ACCI Trade Modernisation Event | Speech by Andrew Bragg

Opening Remarks by Senator Andrew Bragg 
 Liberal Senator for New South Wales

ACCI Trade Modernisation Event 

Wednesday 20 November 2019

Utilising technology, better regulation, and modern agreements to unlock the potential of trade while protecting our vital interests.

Thank you. It’s a real pleasure to join you all today. I would like to acknowledge the traditional owners – and pay my Respects to their elders past and present, extending that respect to any Aboriginal elders here today.

Ladies and Gentlemen – listening to some of the commentary you’d be forgiven for thinking global trade was on its last legs!

Global trade growth projections are down.[1] 

US-China tensions continue.

The uncertainty surrounding Brexit. 

And the rules are under pressure too.

The WTO Appellate Body impasse.

Trade rules not keeping pace with modern commerce.

And the APEC Ministerial meetings and Leaders Summit cancelled.

Now, many do catastrophise about the future of global trade and the rules-based system that underpins it. But frankly, mere worry gets us nowhere. And in any respect – I’m optimistic. And so is the Morrison Government. That’s because we have good reason to be.

Australia continues to experience strong trade growth.[2] Good economic sense remains on our side.

As I wrote in my recent short book “Fit For Service”: “Australia is a trading nation whose high living standards rely upon free trade which allows exports beyond our small domestic market.” We have faith in open trade settings – they’ve helped deliver 28 consecutive years of economic growth. And global trade rules and institutions have helped create the most prosperous period in world history, delivering a peace and development dividend.

Reassuringly, others share our view. There remains strong momentum for open economies and rules-based trade. We’re forging ahead on RCEP because fifteen of the negotiating countries see the gains to be made. We’re leading reform efforts in the WTO so the organisation continues to underpin global rules-based trade.

Remember, WTO rules provide the foundation for almost all trade – so when the WTO works well, so too does global trade. And as important as the Leaders Summit is, APEC is much bigger – it’s a year-long process of cooperation to better integrate regional economies. Australian business, and groups like this Chamber, continue to be strong advocates for open, rules-based trade. Your support for the system demonstrates its value to those who use it. 

Technology, Digital Innovation and Better Regulation 

But of course, we’re not here to talk shop on the international politics of trade. We’re here because all good economic and trade reform starts at home. And modernising our trade processes and agreements is a priority for this Government.

Now, often it’s our international work that grabs the headlines – expanding market access through FTAs and initiatives like the India Economic Strategy. But just as important is what we do at home to facilitate trade by simplifying, modernising, and harmonising our export and import processes to fully unlock the potential of trade.

I was recently appointed Chairman of the Senate Select Committee inquiry into Fintech and Regtech and have begun receiving submissions from the private sector. And from what I have seen so far Australia is ready to pounce.

I want this inquiry to unleash the shackles and create jobs in Australia.

As I said in my short book: “Growing sectors such as Financial Technology and Agricultural Technology (AgTech), which are developing new ideas daily, will never read lengthy texts which will rapidly become redundant unless new trade agreements are built for these industries.”

We are good at things like FinTech. The 2019 FinTech 100 is a global list announced by FinTech Innovators, a collaboration between investment firm H2 Ventures and KPMG.

Seven Australian FinTech startups were ranked among the world’s best, with cross-border payment provider Airwallex the highest ranked firm at number 32 on the Top 50 Established firms. It was followed by Judo Bank at number 33 and online payment service AfterPay Touch at 47.

Australia has a challenge ahead but is well placed with the Asia-Pacific region dominating the list for another year. Singapore is the other jurisdiction in our Time Zone which has developed into a FinTech leader.

FinTech global regulation is in its infancy. Australia has a FinTech bridge with the UK which was established by the Prime Minister when he was the Treasurer. The Bridge is a world leading initiative which has already boosted the size of the market for some FinTechs. The Review can now look at the Bridge as a starting point for other jurisdictions with which we can work and expand the available markets.

The challenge upon us now is turning our head start on FinTech into exports in our own region.

We already know business and consumers will buy tech from abroad. We do it every day in Australia with iPhones and search engines! Everything we do in this space has to be seen through a prism of exports.

Time and money spent on unnecessary domestic procedures and burdensome regulations can sometimes be a bigger impediment than tariffs. We just can’t afford to put lead in our saddlebags in any key sector.

