Australia: July 1998
Members welcomed Australia's strong and active participation in the multilateral trading system. They commended the high degree of transparency in the conduct of Australia's trade and investment policies.
POLICY REVIEW BODY: REVIEW OF AUSTRALIA
The Trade Policy Review Body of the World Trade Organization (WTO) concluded its third review of Australia's trade policies on 30 June and 2 July 1998. The text of the Chairperson's concluding remarks is attached as a summary of the salient points which emerged during the discussion.
The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member country at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.
The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including: its domestic laws and regulations; the institutional framework; bilateral, regional and other preferential agreements; the wider economic needs and the external environment.
A record of the discussion and the Chairperson's summing-up, together with these two reports, will be published in due course as the complete trade policy review of Australia and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed:Argentina (1992), Australia (1989, 1994 & 1998), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia (1993), Botswana (1998), Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992, 1994 & 1996), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), C˘te d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993 & 1998), Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Namibia (1998), Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), South Africa (1993 & 1998), Sri Lanka (1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY:
REVIEW OF AUSTRALIA
CONCLUDING REMARKS BY THE CHAIRPERSON Back to top
The third Trade Policy Review of Australia was conducted by the TPR Body on 30 June and 2 July 1998. These remarks, prepared on my own responsibility, are intended to summarize the main points of the discussion; they are not intended as a full report. Details of the discussion will be reflected in the minutes.
Members raised a large number of written questions, which have been answered in writing today. The discussion developed under three main themes: (i) the economic environment; (ii) trade and investment measures; and (iii) sectoral issues.
Members welcomed Australia's strong and active participation in the multilateral trading system. They commended the high degree of transparency in the conduct of Australia's trade and investment policies. Members also recognized that Australia's unilateral approach to trade liberalization, which complemented internal structural and regulatory reforms, had greatly improved the country's overall economic performance, leading to high rates of growth in output and productivity together with low inflation since the last Trade Policy Review, and contributing to a substantial fall in unemployment from a peak of 11% in 1992/93 to near 8% at present.
Some Members noted that a slowdown in the process of liberalization had occurred in recent months. They pointed to an increase in export assistance, slower unilateral reduction in tariff peaks, an increasing threat of contingency measures and a more active industrial policy as symptoms of the slowdown. In this connection, they expressed concern about the likely impact of the continuing Asian crisis on Australia's economic growth rate and current account deficit, sought reassurance concerning the Government's policy response, and encouraged Australia to continue to open and deregulate its markets.
In response, the representative of Australia emphasized that economic projections of 3% growth in 1998/99 remained valid, although caution was required in the light of the continuing Asian crisis. The current account deficit did not so much reflect trade imbalances, as payments for previous borrowings, and would therefore be addressed by fiscal consolidation, not by trade measures. Delegates were assured of the Australian Government's commitment to keeping its markets open and continuing to pursue overall economic reform, while taking into account the legitimate needs of individual sectors for assistance in adjusting to the challenges of globalization.
The representative reiterated the Government's determination to push ahead with autonomous, gradual and predictable MFN trade liberalization under its WTO and APEC commitments. In the latter context, it remained committed to the achievement of free trade by 2010, including in textiles, clothing, footwear and motor vehicles.
Delegations expressed concern that Australia might be moving to a more interventionist industry policy. The representative of Australia stressed that the Government was not attempting to pick winners. Instead, policy focused on improving the business environment through a sound macroeconomic stance and the vigorous pursuit of microeconomic reforms, including the pursuit of more labour market flexibility, tax reforms and competition policy in key sectors like telecommunications, energy and transport.
Questions were raised about relations between Commonwealth and State Governments, notably the adherence by State authorities to the Commonwealth Government's trade and investment commitments. In response, Australia stressed that States did have constitutional responsibilities in several areas and outlined the consultation mechanisms in existence to ensure consistency of State and Commonwealth policies.
Trade and investment measures
Members raised the following concerns over specific trade and investment measures:
- remaining tariff peaks and escalation, and the tariff "pause" in the textiles, clothing and footwear and passenger motor vehicle sectors, which also retained higher than average tariff protection; new export assistance policies in the PMV sector were also noted in this connection;
- the effects on developing countries of the "pause" combined with a phaseout of GSP preferences;
- recently introduced changes in anti-dumping and safeguard legislation leading to shorter lead times before introduction of such measures;
- the continuing restrictive nature of Australia's SPS system, under which import of many food products was virtually impossible;
- measures seeking to increase "strategic" investment in Australia;
- concerns relating to Government procurement including local preference schemes operated at the State level and offset requirements at both State and Commonwealth levels; a number of Members questioned Australia's policy not to participate in the WTO Agreement on Government Procurement;
- the application of intellectual property rights including on software decompilation, protection of test data and parallel importation.
In response, the Australian representative said that the pause in tariff reductions in the TCF and PMV sectors would be followed by a significant autonomous cut in tariffs in 2005, lowering tariffs to the same point as would have been reached under a gradual reduction. He expressed the view that, as most of Australia's tariffs were at or less than 5%, preferences for developing countries became largely meaningless; preferences for the least developed countries would, however, be maintained as tariffs declined. The fall in 2005 in tariffs in the textile sector would be also to the benefit of developing and other textile-exporting countries; moreover, he emphasized that Australia had no quotas in this area.
