ECA News

LOCAL: Trade increasing between Australia and APEC nations by David Sexton

Liam Dilley - Tuesday, June 09, 2015

Author: David Sexton

More than two thirds of Australia’s trade is with fellow APEC nations, according to a new report from the Department of Foreign Affairs and Trade. 

Beef is one of the many commodities being traded between Australia and APEC nations. Credit - Shutterstock

APEC nations also are reported to account for more than half (57%) of Australian investment overseas and almost 45% of foreign investment in Australia.

According to the report, in 2012, Australian total trade in goods and services with APEC grew 1.4% to $437.8bn.

Meanwhile exports fell 3% to $231.6bn and imports rose 6.8% to $206.4bn.

Major trading partners in APEC in 2012 were China ($125.1bn), Japan ($71.1bn) and the US ($56.2bn).

“The value of the APEC region’s exports to the world increased by 2.9% to US$10.3 trillion in 2012, while APEC imports from the world increased by 4.5% to US$10.8 trillion,” the report stated.

China was reported to be the largest APEC exporter, with exports globally valued at just over US$2.2 trillion in 2012 (up 8%).

It was followed by the US which was valued at just under US$2.2 trillion and Japan with exports of US$944bn.

Last year, some 69.15 of APEC members’ merchandise exports and 68.5% of imports were from within the region.

The APEC Region – Trade and Investment is published each year by the Department of Foreign Affairs and Trade on Australian international trade.

http://www.lloydslistdcn.com.au

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Announcement of new Federal Ministry provides additional details on policies

Liam Dilley - Tuesday, June 09, 2015
Introduction

Our recent Customs Trade and Transport update of 9 September 2013 contained some predictions on developments in the Customs, Trade and Transport industry following the Federal election based on policy statements which had been issued by the incoming Federal Government.

New Ministers and Ministries

In the new structure for the Federal Government announced on 16 September 2013, responsibility for Customs and Anti-Dumping administration will move to Scott Morrison as Minister for Immigration and Border Protection. A new Trade and Investment Ministry has been created which will have responsibility for completing current FTA under negotiation, advancing negotiation with other trade partners towards other FTA and otherwise attracting foreign investment. The new Ministry will be led by Andrew Robb.

The FTA agenda and industry

As indicated in our last update, the new Government is planning a focus on completing existing FTA under negotiation and to institute and complete other FTA with other trading partners. As part of this focus, Minister Robb has already indicated that he wanted to boost the profile for foreign investors as a key to advancing delayed FTA.

However, this admirable aim does lead to some additional complexity as follows.

  • The new Federal Government may have to move from the 'pure' position of the previous Federal Government which insisted on comprehensive FTA. Given the apparent inability to complete such comprehensive FTA, one option would be for the incoming Federal Government to compromise that position and focus on specific interests of the negotiating parties which can be agreed and then otherwise provide general commitments to improve trade and co-operation in other areas at later stages. For example, under the China FTA this could mean that China would provide increased access to Australian primary produce at the same time as Australia allows a more liberal regime for foreign investment to specifically include increased foreign investment by Chinese State Owned Enterprises (or as they are sometimes described State Invested Enterprises).
  • The aim to liberalise foreign investment may create tensions between the Liberal and National Party elements of the Federal Government. From this perspective, it is relevant to note that the Nationals have lost their usual position as providing the Minister for Trade. This tension could immediately manifest itself in two areas by way of example. Firstly, the current proposed Chinese investment in the GrainCorp takeover and the recent announcement by the Indonesian Government that it wishes to buy millions of hectares of prime beef-farming land to support its developing beef industry. There have been significant levels of opposition to both types of investment. In both cases, while the investment opportunities may come under the auspice of the Trade Minister, doubtlessly the Nationals' Agriculture Minister will express concerns although, ultimately, the decision on approval of such foreign investment is likely to reside with the Federal Treasurer.
  • The incoming Prime Minister, Tony Abbott, has indicated that he will be taking a harder line against subsidies for the domestic car industry which policy will be implemented in conjunction with Industry Minister Ian McFarlane who last held that job under the previous Coalition Government which provided higher levels of support to the Australian car industry. It may well be that the revision or reduction in levels of support to the Australian car industry may also be tied to mechanisms to allow increased foreign investment and export of vehicles into Australia which would please both the Chinese and Korean Governments.

As always, we will keep you informed of developments as they arise. Clearly, the way in which the new Trade agenda is advanced will be of significant interest. We would also be pleased to provide guidance on developments and the impacts for your business.

Author: Andrew Hudson

Partner, Hunt & Hunt Lawyers

Director and Chair Trade Policy Committee, ECA

W: www.hunthunt.com.au
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