Simon Crean (Hotham, Australian Labor Party, Minister for Trade) Share this | Hansard source

by leave—I have the pleasure to make a ministerial statement to update the House on developments with the Asia-Pacific Economic Cooperation forum (APEC) and particularly on an important meeting I attended on 31 May and 1 June—the APEC Ministers for Trade Meeting in Arequipa, Peru.

APEC is the premier forum for promoting trade and investment in the Asia-Pacific. Let us not forget, Mr Speaker, that the genesis of the APEC idea was the Australian Labor government under then Prime Minister Bob Hawke. APEC started right here, in Canberra, with a ministerial meeting in 1989. Reflecting the initiative of Prime Minister Keating, since 1993 APEC has also included an annual leaders-level meeting, which allows the leaders from around the region to hold informal discussions on important trade and economic developments as well as the broader set of regional and international issues. Importantly, APEC leaders have played a key role in responding to issues such as the Asian financial crisis, SARS, avian influenza, the Indian Ocean tsunami and North Korea.

The Rudd government will work to re-energise APEC because we are committed to it. We initiated it. We believe in it. We support it. We will continue to shape its thinking and its direction. We understand its strategic importance for prosecuting Australia’s interests as well as those of our regional partners.

The three areas of APEC’s focus—trade and investment liberalisation, business facilitation, and economic and technical cooperation—form the basis of its work and help APEC pursue the Bogor Goals of free and open trade and investment set out by APEC leaders in 1994. It was a commitment in 1994 that built off the Uruguay Round—a point I referred to yesterday.

APEC has also been instrumental not just in supporting the multilateral trade negotiations in the World Trade Organisation (WTO) but indeed in enhancing them. That is what the Bogor Declaration was—it was to say that we have not completed the argument with the Uruguay Round; we will use regional architecture to further enhance multilateral objectives in the region.

Whilst APEC did support efforts to bring the Uruguay Round to its conclusion in 1994 and continues to do that with Doha, in its day, when Labor was in office, we used it to enhance the WTO Round. We want to do that again in the expectation that we can conclude successfully the Doha Round. From the point of view again of Labor governments initiating the important reform agendas when it comes to trade and engaging the global community, it would be great to have an outcome with Doha that would bookend the two major multilateral negotiating efforts over the last two decades.

APEC is a leader in building a better environment for business and emphasises private sector participation in its activities. The APEC Business Advisory Council, which is a high-level permanent forum of regional business leaders, advises APEC leaders directly on private sector priorities and is a key part of APEC’s architecture.

Our membership of APEC expands our focus beyond the domestic market and provides tremendous opportunities to create jobs and income. Australian business has access to over 2.5 billion consumers and around 60 per cent of global income in 21 APEC member economies. These economies also purchase more than three-quarters of Australia’s exports. In 2007 Australia’s trade with APEC economies comprised almost 70 per cent of our total two-way trade. Eight of our top 10 export markets are APEC economies. So APEC does matter to this country.

By progressively reducing tariffs and other barriers to trade, APEC members’ economies have become more efficient and exports have expanded dramatically. APEC has been a driving force in the reduction of tariffs in the region from an average of 17 per cent in 1989 to around five per cent today. In the last decade APEC exports have more than doubled to nearly A$7 trillion, and APEC economies have generated 195 million new jobs.

APEC has also helped Australia’s neighbours in reducing poverty by a third in some APEC economies. Higher incomes have enabled people to have better access to safer drinking water and facilitated increased expenditure on health and education. These improving social indicators promote regional stability and generate more stable and larger markets for the goods and services Australia can provide.

The Australian Bureau of Agricultural and Resource Economics commodity forecasts released yesterday highlighted in clear terms that Australia continues to benefit from a resources boom of historic proportions. ABARE forecasts that Australia’s minerals and energy exports will grow from $120 billion in 2007-08 to $178 billion in 2008-09. Further price increases are expected for a range of Australian minerals, energy and farm exports. These figures highlight the challenge before us—to build Australia’s competitiveness and productivity in a way that sustains us beyond this resources boom.

