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McGill University

North America & Global EconomyLecturer: Dr. Kenneth Matziorinis

Country Trade ReportAustralia / New Zealand & the WTO

Prepared by:Ghada Hassan Sirine Hirsh260203755 260165723

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Table of contentsTable of contents

• -Executive summary -New Zealand (country profile)

• -Australia (country profile). -New Zealand Agricultural products • -Australia (global positioning). -New Zealand in Doha round. • -Australia & the WTO. -Trade issues.• -Agricultural products. -Trade distorting subsidies.• -Australia in Doha round. -Environmental issues.• - Discussion outcomes. -New Zealand & the WTO.• -Cairns group. -REFERENCES.• -Non-agricultural products.• -Trade in services. • -Trade related technical assistance.• -International intellectual property rights.• -Trade remedies.• -Trade & environment.• -Australia & other international issues.

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Executive summaryExecutive summary

Doha rounds were launched for the reform and liberalization of multilateral trade rules. Australia, as well as NZ, have pursued similar priorities:

1. liberalization of global agricultural markets.

2. reform of the agriculture support and protection procedures.

3. to end discrimination which damages efficient agricultural producers and denies developing countries from benefiting from global trading system

4. secure and facilitate access to overseas markets for Australia's services export sector and manufacturing and industrial sectors

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Australia: Country ProfileAustralia: Country Profile

Capital: Canberra

Chief of state: Queen of Australia ELIZABETH II (Feb 1952)

Population:20,264,082 (July 06 est.)

Growth Rate: 0.8%• Age Distribution

– 0-14 years: 19.6% (m/f = 1.05)15-64 years: 67.3% (m/f = 1.02) 65 years and over: 13.1% (m/f = 0.79)

• Ethnic groups: white 92%, Asian 7%, aboriginal and other 1%

• Religious composition: Catholic 26.4%, Anglican 20.5%, other Christian 20.5%, Buddhist 1.9%, Muslim 1.5%, other 1.2%, unspecified 12.7%, none 15.3% (2001 Census)

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Economic IndicatorsEconomic Indicators• GDP (PPP): $666.3 billion• GDP (real Growth Rate): 2.7%• GDP (per capita): $32,900

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Economic Indicators (continued)Economic Indicators (continued)

• GDP (by sector):– Agriculture 3.6%– Industry 21.2%– Services 75.2 %(2004 est.)

• Public debt: 14.1% of GDP (2006 est.) • Current account balance: $ -41.62 billion (2006 est.) • Reserves of foreign exchange and gold: $48.25 billion• Debt – external: $585.1 billion (30 June 2006 est.)

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Export/ImportExport/Import

Exports

$117 billion (2006 est.)

Imports

$127.7 billion (2006 est.)

Commodities coal, gold, meat, wool, alumina, iron ore, wheat, machinery and transport equipment

machinery and transport equipment, computers and office machines, telecommunication equipment and parts; crude oil and petroleum products

Partners Japan 20.3%, China 11.5%, South Korea 7.9%, US 6.7%, New Zealand6.5%, India 5% (2005)

US 13.9%, China 13.7%, Japan 11%, Singapore 5.6%, Germany 5.6% (2005)

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International agreementsInternational agreements

Australia-USA free trade agreement (AUSFTA): - agriculture: improve access. - beef annual quota. - automotive eliminate tariffs.

Thailand- Australia (TAFTA).Singapore – Australia ( SAFTA ).Australia – New Zealand ( Australia New Zealand Closer

Economic Relations Trade Agreement ).

All agreements are made to improve trade and reduce tariffs on goods and services.

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Australia global rankingAustralia global ranking

• Human Development Index:– Australia: ranked=3, HDI = 0.957 (high human development)– New Zealand: ranked=20, HDI=0.936 (high human development)

• Corruption Index:– Australia: Ranked=9/163, CPI=8.7– New Zealand: rank=1/163, CPI=9.6

• Global Competitiveness Index:– Australia: rank=19– New Zealand: rank=23

• Democracy Index:– Australia: rank=8– New Zealand: rank=1

CPI = Corruption perceptions index

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Australia & Canada as trade partnersAustralia & Canada as trade partners

• Canada is the 18th-largest merchandise trading partner $2.73billion ($1.43bn in imports and $1.35bn in exports)

• Australian main exports: wine, nickel ores, medicaments, and services trade exporting.

