nearly 21 000 students.

The Queensland University of Technology (QUT) and theUniversity of Queensland (UQ) won Hong Kong EducationDepartment tenders to run the English Language ProficiencyProgram for English Teachers in Hong Kong.

Market visits for relevant Australian environment companieswere organised.

Australian companies won consultancy work on the HarbourArea Treatment Scheme Review and project work forwastewater flow surveys, and were shortlisted for the WetlandsPark project in the New Territories.

More than 600 new grocery, food and beverage items wereintroduced into the Hong Kong retail market through majorsupermarket promotions.

Products which enjoyed particularly strong export growth byvalue in 2001 include oranges (up 47 per cent to $48.9 million),plums (up 55 per cent to $14.0 million), cheese (up 19 per centto $19.1 million), margarine (up 31 per cent to $38.9 million)and wine (up 22 per cent to $17.7 million, following 22 per centgrowth in 2000).

M e x i c o

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Desired outcomes Outcome/progress achieved

INFORMATION ANDCOMMUNICATIONSTECHNOLOGY

Successful entry of Australiancompanies into the ICT market

INVESTMENT IN AUSTRALIANINFRASTRUCTURE

Increased level of interest, and directinvestments, in Australianinfrastructure by Hong Kongconglomerates

TRANSPORT (RAILWAYS)

Increased participation of Australiancompanies in Hong Kong’s railwaydevelopment strategy

BEEF

Increased exports and progress on aproposal for a tariff quota system

Australian technology providers of energy management andaccess control systems won projects with both rail operators inHong Kong.

Smart card technology companies won projects to supplyticketing solutions to rail expansion projects with both railoperators.

Cheung Kong Holdings made a $3.25 billion investment inETSA Utilities.

China Light and Power made a A$1 billion investment inYallourn Energy.

Cheung Kong Holdings made a $2.14 billion investment inPowercorp Australia (Victoria’s largest electricity distributionand retail company).

Australian companies won tenders for major track constructionwork on MTRC’s Tsuen Kwan O extension and KCRC’s West Railexpansion; supply of integrated training systems for operators ofKCRC’s West Rail; and light rail civil construction works andautomatic fare collection systems for KCRC’s Light Rail.

No change since TOOS 2000.

MexicoDesired outcomes Outcome/progress achieved

AGRICULTURE

Maintain current market share for livecattle exports to Egypt

Continued access for live animalexports to Israel and Jordan and

Australia continues to maintain market share for exports of livecattle to Egypt. Exports in 2000 were 208 000 head valued at$129.7 million, and in 2001 were 204 633 valued at $154.7 million.

Australia continues to have access to Jordan and Israel for liveanimal exports. Sheep exports to Jordan were 713 000 head in

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EDUCATION

Increased number of Mexicanstudents undertaking studies inAustralian educational institutions

GRAINS AND SEEDS

Agreed conditions for import ofAustralian sunflower seed, cottonseedand sorghum

Increased grain and seed exports as aresult of Mexico’s completion of pestrisk analysis for malting barley

LIVE CATTLE

Agreement on a more favourablecattle protocol that will make bilateraltrade more commercially attractive

WOOL

Elimination of the tariff on woollenknitting yarn and an increase inAustralian wool exports to Mexico

There has been little change in the number of Mexican students.

Special permits have been granted to allow the import ofsorghum until revised norms are finalised.

A significant breakthrough was made in relation to grains, withspecial permits granted to allow the import of Australianmalting barley. The permits will be valid until revised normsfor the importation of these grains are finalised.

The Mexican Agriculture Ministry (SAGARPA) has added twonew clauses to the protocol for the importation of feeder cattlefrom Australia. This effectively precludes the export of cattlefrom Australia’s northern ports. The Embassy continues tolobby the Mexican Government on this issue.

Mexico has not eliminated the 3 per cent temporary tariff, butcontinues to apply an exemption to imports of Australian wool.The Australian Government continues to lobby for permanentremoval of the tariff.

Middle EastDesired outcomes Outcome/progress achieved

Desired outcomes Outcome/progress achieved

M i d d l e E a s t

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increased shipments of live animals,particularly sheep

Acceptance by Egyptian authorities ofthe need for a scientific basis to anyrestrictions on beef following theirban on bone-in cuts of beef

Improved Australian businessawareness and involvement inopportunities in the Toshka and EastOweinat agricultural development‘mega projects’ in the Upper NileValley in Egypt

Increased Australian wheat exports to Iran

Increased use of available fundsunder the MOUs on Cooperation inscience and technology andagricultural research anddevelopment for bilateral agriculturalresearch and cooperation with Israel

INFORMATION TECHNOLOGYAND TELECOMMUNICATIONS

Increased number of Israelicompanies using Australia as aregional base

Increased use of Israeli venture capitalfunds and continued high-level two-way ICT business contacts

Desired outcomes Outcome/progress achieved

2000 and 542 000 head in 2001 and to Israel were 32 700 head in2000 and 196 000 head in 2001.

Australia is continuing negotiations with Egyptian regulatoryauthorities on appropriate standards, following the provision in2000 of a major technical paper to the Egyptian regulatoryauthorities on means by which regulatory objectives could bemet in a less trade-restrictive way.

Australian companies continue to sell live cattle to the SouthernValley project in Egypt with sales of approximately $5 million in2001. Australian companies are active in the Southern Valley inproperty management and management consultancies.Australian-sourced irrigation monitoring and controlequipment has been supplied to the developers. Austrade-ledmissions with senior Egyptian agribusiness people haveresulted in negotiations for new joint ventures.

Iran remains a strong market for wheat exports.

Australia and Israel are undertaking a joint study on thebenefits and operation of a formal Science and Technologycooperation program. Agricultural cooperation is continuing atindustry level. Grants for International Research andDevelopment and Technology Access Activities (IRDTA) areavailable to business through AusIndustry’s Innovation AccessProgram (IAccP) (see http://www.ausindustry.gov.au).

Australia has increasingly been recognised as an importantbusiness location for Israeli companies. The number of Israelicompanies with offices in Australia increased from fifteen tothirty-five.

Australia and Israel are maintaining an active program of ICTvisits and industry contact. International economicdevelopments reduced the volume and availability of venturecapital funds.

MULTI-SECTOR ISSUES

Review of tariff policy to ensurecoherence with the principlesarticulated in the PNG Government’sWhite Paper on tariff reforms

In January 2001, existing tariffs were reduced across the boardby a further 5 per cent under the tariff reform program begun in1997. Many items are already at zero per cent. Rates will fallagain in 2003 and 2006, when average tariffs will be reduced tobelow 5 per cent.

Under the 2000 Tax Review, changes were made in late 2000 toprevent Ministers from granting import duty exemptions on anad hoc basis to favoured companies or projects. Suchexemptions must now be approved by Cabinet.

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INVESTMENT

Finalisation of Investment Promotionand Protection Agreements (IPPAs)with Egypt, Iran and Lebanon

MINING INFRASTRUCTURE

Continued access for Australian firmsto Iranian minerals and oil and gasprojects

PROCESSED FOODS

Increased Australian food andbeverage exports, exploiting increaseddemand for processed food byEgypt’s growing middle class

Desired outcomes Outcome/progress achieved

An agreement with Egypt was signed by Senator Alston on 3May 2001. Negotiations with Lebanon are close to finalisation.Negotiations with Iran are continuing.

Several Australian companies have been negotiating buy-backprojects in the oil and gas sector. Australian expertise in theLNG fields is well recognised and the Iranian Government isendeavouring to attract foreign companies in this sector.Austrade is developing an internet-based project trackingsystem for delivery of opportunities to Australian companies.The current Iranian five-year plan focuses on the mining sectorand efforts are being made to raise awareness of Australiancapability.

Australia’s disease-free environment is being promoted to helpmeet the health clearance and complex standards regime inEgypt. New supermarket chains are entering the Egyptianmarket and are being targeted by a number of Australiancompanies that have not previously exported to Egypt.

Papua New GuineaDesired outcomes Outcome/progress achieved

P a p u a N e w G u i n e a

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Consistent and clear investmentpolicies and phase-out of measuresrestricting foreign direct investment,including the reserve list

Commitment by the PNGGovernment to resolve outstandingclaims of Australian companiesagainst the PNG Government

INFORMATION ANDCOMMUNICATIONSTECHNOLOGY

Opportunities identified for small tomedium enterprises resulting inincreased Australian ICT equipmentand services exports

EDUCATION AND TRAININGSERVICES

Increased number of studentsstudying in Australia at all levels

Desired outcomes Outcome/progress achieved

The Internal Revenue Commission has been responsive torepresentations from Australia when concerns over arbitrary orinconsistent application of tariff policy have been raised.

Following representations by Australia and the World Bank inrecent years on the liberalisation of foreign direct investment,Papua New Guinea agreed in 2001 to revise the ‘reserve list’ ofinvestment activities restricted to foreigners. Regulations will bechanged and half the items will be removed from the reservelist in the near future.

A new category restricting foreign investment in small tomedium enterprises (SMEs) has been created. This category willnot affect Australian investors, however, as the turnoverthreshold of $55 000 is well below the turnover of potentialAustralian investments.

The Morauta Government, with Australian and internationalsupport, maintained its commitment to responsible budgetmanagement and clearing arrears. A number of claims havebeen resolved; others remain under consideration.

Six exhibitors participated in the inaugural Australian IT andSecurity Exhibition in Port Moresby in November 2000, drawingaround 230 visitors over two days. A further 60 visitorsattended a demonstration of security products. The eventgenerated considerable interest from local businesses,diplomatic missions and the constabulary. Companies reportedsales during the exhibition and are expected to undertakefurther visits to Papua New Guinea.

Twelve exhibitors participated in the Australian Education &Training Roadshow in October 2000, including two new to thePNG market and one new exporter. Over 2 000 visitors wererecorded. Participants reported a high level of interest, andinitial indications of enrolments emanating from the Roadshowwere valued at around $2 million.

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MINING, OIL AND GAS

Continuing high profile in PapuaNew Guinea for Australian suppliersand identification of futureopportunities as projects reachdevelopment stage

Continued close contact withstakeholders in the proposed $3.7billion PNG–Queensland gas pipelineproject and Australian companiespositioned to take advantage ofconstruction phase purchasing

PROCESSED FOOD

Increased food and food-relatedexports

Desired outcomes Outcome/progress achieved

Secondary schools that participated in the June 2000 SecondarySchools Fair in PNG reported their 2001 enrolments of PNGstudents were worth $792 000.

The Australian High Commission and Austrade in PortMoresby continue to promote opportunities in mining, oil andgas to Australian companies through regular briefings andarranging company participation in exhibitions and site visits.

