The Australia-China Chamber of Commerce and Industry of New South Wales
Return to the publications page. Return to the home page.	SUMMARY OF ACCCI ROUNDTABLE DISCUSSION ON AUSTRALIA’S TRADE AND AID POLICIES WITH CHINA 24 November 2000 Morning Session: Australia’s Trade Policy with China
	Introduction This summary is intended to convey the main thoughts, ideas and suggestions that emerged from the discussion. Although attribution to specific individuals is possible, it would be complicated since most of the thoughts and ideas that are reported here arose through from comments by several people. It is nevertheless important to note separate comments from the public sector participants and the private sector participants. This separation is relevant to much of what is contained in the summary.
	Nature of Australia’s current trade policy Introductory comments by the chairperson were linked to the briefing notes that were supplied prior to the roundtable discussion. These were intended as a “spring board” for the main discussion. The discussion began with a restatement of paragraph 4 of In the National Interest, which is a recent publication from the Department of Foreign Affairs and Trade (DFAT). Specifically, Australia’s trade policy consists of three approaches: multilateral efforts, regional efforts and bilateral efforts. These are deployed in an integrated and mutually supportive way. Moreover, “the greater part of Australia’s international efforts is, however, bilateral, and bilateral relationships are the basic building block for effective regional and global strategies’”. While the emphasis on integration and mutual support is both relevant and important, it was not clear how this can be achieved. Specifically, integrating multilateral objectives associated with WTO initiatives, for example, with either of the other efforts would seem to dictate a similar (and perhaps identical) agenda for all three approaches. Thus, in terms of the overall objective (or guiding principle), only one approach would exist with several slightly different courses of action available for the implementation of the policy. Some confusion also existed in relation to a specific choice for a course of action. For example, at the latest round of APEC meetings in Brunei, it was announced after the ministerial meeting that bilateral negotiations were under way for the possible enlargement of the Australia-New Zealand Closer Economic Relations (CER) Agreement to include Singapore. Several days later, after the leader’s meeting of APEC, agreement was reached for a commitment to new round of multilateral trade negotiations. While more than one course of action could be followed at the same time, doing so creates uncertainty as to how the choices are made and which is the focus of attention at any given time. The public sector participants commented on the APEC outcomes, indicating that the possible enlargement of CER had been discussed for some time and a new round of multilateral trade negotiations was on the WTO agenda last year, but agreement was not reached for various reasons, including the public demonstrations in Seattle. Considerable discussion followed, with the following points emerging: Ø The most fundamental (and perhaps simplest) component of Australia’s trade policy is the objective of increasing exports in a way that is consistent with the policy of Australia’s trading partners. Ø The principle role of DFAT in this objective is to seek ways of reducing trade barriers. This includes both tariff and non-tariff barriers to trade in goods and services. Ø A rules-based multilateral trading regime is considered to be the most effective approach for Australia in achieving the objective of trade liberalisation. Not only does it allow negotiated outcomes to be shared by all signatories to the regime, it is also more conducive to a multi-sector approach (more on this below), which generally involves a number of government departments in addition to DFAT. Ø Such a multilateral trading regime requires support through voluntary commitments of member countries under a mutually supportive regime (such as the APEC) and close country-to-country contact in bilateral trading relations. The impact of this on the question of relative proportions of public sector resources devoted to multilateralism, regionalism and bilateralism is that flexibility is needed in those proportions in order to adjust to rapidly changing circumstances. Perhaps more importantly, a shift in the relative proportions does not imply that Australia’s policy (in terms of guiding principles, plans and courses of action) has changed. The participants generally accepted this statement and various elements of the dot points mentioned above were discussed.
	Multilateralism The aspect of the WTO and that is particularly important to Australia is the capacity for negotiations on trade liberalisation to proceed simultaneously on a multi-nation and multi-sector basis. A relaxation of trade barriers on agriculture, for example, may require that the proponents of a more liberal agricultural trading system agree to trade concessions in other sectors, such as services or intellectual property rights. The binding nature of the WTO agreements gives some assurance that negotiated arrangements, generally with an assortment of concessions, will be adhered to after the agreement is reached. Without this, the often-protracted negotiations may not be taken seriously and the entire process may appear uncertain and questionable. The dispute resolution procedure of WTO is an integral part of the binding nature of the WTO agreements but is not a major justification for the agreements, which is, put simply, to reduce tariff and non-tariff barriers to trade.