Unlike the previous government, the Rudd government will not squander the opportunity provided by this resources boom. Rather, we will use it to shift the Australian economy onto a more sustainable, longer term footing. That means using our resources boom as a basis for building our services and investment performance. Services currently comprise 80 per cent of our economy but only about 20 per cent of exports—there is considerable room for improvement here and we need to strengthen our two-way investment flows.

On the investment front, the stock of direct investment abroad by Australian companies now stands at $318 billion. It is not far short of foreign direct investment into Australia of $357 billion. This underlines the importance of investment to the offshore strategies of Australian businesses. It also highlights the changing nature of trade. APEC has been working on these issues for many years and we want to build on this agenda. We need both pillars of the Rudd government’s trade policy to be fully deployed—bringing down trade barriers at the border, as well as important behind-the-border reforms to improve and sustain our international competitiveness.

With its successful work on trade facilitation over many years and recent agreement to extend this to investment facilitation, APEC has a central role to play in promoting reforms behind the border throughout the Asia-Pacific region. APEC work on issues like customs facilitation, business mobility and regulatory reform can have a major impact on the costs of doing business in the region, and can have a major impact on productivity growth. APEC has recently agreed to accelerate several measures in its second Trade Facilitation Action Plan, which has as its goal reducing the transaction costs facing business in the region by a further five per cent by 2010.

I have spoken many times about the importance of open regional arrangements and the contribution they can make to increasing prosperity in the region and expanding job opportunities for Australians and opportunities for Australian exporters. APEC’s agenda for strengthening regional economic integration is designed to achieve this aim.

APEC’s future work on trade, investment and economic reform for the next few years will be guided by a report endorsed by leaders on Strengthening regional economic integration (REI) and reaffirmed by the Meeting of Ministers Responsible for Trade in Peru. This document contains some fifty agreed actions and recommendations aimed at giving a boost to APEC’s efforts to promote regional economic integration. The agreed actions include: continuing support for the multilateral trading system through strong commitments and concrete actions; an examination of the options and prospects for a Free Trade Area of the Asia-Pacific (FTAAP); strengthening APEC’s work to promote high-quality free trade agreements; strengthening APEC’s work on structural reform and reducing behind-the-border barriers; and intensifying efforts to strengthen and deepen financial markets.

Australia will engage actively and constructively in the APEC discussions on the scope for a free trade agreement covering the Asia-Pacific region. To support this work, Australia recently led an examination of the possibility of enlarging or merging regional trade agreements and free trade agreements to simplify the trade landscape. Australia will continue to strongly support APEC’s ongoing encouragement of high-quality, comprehensive free trade agreements among APEC members. I was pleased to be able to convey to my colleagues in Peru news of Australia’s high-quality FTA with our APEC partner Chile, which I hope will enter into force on 1 January 2009. FTAs of this quality will boost economic integration in the Asia-Pacific. Successful implementation of the APEC program for regional economic integration offers substantial scope for boosting the economic dynamism of the Asia-Pacific region even further. We will, of course, also be talking to our regional partners about closer economic integration in the region in the context of Prime Minister Rudd’s long-term vision for a new Asia Pacific community. This proposal once again shows Australia is looking to shape the regional architecture to 2020 and beyond, and is the next logical step in deepening the sense of community in our region.

As I said earlier, getting our domestic policy settings right is a key component of what I call our twin pillars approach to trade policy. Getting our own house in order is vital, because there is no point fighting for improved market access opportunities if we as a nation are not competitive enough or productive enough to take advantage of those new opportunities. We need, above all, a trade policy that crosses traditional portfolio barriers and forms the basis of a genuine whole-of-government approach and one that acknowledges that investments and infrastructural improvements, for example, involve the states as well as Canberra. So as well as requiring a whole-of-government approach, we need a whole-of-government approach.