Austrade conducted a series of mining briefings in Mackay,Townsville, Bundaberg and Maryborough in July 2000.The Australian Suppliers to Mining Industry Exhibition, held inPapua New Guinea in August 2000, attracted 18 exhibitors(including nine new ones), 320 visitors and significant mediacoverage. Several exhibitors requested that further marketresearch be undertaken.

Fifteen Australian companies participated in a visit program tofour major PNG mine sites in June 2001. Austrade arranged thevisits in conjunction with the PNG Chamber of Mines andPetroleum. Initial feedback from participants was very positive.

The Government continues to monitor closely negotiationsbetween the PNG Government and the project’s proponents. In 2000 and 2001, the Australian Government offered the PNGGovernment assistance in identifying possible alternativesources of funding for the project. The PNG Government hasnot taken up this offer.

Austrade Port Moresby visited major food and beveragemanufacturers in:• Lae and Madang in August 2000, resulting in opportunities

being identified for Australian suppliers of labelling systems,packaging technology, tomato paste, artificial inseminationbreeding technology and products for tuna canning;

• Fine Food, Melbourne in November 2000 to promoteopportunities in Papua New Guinea; and

• Port Moresby in February 2001, to discuss supply contacts inAustralia and to promote Australia’s industry capability.

P e r u

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SECURITY SERVICES ANDPRODUCTS

Increased exports through successfulpromotion of Australia’s capability inthe PNG market

AGRIBUSINESS

Increased cooperation with Peru onquarantine issues, including throughinspection visits to Australia bySENASA (the Peruvian quarantineagency) and the signing of exportcertificates recognising AustralianQuarantine Inspection Service (AQIS)standards

Removal of the surcharge on dairyimports into Peru, or change in theway it is applied

Exports of Australian beef and lambto begin following Peruvianrecognition of AQIS certificationprocedures

Desired outcomes Outcome/progress achieved

A Grocery Week promotion held in Port Moresby in May 2000generated initial export sales by November 2000 of $150 000 forseveral Australian participants.

Austrade facilitated opportunities worth $2 million in the foodand beverage sectors for Australian companies during 2000–01.

See comments on information and communications technologysector above.

As a result of contacts made at the Australian Suppliers to MiningIndustry Exhibition in 2000, a Victorian firm secured a contractworth $4.3 million to supply security fencing around JacksonAirport in Port Moresby.

SENASA is currently recognising AQIS standards for severalAustralian animal products. The last certificate signed inAugust 2001 covered ovine semen and embryos.

The surcharge is still at 5 per cent; however, it has been changedfrom an obligatory duty to a specific duty, based on a priceband.

Milenio Import has re-started imports of lamb meat fromAustralia. Beef imported from neighbour countries iscompetitive and good quality. Australian beef exports sufferdue to shipping costs.

PeruDesired outcomes Outcome/progress achieved

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Increased awareness of Australiancapabilities to assist privatisation ofPeru’s sugar sector – for example, byshowcasing Australian technologyduring visits to Australia of Peruviansugar industry representatives

INFORMATION ANDCOMMUNICATIONSTECHNOLOGY

Identification of new niche markets in ICT

‘Migration’ into the Peruvian marketof Australian businesses alreadyestablished elsewhere in LatinAmerica

INFRASTRUCTURE

Joint exploration with SouthAmerican companies of potentialinvestment, sales and joint venturebusiness opportunities

Identification of opportunities inprivatisation projects for ports,airports and railways

Desired outcomes Outcome/progress achieved

President of the Peruvian Sugar Producers Association (APPAR)visited Australia as part of Austrade’s Olympics visitorsprogram. The General Manager of San Jacinto and Advisor tothe President of the APPAR participated in a Sugar CaneTechnologists Congress in Brisbane in September 2001.

Austrade Lima delivered a South America IT presentation to theAnnual Regional TradeStart and State Allies Conference inAustralia in May 2001 to raise awareness of opportunities in Peru.

Austrade Lima has undertaken an ICT buyer visit program tobuild partner relationships for Australian companies,particularly those already in the region.

The infrastructure division of COPRI (Commission for thePromotion of Private Investment) is aware of the interest ofAustralian companies in participating in joint venture processes.

A number of companies participated in several tenders calledby Peru’s airport authority as part of its airport developmentplan. The privatisation of ports has been postponed until thefirst quarter of 2002.

Austrade has delivered opportunities in air quality monitoring,gas pipeline and aircraft noise monitoring, airportrefurbishment, and aero-navigation system infrastructureprojects to the Australian export community.

T h e P h i l i p p i n e s

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Desired outcomes Outcome/progress achieved

MINING

Identification of market niches forAustralian equipment, services andtechnologies exporters and increasedawareness of Australian capabilities

AGRIBUSINESS

Encourage the PhilippineGovernment to commit to a timetableto reduce high tariffs on sensitiveagricultural products and eliminateminimum access volume quotas

Increased food, beverages andagricultural product and service salesto the Philippines and new exportersintroduced to the market

Predictable and non-discriminatoryregime for the issue of import permitsfor agricultural products and improvedapplication of SPS regulations

INFRASTRUCTURE

Tariff reductions and increasedparticipation by Australian firms inthe environmental sector, particularlyin multilateral-funded projects inwater and wastewater and in theairport and railway sectors

Austrade visited over ten mine sites between 1999 and 2001,and organised an Australian pavilion at the XXV MiningEngineers Convention (Extemin) with ten Australian exhibitorsand 25 delegates.

Austrade Lima staff visited major cities in Australia andprovided 42 one-on-one consultations with selected Australianmining companies about the opportunities in Peru.

The Philippine Government has committed to a tariff schedulefor 2001–04. However, individual tariff schedules are yet to bedetermined for certain meat products, rice, corn and sugar. Atariff band of 0–5 per cent will be implemented in 2004 for amajority of tariff lines. Some tariff lines of sensitive agricultureproducts will have a 30 per cent tariff rate in 2004. The overallaverage nominal tariff rates are programmed to decline from7.72 per cent in 2001 to 4.72 per cent in 2004.

There was an increase in Australian exports to the Philippinesof food, beverages and services by approximately 20 per centfor 2000–01 over 1999–00. Three companies entering thePhilippines in 2000-01 were new to the market and 35 were newto export.

The issue of import permits and the application of SPSregulations have become more predictable and non-discriminatory.

Tariffs on materials and equipment have reduced from a rangeof 3 to 30 per cent in 2000 to a range of 0 to 30 per cent in 2001.

Australia is co-financing the North Luzon Expresswayrehabilitation and expansion.

The PhilippinesDesired outcomes Outcome/progress achieved

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COAL

Reforms of coal purchasingarrangements that open opportunitiesfor Australian coal exporters

DEFENCE EQUIPMENT

Australian defence companies tosecure contracts for Australiandefence equipment under the ArmedForces of the Philippines (AFP)Modernisation Program

INTERNATIONAL PURCHASINGOFFICES (IPOS)

Increased sales by Australian firms toIPOs of major multinational firmslocated in Singapore

Establishment of links between IPOsand Australian exporters and creationof a database on IPO buyingpractices, standards and requirements

Desired outcomes Outcome/progress achieved

Maunsell McIntyre Pty Ltd, in association with Brockman TymInternational of Queensland, won the US$1 million contract toprovide advisory and operational technical assistance to theADB-funded project ‘Capacity Building Support for PasigRiver: Environmental Management and Rehabilitation’.

Australian coal exports are well suited to the coal requirementsof the Philippines. However, suppliers from Indonesia andChina are providing tough competition on price.

In 2000–01, 11 ‘new to market’ defence companies werecontracted to supply equipment and/or provide consultancyservices under the AFP Modernisation Program.

Visits to Australia were organised for the international purchasingoffice managers from two major Singaporean corporations. Both corporations are working on multi-billion dollar projects,including five pharmaceutical and LNG plants, and offshore oiland gas projects. The two visits included seminars for Australiancompanies in capital cities and one-on-one meetings. Over 100Australian companies were involved in both visits. Immediateresults of almost $20 million in sales were achieved, with moresales in the pipeline. Further visits are planned for 2002.

Austrade has begun developing a database on IPO buyingpractices, standards and requirements and will continue thiswork in 2002. The database will provide Austrade withinformation on the key firms and enable identification ofopportunities for Australian firms.

SingaporeDesired outcomes Outcome/progress achieved

S i n g a p o r e

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STANDARDS – MUTUALRECOGNITION OF CONFORMITYASSESSMENT

Successful negotiation of MutualRecognition Agreements withSingapore, covering at least some ofthe target sectors by mid-2000. Targetsectors include electronic, electricaland telecommunications equipment,with the remaining sectors to becompleted by early 2001

EDUCATION

Increased enrolment of Singaporeanstudents in Australian educationinstitutions

ENGINEERING SERVICES

Increased recognition of Australianengineering qualifications

FINANCIAL AND INSURANCESERVICES

Greater Australian involvement inSingapore’s financial sector, followingmajor financial reforms implementedin 1999

INFORMATION ANDCOMMUNICATIONSTECHNOLOGY

Increased Australian IT products andservices exports

Desired outcomes Outcome/progress achieved

The Mutual Recognition of Conformity Assessment betweenAustralia and Singapore was signed in Canberra in February2001, and came into force in June 2001. The MRA establishes alegal framework for the acceptance by the Parties of the resultsof assessments undertaken by one Party to demonstrateconformity with the other Party’s mandatory requirements(‘standards’) relating to electrical and electronic equipment,telecommunications equipment and medicinal products. The agreement is designed to facilitate trade by reducing oreliminating regulatory barriers to trade.

Singapore was Australia’s largest source of internationalstudents during 2000, with 20 866 students representing anincrease of 8.6 per cent over 1999 figures. There were increasesin both onshore (6.6 per cent) and offshore (11.4 per cent)enrolments in 2000.

This objective is being pursued through Australia-SingaporeFree Trade Agreement negotiations by working closely with theprofessional bodies in both countries.

The National Australia Bank and the ANZ Bank were affordedWholesale Banking Licences under the second phase of bankingliberalisation in December 2001.

In 2001, Australian ICT security firms such as Citadel Securixteamed up with 1-Net Singapore, a government-linked

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INFRASTRUCTURE

Australian firms securing sales arisingfrom major infrastructure projects inSingapore, especially thedevelopment of railways,environmental management, publicsector projects and ICT infrastructure

Desired outcomes Outcome/progress achieved

company, to pursue private and public sector projects, both inSingapore and South-East Asia. CorVu Australasia, whichspecialises in business intelligence software, has also establisheda presence in the market through a distribution network. OtherAustralian ICT companies have benefited from Singapore’s pro-ICT policies, including Baltimore Technologies (e-security), ERGTransit Systems (integrated fare card systems), and FutureSchool (online tutoring products).