• Australian main imports: motor vehicle, telecommunications equipment, and pork.

• Trade: Canada liberal but apply tariff peaks.• Australia invited Canada to Cairns Group 1986. • Australian FDI in Canada $3.16bn in 2005• Canadian FDI in Australia $5.8bn in 2005

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Australia and the WTO:Australia and the WTO:

-The World Trade Organization (WTO) established after Uruguay round ,regulates the global rules of trade and ensures trade flows as smoothly, predictably and freely as possible.

-Australian importers have been able to pass savings on to consumers, reducing the cost of many everyday goods.

-Australia continue to push for the negotiations to address the damaging agricultural policies of some countries, such as export subsidies, which unfairly support their farmers and lock other countries’ out of their markets.

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Agriculture productsAgriculture products

Agriculture in Australia is a major industry and accounts for approximately 3% of Australia’s GDP.

• Australian farm sector is an export oriented sector, with an average around two thirds of total production being exported.

• Australia accounted for 2.8% of all worldwide agricultural exports.

• In 2004-05 agricultural products, including processed food and beverages, accounted for (20.8%) of Australian merchandise exports.

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Australia is a vocal supporter of fair trade in agriculture.Agriculture sector allover the world remains the highest sector with domestic support,reached over US$ 257 billion done by rich developed countries.Australia subsidies in 2004 to agricultural sector were only 4%. It is estimated that Australian farmers’ real income would rise by around 65%, or A$16 billion per year, if this sector is liberalized world wide .

Agriculture products (cont’d)

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Australia position in Doha roundAustralia position in Doha round

• Australia pushed for three main outcomes in the Doha round in the agricultural sector which are:

• Concrete reductions in financial domestic support • Markets access which concentrate on cutting tariffs:

Australia wants to lower the tariffs enough to create real opportunities for increased farm trade

• Elimination of export subsidies that is done by many developed countries for this sector.

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Discussion outcomes:Discussion outcomes:

• The market access part in the framework agreement provided for tariff reductions, leading after that to real access improvements for all products. Although negotiations that took place in Cancun ministerial meeting did not achieve any progress regarding this matter.

• During the Hong Kong Ministerial Meeting, WTO members agreed to fulfill the commitment made in the July 2004 Framework Agreement and agreed to eliminate export subsidies by end 2013

• Elimination of different kinds of subsidy elements for agricultural products such as export credits, food aid, and exporting state trading enterprises.

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Discussion outcomes (cont’d):Discussion outcomes (cont’d):

• Regarding the non tariff barriers The World Trade Organization's (WTO) has done the quarantine agreement (the Sanitary and Physioanitary Agreement) which allows all WTO members (including Australia) to set their own level of quarantine protection for protecting their environment, health and people .

• Under Services Agreement, every WTO must make commitment on opening up to foreign service providers. Under GATTS, such opening does not need to be same for all members.

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Cairns groupCairns group

The Cairns Group coalition of 19 agricultural fair traders, chaired by Australia

The Cairns group is a group of countries that don’t give subsidies to their farmers as well as sharing the same opinion which is the importance of eliminating subsidies to the agricultural sector .

Australia and the Cairns Group will continue to be at the forefront of the negotiations, pushing for real outcomes in the negotiations for agricultural trade liberalization .

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Non agricultural/industrial productsNon agricultural/industrial products

• Non-agricultural products, including all industrial, mineral, energy, and fishery and forestry products, account for 82 per cent of Australia’s merchandise exports

• The minerals and energy sector is the largest export industry in Australia accounting for 43 per cent of total exports in 2005. Australia industrial sector is participating by 26.6% from the Australian GDP.

