28 August 2008

Press Conference

Subject: Australia - ASEAN - New Zealand FTA

SIMON CREAN: We can announce that we've concluded the negotiations for this region-wide free trade agreement.

We've locked in the details on goods with all but two countries but we have a mechanism within this FTA to resolve the outstanding issues with those countries. And we've also locked in all of the outcomes in other areas such as services, investment, intellectual property, competition and economic cooperation.

This is a very good deal for Australia because we will gain considerably from the agreement, but it's also the most comprehensive trade agreement that ASEAN has ever negotiated, and it's the biggest free trade agreement Australia has ever negotiated. It covers 16 per cent of Australia's trade in goods and services worth $71 billion. And it's also the first region-wide agreement that Australia has negotiated.

The market is big; 570 million people with a combined GDP USD$1 trillion. And as an economic bloc, ASEAN is a larger trading partner for Australia than any other single country. And, according to the Bureau of Statistics, more than four out of 10 Australian exporters sell their goods to ASEAN countries.

There is a strong market access outcome in goods. I can't obviously go in to the precise details until we finally sign the deal but there are substantial improvements.

Tariff elimination by the major countries on goods will cover around 95 per cent of trade. There will be different timeframes for different products but that's another reflection of the need for these negotiations to recognise different stages of development by the participating countries.

But the outcome has been acknowledged by ASEAN as an agreement which has lifted their ambitions higher than they've ever gone before, and they are negotiating ASEAN Plus Ones with six countries, six groups of - six countries, but two of them are in this; Australia and New Zealand. But this is by far the most comprehensive.

There are good outcomes on services, outcomes which go beyond what we've been offered in both the Doha Round by ASEAN countries, and in some cases beyond that which was signalled recently in the WTO signalling conference.

They include commitments in engineering services from Malaysia and the Philippines; other professional services including legal, Vietnam; accounting, Malaysia and the Philippines; and architecture, Brunei and the Philippines; education services from Malaysia and the Philippines and Vietnam; financial services from Indonesia and the Philippines; and al… that's so far as banking is concerned; and with insurance, Indonesia. Construction services from Indonesia and the Philippines; and WTO Plus regulatory disciplines in telecommunications services.

Another good outcome is what we've been able to achieve on investment. The agreement includes provisions providing greater certainty and transparency for Australian investors.

It establishes a significant regime of investment protections. It includes an investor state resolution mechanism, and we've got a framework for negotiating the specific investment outcomes with individual countries of ASEAN.

Significantly, this is the first time ASEAN has agreed to this in any of its FTAs. And when one looks at the fact that Australian investment into the ASEAN countries is now in excess of AUD$16 billion, this is important progress. Now AUD$16 billion.

Finally, if I just also make the point that this isn't the end of the road even though it has been a tough set of negotiations. There has been intensive negotiation, particularly over the last four weeks. That's a culmination of what has been going on one way or another for a bit over two years. And when you think of the complexity of this, this is a significant achievement in a relatively short space of time. Compare it to what we've been going through in Doha, compare it to the fact that other ASEAN Plus Ones are less comprehensive than this, and it is a great tribute to those who have been involved in the negotiating exercise.

But in the end, those negotiations wouldn't have come to fruition had it not been for the political will around the table. The last couple of days has seen intensive discussion to try and resolve differences. They've been resolved because, again, the realisation at the political level is once you get so close it is important to try and effect a closure.

I think it's an important signal in the overall direction of what we hoped to get back on track in Doha, but in its own right it stands as a significant achievement.

That's all I'd like to say by way of introduction. There is a joint statement. I don't know whether that - I'm sorry, the joint statement can't be issued, I take it, until tonight because we're not having the formal press conference to announce this until six o'clock Singapore time, so that's eight o'clock your time. But there will be a joint media statement come out from that and we of course will issue our press statement.

But I'm happy to answer any questions you've got.

JOURNALIST: Firstly, if I could just - Tim Colebatch. Minister, can you say over what period this timing will phase in, and what products will not be covered by this deal.

CREAN: No, I can't go to the specific details until we get to the signing point. That's the undertaking we've got because everyone's got to go back and do this verification.

