2 July 1998
POLICY REVIEW BODY: REVIEW OF AUSTRALIA
TPRB'S EVALUATION Back to top
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
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
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
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
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
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.
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.