• The Doha agenda on non-agricultural market access is aiming in its negotiations to reduce or eliminate tariffs, including tariff peaks, high tariffs and tariff escalation, as well as non-tariff barriers .

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Non agricultural/industrial products(cont’d)

Non agricultural/industrial products(cont’d)

• Australia has a priority in the Doha Round in the lowering of tariffs and reducing other barriers to trade in industrial products as it is expected after this reforms to assist in enhancing the Australian industry exports.

• Negotiations on these industrial goods in the Doha Round were known as the non-agricultural market access or the "NAMA" negotiations.

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Trade in services:Trade in services:

• Australia is a main player in pushing to open the world services market through the WTO’s Rounds of negotiations.

• Trade in services account for 19 per cent of world export activity in 2004 .

• services sector is participating in the Australian GDP with 71% (2005 est).

• *WTO and GATS

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Services in Australian economyServices in Australian economy

• Australia is a world-class provider of a range of services, such as telecommunications, travel, banking and insurance.

• Services exports presented 71 per cent of Australia's gross domestic product (GDP),and employee 84% of australian workers.

• Over the last ten years Australian exports of services have increased by an average of almost 6 per cent per year.

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Trade-related technical assistanceTrade-related technical assistance

• Australia recognizes that trade-related technical assistance is important to developing countries and is committed to enhance this issue which will enable developing countries to participate more actively in the negotiations.

• As Chair of the Cairns Group, Australia led the push for reductions in barriers that rich countries impose on exports from developing countries.

• Australia fully opened its markets to all products from Least Developed Countries from 1 July 2003.

• Australia is actively participating, to strengthen considering the differences between developed and developing countries in stages of economic, financial and technological development to make them more clear during the negotiations and the commitments of the developing countries.

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International intellectual property rightsInternational intellectual property rights

• Intellectual property is an integral part of international trade, and its importance is increasing as the effective use of knowledge contributes ever more to national economic prosperity. 

• The current value of intellectual property in Australia is at least $30 billion.

• Australia has vital interests in the agreed international standards on the protection of intellectual property rights.

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Trade remedies Trade remedies

Negotiate to clarify and improve measures in antidumping agreements.

Negotiate measures on subsidies agreements.

Australia submitted 2 proposals:

-remedy for subsidy removal .

-proposal on prohibited export subsidies.

Negotiation to simplify and harmonize international trade procedures to assist the movement of goods.

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Trade and environment:Trade and environment:

Australia view is:• Countries should not use trade policy to force

environmental objectives.• Instead, liberalization of trade will result in increased

economic prosperity which will result in turn to increased resources devoted to Environmental management.

In Doha rounds, WTO countries agreed to:• Improve market access to environmental products.• Improve market access in developing countries to help

economic and environment development.• Labeling requirements for environmental purposes.

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Australia and international issuesAustralia and international issues

Tariffs imposed on goods imported into Australia will be 5 to 10% less than the WTO commitments set out in the consolidated schedule.

Since 1995 Australia has been involved in a number of disputes as a complainant, a respondent or as a third party and results achieved to date have delivered real economic benefits to Australia.

-Australia is also working with the WTO to provide real opportunities for exporters of goods and services by reducing protection and barriers.

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New Zealand: Country ProfileNew Zealand: Country Profile

• Population: 4,076,140 (July 06 est.)• Growth Rate: 0.99%• GDP (PPP): $106 billion• GDP (real Growth Rate): 1.9%• GDP (per capita): $26,000• GDP (by sector):

– Agriculture 4.3%– Industry26.9%– Services 68.8%(2006 est.)

• Public debt: 19.9% of GDP (2006 est.) • Current account balance: $-7.944 billion (2006 est.) • Reserves of foreign exchange and gold: $10 billion• Debt – external: $47 billion (2006 est.)