As you’ll know, Australia has a proud pedigree in streamlining trade. Just last month, Minister Birmingham launched the film World in a Box celebrating the 50th anniversary of the visit of the Encounter Bay – the first purpose-built container ship to come to Australia. A simple but profound development, containerisation has helped make Australia’s goods trade a staggering 94 times larger than it was in 1969. In that tradition, the Government continues to modernise trade processes.

Together, the Australian Border Force and Department of Agriculture are developing new ways to manage our borders that increase efficiency while protecting us from national security and biosecurity risks. Now, there’s a lot of work going on here – and I’m sure this audience will be across the detail better than most!

Border Force leads the Government’s customs and border modernisation program, which aims to deliver a digital, seamless, and secure system supporting prosperity without compromising security.

I’m sure many of you will be familiar with this program – including:

  • streamlining regulations and business processes;
  • enhancing trade enforcement; and
  • expanding the Australian Trusted Trader program.

We’re also working towards a single window for trade that will provide a seamless and secure facility for traders to talk to Government while reducing the regulatory burden.

Border Force is also conducting a review of their border permits, reporting back next month. We’re expecting recommendations on:

  • removing barriers for trade;
  • simplifying regulation on permits for prohibited goods; and
  • streamlining processes on prohibited and licenced goods.

Our agriculture industries are also at the forefront of trade modernisation. A strong biosecurity system helps protect our environmental assets valued at $6 trillion and our agricultural exports worth over $50 billion annually. While we want quicker clearance of goods and people at the border, we must acknowledge that the biosecurity landscape is changing rapidly. Increased trade and passenger movements and the accelerating spread of pests and diseases – like African swine fever – are creating new challenges.

To meet these imperatives, the Department of Agriculture is trialling technologies new to biosecurity such as:

  • three-dimensional x-ray;
  • underwater drones; and
  • automated sensing technologies.[3]

The Modernising Agricultural Trade initiative is also helping businesses by updating export systems, with $32.4 million funding over four years. With consumers demanding more information on food safety and sustainability, the initiative aims to cement Australia’s reputation as a supplier of clean, green produce, and improve freight and supply chain efficiency and capacity.

All this work is part of Australia’s commitments under the WTO’s Trade Facilitation Agreement – or “TFA” – which aims to realise the global benefits of better trade facilitation. The OECD estimates that for every 1 per cent reduction in global trade costs, $40 billion US dollars would be added to world GDP. We continue to push for the TFA’s implementation. And good progress has been made – 147 of 164 WTO members have ratified.[4]

But sometimes – ladies and gentlemen – it’s the simple things that make a big difference. Take the great FTA Portal developed by DFAT. A testament to its value, it’s already been accessed over 300,000 times. Simple but powerful, the Portal is a game-changer for small-to-medium enterprises, in particular – sorting through the minutiae of FTAs to find the information that really matters to an SME, so it can make informed decisions.

It also helps alleviate the so-called “noodle bowl” of overlapping FTAs by allowing businesses to choose the agreement offering the best deal. SMEs – as 87 per cent of our exporters – are also the focus of our FTA information seminars. We’ve engaged over 5,600 businesses and other representatives across 129 seminars, raising awareness and use of our agreements.

They’ve been so successful that the Government has committed to a further 100 seminars over the next three years – part of our work to add another 10,000 businesses to Australia’s export profile.

As well as helping exporters make use of FTAs, we must ensure that our hard-fought gains are not eroded by non-tariff barriers – or ‘NTBs’ – which can cost industry up to three time more than tariffs.

The Government’s NTB Gateway gives businesses a further avenue to report issues and have them managed by the Government. This is especially useful for SMEs. The Chamber has been very helpful in using the Gateway, registering concerns on behalf of its members – assisting government efforts to focus on the issues that matter most to Australian exporters. And when it comes to trade in services, we’re determined to facilitate the massive growth potential of our exporters.

Services comprise 73 per cent of our economy and provide 88 per cent of jobs. Our services are sought-after, as a developed, highly-educated country. Next Wednesday, Minister Birmingham will be meeting with the services sector to discuss how government can remove barriers to services exports. The Government is also driving negotiations in the WTO for new rules on the domestic regulation of services.

If we can get agreement, there will be important improvements for service suppliers with increased transparency and streamlined procedures for qualifications and licensing.