He stressed that the new Automotive Competitiveness and Investment Scheme was not linked to export performance in any manner and, instead, encouraged competitive investment, research and development and productivity improvements in the sector.
The recently introduced changes in anti-dumping legislation would streamline the process further and reduce the degree of duplication in investigations. Furthermore, an additional appeal mechanism, not available under the previous system, would now be available. It was also stressed that the private sector will not have an enhanced role in the investigation process.
On safeguards, Australia had established, and notified to the WTO, a mechanism by which to undertake actions required under the WTO Agreement. The first investigation was initiated in June 1998 on imports of frozen pork. He emphasized that no actions had yet been taken.
On quarantine, the representative said that Australia took its obligations under the SPS Agreement very seriously, including the need to base SPS measures on sound science, risk assessment and a consistent approach to risk management. Contrary to what was claimed by many delegations, despite quarantine measures, import penetration in Australia's agricultural market was high. He stressed that in all risk analyses, the quarantine authorities consulted with all stakeholders, limiting their consideration to matters of science and not economic or other unrelated matters. However, the entry of imported pests could have devastating and expensive consequences for production and trade.
Australia remained committed to aligning its standards with relevant international standards and in fact there was already a substantial degree of alignment. However, the representative expressed concern at what seemed to be a push for international standards to take on a dominant role in the area of technical regulations. The Australian Government's policy was that regulations should be written for a specific purpose, and must not be more burdensome than is necessary to achieve their objectives.
In reply to questions about recent measures to attract foreign investment, the representative stated that no separate funds had been set aside to provide investment incentives in the new policy. Rather, the Government would consider granting incentives only in limited and special circumstances for projects which met the eligibility criteria. Screening policies through the Foreign Investment Review Board were liberal, limited to proposals in sensitive sectors and for investment above a certain threshold. He stressed that the "national interest" test placed the onus on the authorities to show reason to reject a proposal.
Australia's position on joining the Government Procurement Agreement was that the Agreement, in its present form, did not necessarily encourage open and transparent government procurement practices. The conditional basis for accession to the Agreement had potentially made the markets of several major industrialized countries more restrictive than Australia's. Australia's approach to WTO activities regarding government procurement was being developed by a Consultative Group comprising agencies of Federal, State and territory governments. Australia's federal structure was not relevant to the fact that Australia had not joined the Agreement: all sectors considered that the present Agreement was disadvantageous to Australia.
On intellectual property rights, the representative pointed out that Australia had implemented all its obligations under the TRIPS Agreement: in addition, a number of legislative reforms had been introduced relating to parallel importation, maintaining high standards for protection while avoiding unnecessary restrictions on the market for legitimate copies of protected works. Australia also paid close attention to enforcement, as demonstrated by recent increases in penalties for pirated intellectual property products, and was involved in promoting improved intellectual property protection throughout the region.
Members raised a number of questions regarding agricultural trade, in particular relating to levels of protection as reflected in AMS and PSE data, and the role of federal and State marketing boards.
Questions were posed concerning the scope and effects of Government bounties in the machine tool and shipbuilding sectors, and the operation of the "factor f" scheme in pharmaceuticals.
Many delegations raised issues relating to trade policies and conditions in services sectors, including banking, telecommunications, coastal shipping, civil aviation, audio-visual services, and the movement of persons, particularly in regard to Federal and State conditions for exercising professional services.
In reply, the representative of Australia emphasized that whatever measure was used, Australian agricultural support was low. In addition, Australia did not use export subsidies and domestic support measured only one third of the level to which Australia was entitled.
The Government had continued the reform agenda to make Australia's state-trading enterprises more commercially focused, more responsive to international markets and more accountable to their stakeholders. He stressed moves to privatize the Wheat Board and bring all government business activities subject to competition policy. Australia also supported greater transparency in the WTO of state trading activities and actively supported the new WTO questionnaire on state trading enterprise operations.
The representative expressed his appreciation of the acknowledgements, made by many delegations, of the liberalization in Australia's services sector. He stressed that progressive liberalization would continue to be a main pillar of Australian trade policy and Australia would press its trading partners to do the same in the next round of trade negotiations.
Australia would continue to deregulate its financial sector. The new financial system structure, when in place, would provide flexible, efficient, coordinated and consistent regulations in a highly competitive and transparent environment. In telecommunications, deregulation would continue, including, subject to Parliamentary approval, further privatization of the largest carrier, Telstra; the Australian telecommunications sector was now fully open to competition. Another service area high on the Government's agenda was electronic commerce, where Australia was pursuing a forward-looking strategy to ensure that it remained at the forefront of developments in the area. Australia would also continue to make changes and push for greater market access as deregulation of the domestic economy continued.
Conclusions Back to top
Australia's participation in this review has reflected its commitment to the WTO process. The statements made on Tuesday, and again this morning, have indeed been transparent and helpful to Members. I am sure that Members will also be greatly assisted by the very full written answers provided by Australia to questions.
I would agree with Ambassador Krirk-Krai that many WTO members have much to learn from Australia's process of reform and liberalization. I believe members can be reassured by the Australian Government's replies regarding the status of the "pause" in tariff reductions in a few sectors and the clear liberalization objectives set out up to the year 2010.
I thank Australia for its clear statements and its helpful participation in the Review.