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Govt has reviewed Australia's export policies and programs

11 March, 2008

Simon Crean has announced a comprehensive review of Australia's export policies and programs.

"Despite rapid economic growth in our region driving high demand for energy and mineral resources, Australian exports have underperformed in recent years.

"Across all major export categories, growth of export volumes in the past six years has been below the historical average since the floating of the Australian dollar in 1983.

"Under the previous Government, net exports made a positive contribution to growth in just 2 out of 11½ years. Under the last Labor Government, net exports made a positive contribution to growth in 10 out of 13 years.

"Against that backdrop, the review will examine Australia’s trade performance over the past two decades and identify factors that impact on export growth.

"It represents the Government's determination to develop an integrated approach to trade policy and ensure it is part of the broader economic policy settings. All arms of policy must work together to drive productivity growth, enhance our level of international competitiveness and improve our export performance.

"This is vital to ensure our trade performance once again becomes a strong contributor to Australia’s economic performance to sustain us beyond the resources boom.

"The Government wants to assess the challenges and develop a strategic, whole-of-government approach to advancing Australia’s international economic and commercial interests.

"The review will be chaired by David Mortimer AO, Chair of Leighton Holdings and Australia Post. Mortimer has a strong record of achievement in business and is ideally suited to lead this review. Mortimer will be supported by Dr John Edwards, Chief Economist of HSBC Australia. Biographical details of Mortimer and Edwards are attached.

Under legislation, the Government is required to initiate a review of the Export Market Development Grants (EMDG) scheme by 2010. Given the integral role of EMDG in the current mix of export policies and programs the EMDG review will be brought forward and undertaken as part of this review.

The review will consult widely with stakeholders and will be calling for public submissions. The review will be completed by 31 August 2008. Terms of Reference for the review are attached.

A separate research project on Australia’s approach to free trade agreements will be undertaken in parallel with the export policies and programs review, and its results will be incorporated in the review’s final report.

This research will analyse Australia’s most recent free trade agreements (FTAs) – with the United States, Singapore and Thailand – to assess their net benefits and include a comparative analysis of Australia’s FTAs with those concluded by other countries. It will examine options for ensuring that FTAs strengthen the WTO multilateral trade system, including benchmarks for any future agreements Australia may negotiate.

The research on FTAs will be conducted under the leadership of a reference group of experts; specifically:

- Professor Kym Anderson, Professor of Economics at the University of Adelaide; - Andrew Stoler, Executive Director of the Institute for International Trade;
- Peter Gallagher, Managing Director of Inquit, and formerly CEO of the Australian Dairy Council; and Dr Nicholas Gruen, CEO of Lateral Economics.

Terms of Reference for the Review of Export Policies and Programs

1. Despite the rapid economic growth of China and India generating unprecedented global demands for energy and mineral resources, Australian exports have underperformed in recent years. Across all major export categories, the growth of export volumes in the past six years has been below the historical average since the floating of the Australian dollar in 1983. While export revenues for resources have grown in the past six years, there has been a slowdown in resource export volumes over that period.

2. In the last Labor Government, net exports made a positive contribution to economic growth in 10 of 13 years. Under the previous Government, net exports made a positive contribution to growth in just 2 out of 11½ years. The export slowdown over the past decade reflected a failure to develop an integrated approach to trade policy and a failure to achieve the necessary productivity gains to drive Australia’s international competitiveness.

3. In this context, the Australian Government has commissioned David Mortimer AO and Dr John Edwards to conduct a comprehensive review of export policies and programs, in consultation with a broad range of industry stakeholders. The review will examine export policy and programs across all Government portfolios and agencies and their linkages to State/Territory programs. It will cover goods, services and investment. This review is to take place in parallel with an analysis of Australia’s recent bilateral free trade agreements to assess their net benefits and to develop new benchmarks for Australia’s future bilateral and regional trade agreements.4. The review will examine Australia’s trade performance over the past two decades including factors impacting on export growth. It will identify measures to maximise Australia’s export competitiveness potential. The review will contribute to the formulation of a more strategic whole-of-government approach to advancing Australia’s international economic and commercial interests.

5. The review will bear in mind the Government’s desire to optimise the overall economic performance of the Australian economy through productivity gains and deeper integration of the Australian economy and business with the global economy. It will also take into account the Government’s commitment to the rules-based multilateral trading system and in particular the World Trade Organisation (WTO) Doha negotiations.

6. The review will make an assessment of the challenges and opportunities currently facing Australian exporters and international business. In making this assessment, the review should examine:

a) Australia’s export performance over the past two decades, identifying factors that are inhibiting export performance, domestic productivity, productive investment flows and international competitiveness;

b) the extent to which Australia’s trade policies adequately reflect Australia’s interests in the contemporary global economy; and

c) the coverage, coherence and effectiveness of current trade development services and programs, and the extent to which they adequately address the needs of exporters, importers and investors.

7. The review will make recommendations on any of the issues identified, including:

a) measures required to improve export performance, including the relationship with domestic policy settings and productivity-enhancing policies;

b) measures which will improve the capacity of new and existing exporters to expand their export base and take optimal advantage of the expansion and evolution in international trade and investment;

c) measures to encourage more small businesses to begin exporting or to expand their export operations;

d) measures to promote an improved services export performance, including financial services;

e) policies and programs that will promote high value added exports, enhanced levels of productivity and improved international competitiveness;

f) measures to expand market access opportunities for Australian exporters of goods and services; and

g) measures to promote a more concerted and coordinated national approach to lifting export performance.

8. In its recommendations, the review will be mindful of the Government’s overall approach to budget policy, Australia’s international commitments, the Government’s support for the multilateral trade system and the initiatives the Government is in the process of implementing.

9. The review will include specific recommendations about the continuation of the Export Market Development Grants scheme (EMDG), pursuant to section 106A of the EMDG Act 1997.

10. The review is to release a scoping paper for stakeholder consultations by April. The final report will be provided to the Minister for Trade by 31 August 2008.

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