But clearly, there are - there will be eliminations on entry into force, progressively stepping up to further eliminations to get to that 95 per cent figure into you know, halfway through roughly, into the next decade. The timing when you see the final schedules, will reflect different circumstances in different countries and mostly have regard to the different stages of development.

I can't stress the significance of that point enough, Tim, because if you think about it, there's been a lot of scepticism in the climate change context as to what common, but differentiated, means. This negotiation reflects real progress in defining those concepts. Because we've had to come to grips with different timetables, depending upon the country's stage of development, Australia has had to be prepared to offer up commitments to eliminate on entry into force in some product lines. And you'll see that when the schedules themselves come out.

But it is a - it is a significant achievement. We of course, would have preferred it to have been more ambitious, but that's the nature of these things.

JOURNALIST: Inaudible

CREAN: Yep. It's Malaysia and Indonesia and its autos.

JOURNALIST: And is it safe to assume that there are commitments that Australia has to reduce its TCF and car tariffs as part of this FTA [indistinct]?

CREAN: Yeah, but in return we've got commitments from all of the other ASEAN countries at this stage, bar these two to elimination in accordance with a timescale that is in the very near future. What we haven't got is that same commitment, even though we've got the, in principle, elimination with Indonesia.

We haven't got agreement yet on the timetable, and we haven't got that fully with Malaysia because they're undergoing a national review into their automotive sector. Cabinet will not be making decision on that until that review reports to them at the end of this year. And that's why in the case of both Indonesia and Malaysia, we as part of this agreement have got an understanding to progress with both countries, these two areas of unresolved issue in the one sector, to progress those bilaterally, but within the framework of this free trade agreement.

We took the judgement that rather than hold up further - or take further time to enable finalisation with those countries to hold up the rest of the agreement, which is substantial progress in many other areas, it was far better of to take the decision here to conclude the negotiations on the understanding that that conclusion itself involves a mechanism to progress

the outstanding issues with Malaysia and Indonesia on autos.

JOURNALIST: Minister, I'm wondering can you just give us a little more clarity around the financial services, particularly with Indonesia and the Philippines in banking, and Indonesian insurance. What does that actually mean? Does it free up foreign equity interest? Does it allow sort of, greater ownership by Australia and New Zealand firms?

CREAN: It - again, I can't go to the detail of that. We will have to simply await the outcome of the scheduling themselves. But it is important to understand that - and I come back to the autos question again. It is interesting that in both these countries, we have really developed in the last nine months, important progress in advancing the bilateral relations.

So in the case of Indonesia, again on services, we want to use wherever the bilateral relationship takes us down the track the ability to keep building on this platform. So I made the point earlier that this is not the end of the road, although it's a sub… significant milestone in the road.

But it's something that we want to build upon, keep progressing and I think that with the good will, commitment, the hardness of the negotiations that was involved. There's a realisation that here we've been able to not just look at the picture of the economic benefits all around, but actually address the institutional and political will as well.

JOURNALIST: Well, I'll ask another. Tim Colebatch again. Minister, one of the releases or news reports from Singapore said that it includes some [indistinct]. Can you say anything about what that includes?

CREAN: Well, the - as you know, that the mode for issues have become a lot more prominent in trade negotiations with the movement of capital, with investment flows. And obviously the more trade diversifies in this direction, the more pressures there are going to be on for the skills to follow the investment.

But we've also had other requests put on us from certain countries. We've been prepared to respond positively to those. Again, I can't go to the details, but they are authorisations that we've had, you know, through our processes back home, knowing full well, you know, what these - where these are going to take us. So I think it is a reflection of the changing direction of trade negotiations, and I think that the ability to make some progress in this area sends a very important signal.

JOURNALIST: It's also reported that the India agreement with ASEAN also [indistinct] will exclude 490 tariff items. Are there any tariff items excluded from our agreement?

CREAN: What are we saying on this, guys? We've - I mean, obviously it comes back to the schedules, but - I'm just getting a bit of advice on this, Tim. Can I just say on India though, before we go to that, I don't know the full details of the Indian agreement, but the Indian agreement with ASEAN is only on goods. This is an agreement that is goods, services investment, agriculture – this is the most comprehensive agreement.