Our Modern and Ambitious FTA

Ladies and gentlemen – the global economy is rapidly transforming. And you’ll know that better than most – you’re at the coalface of change. The Morrison Government intends to keep Australia ahead of the curve, in the lead defining the rules for new and evolving forms of commerce. As trade becomes more digital, we are determined to facilitate it as best we can.

By 2030, Australia’s digital exports are expected to grow by 210 per cent – and total digital trade could enable up to $192 billion in value to our economy.[5] It’s critical that Australia shapes digital trade rules to reflect our interests in an open and predictable online environment. In the WTO, we chair E-Commerce negotiations, which aim to develop the first global digital trade rules. We’re also pushing to extend the WTO moratorium on customs duties for electronic transmissions. And we pursue similar outcomes in our FTAs.

We want to develop new rules that set ambitious benchmarks for our region. That’s why I’m pleased that the Morrison Government launched negotiations with Singapore for a digital economy agreement. We want this agreement to significantly expand cooperation in emerging areas like digital identity, artificial intelligence, and e-invoicing.

The agreement will be a testbed for our trade modernisation agenda – for instance, electronic certification for agricultural products. The CPTPP – or TPP-11 – agreement also facilitates trade and improves compliance efficiency, with self-certification and electronic certificates of origin making it easier to access preferential tariffs.

Rules supporting online commerce make trade more efficient and secure – including by protecting cloud computing, limiting data localisation, and promoting cross-border data flows.

Once RCEP comes into force, it will also help facilitate trade in services by setting high-quality rules. Australia will benefit from cooperation on professional services, disciplines on licensing and regulation, and WTO-plus commitments on financial services and telecommunications. Not to mention, e-commerce rules for digital trade. Both the TPP-11 and RCEP reflect the ambitious approach this Government takes, creating common rules and standards, and enhancing Australia’s access to regional supply chains.

The FTA we’re negotiating with the European Union also fits this bill. We’re pushing for a thoroughly 21st Century agreement giving our services exporters new opportunities, while also developing trade rules to support the digital economy.

Similarly, our FTAs with Indonesia, Hong Kong, and Peru – now before the Parliament – include trade facilitation measures. These agreements are testament to the Morrison Government’s committed to lowering trade barriers and making it easier for our exporters. IA-CEPA, for instance, expands opportunities for businesses to use Declarations of Origin. These can be made on invoices, rather than following a prescribed format.

It’ll also be easier to export food and wine to Hong Kong. Clear requirements on wine labelling and better collaboration on food regulation will help reduce uncertainty and minimise compliance costs for exporters.

However, the results are in the outcomes this Liberal and Nationals Government have achieved. We have a record number of goods exporters, more than 53,000 (including 46,000 SMEs) goods exporting businesses in 2017-18 which is up 18.5 per cent since 2013-14.

The Morrison Government is committed to more Australian jobs; with one in five Australians employed in trade-related employment, it is estimated that more than 240,000 trade-related jobs have been created in the last 5 years.

We have reached record levels of goods and services exports. And we know that our FTAs are helping Australian businesses, as our free trade agreement partner countries had the largest average export value per merchandise exporter led by Japan ($13.7m) and China ($13.6m). We have also recently recorded a record trade surplus, the second longest consecutive number of trade surpluses and for the first time in 44 years a current account surplus.

The Morrison Government is committed to creating more Australian jobs through trade because research shows that Australian businesses that export, on average, hire 23 per cent more staff, pay 11 per cent higher wages and have labour productivity 13 per cent higher than non-exporters. 

Conclusion

Ladies and gentlemen – this is a Government committed to taking every opportunity to grow our trade.

Whether through practical modernisation initiatives at home, or by negotiating new rules that support the future of trade – this Government, the Morrison Government, is implementing a comprehensive plan to grow our prosperity, while protecting the future of international rules-based trade.

I wish you the very best in your discussions today.

 

[1]WTO lowers trade forecast as tensions unsettle global economy’, World Trade Organization (1 October 2019).

[2]Monthly Trade Data – September 2019’, Department of Foreign Affairs and Trade (8 November 2019).

[3] ‘Hyperspectral imaging with deep learning architecture’ is being used to improve the detection of pests and contaminants that may arrive in or on goods, containers and vessels. Contaminants can include plant material, animal faeces and soil, which can carry disease or harmful mites.

[4] As at 4 November 2019.

[5] Hinrich Foundation, Export Council of Australia, Alphabeta, From Resource Boom to Digital Boom: Capturing Australia’s Digital Trade Opportunity at Home and Abroad.