	Regionalism APEC relies mainly on voluntary commitments in trade liberalisation and these provide potentially valuable inputs into the multilateral system of binding commitments. They not only help to identify structural elements within the individual economies that may make it difficult to enter into more extensive binding agreements, they also provide an environment for co-operation and coordination in reducing or eliminating the restricting structural elements. This is more easily accomplished with interactions among sub-sets of trading nations.
	Bilateralism Direct government-to-government contact among members of the WTO or of regional trade groupings assists in identifying potential constraints to further liberalisation and, when accumulated across all bilateral discussions, often sets the agenda for regional and global negotiations. Bilateral discussions are also of vital importance in resolving disagreements over trade and trading conditions before they require the use of an adversarial-based dispute-resolution procedure. These discussions can also pick up trade issues that are not part of regional or multilateral agendas.
	Current focus on the multilateral regime Ways of overcoming the failure to achieve agreement for new multilateral negotiations at the Seattle meeting of the WTO was a major focus of the Australian Government for much of this year. Government participants pointed to various documents that showed substantial macroeconomic advantages of increased trade liberalisation for both developed and developing countries. It was generally agreed that opposition to further trade liberalisation, and to the globalisation process generally, has arisen from an unlikely coalition of various, otherwise disconnected interest groups. As with many such coalitions, it is uncertain whether it will prove to be stable and durable. Private sector participants in the roundtable discussion nevertheless suggested that even if the existing coalition becomes unstable, it does not necessarily follow It was specifically suggested that those who are opposed to further trade liberalisation are not persuaded by the macroeconomic benefits of freer trade. Rather, they are concerned about the micro effects of the liberalisation process. Perhaps more importantly, continued emphasis on the macro benefits may become counterproductive by highlighting benefits that are perceived to be unavailable to the opponents. Greater benefits therefore create (or are perceived to create) greater disparities.
	Function of government Public sector participants indicated that the main function of government was to establish a framework for a more competitive domestic economy and not to exert undue influence on a market-based distribution of trading benefits. Private sector participants suggested that an economy cannot become fully and effectively competitive unless information is made available to all market participants. In the case of information arising from the government, this is not likely to occur unless the relevant government departments make an effort to achieve it. It is not sufficient to pass on information to selected individuals and expect that it will become widely distributed. The constraints are: Ø Smaller enterprises lack the resources to maintain extensive information networks and therefore suffer a disadvantage in receiving relevant information either too late or not at all. Ø Since getting the relevant information early is of benefit to any private sector enterprise or individual receiving it, there is a built-in disincentive for those enterprises or individuals to distribute it widely. Stated differently, if information is valuable, those who have it will attempt to preserve its scarcity value. Public sector participants agreed that public sector/private sector communications could be improved but indicated that the public sector did not have sufficient resources to undertake a comprehensive program to educate and inform every member of the business community. For some time, the practice of the Australian Government has been to convey information through representative bodies to the greatest extent possible. For example, the Trade Policy Advisory Committee represents a peak business forum for advice to the public sector on matters relating to trade and investment. The Agricultural Trade Consultative Group represent a peak forum for consultation and coordination for WTO negotiations on agriculture. In addition, regular industry consultations are held with services and manufacturing industry representatives. Depending on the issue, consultations are held through peak councils, industry sector associations and individual firms. DFAT organised informal consultations in the lead-up to the Seattle meeting of the WTO to discuss work on trade-related matters. Private sector participants agreed that these consultations are of value to the private sector. The Chamber participated in one of the WTO consultations and benefited from the discussion. The belief nevertheless remained that these consultations could be improved with relatively little additional resource input. The Chamber agreed to collect and compile suggestions for improvements in the consultation process in a separate document.
	Orientation of the public sector It was also suggested that while the outcome-orientation of the public sector is understandable in relation to the work plans, progress evaluations and perhaps also for budget considerations of specific work groups, it does not carry a similarly useful purpose in communications with the private sector. Specifically, if the information process is initiated only when outcomes are available, then the private sector is effectively precluded from providing any input into the activity that generates those outcomes. Public sector participants suggested that the importance of outcomes should not be dismissed. They arise at a fairly high governmental level and community approval or disapproval of them will necessarily be recognised at that level. In addition, multiyear corporate plans, annual operating plans and annual reports gives a strong indication of priority areas, together with progress that is anticipated and outcomes that were achieved. These should provide ample opportunity for private sector input. More dialogue and exchange of information on this issue was believed to be desirable.
