Good evening and welcome.

  • I am here this evening with OECD Secretary-General Angel Gurria to launch the OECD, WTO, World Bank and UNCTAD publication Analysis of Global Value Chains: Challenges, Opportunities and Implications for Policy.
  • Global value chains are an increasingly important feature of the modern economy.
  • The value chain is best defined as the full range of activities or inputs required to produce or make something.
  • Physical production may take place in one country but draw inputs from any number of countries around the globe.
  • The input could be a component like a valve or a switch, or the protective clothing worn by workers or the vehicles they driven or it could be design, engineering services or other IP.
  • International production, trade and investment are increasingly organised within these global value chains (GVCs).
  • The income from trade flows within GVCs has doubled between 1995 and 2009.
  • For China it has increased six-fold, India five-fold and Brazil three-fold.
  • GVCs are now integral parts of the global economy and will only grow in importance over time.
  • G20 Leaders recognised this at the Saint Petersburg Summit in September 2013.
  • They asked for further information on the impact of global value chains on trade, economic growth, development, and job creation.
  • This report is the product of that work.
  • Australia is a nation that places great value on global value chains.
  • To be globally competitive and grow our economy we look to back our strengths – the things we do as well as anyone and better than most.
  • Mining and resources is one of Australia’s great strengths.
  • This has led to Australia having a global competitive advantage in the services that sit alongside our mining industry. From professional services such as engineering and environmental management to mining technology.
  • We have supported – through our Export Finance and Insurance Corporation – Australian mining services companies to access global value chains abroad.
  • As an example, Optalert in Melbourne manufactures safety glasses for operators of mining machinery and heavy vehicle drivers that stop them going to sleep. They have a $2.5 million contract with BHP/Rio in Chile.
  • Hoffman Engineering in Bendigo and Peth exports mining equipment to 20 countries – they have a $1.9 million contract with BHP/Rio in Chile.
  • This is backing your strengths.
  • Australia is also a participant in the Boeing 787 Global Value Chain. The 787 is an example of a globally produced product.
  • Here in Australia, at Boeing’s Port Melbourne site, we manufacture the moveable trailing edge of the 787 wing.
  • The fuselage of a 787 is manufactured in four countries – from Korea, Japan, Italy and the US.
  • As advanced manufacturing progresses in the Asia Pacific region -Australia has a significant part to play in global value chains.
  • Chocolate producers in Malaysia, for example, can access cocoa sourced locally, processed milk from New Zealand, refined sugar from Australia and Thailand.
  • Chocolate manufacturing plants are built with the help of foreign investment, the packaging designed in New York, and the product sold globally.
  • OECD and WTO figures estimate that Australia’s trade balance with Germany in 2009 was a deficit of US$9 billion.
  • Yet when the contribution to Global Value Chains was taken into consideration, Australia’s trade balance with Germany was in fact a small surplus of US$315 million.
  • This year in the G20 it is important that all member countries take actions to support the private sector drive growth and jobs.
  • Doing what we can to assist our businesses – big and small – to gain access to Global Value chains needs to be a priority focus.
  • I thank the Secretary-General, and those involved, for this report.

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