Focus on new technologies such as eCustomer RelationshipManagement, enterprise architecture, network management,network security and wireless technologies will continue in2002. Australian firms operating in these niche sectors remaincompetitive.

Austrade organised a broadcasting industry mission toAustralia that resulted in increased awareness of Australiancapability. A reciprocal visit to Singapore by Australiancompanies in 2002 will pursue export opportunities.

An Australian company has won tenders for interior design atChangi Airport Terminal 3 and for the new Singapore PublicLibrary project.

Australian companies are well placed for other major contractsat Changi Airport Terminal 3 and the Mass Rapid Transit (MRT)expansion projects when tenders are called in early 2002. MRTexecutives will be visiting Australia in early 2002 to examineAustralia’s capability.

A high-level mission visited Australia to investigate Australia’sapproach to using compressed natural gas (CNG) with the viewto converting Singapore’s bus and taxi fleet.

A senior sports mission will visit Australia in early 2002 toinvestigate Australian capability for the development ofSingapore’s sports infrastructure.

S i n g a p o r e

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LEGAL SERVICES

Recognition by Singapore that aderegulated financial sector requires aliberalised commercial law practiceregime

Reasonable access for Australian lawfirms to the Singapore legal servicesmarket beyond current arrangementsallowing a limited number of jointventures and formal alliances

Recognition of Australian law degreeson merit and on equivalent terms withthose of other common law countries

PROCESSED FOOD ANDBEVERAGES

Increased sales to Singapore,including to airlines, institutionalcaterers and hotels

Establishment of long-term contractsand supply relationships withSingapore importers, andconsolidation of the chilled porkmarket against a background ofchanging market preferences

Desired outcomes Outcome/progress achieved

Australia is pursuing greater access to Singapore’s legal servicesmarket through the FTA, including recognition of Australianlaw degrees and joint venture opportunities for Australianfirms. Australian law schools and professional practices canoffer their expertise in areas such as financial, business andintellectual property law, contributing to Singapore’s objectiveof further developing its financial, IT and life sciences sectors.

In March 2001, the Singapore Attorney-General’s Chambersreleased the report of a committee established to examine thesupply of lawyers in Singapore. The report recommended thatrecognition, for the purposes of admission to practice, berestored to law degrees from three previously recognisedAustralian universities (the University of Melbourne, theUniversity of Sydney and Monash University). It alsorecommended adding the University of New South Wales tothis list. These recognitions were forthcoming in July 2001. Inthe case of all four universities, recognition for admissions willbe automatic only where the student has graduated in the top30 per cent of his or her finishing class.

The major event for the year was the opening of the AustralianPavilion by Singapore’s largest supermarket chain, NTUCFairprice. The project introduced over 200 new companies tothe market, representing more than 1 500 new product lines,and it is anticipated to generate sales of over $20 million in thefirst year of operation. Many of the participating companieshave not exported before.

Australian ‘Airpork’ continues to be the dominant marketplayer, with sales of fresh pork reaching $112 million in 2001.

AUSTRALIA-SINGAPORE FREETRADE AGREEMENT

Australia’s key market access priorityis the negotiation of a Free TradeAgreement with Singapore. Many ofthe above objectives are beingpursued further through thesenegotiations

AGRIBUSINESS

Increased sales of agriculturalcommodities including wheat, oilseeds, pulses and tallow to SouthAsian markets through theidentification of major buying groups

Cotton tariff level in Pakistan reducedfrom the current 15 per cent

Prime Ministers Howard and Goh jointly announced thedecision to proceed with an FTA in December 2000, committingtheir officials to the negotiation of a substantial, comprehensiveand liberalising FTA.

During 2001, officials conducted five rounds of formalnegotiation. The FTA provides a valuable opportunity for bothsides to negotiate improved access to each other’s markets. A key focus for Australia is increased access to Singapore’sservices sectors (including telecommunications, financialservices and professional services). Other areas of interest toboth parties are: reduction of tariffs, rules of origin, governmentprocurement, competition policy, standards and SPS andquarantine cooperation.

Significant progress has been made in expanding exports ofagribusiness commodities to South Asia. Solid growth has beenachieved over the last two years in the export of fresh fruit andvegetables to Bangladesh, Pakistan, and to a lesser extent, Sri Lanka. There has been considerable growth in oil seedexports, particularly to Pakistan (up 130 per cent in 2001),where Australia is now the premier supplier. Pulse exports toSouth Asia continue to grow. However, exports of wheat toPakistan, Australia’s major market in South Asia, have declinedin 2001, as a result of a bumper domestic wheat harvest.Pakistan remains a major long-term market for high-qualityAustralian wheat. Australia has emerged as the single largestexporter of wheat, pulses and processed foods, includingprocessed agribusiness commodities, to Sri Lanka.

The cotton tariff in Pakistan was reduced from 15 per cent to 5 per cent.

194

South AsiaDesired outcomes Outcome/progress achieved

Desired outcomes Outcome/progress achieved

CONSUMER GOODS

Increased penetration of South Asianconsumer markets to take advantage ofgrowing sophistication of South Asianmarkets and decreasing tariff levels

EDUCATION

Continued growth in studentnumbers and closer collaborationbetween Australian and South Asianeducational institutions

GAS

Increased Australian involvement inniche opportunities in Bangladeshand Pakistan in this emerging sector

INFRASTRUCTURE

Increased penetration by Australiancompanies in World Bank, UnitedNations and Asian DevelopmentBank projects in South Asia

Limited progress has been made, in part because of slowingdemand in South Asian markets. The potential for exploitingniches in the South Asian market remains considerable.

Although South Asia remains a small market in absolute terms,Australia continues to perform strongly as a preferred destinationfor South Asian students studying abroad. Australia has nowbecome the second most popular destination for both Indian andBangladeshi students studying abroad, and has successfullypenetrated markets in Pakistan and Sri Lanka. To capitalise onincreased internet usage in Pakistan, the Australian Governmentis establishing a web site to promote Australian education.Further progress, in the short term, is likely to be adverselyaffected by new Australian student visa requirements.

Pakistani prospects continue to be evaluated following thesigning of gas price agreements and the release of onshore andoffshore exploration policies. One Australian company has beguncommercial production in Pakistan, and one has identified viablegas fields, with commercial production to begin soon.

Little progress has been made in Bangladesh, in large part aresult of the hiatus in decision-making ahead of nationalelections. The new Bangladeshi Government has, however,made encouraging statements about their approach to openingBangladesh’s gas reserves to development. Australiancompanies have been apprised of this development.

Australian companies have undertaken invaluable preparatorywork in this area, including exploring possible development ofLNG infrastructure projects in India, Sri Lanka and Pakistanand hydro-electric projects in Nepal. Potential for securinginfrastructure contracts remains promising, with the possibilityof significant international reconstruction contracts inAfghanistan also potentially presenting opportunities.

A p p e n d i x 4 : P ro g re s s a g a i n s t o b j e c t i v e s i d e n t i f i e d i n T O O S 2 0 0 0 195

Desired outcomes Outcome/progress achieved

S o u t h A s i a

196

AADCP ASEAN–Australia DevelopmentCooperation Program

ABARE Australian Bureau of Agriculturaland Resource Economics

ABS Australian Bureau of Statistics

ADB Asian Development Bank

AEI Australian Education International

AFTA ASEAN Free Trade Area

AFTA–CER ASEAN Free TradeArea–Australia–New ZealandCloser Economic Relations

ALNG Australia Liquefied Natural Gas Ltd

ANAO Australian National Audit Office

ANZCERTA Australia-New Zealand CloserEconomic Relations TradeAgreement (commonly known as CER)

ANZFA Australia New Zealand FoodAuthority

APEC Asia Pacific Economic Cooperation

AQIS Australian Quarantine andInspection Service

ASEAN Association of Southeast AsianNations

ATC Australian Tourism Commission

ATCG Agricultural Trade ConsultativeGroup

BSE Bovine Spongiform Encephalopathy(‘mad cow disease’)

CAP The European Union’s CommonAgricultural Policy

CCSBT Commission for the Conservation ofSouthern Bluefin Tuna

CEP Closer Economic Partnership

CER See ANZCERTA

COALAR Council on Australia–Latin AmericaRelations

DFAT Department of Foreign Affairs andTrade

DITR Department of Industry, Tourismand Resources

DOTRS Department of Transport andRegional Services

DTA Double Taxation Agreement

EA Department of Environment andHeritage (Environment Australia)

EC European Commission

ECB European Central Bank

EFIC The Export Finance and InsuranceCorporation

EFTA European Free Trade Association

EMDG Export Market Development Grant

ETM Elaborately transformedmanufacture

EU European Union

FDI Foreign direct investment

FTA Free trade agreement

FTAA Free Trade Agreement of theAmericas

GATS General Agreement on Trade inServices

APPENDIX 5: GLOSSARY OF TERMS

GATT General Agreement on Tariffs andTrade

GDP Gross domestic product

GI Geographical indication

GM Genetically modified

HIPCs Heavily indebted poor countries

ICT Information and communicationstechnology

IMF International Monetary Fund

IOR–ARC Indian Ocean Rim Association forRegional Cooperation

IPO International Purchasing Office

IPPA Investment Promotion andProtection Agreement

IPPC International Plant ProtectionConvention

ITC US International Trade Commission

KBI Knowledge-based industry

LNG Liquefied natural gas

MDG Market Development Group

MEA Multilateral environmentalagreement

MOU Memorandum of understanding

MRA Mutual recognition agreementsand/or arrangements

NAFTA North America Free TradeAgreement

NGO Non-government organisation

NTC National Trade Consultations

OECD Organisation for EconomicCooperation and Development

OIE Office International des Epizooties

OPEC Organisation of PetroleumExporting Countries

RTA Regional trade agreement

SDR Special Drawing Rights, an artificialcurrency unit created by the IMFand defined as a basket of nationalcurrencies.

SELI Strengthening Economic LegalInfrastructure

SER Strengthening Economic Relations

SME Small to medium-sized enterprise

SPS Sanitary and phytosanitary

STM Simply transformed manufacture

TBT Technical barriers to trade

TCF Textiles, clothing and footwear

TIFA Trade and Investment FacilitationAgreement

TPAC Trade Policy Advisory Council

TRIPS Trade-Related Aspects of IntellectualProperty Rights

TTMRA Trans-Tasman Mutual RecognitionArrangement

WTO World Trade Organization

197A p p e n d i x 5 : G l o s s a r y o f Te r m s

Title Cost (inc.GST and postage) $

STATISTICAL PUBLICATIONS

The APEC Region: Trade and Investment 48.00Trade in Services Australia 26.50Exports of Primary and Manufactured Products Australia 35.00Composition of Trade Australia 48.00Direction of Trade Time Series 26.50Australian Basic Trade Statistics 15.00Australia’s Trade with the European Union 26.50Australia’s Trade with the Americas 30.00

ECONOMIC ANALYTICAL UNIT STUDIES

India: New Economy, Old Economy 39.00Investing in Latin American Growth: Unlocking Opportunities in Brazil, Mexico, Argentina and Chile 39.00

MAGAZINE

Asialine* (4 issues – annual subscription) 30.00(8 issues – special price) 55.00

* Discontinued in printed form in February 2002. From March 2002 publication will be available free of charge on the Department’s web site.