	Structure of the public sector Since information streams that are initiated by the various work groups in the public sector focus on their individual outcomes, a wide variety of outcomes will be reported. If the private sector is given the task of putting all of these individual outcomes together to form an overall picture, then it should not be surprising that misinterpretations and misconceptions occur. This, in turn, is likely to lead to overly critical views of the outcomes and impede the process of information exchange. This was considered to be partly a problem of interagency co-ordination and interpretation of the policy framework. Some of the discussion focused on the current structure of the public sector, compared to previous structures with several comments suggesting that the previous structure was more effective. The public sector participants expressed the opinion that interagency co-ordination is much better now than it was before.
	Role of the private sector Input from the private sector in matters relating to trade and investment policy has tended to be relatively narrow, reflecting short-term goals of specific enterprises. There is, or seems to be, a general lack of understanding of many of the broader trade issues and this creates a level of involvement that is deficient in providing useful input to the public sector on these broader areas. Private sector participants agreed that corporate executives in Australia lack an appropriate “culture” to focus on longer-term strategies in relation to trade and investment, as compared to other trading nations. Leadership in remedying this must come mainly from the private sector.
	Trade policy with China after China’s entry into the WTO Discussion of this issue began with the suggestion that micro adjustments (adjustments at the enterprise and industry levels) will be needed in both Australia and China (especially in China). An assessment of the overall benefits from a more open trading regime will be of little value in the adjustment process. It was suggested further that these micro adjustments could be achieved with greater participation of private sector organisations in contributing to institutional strengthening and improved capacity of Chinese enterprises to manage the necessary changes. Public sector participants pointed out that considerable work in these areas is being done within APEC. Private sector participants reported that they had difficulties in linking into this work. The information available from the APEC Secretariat consists mainly of minutes of meetings, and there is a substantial delay in posted that information on the Internet. Presumably, the minutes are not made available to the public until each member country officially approves them. Detailed agendas are not available to the public prior to the meetings and little is available about the APEC Business Advisory Council (ABAC), other than press advisories/releases and a copy of the report sent by the Council to APEC economic leaders prior to their annual meetings. Though the number of private sector participants at the roundtable discussion was relatively small, none had ever received information about agendas or minutes of ABAC meetings in Australia. No links exist on the APEC Internet site for an ABAC Internet site in Australia. A general perception was that if the Chamber or one of its associated organisations developed suggestions for institutional strengthening to improve the capacity of Chinese enterprises to adjust to a more open trading environment, there is no easy way of conveying them to either the Australian Government or to APEC. Sister city relations represent a potentially effective platform for closer linkages between Australian and Chinese enterprises and industry associations. They are nevertheless difficult to coordinate and participation of organisations such as the Local Government and Shire Associations would seem to be required.
	Trade promotion for Australian exports to China Some dissatisfaction was expressed by private sector participants in matters relating to information and advice given to exporters, or potential exporters, in ways of accessing China’s market. Public sector participants commented that such matters should be discussed with Austrade or with the various industry associations that participate in export promotion. While the division of responsibility among various government departments was generally understood, as was the cutback of government expenditure for trade promotion, a considerable amount of frustration had accumulated over the past several years as a result of those changes. A useful comment was made by Mr Lin Kun, outgoing Head of the Economic and Commercial Office of the Consul-General of the People’s Republic of China and guest of honour at the roundtable discussion and banquet following it regarding the under-representation of Australian products in China. The quality of many products is believed to be substantially better than their share of the Chinese market. This suggests that promotion and marketing are weak. The discussion of these matters yielded no definite solutions, or suggestions for solutions, but it did highlight the concern that is being felt about weaknesses in trade promotion.
	Summary of follow-up from the Chamber 1. Separate document making suggestions and comments about improving the flow of information from the public sector (and from APEC) to the private sector. This will concentrate on the contents of the relevant Internet sites in stating what information could be supplied with relatively little additional resources, as well as information currently supplied that is perceived to be of little value. Public sector participants indicated that they would be receptive to these suggestions as they recognise that improvements could be made to electronic flows of information. 2. More detailed information about the nature of enterprise and industry adjustments in both Australia and China as a result of China’s entry into the WTO. This will include a compilation of studies and opinions about the effects of China’s entry into the WTO. 3. Continue the dialogue with relevant government agencies in Australia and in China in matters relating to trade and investment policy with China.
	Return to the top of this page.