JASON CLARE MP
SHADOW MINISTER FOR TRADE AND INVESTMENT
SHADOW MINISTER FOR RESOURCES AND NORTHERN AUSTRALIA
MEMBER FOR BLAXLAND
LAUNCH OF THE AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY FOURTH NATIONAL TRADE SURVEY REPORT 2018
TUESDAY, 26 MARCH 2019
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It’s an interesting time for anyone involved in trade.
Brexit was supposed to happen this week. It’s now off till April or May.
We are also still waiting and hoping that the US and China will work out a deal that ends the trade war of the last few months.
I also hope that whatever deal is done helps and doesn’t hurt Australian exporters.
We also have an election here in a couple of weeks.
So I thought I would talk to you today about what some of Labor’s priorities will be if we win the election.
Unlike some other parts of the world, trade is an area where there is a lot of bipartisanship in Australia.
Both sides can lay claim to big reforms. Both sides understand the importance of trade in creating new businesses and more jobs.
The open competitive economy we have today was largely built by Bob Hawke, Paul Keating and Bill Kelty. They pulled down our tariff walls. Big important hard reforms.
The Coalition has also signed a number of trade agreements. Including one recently with Indonesia and one today with Hong Kong.
They are positive steps and those agreements will go through the process of being scrutinised by the Parliament after the next election.
I have a good working relationship with the Trade Minister Simon Birmingham and we work away quietly on a lot of important issues together.
The government has also started negotiating a trade agreement with the European Union. Collectively, the EU is our second largest trading partner.
If we win the election we will make concluding that deal a priority.
If Brexit happens we will also make it a priority to strike a good agreement with the UK.
We are also one of the countries involved in a potential trade agreement called RCEP that includes most of Asia, more than 30 percent of the world economy and almost half the world’s population.
Negotiating a deal here that is good for our region and good for Australian businesses and workers will also be a priority.
I am also hopeful that one day we can bring all the countries of the Indo-Pacific under one trade agreement. APEC wide. A set of trade rules for all the countries of our region. That’s the holy grail. Not easy. Not any time soon. But not impossible.
There is also a lot of important work to do in the World Trade Organisation on things like e-commerce and reforming the way the WTO works to make sure it remains effective in solving disputes and is capable of forging big multilateral trade agreements.
But as this report we are releasing today shows, just signing trade agreements is not enough.
They are only of real value if we actually use them.
And what this report shows is that we don’t use them anywhere near enough.
The report shows that the majority of businesses surveyed said that free trade agreements were not relevant to them.
A large number of businesses said they didn’t understand them and did not use them.
Here’s a quote from a small agricultural manufacturer in the report:
“I’m not savvy on Foreign Trade Agreements so there’s too many of them... I’ve tried to read about them via news portals, via government websites, but none of the information really sinks in. I don’t really understand what it means for my industry, so I’ve just sort of ignored them. I haven’t really paid much attention to them.”
Compared to other countries we also massively under-utilise the trade agreements we sign.
The Economist conducted a survey of senior executives recently from 800 companies in Australia, China, Hong Kong, India, Indonesia, Malaysia, Singapore and Vietnam about their utilisation of free trade agreements.
It found that only 19 percent of the Australian companies surveyed used free trade agreements.
The average amongst the other countries was 26 percent.
A study done by PWC just over a year ago on the utilisation of trade agreements revealed that it is SMEs in particular that aren’t using the FTA’s we sign.
We have got to fix this. That means a lot more hard work here at home to get business to use these agreements.
A business as usual approach is not good enough.
But the problem is bigger than this.
It’s not just that a lot of companies aren’t using Free Trade Agreements.
It’s that they are not exporting at all.
There are about two and a half million companies in Australia. Fewer than 52,000 of those export what they make overseas.
We pride ourselves on the skills and capabilities of our SMEs. And they employ lots of Australians. But only about one in ten exports what they do to the world.
Again that’s less than you will find in other parts of the world.
Here’s the most troubling statistic.
According to the Department of Industry over the last ten years the value of the exports of large Australian companies has increased by 48 per cent.
Over the same time the value of exports by Australian SMEs has been flat.
So how do we fix this?
This report identifies some of the challenges businesses face that want to export.
Everything from red tape, to problems getting finance, to the way the government provides export support and incentives.
It also touches on the key issue of the skills businesses need in emerging markets like Asia.
There are a lot of important recommendations here that both sides of politics need to look at - whoever wins the election.
At the moment we have got organisations like AusTrade and EFIC. We have also got programs like TradeStart and Export Market Development Grants. And the Department of Industry also run Export Hubs. They all do good work.
There’s also all the work different State and Territory Governments do and organisations like ACCI.
It’s all important work. But as this report says it’s worth looking at whether there are ways to make the work we do here a lot more effective.
If we win the next election I would be very keen to work with everyone here on that.
I have also said that if we win the election I also want to get SMEs more involved in the development of trade agreements.