DEPARTMENT OF FOREIGN AFFAIRS AND TRADE’S 2001 PUBLICATIONS

Department of Foreign Affairs and Trade Annual Report 2000-01 30.00

OTHER PUBLICATIONS

Subsistence to Supermarket II Series: Agrifood Globalisation and Asia Volume I: Agrifood Multinational Corporations and Asia 35.00APEC Progress on Tariffs: Implications for a New Agenda FreeGlobalisation and Poverty: Turning the Corner FreeAustralia’s Trade: Influences into the New Millennium FreePaperless Trading: Benefits to APEC FreeExport EU: A Guide to the European Union for Australian Business Free

APPENDIX 6: FOREIGN AFFAIRS AND TRADEPORTFOLIO – 2002 TRADE AND ECONOMICPUBLICATIONS

198

Title Cost (inc.GST and postage) $

From Sheep’s Back to Cyberspace: Trade and Regional Australia in Changing Times FreeAn Australia–USA Free Trade Agreement: Issues and Implications Free

AUSTRADE’S 2002 PUBLICATIONS

Austrade Corporate Profile FreeHelping arts and cultural organisations go international FreeClient Service Charter FreeGoing International? FreeHow we help rural Australia export to the worldAt-a-glance publications – individual summaries of theeconomies of 26 countries (titles available on request) FreeExport Market Development Grants – Getting Started: How to apply for your first grant FreeExport Market Development Grants – In Brief FreeExport Market Development Grants – Approved Joint Venture Requirements FreeExport Market Development Grants – Approved Body Requirements FreeExport Market Development Grants – Approved Trading House Requirements FreeExport Market Development Grants – Grants at a Glance FreeExport Market Development Grants – Grants at a Glance (Chinese)Export Market Development Grants – Questions and Answers: The improved EMDG scheme FreeExport Market Development Grants – Scheme Improvements FreeExport Market Development Grants –How the EMDG scheme helps exporters with e-marketing FreeExport Market Development Grants – How the EMDG scheme helps tourism exports FreeExport Market Development Grants – Application form 2000-01 FreeExport Market Development Grants – Application form 2000-01, guide and schedules FreeExport Market Development Grants – Guide to record keeping FreeExport Market Development Grants – Guide to record keeping (Chinese) FreeDirectory of Australian Indigenous Cultural Products FreeExport Update (monthly newsletter) FreeAustrade Annual Reports Free

199A p p e n d i x 6 : P u b l i c a t i o n s

200

Export Access – your passport to success FreeExport Access application form FreeExporting for the Future – Fact Sheet FreeReflection – Sydney 2000 Games FreeWhat is this thing called Globalisation? FreeEasy Markets for New Exporters to expand Profitability –South Pacific region FreeDoing Business in Eastern India Free

PUBLICATIONS FOR SALE (PRICE ON APPLICATION)

Business Briefs and Market Profiles – approx 520 titles available on requestGuidelines to the Export Market Development Grants ActWorld Import Regulations DirectoryDirectory of Australian Businesses in IndonesiaDirectory of Australian Companies in IndiaAmericas’ Mine Site ReportsA Portrait of Australian Exporters: A Report Based on the Business Longitudinal SurveyWhy Australia Needs Exports: the Economic Case for Exporting

How to order publications

For Austrade publications contact Austrade: Tel: 13 28 78Fax: (03) 9284 3133

Or visit Austrade’s website at www.austrade.gov.au

For the Department of Foreign Affairs and Trade publications, order online atwww.publications.dfat.gov.au

Or contact:Market Information and Analysis Unit Department of Foreign Affairs and TradeBARTON ACT 0221

Tel: (02) 6261 3114Fax: (02) 6261 3321Email: statssection@dfat.gov.au

The Foreign Affairs and Trade portfolio is responsible for four principal agencies that provide a widerange of services to the Government, business and the community.

• The Department of Foreign Affairs and Trade (DFAT) is the Government’s principal adviser onforeign and trade policy and represents Australia’s national interests to foreign governments. Itprovides advice to business on general economic and political conditions abroad and acts on behalf ofindustry sectors and individual firms to improve access to foreign markets. DFAT is the lead agency forinternational negotiations.

• Austrade is the Government’s export facilitation agency and is dedicated to helping Australian firmswin international business. A statutory body responsible to the Minister for Trade, it providesAustralian exporters and investors with practical assistance and targeted financial support for theiroffshore business activities.

• The Export Finance and Insurance Corporation (EFIC) is a statutory body responsible to the Ministerfor Trade. It provides Australian exporters with internationally competitive insurance and financeservices, particularly for countries, companies and contracts that the commerical market may not havethe capacity to cover.

• AusAID operates autonomously within the portfolio, administering Australia’s overseas developmentassistance programme. Under the direction of the Minister for Foreign Affairs, it provides developingcountries with financial assistance to promote sustainable development and social advancement. Theaid programme opens up commercial opportunities by introducing developing nations to Australiangoods, services and other capabilities.

Web Sites

FOREIGN AFFAIRS AND TRADE

Homepage www.dfat.gov.au

Trade www.dfat.gov.au/trade/

Trade and Economic Statistics www.dfat.gov.au/publications/stats.html

Trade Liberalisation www.dfat.gov.au/trade/opening_doors/

Trade Negotiations www.dfat.gov.au/trade/negotiations/

Trade Objectives and Outcomes Statement www.dfat.gov.au/toos/

Trade Publications www.dfat.gov.au/publications/

TradeWatch www.tradewatch.dfat.gov.au

Calender of Trade Related Events www.dfat.gov.au/business_services/tradecal.html

Australia’s Overseas Foreign and Trade Representation www.dfat.gov.au/missions/

A p p e n d i x 7 : Fo re i g n A f f a i r s a n d Tr a d e P o r t f o l i o 201

APPENDIX 7: FOREIGN AFFAIRS AND TRADE PORTFOLIO

202

Economic Analytical Unit www.dfat.gov.au/eau

Export Finance Policy www.dfat.gov.au/trade/export_finance_policy.html

Market Development Group www.dfat.gov.au/trade/mdtf/index.html

Market Access www.dfat.gov.au/ma/

Multilateral Procurement www.dfat.gov.au/business_services/mp.html

WTO Disputes www.dfat.gov.au/trade/negotiations/wto_disputes.html

AUSTRADE

Homepage www.austrade.gov.au

EXPORT FINANCE AND INSURANCE CORPORATION

Homepage www.efic.gov.au

Contact Numbers

CENTRAL SWITCHBOARDS

Department of Foreign Affairs and Trade (02) 6261 9111

Austrade 13 28 78

KEY CONTACT NUMBERS

Agriculture Market Access Facilitator (02) 6261 2688

Automotive Market Access Team (02) 6261 3678

WTO Disputes Investigation and Enforcement Mechanism (02) 6261 1890

Information Industries Market Access Team (02) 6261 2468

Market Development Group (02) 6261 3236

Market Information and Analysis Unit (02) 6261 3114

National Trade Consultations (02) 6261 2125

Processed Food and Beverages Market Access Team (02) 6261 2545

Services Negotiations (02) 6261 1874

Textiles, Clothing and Footwear Market Access Team (02) 6261 3465

Trade Outcomes and Objectives Statement (02) 6261 3236

Trade Policy Advisory Council (02) 6261 2125

A

ABARE forecasts, 124

access, see market access

Access Economics, 36

accessions to WTO, 25, 159

accountancy services, 11, 19, 96

ACL Bearing Company, 143

acronyms and abbreviations, 196-7

Action Agendas, 40, 71, 131

Advancing with E-Commerce, 42

aerospace industry, 128

Afghanistan, 195

Africa, 34, 143see also Egypt; South Africa

AFTA-CER Closer Economic Partnership, 33, 42, 43

Agreement on Trade-Related Aspects ofIntellectual Property Rights (TRIPS), 21, 22

agribusiness and food, 34, 62, 71, 124–5, 143ASEAN, 105, 106Canada, 24China, 94Europe, 114, 115European Union, 9, 101, 178-9genetically modified food, 43–4, 87, 99Hong Kong, 180India, 117, 118, 167Japan, 86, 87Latin America, 112, 171, 181, 182, 187-8Market Development Group priorities, 158Middle East, 108, 109, 110, 182–3, 184multilateral negotiations, 15, 16–17New Zealand, 99Papua New Guinea, 186–7Philippines, 189

Republic of Korea, 23, 95-6Singapore, 104, 193South Asia, 194Thailand, 37United States, 10, 90-1see also dairy products; grains and cereals;

meat; quarantine

agricultural equipment and technology, 108, 112

agricultural support, 4, 5, 9–10, 16, 23

Agricultural Trade Consultative Group, 69

agriculture, see agribusiness and food

aid program, 33, 34

air services, 19, 83, 89, 179, 188aviation fuel, 83-4freight, 40, 179

air services agreements, 35, 172

air traffic control systems, 93

aircraft, 24, 128

‘Airpork’, 193

airports, 106, 187, 188, 192

alcoholic beverages, 78, 87see also wine

Algeria, 110

Allen Consulting Group, 41, 135

aluminium, 78, 86, 95, 101, 105

aluminium casting technology, 127

aluminium boats, 129, 173

American Australian Free Trade AgreementCoalition, 37

AMP, 87

animals, see live animals

animal health, see quarantine

animal oils, 87

Ansett collapse, 123, 179

I n d e x 203

INDEX

204

anti-competitive business practices, APEC, 40

anti-dumping and countervailing duties, 24

ANZ, 160, 191

ANZCERTA, 35

APEC, 20, 30, 44

APEC Australian Business Forum, 69

APEC Automotive Dialogue, 127

APEC Sub-Committee on Standards andConformance, 44

APEC Support Program, 34

APEC Transportation Working Group, 40

apples, 111, 118, 167

AQIS, 41, 171see also quarantine

aquariums, 96

architecture, 19, 161

Argentina, 111, 112, 155, 171, 173

armoured vehicles, 128

aromatherapy, 87

artificial insemination breeding technology, 186

ASEAN, 7, 8, 43, 103-6, 126-7see also Indonesia; Malaysia; Philippines;

