Monday will be my last day as federal Minister for Trade, Tourism and Investment. It comes at a time of great global disruption for many of the businesses I have had the honour of working with.
COVID-19 has seen global trade plummet. The World Trade Organisation predicts volumes of merchandise trade will be down by more than 9 per cent this year. Services trade is impacted even more, with sectors such as international tourism ground to a near halt and others, like international education, dramatically impeded by widespread travel restrictions.
Exporters who still have willing buyers face enormous logistical challenges. Our government has implemented the International Freight Assistance Mechanism to help ensure sufficient planes are flying out of Australia to get our premium goods to market. It has helped more than $3.5bn worth of produce reach customers overseas, which may otherwise have gone to waste.
Some businesses are also feeling or bracing for the impact of China’s punitive trade actions. Having acted with nothing but integrity in supplying high-quality, safe and reliable goods and services at competitive market terms to Chinese customers, the targeting of these businesses is unjust and unwarranted.
In the face of these difficulties it would be easy to be pessimistic or even resigned to defeat. But we should bring the opposite disposition. If there were one piece of advice I would offer it would be to keep on reaching out to the world because, over the long term, opportunities still abound.
Despite the economic shocks of this year, the value of Australia’s exports has, even in our worst month of 2020, remained above the value routinely recorded just two years ago. The success of our exporters has driven 34 consecutive monthly trade surpluses for Australia. This, in turn, contributed in the June quarter last year to the first quarterly current account surpluses for Australia since 1975.
With farmers who produce 70 per cent more food than our population needs, world-leading resources companies fuelling the needs of other economies and services sectors offering quality second to none, Australia is good at trading. It’s why one in five jobs is trade-related. To sceptics who say “isn’t it all just China?” or “isn’t it all just iron ore?”, I urge them to talk to the many businesses growing trade in other goods or services with other markets. The number of businesses exporting has grown by at least 27 per cent, or more than 12,000 since 2013. While some chose to focus on one market many others balanced risk through diversification.
My immediate predecessors as trade minister secured and implemented important agreements with South Korea, Japan and China. In my term we’ve overseen implementation of the Trans-Pacific Partnership, providing our first-ever trade pact with Canada and Mexico, and improved access into markets such as Vietnam and Japan. We implemented a bilateral agreement with Peru, as well as concluding and implementing agreements with Hong Kong and, crucially, the 270 million people of Indonesia. Most recently we signed the 15-nation Regional Comprehensive Economic Partnership Agreement, cementing our place as an integrated regional partner of the 10 member states of the Association of South East Asian Nations.
Trade is dynamic and competitive, which is why we can’t rest on our laurels. The first round of negotiations for an agreement with the EU was held in 2018, while negotiations with the UK were launched last year. Each of these should be concluded within the next year, along with our Pacific Alliance agreement with our Latin American partners.
We have seen strong recent growth in trade with India, which last week launched its own companion to our India Economic Strategy. Hopefully, the Middle Eastern nations of the Gulf Cooperation Council can find a pathway to restart negotiations.
But deals must be commercially meaningful and in negotiating agreements we should never sacrifice the prime ambitions of substantially eliminating trade-distorting tariffs, quotas and other non-tariff barriers.
In this year’s budget we committed funding to scope out the potential for other new agreements with Israel and the four non-EU countries of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland). Total merchandise trade with Israel stood at $1.1bn in 2019 while total trade with EFTA countries reached $9.4bn in 2019.
We must also embrace change. It’s why Australia launched negotiations on e-commerce at the WTO last year and concluded a world-leading digital economy agreement with Singapore this year. We are also helping new export industries emerge, from hydrogen to Fintech.
Ministers may change portfolios but they accumulate interests and knowledge. Australia’s exporters and tourism businesses will be in good hands with my successor, Dan Tehan.
Opinion Piece published in The Australian.