So of course, by very definition of us getting 95 per cent of tariff lines, not all goods will be included but in terms of it being an agreement that specifically excludes areas, my understanding is it's not an agreement that does that and that's interesting itself because exclusions can be the vehicle by which many countries take the easy way out.

JOURNALIST: I appreciate that you can't - you are bound and you can't talk about other things specific… too much specifics, but can you give us some broad indication of what happened with food exports and whether food exporters will have free trade with ASEAN.

CREAN: Food exporters will get significantly improved access to ASEAN under this agreement.

JOURNALIST: Minister is it fair to say that Australia didn't have a lot of bargaining chips in terms of our own tariffs to reduce by the nature of having fairly low tariffs, is one of the things that we have allowed is easier visa arrangements like say for student work holiday visas, you know, general business visas. Have we freed up immigration, is that one of the things that we've done?

CREAN: Well, what it's done is to make commitments on temporary business entry that go beyond simply serviced suppliers to include good sellers and investors. And there are further disciplines to promote expeditious processing of formalities as well as an enhanced transparency. I can't - as I say, I am bound by the nature of the agreement not to go into the details.

We would dearly like this to have been at the point where it's not just concluded but signed, but the reality is you can't do it that way. We've - there have been a lot of political interventions over the last couple of days, in fact over the last week by phone, but the last couple of days here in particular. Now the technicians have to go back to vet all of this, that's why it is going to take some time. But we also need that time; quite frankly for us to resolve those two outstanding issues that I talked about, these two countries, on one outstanding issue.

JOURNALIST: Is it fair to say that the deal will be signed, probably by leaders in Bangkok at the ASEAN leaders meeting, at the East Asian summit.

CREAN: That's the goal. But - and obviously today's agreement takes us a significant way to that goal and the aim would be to have this in place by the middle of next year. Given our further commitment here in Singapore, unless there's another question from Canberra, I'll close it up, I know that you're pretty close to deadlines, down there.

JOURNALIST: This is a big agreement compared to other agreements as you just said earlier, how does it stack up for agriculture compared to say the US free trade agreement?

CREAN: It will see a significant improved access for agricultural products; I can't go into the details. I - it's a bit difficult to sort of stack it up against the so-called US free trade agreement because we're dealing here with ten countries apart from our two but it is the most, I guess, the most effective way to put it, it's certainly the most comprehensive agreement that ASEAN has signed.

Collectively these countries represent our biggest trading partn… if you took it as one country, this is bigger than China, and that's now our largest trading partner and it's across all sectors. Now I know the Rural Press is particularly interested in agriculture. My view is that a lot of our negotiations have - under the previous government had an important focus on agriculture and not enough in some of the other areas.

We're trying to drive this comprehensive dimension and quite frankly if you look at some of the huge opportunities in services and investment, most of them will relate to agriculture and mining because they do go to the value-added end of both of our traditional strengths but they increasingly go in the case of agriculture to land and water management issues and food processing, that's what we're seeking to open up, not just by way of trade opportunities but by genuine aid, genuine technical cooperation agreements which have been also an important part of this negotiation.

In the case of the mining sector the services dimension and the technology that's associated with that sector. Both of these are huge strengths. We've under-utilised the significant - under - we haven't been as good at getting them into exports and into traded opportunities in the past and so that's why we've given a lot of focus to the services sector. It's not moving away from the traditional base, it's doing more with it and that goes particularly for agriculture.

Can I just say by way - I've got to go to another discussion as been indicated but this - there also will be a statement coming out today from the EAS group which is ASEAN plus six - that's 16 countries which has a good statement, good call to arms in terms of Doha, that's significant because Kamal Nath also participated in that meeting and you know, my view, I did the parliamentary, the ministerial statement the other day about my continuing view that we can conclude the round.

I am convinced today even more so as a result of the broader discussion as well at the bilateral I had with Kamal Nath that that remains eminently achievable.

Got to go, thanks very much.

ENDS

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