The United States has a system called Cleared Advisers. How it works is that people from business, unions and other organisations are shown the draft text of the trade agreement as it is being negotiated and asked to provide real time feedback.
I want to set that up here and I want SMEs to be involved in that. I think that’s an obvious way we can make sure these agreements are more relevant for small and medium sized companies - and hopefully used by them in greater numbers.
One of the big things that stops potential exporters in their tracks is non-tariff barriers in other countries. Things like product standards or product testing rules or certification requirements.
It can be complicated. Often it requires a bit of help from government agencies here. This is where it can get confusing.
Who do you talk to? Who is responsible?
To help I have also said if we win the election we will set up a joint team made up of officers from DFAT, Austrade, the Department of Agriculture and the Department of Industry.
A one stop shop. One team responsible for helping Australian companies sort out problems they are facing.
It’s a common sense idea. Based on a model in New Zealand.
I also think we have got a lot more work to do to be match fit for Asia.
You have heard me talk about this before.
Only a fraction of the people running our big companies have a lot of experience working in Asia.
There are a lot of Asian Australians working in the office towers of Sydney and Melbourne, but very few in senior management and board positions.
Not enough Australians speak an Asian language. And those that do probably learnt it at home not at school.
Think about this for a second – there is more foreign direct investment by Australian companies in New Zealand than in China, Japan, India, South Korea and all of Asia combined.
If we are going to make the most of what Asia is today and what it is going to be we have to fix this.
The heavy lifting has to be done by business but government can help.
That’s what our FutureAsia policy is about. It includes things like:
- A massive boost in the study of Asian languages in our schools
- A mentoring program run by the Australian Institute of Company Directors to get more business people with experience working in Asia onto the boards of top Australian companies, and
- Helping young Australians who have just finished university here in Australia to start their career in Asia – by setting up an internship program where they can work for 6 months learning how business in that country works. The first three countries we would like to set this up with are China, India and Indonesia.
Finally I want to talk about how we build more support for what we are doing in trade – right across the community.
You might think this is obvious. Trade creates jobs. Good paying jobs. Of course it should be popular.
But that’s not necessarily the case.
A recent Essential Poll indicated that fewer than three in ten Australians think trade has created more local jobs.
I started today by talking about Brexit and trade wars. None of that happened in a vacuum.
Something has happened. The world has changed.
Think about what’s happened in the last ten years or so.
Ten years ago we were in the grip of the GFC. It’s come and gone. But we are still dealing with the hangover.
In the ten years before the GFC living standards in most developed countries went up. Since the GFC they have been pretty flat.
In the last ten years China has also become a genuine economic superpower - a decade ago it was about a third of the size of the US economy. Not any more.
And some time next decade it will probably pass it.
This has lifted tens of millions of people out of poverty. Trade has helped do that.
But it’s also created anxiety in other parts of the world. People blaming trade for losing their job.
The pace of technological change is also quickening and quickening and this scares a lot of people. Ten years ago a lot of people would have thought Big Data was a rapper. Not any more. People are worried about whether they are going to have a job in another ten years or what their kids will do.
All of this has created the perfect petri dish for the sort of distrust and division we are seeing overseas.
I don’t want that to happen here.
That’s why we have put so much focus on the importance of lifting real wages in Australia.
On making the tax system fairer.
And the focus on education and skills. Particularly STEM.
But it’s also why I have said we need to change the way we do trade deals.
There is too much secrecy around them at the moment. And that just breeds cynicism.
I find out more about the trade deals we are negotiating by reading what’s on the websites of other governments than our own.
I think we need to be a lot more open as we go about developing them and include more people in their development.
We also need to make sure they are independently economically tested. We don’t do that at the moment. ACCI has argued for that for a long time and I think that sort of independent pressure test would help build more community support.
When we sign trade agreements we should be able to point to independent analysis that shows what it means for jobs. What it means for different parts of the economy. What it means for different regions. And what it means for our community.
We also shouldn’t put things in trade agreements that make people angry. That make people think these agreements are all about big companies and not about them.
I will give you an example - waiving labour market testing.
We have a law in Australia that says you have to advertise a job here in Australia before you can employ someone from overseas. Fair enough.
But you can get around that if you bring in someone from one of the countries where the government has signed a trade agreement waiving this requirement.
That just makes people angry and helps to stoke opposition to trade agreements.
But what is worse, it undermines confidence in trade more generally.
As you can see if we win the election there is a lot we want to do.
We want to do better trade deals.
We want to encourage and help more businesses to become exporters.
And we want to make sure we make the most of the rise of Asia.
Some of the ways to do this are captured in this report.
Thanks James, Bryan and Professor Freeman for all the work you have done here, and I also want to thank everyone else here for all of your help and advice and guidance over the last few years.
If we are fortunate enough to win in a few weeks’ time I am really looking forward to working with you on the things I have talked about today.
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