Many behind-the-border or structural reform issues—such as decisions on investment, and infrastructure improvements, on skills development, on innovation—require extensive consultation with state and territory governments. So I was pleased to announce in March that the Rudd government will now coordinate our efforts within the framework of the new Ministerial Council on International Trade through the Council of Australian Governments (COAG) process. The Rudd government is committed to working with the state and territory governments to restore Australia’s level of productivity and international competitiveness through better dialogue and cooperation on a broad range of trade-related issues.

Structural reform behind the border is a new and extremely important area of focus in APEC, particularly as barriers at the border continue to fall. These issues include regulatory reform, strengthening competition policy, improving governance, fighting corruption and enhancing trade and investment facilitation. To assist in this process, the Treasurer will host APEC’s first ministerial meeting on structural reform in August in Melbourne. This meeting will allow participants to share experiences with building a domestic constituency for structural reform, identify regional priorities and inject greater direction into APEC’s work on these issues. The meeting will be a key milestone to set the direction of, and build further momentum on, behind-the-border issues within APEC. With my colleague the Treasurer I look forward to working with our counterparts to further enhance APEC’s work program in this area.

The Rudd government is also committed to strengthening APEC’s links with business and ensuring it continues to play a leading role in the region. As much as trade negotiations involve government-to-government exchanges, it is critical, if we are to develop this improved competitiveness and productiveness, that we also strengthen the business-to-government relationship.

The APEC Business Advisory Council, otherwise referred to as ABAC, is a group of 63 leading businesspeople, comprising three business representatives from each of the 21 APEC economies. ABAC meets four times a year and it plays a key role in ensuring APEC reflects business priorities. Recently the Prime Minister appointed two highly respected members of the Australian business community—Mr Lindsay Fox, AC and Mr John Denton—to serve on Australia’s APEC Business Advisory Council.

Mr Fox is a leader in the transport and logistics sector in Australia and throughout the region. Mr Denton is Chair of the Business Council of Australia’s Trade and International Relations Task Force as well as being CEO of the legal firm Corrs Chambers Westgarth. Mr Fox and Mr Denton join Mr Mark Johnson, the former Deputy Chairman of Macquarie Bank and Chairman of AGL, who remains as chair of our ABAC group. Australia’s three ABAC representatives have already been active in formulating business advice to APEC and I look forward to working with them in driving APEC’s agenda.

Member economies are pursuing a number of other priorities to strengthen APEC. Institutional reform of APEC is continuing—notably a 30 per cent increase in membership contributions, the establishment of a policy support unit to boost the APEC secretariat’s analytical capacity, and a proposal to appoint a fixed-term executive director to provide greater continuity and leadership.

In addition APEC’s human security agenda also continues to expand, with new initiatives on counterterrorism, food security, cleaner energy and energy efficiency, health initiatives and emergency preparedness. Prime Minister Rudd and Indonesia’s President Yudhoyono recently agreed to take to this year’s APEC leaders meeting a joint proposal on better coordination of regional disaster response work.

APEC should fully reflect regional economic influence. That is why the Rudd government is a strong supporter of India’s membership of APEC at the end of the moratorium. This was a point referred to by the Minister for Foreign Affairs yesterday, when he was hosting Foreign Minister Mukherjee from India. Personally I have been a long-time and strong proponent of India’s membership and I will continue to be a strong advocate for India’s inclusion in the APEC forum.

The Rudd government is committed to strengthening APEC to ensure that we can best capitalise on the opportunities that will arise in the Asia-Pacific century. We need to tackle head-on the policy challenge represented by the changing nature of international trade. We need to recognise the enormous opportunities that we have in the Asia-Pacific region. APEC provides us with the mechanism to pursue these objectives.

To help shape APEC’s forward agenda, I am working closely with Peru, this year’s chair, along with future hosts Singapore, Japan and the United States, to ensure that we achieve an ambitious, cohesive approach to APEC’s ongoing work in this the first term of the Rudd Labor government. Australia has much to gain from supporting and strengthening APEC and working with our Asia-Pacific neighbours to further liberalise trade and investment in our region. I look forward to working with other members of APEC to this end.

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