ECA’s Submission to the Inquiry into the implications of the COVID-19

14.07.2020 Tamara Oyarce

The COVID-19 crisis has led the ECA to embrace a multilayer strategy aimed at building capacities for response, resilience and recovery particularly geared to provide support to our members, SME exporters and the broader trade community.

As part of our advocacy work the ECA lodged a Submission to the Joint Standing Committee on Foreign Affairs, Defence and Trade (JSCFADT) Inquiry into the Implications of the COVID-19and will give evidence on a Hearing scheduled on 16th July.

We thank all our members who shared their experiences and voiced their concerns while navigating these testing times. Our submission has a strong focus on our SME exporters and the challenges they face and provides clear recommendations for our Government to continue to support SMEs on the road towards recovery.

The full text of our submission can be accessed here.

Highlights of our Submission into the Implications of the COVID-19

Australia is more exposed than most to the global economic downturn sparked by COVID-19. Trade represents nearly 21% of Australia’s GDP, which means that around a fifth of all goods and services (by value) produced in Australia are traded internationally.

With trade creating 1 in 5 jobs and foreign investment 1 in 10, supporting an open multilateral trading system remains in Australia’s national interest and is critical to the recovery of our open and trading-based economy.
Small and Medium Enterprises (SMEs) play a significant role in Australia’s economy, providing 5.6 million jobs and 32% of the 17.6 million jobs held in Australia in the combined private and public sectors. Since 2012, small businesses have accounted for 57% of jobs growth.
ECA’s research on the impact of COVID-19 on Australian SME exporters  
Findings from a study conducted by the ECA from March until early June 2020, showed that the five greatest impacts of COVID-19 on SMEs were a reduction in revenue (76%), decreased demand for their products and decreased supply of inputs needed (57%), supply chain disruption problems (46%), lockdown restraints that constrained access to foreign markets (38%) and changes in the company’s workforce (24%) which led to reducing staff hours, lay off staff and finding new ways to operate remotely.

Our consultations with members indicated that the top four export challenges identified by our respondents in order of relevance were:
  • Freight and logistics issues;
  • Supply chain disruptions;
  • Market access issues, and
  • Export documentation and digitisation
  • Support SME digitalisation. Building SME exporters resilience is paramount to help them face future economic downturns. In particular digitalization can help SMEs overcome damaged supply chains and allow them to access a wider range of international buyers and suppliers.
  • Development of network of organisations that support SMEs. Additional support can be provided to SME exporters including assistance with access to the means to transport goods, further access to capital and strengthening existing mechanisms to support their international market access. In practical terms, providing additional funding for government led organisations and key industry bodies who can support upskilling SMEs and help their continued engagement in international trade can be critical on the roads towards economic recovery
  • Digitisation of export documentation.
    Fast tracking the adoption of electronic communication and verification of trade without the need for physical paperwork through avenues such as the single window is a key measure to be discussed and implemented.
  • Australian Free Trade Agreement (FTA) agenda and support for SMEs internationalisation. The Australian Government should continue to pursue a comprehensive FTA and internationalisation agenda both at a bilateral and regional level. Future FTA agreements should also consider the particular needs of SMEs and design for the inclusion of specific chapters, include a broader range of SMEs into the negotiations, make FTAs ‘SME friendly’ and strengthen the mechanisms for market access and internationalisation in the context of FTAs.
The Australian government is faced with unpecedented challenges. Today’s recovery policies will without doubt shape the economic and social prospects for Australia for the near and longer term future. Moreover, the recovery will not gain momentum without more confidence which will need to be boosted both at national and international levels. While looking inwards to reassess the impact of the COVID-19 crisis on our businesses and SMEs is paramount, international cooperation and the resumption of the multilateral dialogue will be also critical for Australia’s recovery and prosperity for our SME exporters in the ‘new normal’ of international trade.

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