Singapore; Thailand

ASEAN–Australia Development CooperationProgram, 43

ASEAN Free Trade Area (AFTA)-CER CloserEconomic Partnership, 33, 42, 43

ASEAN+3 process, 8

Asia, 125see also North-East Asia; South-East Asia

Asia–Pacific Economic Cooperation, see APEC

Asian Development Bank (ADB), 66, 190

Association of South East Asian Nations, see ASEAN

ASYCUDA, 34

Athens Olympics, 102

audio tours, 118

AusAID, 39

Ausbiotech, 62

Austal Ships, 128, 129, 172

Austrade, 51, 163, 164Americas, 90Americas Mining Industry Team, 113ASEAN, 106Australian Export Awards, 29Automotive Market Development Program, 127Chengdu, 165contact information, 202defence aerospace projects, 128education and training services promotion,

164, 172, 178Enviro 2002, 131European Union, 102, 178Export Access, iii, 61Export Advisory Panels, 69–70Export Advisory Service, 62Export Market Development Grants Scheme,

64, 65Exporting for the Future Program, 59India, 170industry specialists, 62Knowing and Growing the Exporter Community

research project, 51, 53missions, 62, 106, 112, 162, 183, 192Latin America, 112–13, 172, 173, 188, 189New Exporter Development program, 52Port Moresby, 186–7publications, 199-200TradeStart, iii, 52, 60–1, 62, 188United States, 90, 91see also exhibitions, trade shows and

promotions; seminars, briefings and conferences

Austrade Euro-Link Centre, 55

Australia–China Business Council, 133

Australia–China Chamber of Commerce, 164

Australia Festival in Brazil, 172

Australian–Japan Conference, 38

Australia LNG/North West Shelf, 160

Australia–New Zealand Closer EconomicRelations Trade Agreement, 35

Australia–New Zealand Trade Ministers’ Meeting, 35

Australia–Singapore Free Trade Agreement, 35–6,42, 158, 191, 193, 194

Australia Sport International, 133

Australia–Thailand Free Trade Agreement, 37, 42

Australia–United States Double TaxationConvention, 90

Australia–US FTA Business Group, 37

Australian Bureau of Agricultural and ResourceEconomics forecasts, 124

Australian Capital Territory, 70

Australian Capital Territory Chief Minister’sDepartment, 70

Australian Chamber of Commerce and Industry, 29

Australian Customs Service, 41

Australian Education & Training Roadshow, 185

Australian Education International, 102, 164, 169, 172

Australian Export Awards, 29

Australian Health Insurance Commission, 175

Australian Information Industry Association, 168

Australian investment, see investment by Australia

Australian IT and Security Exhibition, 185

Australian Pavilion, 8, 104, 193

Australian Quarantine and Inspection Service(AQIS), 41, 171see also quarantine

Australian Rainforest Honey, 61

Australian Suppliers to Mining Industry Exhibition, 186, 187

Australian Tourism Commission, 123

Australian Tourism Export Council, 123

Australian Trade and Investment Seminar, 166

Australian Vintage, 143

Australian Wine Export Council, 52

Austria, 151

Automated System of Customs Data(ASYCUDA), 34

automotive industry, 69, 126-7ASEAN, 105, 106European Union, 101, 102, 177Latin America, 112Market Development Group priorities, 158Middle East, 108, 109

Republic of Korea, 96Thailand, 37, 127United States, 89, 91

Automotive Market Development Program, 127

Automotive Trade Council, 69

aviation, see air services

awards, 29, 61

awareness of export sector, 58

B

Bahrain, 109

balance of payments, 156

balance of trade, 75, 76

Baltimore Technologies, 192

Bangkok International Airport, 106

Bangladesh, 194, 195, 150

bank notes, 173

Bank of Mexico, 173

banking, 11, 96, 191

barley, 11, 182

bathing costumes, 87

beef, 124Egypt, 183Europe, 115Japan, 86, 87Mexico, 181Peru, 187Poland, 176Republic of Korea, 23, 95-6United States, 89

Beijing Olympic Coordinating Committee, 133

Beijing Olympics, 62, 94, 160-1, 162, 163

Beijing Organising Committee for the OlympicGames, 160-1

Beijing Planning and Development Commission,160-1

Belgium–Luxembourg, 128, 150-5

Bewley Review, 65

BHP Billiton, 173

I n d e x

205I n d e x

206

bilateral strategies, 35–9see also free trade agreements

BIO 2001, 136

BioPartnering Europe, 62

Biosafety Protocol, 43

biosecurity, 42–3see also quarantine

Biosecurity Australia, 42, 86

biotechnology, 38, 39, 43–4, 91, 135-7European Union, 101, 102Market Development Group priorities, 158New Zealand, 98-9

Blackburne, Dr Ian, 56

Bligh Voller Neild, 78

blue tongue viruses, 42

boats, 101, 128, 129, 172

body lotions, 87

boots, 87

Bosnia Herzegovina, 115

bovine embryos, 161

brake products, 127

branding, 124

Brazil, 111, 157, 171, 172, 173Austrade services, 112, 113exports to, 112, 150imports from, 112, 151Market Development Group priorities, 157trade dispute, 24

breeding technology, 186

Britain, see United Kingdom

broadband-related technology, 163

broadcasting, 192

Brockman Tym International, 190

Brunei, 105, 151

BSE, 87, 115

building, see construction

‘Building with Australia’ trade shows, 179

Built-in Agenda, 16, 19

Built of Business: Australia’s Internet Economy, 41

Bulgaria, 114, 115, 174, 175

Burma, 105

Busan Aquarium, 96

business, consultation with, 68–70

business law, 35

business practices, APEC, 40

business services, 19, 39, 135

‘Byrd Amendment’, 24

Bytecraft, 163

C

Cadastral computerisation package, 175

Cairns Group, 3, 9, 16, 17

Cambodia, 25, 105

Canada, 41, 98, 113biotechnology, 43, 136exports to, 91, 150, 152imports from, 151, 153information technology and

communications, 42, 90investment, 154, 155trade disputes, 24

CAP, 9

capacity building, 34

cars, see automotive industry

Cartagena Protocol on Biosafety, 43

catamarans, 128, 129

cattle exports, 171, 182, 183

Central Europe, 114–16, 157, 174–7

CER, 35

cereals, see grains and cereals

Changi Airport, 192

cheese, see dairy products

chemicals, 11, 112

Cheung Kong Holdings, 181

Chevron Australia Pty Ltd, 160

Chia National Offshore Oil Corporation, 160

Chile, 3, 7, 98, 111, 112, 171air services agreement, 172exports to, 112, 113, 152imports from, 153railway industry, 132

China, 7, 8, 39, 42, 43, 70, 92–3, 123, 131area freedom negotiations with, 42automotive and automotive components

industry, 127, 158exports to, 75, 76, 150, 152free trade agreement with ASEAN, 103imports from, 151, 153investment, 92–3, 154, 155, 165–6Market Development Group priorities, 158progress against TOOS objectives, 159-66railway industry, 133representation in, 70tourism from, 123trade-related assistance, 34WTO accession, 11, 24, 159

China Light and Power, 181

Chinese Taipei, see Taiwan

CI Technologies, 163

Citadel Securix, 191-2

citrus, 86, 161, 180

Closer Economic Partnership (AFTA-CER), 33, 42, 43

Closer Economic Relations (CER), 35

clothing and textiles, 37, 87, 118see also cotton; wool

CNG, 165, 192

coalEurope, 114, 174European Union, 78, 101India, 117, 118, 167Japan, 86Latin America, 112, 173Mexico, 78Philippines, 190Republic of Korea, 95

COALAR, 112

Cochlear, 175

Codex Alimentarius Commission, 42–3

Coface, 66

coffee, 105

cold disinfestation treatment, 86

Colombia, 111, 172

Colonial Mutual, 160

commerce, investment in, 86

Commercial Account, EFIC, 65–6

commercial dispute settlement, 10–11, 23–4, 95–6, 166

commercial law, 24, 30

commodity exports, see agribusiness and food;mining

Common Agricultural Policy (CAP), 9

competition policy, 5, 16, 20, 37

compressed natural gas (CNG), 165, 192

computers, see information and communicationstechnology

confidential items, 114

conformance, 37, 44–5, 191

Connell Wagner, 78

construction, 19, 78, 96, 99, 179–80see also infrastructure development

consultancy services, 91, 180

consultation with business community, 68–70

consumer goods, 87, 195

contact information, 201–2

container freight, 40

copper, 77, 101, 117

corn, 105

corn oils, 87

CorVu Australasia, 192

cosmetics, 87

cotton, 11, 43, 78, 101, 105, 117export barriers, 10, 194

Council on Australia–Latin America Relations, 112

course grains, see grains and cereals

cream, see dairy products

Croatia, 175

crude oil, see petroleum

current account deficit, 75

curriculum support material, 59

customs, 36Asia–Pacific region, 34, 40Australia–New Zealand, 35

Czech Republic, 114, 115, 157, 174, 175, 176, 177

I n d e x

207I n d e x

208

D

Daewoo Motors, 96

dairy products, 11, 22, 143, 157ASEAN, 105Canada, 24European Union, 178Hong Kong, 180Latin America, 112, 171, 187Market Development Group priorities, 157Middle East, 108, 109New Zealand, 98United States, 10

defence-related goods and services, 70, 101, 128-9,173, 190

Denmark, 151

Department of Defence, 128

Department of Foreign Affairs and Trade (DFAT), 18, 19, 39, 52, 164

Automotive Taskforce, 127contact information, 201-2Office of Trade Negotiations, 15Port Moresby, 186publications, 58, 125, 144, 171, 198-9, 200Trade Advocacy and Outreach unit, 58WTO Trade Law Branch, 24

Department of Industry, Tourism and Resources, 44

Department of Transport and Regional Services, 40

‘Destination Australia’ initiative, 136

developed countries, 16, 18

developing countries, 3, 4, 5–6, 15, 17, 20, 34

diagnostic testing, 137

diamonds, 87

Dianca, 173

direct investment, see investment

diseases and pests, see quarantine

dispute resolution, 10–11, 23–4, 95–6, 166

distribution, 19

Diversys, 137

Doha Development Agenda, 3, 34

Doha Round, 3, 5–6, 7, 9, 15–21

Doing Business in Brazil, 172

DOTARS, 40

double taxation agreements, 90, 108, 172

E

e-commerce, 30, 36, 37, 40, 41–2, 61

East Asia, see North-East Asia; South-East Asia

East Europe, 114-16, 157

East Timor, 62, 128

economic performance/outlook, 83–4ASEAN, 103–4China, 92Europe, 114European Union, 100India, 117Japan, 85Latin America, 111Middle East, 107–8New Zealand, 98Republic of Korea, 95United States, 88-9, 90

education and trainingexporters, 59, 61officials, 34, 93

education and training services, 19, 70, 130ASEAN, 105, 158China, 164Europe, 174, 226European Union, 102, 178Hong Kong, 180India, 118, 169Latin America, 172Market Development Group priorities, 157, 158Mexico, 182Middle East, 110Papua New Guinea, 185-6Republic of Korea, 96Singapore, 36, 191, 192, 193South Asia, 195