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New Zealand Export/ImportNew Zealand Export/Import

• Exports: $23.69 billion (2006 est.) • Exports

– Commodities: dairy products, meat, wood and wood products, fish, machinery

– Partners: Australia 21.4%, US 14.1%, Japan 10.6%, China 5.1%, UK 4.7% (2005)

• Imports: $25.23 billion (2006 est.) – Commodities: machinery and equipment, vehicles and aircraft,

petroleum, electronics, textiles, plastics– Partners: Australia 20.9%, US 11%, Japan 11%, China 10.9%,

Germany 4.9% (2005)

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New Zealand agricultural productsNew Zealand agricultural products

• New Zealand stands for the benefits of its farmers; they want their agricultural exporters to benefit from the same opportunities in world markets, agriculture represents 4.3% from the GDP.

• Goals for New Zealand in agriculture:• Increasing market access for their products, specially in

the big markets.• Elimination of all types of export subsidies. • Securing major reductions in domestic subsidies.

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New Zealand non-agricultural productsNew Zealand non-agricultural products

• Industrial products represent 26.9% in the GDP.• They include all manufactured goods (from textiles,

clothing and footwear to steel and aluminum) as well as forest and fish products, chemicals, and minerals.

• Non-agricultural products is about 46% of New Zealand’s export receipts in 2005, with a value of about NZ$14.2 billion.

• Negotiations on these industrial goods in the Doha Round were known as the non-agricultural market access or the "NAMA" negotiations.

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New Zealand goals in Doha roundNew Zealand goals in Doha round

New Zealand’s objectives for non-agricultural market access are to:

• Improving trade conditions for the New Zealand forestry and fisheries sectors.

• Secure the maximum possible improvement in existing access and trading conditions for all non-agricultural products.

• Secure the best situation possible for New Zealand in the World Trade Organization negotiations in this sector

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Trade issuesTrade issues

New Zealand’s trade and development policy is the principle that trade can reduce poverty, but that developing countries face challenges making trade useful for development .

New Zealand has offered duty-free access to imports from most Pacific Island countries and extended this advantage to all of the world’s least-developed countries (LDCs), making it one of the few developed countries to take this step.

Improving market access for agricultural products will lead to tangible benefits for developing countries.

Trade in services is also important to many developing countries that have their own export interests in services ranging from construction to education and all this points are of an interest to New Zealand too.

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Trade-distorting subsidiesTrade-distorting subsidies

Using trade-distorting subsidies in its 2 faces; domestic support measures and export subsidies significantly distorts the global trading system.

New Zealand is looking for a positive outcome in implementing the following:

• Tangible reductions in the use of trade-distorting subsidies

• Elimination of export subsidies • Opening agricultural markets

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Environmental issuesEnvironmental issues

New Zealand aims to harmonize its objectives for trade and for the environment ,to achieve the objective of promoting sustainable development worldwide.

In 2001, the New Zealand government adopted a framework for integrating environment issues and trade agreements.

New Zealand is having also great concern for more Market Access for its Environmental Goods and Services.

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New Zealand & the WTONew Zealand & the WTO

There is a tangible overlap between the objectives of developing countries and of New Zealand in the Round and after.

New Zealand takes into consideration regarding the developing countries that:

• International trade has a positive effect on poverty reduction and improves long-term economic growth in developing countries.

• New Zealand will promote development through improving market access for all products.

• New Zealand supports initiatives of the developing countries to allow them for lower cuts and longer timeframes for reducing tariffs.

• New Zealand considers that appropriately and effectively targeted technical assistance is needed to ensure that developing countries are able to use trade to enhance their development

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ReferencesReferences

1. https://www.cia.gov/cia/publications/factbook/geos/as.html2. http://en.wikipedia.org/wiki/Agriculture_in_Australia3. http://www.dfat.gov.au4. http://www.dfat.gov.au5. http://www.wto.org6. http://www.dfat.gov.au7. https://www.cia.gov/cia/publications/factbook/geos/as.html8. https://www.cia.gov/cia/publications/factbook/geos/nz.html9. http://www.mfat.govt.nz10.http://www.cia.gov/cia/publications/factbook/geos/nz.html11.http://en.wikipedia.org/wiki/Economy_of_New_Zealand

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