EFIC, 65–7, 202

Egypt, 107-8, 129, 184exports to, 75, 109, 150, 182, 183

elaborately transformed manufactures (ETMs), 38, 76, 77, 96, 98, 101

see also automotive industry

Electric Energy Industry Export Council, 69

electrical and electronic equipment, 44

electricity, 173, 181, 195

electronic commerce, 30, 36, 37, 40, 41–2, 61

electronics, 104, 105see also information and communications

technology

11 September terrorist attacks, effects of, 3, 130ASEAN, 103Australia, 123Japan, 86Middle East, 107, 108New Zealand, 98United States, 88, 90

EMDG, 64–5, 123

emerging markets, 123, 107–19

employment, 51, 59, 142, 143

emus, 176

energy, 19, 69, 181China, 94India, 118Japan, 85–6Latin America, 112, 173Republic of Korea, 97see also gas; petroleum

engine bearings, 143

engineering, 19, 78, 143, 179, 191see also infrastructure development

engineering equipment, 112

English-language teaching, 180

entertainment, 91, 118

Enviro 2002, 131

environment, 20–1

Environment Australia, 39, 162

environment industry, 19, 131China, 162Hong Kong, 180India, 118, 168Latin America, 112-13, 188Philippines, 190

Poland, 174Republic of Korea, 39

Environment Industry Action Agenda, 131

equestrian goods and clothing, 87

ERG Transit Systems, 192

ETSA Utilities, 181

Euro-Link Centre, 55

Europe, 62, 114–16, 127, 150–5Market Development Group priorities, 157private label branding, 124progress against TOOS objectives, 174–7

European Commission, 178

European Free Trade Association, 44

European Union (EU), 7, 17, 100–2, 115, 116agriculture, 9, 16, 42, 45e-commerce and online issues, 42exports to, 77, 78, 100–1, 102GM labelling, 43Mutual Recognition Agreement, 44progress against TOOS objectives, 177–79trade disputes, 11, 24see also France; Germany; Italy; United Kingdom

EXDOC system, 41

exhibitions, trade shows and promotionsagribusiness and food, 99, 187building materials and housing, 179Brazil, 172education and training services, 178, 185environment, 131Hong Kong, 179information and communications

technology, 185mining, 113, 173, 186, 187, 189New Zealand, 99Papua New Guinea, 185, 186, 187Peru, 189

Exploding the Myths, 58

EXPOMIN, 113

Expomineria 2001, 173

Export Access, iii, 61

Export Advisory Panels, 69–70

Export Advisory Service, 62

Export Awards, 29

I n d e x

209I n d e x

210

export awareness, 58

export credit insurance, 65–7

export finance, 64–7

Export Finance and Insurance Corporation, 65–7, 202

Export Market Development Grants, 64–5, 123

export performance, 4, 75–9

export opportunities, 54–5, 123–38ASEAN, 105-6Europe, 115–16European Union, 102China, 11, 39, 94India, 118Japan, 38, 86–7Latin America, 112–13Middle East, 110New Zealand, 98-9Republic of Korea, 38–9United States, 90-1

export promotion, 51–72

export subsidies, 11, 16, 24, 177

exporters, 51–72, 142-3

Exporting for the Future Program, 59

exports, 142ASEAN, 103, 104China, 92European Union, 100-1India, 117New Zealand, 98Republic of Korea, 95see also merchandise exports; services exports

Extemin, 189

F

FAO, 42–3

Fares Rural, 112

ferries, 101, 128, 129, 172

fertilizers, 112

Fiji, 150-4

film services and entertainment, 91, 118

financial services, 19ASEAN, 103China, 94, 160, 161India, 118Japan, 86-7Republic of Korea, 95, 96–7Singapore, 35, 36, 191United States, 90

finance, 64–7

Finland, 150, 151

fisheries and seafood, 11, 21, 24, 101, 179

Flack & Kurtz Australia, 78

‘flexibility gap’, 21

Fonterra Dairy, 98

food, see agribusiness and food

Food and Agriculture Organization, 42–3

food regulation, 35

food safety, 42–3, 124

food security, 34

food standards, 44

footwear, 87

Ford Motor Company, 127

foreign aid program, 33, 34

foreign investment, see investment

Foreign Sales Corporations, 11

forestry products, 35

Former Yugoslav Republic of Macedonia, 115

France, 70, 100, 101, 150-5

free trade agreements (FTAs), iv–v, 7, 35–7ASEAN–China, 103New Zealand, 98Singapore, 35–6, 42, 158, 191, 193, 194

freight, 40, 179

freight rail, 133

Freight Transport Logistics Industry ActionAgenda, 40

From Sheep’s Back to Cyberspace, 58

fruit, see horticulture

fruit flies, 42, 86

FTAs, see free trade agreements

fuel, see energy

furniture, 157

Furniture Industry Association of Australia, 157

furniture leather, 78

Future School, 192

G

game meats, 115, 176

gasASEAN, 105China, 93, 158, 160India, 170Iran, 184Japan, 86Papua New Guinea, 186South Asia, 195Mexico, 173Middle East, 109, 110, 184Republic of Korea, 97Singapore, 192

gas pipelines, 186, 188, 190-4

GDP, see Gross Domestic Product

General Motors, 127

genetically modified food, 43–4, 87, 99

geographic indications (GIs), 22

Germany, 70, 100, 178exports to, 101, 150, 152imports from, 101 151, 153investment, 154, 155

Getting into Export seminars, 62

Gibbens Industries, 89

Global Food Seminars, 124

global network, Australian, 55, 62

global supply chains, 40, 62

globalisation, 125, 141-7

glossary of terms, 196-7

GM foods, 43–4, 87, 99

gold, 78, 95, 105

governance activities, 34

government–business consultation, 68–70

government procurement, 5, 36, 226

government services, 116

grains and cereals, 10, 11, 96, 105, 177, 182genetically modified (GM), 43see also wheat

Greece, 102, 152, 153

‘Grocery Showcase in the Pacific’, 99

Gross Domestic Product (GDP), 4, 84, 142ASEAN, 103Australia’s principal merchandise exportdestinations, 150China, 92current account deficit, 75Europe, 114Middle East countries, 107, 108New Zealand, 98Republic of Korea, 95United States, 88, 90

Group Egis, 66

Guidelines for Import Risk Analysis, 42

Gulf countries, see Middle East

H

harmonisation of regulations, 40

hats, 87

hay, 87

Health Care International, 175

health foods, 87

health insurance, 175

Health Insurance Commission, 175

health services, 87, 110, 118, 169, 175, 226see also pharmaceuticals

heavy metals, 178

hides and skins, 11, 114

high-speed ferries, 101, 128, 129, 172

Hokubee Australia, 87

Holden, 96, 109

‘home’ brands, 124

honey, 61

Hong Kong, 11, 98environmental goods and services, 131

I n d e x

211I n d e x

212

exports to, 77, 86, 185, 150, 152imports from, 151, 153investment, 154, 155, 181progress against TOOS objectives, 179-81railway industry, 133

horticulture, 11ASEAN, 105European Union, 101Hong Kong, 180India, 117, 118, 167Japan, 86, 87Middle East, 109South Asia, 194

hospitality, 83

housing, 99, 178-80

Hungary, 114, 157, 174, 175, 176, 177

hydro-electricity, 195

hypermarkets, 110

Hyundai, 96

I

Iceland, 44

Ichigo Australia, 87

IMF forecasts, 84, 108

immigration procedures, APEC, 40

import duty exemptions, 184

import permits, 189

import risk analysis (IRA) process, 42

imports, 75, 76, 144, 146China, 92European Union, 101Middle East, 110New Zealand, 98United States, 83, 89see also merchandise imports; services imports

Incat, 129

India, 42, 62, 117-9exports to, 117, 150, 152imports from, 151, 153progress against TOOS objectives, 166–70

Indian Ocean Rim Association for RegionalCooperation (IOR-ARC), 33

Indonesia, 103environmental goods and services, 131exports to, 78, 105, 150, 152imports from, 151, 153investment, 154, 155Market Development Group priorities, 158

industrial products (industrials), see manufactures

Industry Action Agendas, 40, 71, 131

industry missions, see missions

industry specialists, 62

information and communications technology(ICT), 33, 134-5APEC, 30ASEAN, 105, 106China, 93, 162-3, 166electronic commerce, 30, 36, 37, 40, 41–2, 61Europe, 175European Union, 101, 102Hong Kong, 181India, 42, 118, 167-8, 169Israel, 108, 183Japan, 87Latin America, 173, 188Market Development Group priorities, 157, 158New Zealand, 98paperless trading, 30, 41Papua New Guinea, 185Republic of Korea, 38, 39, 42, 96Singapore, 191-2United States, 90

infrastructure development, 34, 132-3, 143, 181ASEAN, 106China, 163Europe, 175-6India, 170New Zealand, 99Peru, 189Philippines, 66, 189-90Republic of Korea, 38, 97Singapore, 192South Asia, 195see also mining

insurance, 11, 83export credit, 65–7

intellectual property, 21–2, 24, 36, 37, 179

intelligent lighting systems, 163

interest rates, 83European Union, 100Republic of Korea, 95United States, 89

international aid program, 33, 34

International Biotechnology Conference &Exhibition, 136

international education, see education and trainingservices

International Finance Corporation, 66

international investment, see investment

International Monetary Fund forecasts, 84, 108

international negotiations, 5–6, 15–22, 43

international outlook, 83-120

International Plant Protection Convention, 43

international purchasing offices, 190

International Trade Information and Cooperation, 34

international trade policy environment, 3–12

International Water Association, 131

Internet, 41–2, 61web sites, 195, 201-2see also electronic commerce

Introduction to E-Commerce for Exportersprogram, 61

Invest Australia, 56, 62, 165-6

Investing in Latin American Growth: unlockingopportunities in Brazil, Mexico, Argentina and Chile, 171

investment, 20, 56–7, 144-5, 146ASEAN, 103, 106India, 117Latin America, 111, 113Middle East, 108, 109New Zealand, 99Papua New Guinea, 185

investment by Australia, 57, 62, 145, 155ASEAN, 105China, 92-3, 165-6European Union, 101Japan, 86, 87, 88Latin America, 112

Middle East, 108, 110New Zealand, 98Republic of Korea, 97United States, 90

investment in Australia, 144-5, 154ASEAN, 105China, 92, 165-6European Union, 101Hong Kong, 181Israel, 183Japan, 86, 87, 88New Zealand, 98United States, 90

Investment Promotion and ProtectionAgreements, 108, 172, 184

Iran, 107, 108-9, 150, 183, 184

Iraq, 107, 109, 150

Ireland, 42, 150–5

iron ore, 77, 78, 86, 95, 114see also steel

irrigation, 109, 183

Israel, 108, 109, 151, 183

IT Business Forum, 41

Italy, 85, 100exports to, 101, 150, 152imports from, 101, 151, 153investment, 154, 155

J

Japan, 7, 37–8, 41, 43, 85-8, 127, 131exports to, 37, 77-8, 85-6, 87, 88, 150, 152imports from, 86, 88, 151, 153information technology, 42, 158investment, 86, 87, 88, 154, 155Market Development Group priorities, 158proteas, 143

jewellery, 87

jobs, see employment

joint venturesEgypt, 183Japan, 87Thailand, 37

Jordan, 109, 110, 182–3

I n d e x

213I n d e x

214

K

kangaroo meat, 115, 176

Knoll AG, 137

Knowing and Growing the Exporter Communityresearch project, 51, 53

knowledge-based products and services, 134-7see also biotechnology; business services;

information and communications technology; professional services

Korea, see Republic of Korea

Kosovo, 175

Kuwait, 109, 110, 128, 150

L

labelling, 62, 124, 186genetically modified (GM) foods, 43–4

Lachley Meats, 143

lamb, 23, 78, 115, 171, 187

land title systems, 175

Laos, 25, 105

large companies, 61

Latin America, 111-14, 127, 157progress against objectives identified in

TOOS 2001, 171-3see also Mexico; Peru

leather, 78, 112

Lebanon, 25, 109, 184

legal services, 19, 39, 62, 96, 193

Leighton Contractors (Asia) Limited, 66

lemons, see citrus

liberalisation, 4–11, 146see also market access

Libya, 109

Liechtenstein, 44

lifestyle (consumer) goods, 87, 195

light rail, 181

Linden Group, 78

line pipe, 24

liquefied natural gas (LNG), see gas

live animals, 157, 158France, 101Latin America, 112, 171Mexico, 171, 182Middle East, 108, 109, 182-3Poland, 176see also wool

LNG, see gas

Lockhart, Hon John, 23

Lopez Group, 66

Ludowici Mineral Processing Equipment Pty Ltd, 113

Luxembourg, see Belgium–Luxembourg

M

macadamia nuts, 167

Macedonia, 115

machinery, 112, 143

Macquarie Bank Group, 97

‘mad cow disease’ (BSE), 87, 115

magnesium casting technology, 127

Malaysia, 41, 69, 103, 104, 105, 127, 131exports to, 86, 150, 152heavy engineering, 143imports from, 151, 153investment, 154, 155

malt exports, 177

malting barley, 182

mandarins, see citrus

mangos, 161

Manila North Tollway Corporation, 66

manufactures (industrials), 76, 77, 142, 143Brazil, 24Canada, 24China, 94European Union, 101, 102Japan, 37, 86Latin America, 112Market Development Group priorities, 157Middle East, 108multilateral negotiations, 5, 15, 18New Zealand, 98

Republic of Korea, 96United States, 24, 89see also agribusiness and food; automotive

industry; pharmaceuticals; wine

margarine, 180

marine products and services, 19, 40, 91, 173ferries, 101, 128, 129, 172patrol boats, 128, 173Market Development Group priorities, 157

market access, 5–6, 15–25, 43, 78, 171see also Austrade; protection; quarantine; tariffs;

trade disputes

Market Development Group priorities, 157–8

Mass Rapid Transit (MRT), 192

Maunsell McIntyre Pty Ltd, 190

measuring and controlling instruments, 101, 112

meat, 143, 157China, 161Europe, 114, 115, 176European Union, 101, 178Latin America, 112, 171, 187Middle East, 108Singapore, 193United States, 23, 78see also beef; live animals

medical equipment, 116

medical patents, 21

medical research, 137

medicines, see pharmaceuticals

merchandise exports, 76, 150, 77-8ASEAN, 105, 106China, 92, 94Europe, 114–15European Union, 100-1, 102, 116Hong Kong, 86, 185India, 117-18, 119Japan, 85-6, 87, 88Latin America, 112, 114Middle East, 108-9, 110New Zealand, 98, 99Republic of Korea, 23, 95-6, 97Thailand, 37United States, 89, 91

merchandise imports, 76, 151

ASEAN, 105, 106China, 92, 94Europe, 114, 116European Union, 101, 102India, 119Japan, 86, 88Latin America, 112, 114Middle East, 110New Zealand, 98, 99Republic of Korea, 97Thailand, 37United States, 89, 91

metals, see mining

Mexico, 7, 78, 111, 112, 127, 171, 173double taxation agreement, 172exports to, 75, 150, 152heavy engineering, 143imports from, 112, 151, 153Market Development Group priorities, 157progress against objectives identified,

171-3, 181-2sanitary and phytosanitary issues, 41, 157

Middle East, 107-10, 128, 143exports to, 108, 110, 182-3, 150imports from, 110, 151Market Development Group priorities, 157progress against objectives identified in

TOOS 2000, 182-4see also Egypt

Milenio Import, 187

milk, see dairy products

Mincom, 175

mining, 157, 158ASEAN, 105China, 165European Union, 101, 178India, 118Iran, 184Japan, 86Latin America, 113, 173, 189Papua New Guinea, 186Taiwan, 158see also coal; energy

Mining Engineers Convention (Extemin), 189

Minister of Industry, Tourism and Resources, 123

I n d e x

215I n d e x

216

Mitsubishi Australia, 109

Monash University, 193

motor vehicles, see automotive industry

motor yachts, 129

multilateral investment, see investment

Multilateral Investment Guarantee Agency, 66

multilateral negotiations, 5–6, 15–22, 43

Murray Goulburn Cooperative, 143

music copyright, 24

mutual recognition frameworks/agreements, 40, 44–5, 191

N

Narrowcasters, 118

National Association of Software and ServicesCompanies, 168, 169

National Australia Bank, 191

National Biotechnology Strategy, 136

National Food Industry Council, 71

National Food Industry Strategy, 71

National Interest Account, EFIC, 66

National Investment Advisory Board, 56

National Office for the Information Economy, 42

National Trade Consultations, 54, 68

natural gas, see gas

NCM Group, 67

NEC, 87

negotiations, 5–6, 15–22, 43area freedoms in Australia, 42WTO accessions, 25see also free trade agreements

Nepal, 195

Netherlandsexports to, 150, 152imports from, 151, 153investment, 154, 155

New Exporter Development program, 52

New South Wales Department of State andRegional Development, 70

New Zealand, 33, 43, 98-9, 123, 131biotechnology, 136Closer Economic Relations Trade Agreements, 35exports to, 77, 98, 150, 152imports from, 98, 151, 153investment, 57, 98, 154, 155Trans-Tasman Mutual Recognition

Arrangement, 45

non-ferrous metals, 101see also aluminium; coal; copper

non-monetary gold, 78, 95, 105

non-tariff measures, see protection

North America, 7, 127, 143see also Canada; Mexico; United States

North-East Asia, 42, 83see also China; Hong Kong; Japan;

Republic of Korea; Taiwan

North West Bay Ships, 129

Northern Ireland, 129

Northern Territory Department of Business,Industry and Resource Development, 70

Norway, 44, 151

Nowra TradeStart Office, 61

NTUC FairPrice, 8, 104, 193

nuts, 167

O

Oceanis Australia, 96

OECD, 5, 20, 84

Office International des Epizooties, 43

Office of Trade Negotiations, 15

offshore investment, see investment by Australia

oil, see petroleum

Oil-For-Food program, 109

oils and fats, 87

oilseeds, 10, 11, 101, 182, 194

Olympic Games, 62, 94, 102, 132-3, 160-1

Oman, 109

opals, 87

open skies air service agreements, 35

oranges, 86, 180

organic foods, 87, 158

Organisation for Economic Cooperation andDevelopment (OECD) countries, 5, 20, 41–2, 84

Organisation of Petroleum Exporting Countries(OPEC), 83, 84, 107

ostrich industry, 171

outlook, 83–120

outward investment, see investment by Australia

overseas aid program, 33, 34

overseas investment, see investment

ovine semen and embryos, 187

P

Pacific region, see South Pacific nations

packaging technology, 186

Pakistan, 150, 151, 194, 195

Palestinian Territories, 109

PANBIO Limited, 137

paperless trading, 30, 41

Papua New Guinea, 184-7, 150-5

Papua New Guinea Government, claims against, 185

Paraguay, 3

patents, 21

patrol boats, 128, 173

PBR International, 127

pearls, 87

penaeidae prawns, 179

People’s Republic of China, see China

Peptech Limited, 137

perishable goods handling, APEC, 40

personal care products, 87

Peru, 111, 113, 133, 187–9

pests, see quarantine

petroleum, 37, 95ASEAN, 105Middle East, 107, 109, 110, 184oil prices, 83-4, 100, 105, 107Papua New Guinea, 186

see also gas

pharmaceuticals, 11, 78, 101, 102, 137TRIPS and, 21

Philippine National Construction Corporation, 66

Philippines, 105, 189-90exports to, 78, 105, 128, 150, 152, 189imports from, 151, 153investment, 154, 155North Luzon Tollway Project, 66railway industry, 133

photonics technology, 134

phytosanitation, see quarantine

pipelines, 186, 188, 190-4

plant health, see quarantine

plantation forestry products, 35

plums, 180

Poland, 78, 114, 174, 175, 176

‘Poland Wool Development Project’, 176

policy, see trade policy

polymer bank notes, 173

pork, 193

port authority procedures, APEC, 40

Portugal, 129

poverty, 145

Powercorp Australia, 181

prawns, 179

prices, 75, 146oil, 83-4, 100, 105, 107

primary product exports, see agribusiness andfood; mining

private label branding, 62, 124

privatisation, 86, 97, 117, 169-70, 188

processed foods, see agribusiness and food

professional services, 11, 19, 35, 40, 87, 96-7, 135

propolis products, 87

Protea Pride, 143

protection, 9–11, 146agricultural support, 4, 5, 9–10, 16APEC, 40ASEAN, 105see also market access; tariffs

I n d e x

217I n d e x

218

public health, 21see also health services

public infrastructure development, 38

publications, 37–8, 171, 172, 198-200Department of Foreign Affairs and Trade,

58, 125, 144, 171, 198-9, 200

pulses, 109, 117, 194

Q

Qatar, 109, 110, 151

quarantine, 41, 42–3APEC, 40China, 161European Union, 177, 178-9Japan, 86Latin America, 171, 182, 187Middle East, 109, 183Singapore, 36Philippines, 189

Queensland, 70

Queensland Department of State Development, 70

Queensland University of Technology, 180

R

racing products and services, 91

railway, 133, 181

real estate investment, 86, 108

recreational marine products and services, 91

Regional Customs Project in the Pacific, 34

regional tourism, 123, 143

Regional Tourism Program, 123

regional trade agreements, 7

renewable energy, 112

Republic of Korea (South Korea), 7, 38–9, 41, 42, 43, 95-7, 98, 127

exports to, 23, 77, 95-6, 97 150, 152imports from, 151, 153investment, 97, 154, 155

residential building, 99, 179-80

rice, 10, 11, 96, 105

Rio+10, 39

road transport regulations, APEC, 40

road infrastructure, 66, 97

roadshows, see exhibitions

Robert Bosch Corporation, 127

Romania, 114, 175, 176

royalty payments, 24

RTAs, 7

Russia, 25, 83, 114, 116, 152, 153

S

SANCRT system, 41

sanitary and phytosanitary issues, see quarantine

Saudi Arabia, 25, 69, 107, 110exports to, 75, 108, 109, 150imports from, 151

SBF, 129

schools program, 59

science and technology, 35, 98-9, 183see also biotechnology; information and

communications technology

sea transport, see marine products and services

seafood, 11, 21, 24, 101, 179

search and rescue vessels, 128

secondary schools, 59, 186

Securing Australia’s Prosperity, 56

security services and products, 187, 192

seeds, 10, 11, 101, 182, 194

seminars, briefings and conferences, 62, 165-6agribusiness and food, 124Australian Trade and Investment Seminar, 166about China, 62, 159, 162environment industry, 113mining, 186, 187E-Commerce for Exporters program, 61international purchasing office managers, 190Mining Engineers Convention (Extemin), 189TradeStart, 60, 188

SENASA, 187

services, 5, 15, 19

services exports, 76, 77, 152ASEAN, 105, 106China, 92, 94, 160-1European Union, 101, 102Hong Kong, 181India, 117Japan, 86, 87, 88Latin America, 112, 114New Zealand, 99Republic of Korea, 96, 97United States, 90, 91

services imports, 153ASEAN, 105, 106China, 92, 94European Union, 101, 102Japan, 86, 88Latin America, 112, 114New Zealand, 99Republic of Korea, 97United States, 89-90, 91

sheep exports, 108, 176, 182-3

shipping, see marine products and services

shrimp, 24

Simeon Wines Ltd, 143

simply transformed manufactures, 76, 77

Singapore, 7, 41, 103, 105, 123Australian Pavilion, 8, 104, 193exports to, 78, 150, 152: citrus, 86free trade agreement with, 35–6, 42, 158,

191, 193, 194imports from, 151, 153investment, 105, 154, 155market visits to, 70Mutual Recognition Agreement, 44progress against TOOS objectives, 190-4railway industry, 133

‘Singapore issues’, 5

skins and hides, 11, 114

Slovak Republic, 174, 177

small to medium enterprises (SMEs), 42, 51, 52, 61–2, 185

Export Market Development Grants Scheme, 64, 65

smart card technologies, 92, 181

social welfare services, 94

software, 93, 135, 192

softwood plantation forestry products, 35

solar water heaters, 168

sorghum, 182

South Africa, 3, 150-5

South America, see Latin America

South Asia, 33, 150, 151, 194-5see also India

South Australia, 70

South Australian Department of Industry andTrade, 70

South-East Asia, 34, 40, 83, 129, 131see also ASEAN

South Eastern Europe Stability Pact, 175

South Europe, 114-16, 174-7

South Korea, see Republic of Korea

South Pacific nations, 34, 129, 150-4see also APEC

Space Cooperation Agreement, 116

Spain, 150, 151

sports, 78, 91, 133-4, 192see also Olympic Games

Sports Linkages Program, 78

springs, 89

Sri Lanka, 194, 195, 150

Ssangyong, 96

Stadium Australia, 78

standards and conformance, 37, 44–5, 191

State government trade promotion activities, 70

steel, 10, 24, 112

steel casting technology, 127

strawberries, 87

Strengthening Australia–Japan Economic relations,37–8

Strengthening Economic Legal Infrastructure(SELI) initiative, 30

strengthening economic relations (SERs), 37–9

students, see education and training services

I n d e x

219I n d e x

220

sub-contracting projects, 179

sugar, 10, 11, 105, 188

sultanas, 167

Supermarket to Asia, 71, 104

supermarkets, 103, 110, 180, 184, 193

supply chains, 40, 62

sustainable development, 39

Sweden, 151-5

swimming costumes, 87

Switzerland, 43, 150-5

Syria, 109

T

Taiwan (Chinese Taipei), 25, 41, 42, 52,exports to, 77, 150, 152imports from, 151, 153investment, 154, 155Market Development Group priorities, 158railway industry, 133

tallow, 194

tariffs, 3, 16, 18, 142, 143, 146Europe, 176European Union, 179India, 118, 166-7, 168Mexico, 182Pakistan, 194Poland, 78Papua New Guinea, 184-5Philippines, 189Saudi Arabia, 108United States, 10, 23, 78

Tasmania, 70

Tasmanian Trade and Marketing business unit, 70

TATM, 93

taxation agreements, 35, 90, 108, 172

technology transfer, 37, 109

telecommunications, 19, 109APEC Mutual Recognition arrangements, 44China, 93Europe, 226Latin America, 173

Singapore, 35

telecommunications equipment, 93imports, 105, 112

Tenix Defence, 128

Territory government trade promotion activities, 70

terrorist attacks, see 11 (eleven) September terroristattacks, effects of

textiles and clothing, 37, 87, 118see also cotton; wool

Thailand, 41, 69, 104, 106, 131automotive industry, 37, 127exports to, 78, 150, 152free trade agreement with, 37, 42imports from, 151, 153investment, 154, 155

Thales Air Traffic Management (TATM), 93

therapeutic goods, 35see also pharmaceuticals

tomato paste, 186

tourism, 19, 123, 143ASEAN, 105Europe, 226Egypt, 108India, 118Japan, 86Republic of Korea, 96

Tourism Industry Working Group, 123

Toyonoka, 87

Toyota Australia, 109

Trade Advocacy and Outreach unit, 58

Trade and Investment Facilitation Agreements, 39

trade balance, 75, 76

trade disputes, 10–11, 23–4, 95-6, 166

trade exhibitions, see exhibitions and promotions

trade law, 24, 30

trade liberalisation, 4–11, 146see also market access

trade negotiations, see negotiations

trade performance, 4, 75-9

trade policy, 29–47international environment, 3–12

Trade Policy Advisory Council, 68–9

trade promotion, 51–72

Trade-Related Aspects of Intellectual PropertyRights (TRIPS), 21, 22

trade shows, see exhibitions, trade shows andpromotions

TradeSat, 62

TradeStart, iii, 52, 60–1, 62, 188

trading partners, 85-119, 150-5

training, see education and training

trams (light rail), 181

Trans-Tasman Mutual Recognition Arrangement, 45

transport and logistics industry, 40

transport equipment, 112

transport services, 76, 86, 90, 94, 101, 192see also air services; automotive industry

Travel North, 11

travel services, 76, 90, 107, 101see also tourism

triangular taxation, 35

trimarans, 129

tripe, 115

TRIPS, 21, 22

tuna canning products, 186

Turkey, 114, 150

U

Ukraine, 25

United Arab Emirates (UAE), 107, 108, 110, 150, 151

United Kingdom, 42, 61, 100, 123exports to, 101, 150, 152imports from, 101, 151, 153investment, 57, 154, 155private label branding, 124

United Nations, 91

United Nations Food and AgricultureOrganization, 42–3

United Nations World Summit on SustainableDevelopment, 39

United States, 9–11, 17, 41, 42, 78, 83, 88-91, 98, 123, 131

area freedom negotiations, 42automotive industry, 89, 91, 127biotechnology, 137defence-related goods, 128, 129dispute resolution, 11, 23–4, 26exports to, 75, 77 78, 86, 89, 91, 150, 152free trade agreements, 7, 98

with Australia, iv–v, 36–7GM labelling, 43imports from, 151, 153investment, 57, 90, 154, 155Market Development Group priorities, 157steel, 10, 24

United States - Foreign Sales Corporations dispute, 11

United States Biopartnering and InvestmentRoadshow, 136

United States Trade Promotion Authority, 10

University of Melbourne, 193

University of New South Wales, 193

University of Queensland, 180

University of Sydney, 193

uranium, 86, 157, 158

Uruguay, 172

Uruguay Round, 4, 6, 16, 18, 19

V

vegetable oils, 87

vegetables, 101, 105, 117, 194

Venezuela, 111, 129, 172, 173

venture capital, 39, 183

veterinary pharmaceutical products, 137

Victorian Department of State and RegionalDevelopment, 70

Vietnam, 25, 69, 78, 105, 150, 151, 158

Virtual Colombo Plan, 33

W

Walkers Pty Ltd, 143

waste management, 99, 174, 180

water management, 99, 108, 180

I n d e x

221I n d e x

222

web sites, 195, 201-2

Welding Industries of Australia, 173

Western Australian Department of Industry andTechnology, 70

Western Development Strategy (China), 164-5

wheat, 11, 95, 124export barriers, 10, 167Middle East, 108, 109, 183South Asia, 194

wheat gluten, 24

WHO, 42–3

wine, 11, 15, 45, 52, 143ASEAN, 105European Union, 101, 102, 179Hong Kong, 180New Zealand, 99United States, 91

Winning Investment – Strategy, People andPartnerships, 56

wool, 77, 124China, 161Europe, 114, 176-7European Union, 101India, 117, 118, 166Latin America, 116Mexico, 182Vietnam, 158

work boots, 87

World Bank, 33, 185projects, 91, 175

World Congress on Information Technology, 41,135, 162

world economic performance, 83-4

World Expo 2000, 178

World Health Organization, 42–3

world outlook, 83-120

World Summit on Sustainable Development, 39

World Trade Organization (WTO), 3–7, 15–25accessions to, 25, 159Appellate Body, 23Committee on Trade and Environment, 21Global Trust Fund, 34disputes and dispute resolution, 10–11, 23–4,

95-6, 166SPS Agreement, 42Trade Negotiations Committee, 15

WTO Advisory Group, 15, 69

WTO Trade Law Branch, 24

Y

yachts, 129

Yallourn Energy, 181

Yemen, 25, 109

Yugoslavia, 175