INTRODUCTION OF AUSTRALIA........................................................................................................................

1
GOVERNMENT OF AUSTRALIA.............................................................................................................................................................................1
FOREIGN RELATIONS..................................................................................................................................................................................................2

ECONOMY........................................................................................................................................................ 3
ECONOMIC LIBERALISATION........................................................................................................................................................................................4
TAXATION.............................................................................................................................................................................................................4
BALANCE OF PAYMENTS......................................................................................................................................................................................4
CURRENT AREAS OF CONCERN............................................................................................................................................................................5

BRIEF PROFILE OF AUSTRALIAN TRADE AUSTRALIA........................................................................................... 6

AUSTRALIA’S TRADE PERFORMANCE............................................................................................................................................................................6

AUSTRALIA AND THE WTO............................................................................................................................... 7

AGRICULTURE AND THE WTO........................................................................................................................... 8

WORLD AGRICULTURAL MARKETS – UNFAIR AND DISTORTED.........................................................................................................................................10
WORLD TRADE ORGANIZATION (WTO) AND AGRICULTURE...........................................................................................................................................10
AGRICULTURE IN THE DOHA ROUND..........................................................................................................................................................................11

NON-AGRICULTURAL MARKET ACCESS (INDUSTRIAL PRODUCTS)....................................................................13

THE IMPORTANCE OF SERVICES TRADE TO AUSTRALIA....................................................................................14

THE COMPOSITION OF AUSTRALIAN TRADE IN SERVICES.................................................................................................................................................14
SERVICES TRADE AND THE WTO...............................................................................................................................................................................15
WHY IS IT IMPORTANT TO OPEN SERVICES MARKETS?....................................................................................................................................................15
HOW IS TRADE IN SERVICES REGULATED?....................................................................................................................................................................15
THE IMPORTANCE OF SERVICES TO GLOBAL TRADE........................................................................................................................................................16

INTELLECTUAL PROPERTY AND INTERNATIONAL TRADE..................................................................................17

WTO AND TRIPS..................................................................................................................................................................................................17
WHAT DOES TRIPS DO?..........................................................................................................................................................................................17
TRIPS AND WTO DISPUTE SETTLEMENT.....................................................................................................................................................................18
ASIA PACIFIC ECONOMIC COOPERATION FORUM (APEC)..............................................................................................................................................18

TRADE REMEDIES........................................................................................................................................... 19
ANTI-DUMPING AND THE WTO ANTI-DUMPING AGREEMENT.......................................................................................................................................19
COUNTERVAILING MEASURES, SUBSIDIES AND THE WTO SUBSIDIES AGREEMENT.............................................................................................................19
SAFEGUARDS..........................................................................................................................................................................................................20

WTO RULES.................................................................................................................................................... 22
ANTI-DUMPING, SUBSIDIES AND COUNTERVAILING MEASURES.......................................................................................................................................22
FISHERIES SUBSIDIES................................................................................................................................................................................................22

SINGAPORE ISSUES: TRADE FACILITATION...................................................................................................... 23

TRADE FACILITATION...............................................................................................................................................................................................23

THE WORLD TRADE ORGANIZATION (WTO) & FREE TRADE AGREEMENTS.......................................................24

REGIONAL TRADE AGREEMENTS AND THE DOHA ROUND OF NEGOTIATIONS RULES NEGOTIATIONS FOR RTAS.......................................................................24
COMMITTEE ON REGIONAL TRADE AGREEMENTS.........................................................................................................................................................24

WTO TRADE POLICY REVIEW MECHANISM...................................................................................................... 26

WTO ACCESSIONS AND HOW AUSTRALIA STANDS TO BENEFIT........................................................................27

MARKET ACCESS....................................................................................................................................................................................................27
AGRICULTURAL SUBSIDIES........................................................................................................................................................................................28

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TRADE INDICATORS........................................................................................................................................ 29

INTRODUCTION OF AUSTRALIA
Australia, officially the Commonwealth of Australia, is a country in the Southern Hemisphere
comprising the mainland of the Australian continent (the world's smallest), the island of
Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. Neighbouring
countries include Indonesia, East Timor, and Papua New Guinea to the north, the Solomon
Islands, Vanuatu, and New Caledonia to the northeast, and New Zealand to the southeast.

Australia is a prosperous developed country with a multicultural society. It ranks highly in

many international comparisons of national performance such as human development,
quality of life, health care, life expectancy, public education, economic freedom and the
protection of civil liberties and political rights. Australian cities rank among the world's highest
in terms of cultural offerings and quality of life.

Australia is a member of the:

United Nations,

 G20,
 Commonwealth of Nations,
 OECD,
 APEC,
 Pacific Islands Forum, and the
 World Trade Organization.

GOVERNMENT OF AUSTRALIA
The Commonwealth of Australia is a constitutional democracy based on a federal division of
powers. The form of government used in Australia is a constitutional monarchy with a
parliamentary system of government. Queen Elizabeth II is the Queen of Australia. The Queen
is represented by the Governor-General at the federal level and by the Governors at the state
level. Although the Constitution gives extensive executive powers to the Governor-General,
these are normally exercised only on the advice of the Prime Minister.

There are three branches of government, known as the separation of powers:

 The legislature: the Commonwealth Parliament, comprising the Queen, the Senate,
and the House of Representatives; the Queen is represented by the Governor-General,
who by convention acts on the advice of his or her Ministers.

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  The executive: the Federal Executive Council (the Governor-General as advised by the
Executive Councillors); in practice, the councillors are the Prime Minister and Ministers
of State.
 The judiciary: the High Court of Australia and other federal courts. Appeals from
Australian courts to the Judicial Committee of the Privy Council in the United Kingdom
ceased when the Australia Act of 1986 was passed.

Foreign relations
Over recent decades, Australia's foreign relations have been driven by a close association with
the United States through the ANZUS pact, and by a desire to develop relationships with Asia
and the Pacific, particularly through ASEAN and the Pacific Islands Forum. In 2005 Australia
secured an inaugural seat at the East Asia Summit following its accession to the Treaty of
Amity and Cooperation in Southeast Asia. Australia is a member of the Commonwealth of
Nations, in which the Commonwealth Heads of Government meetings provide the main forum
for cooperation.

Australia has pursued the cause of international trade liberalisation. It led the formation of
the Cairns Group and Asia-Pacific Economic Cooperation. Australia is a member of the
Organisation for Economic Co-operation and Development and the World Trade Organization,
and has pursued several major bilateral free trade agreements, most recently the Australia –
United States Free Trade Agreement and Closer Economic Relations with New Zealand. As of
2010, Australia is negotiating a free trade agreement with Japan, with whom Australia has
close economic ties as a trusted partner in the Asia-Pacific region.

Along with New Zealand, the United Kingdom, Malaysia, and Singapore, Australia is party to
the Five Power Defence Arrangements, a regional defence agreement. A founding member
country of the United Nations, Australia is strongly committed to multilateralism, and
maintains an international aid program under which some 60 countries receive assistance.
The 2005–06 budget provides A$2.5 billion for development assistance; as a percentage of
GDP, this contribution is less than that recommended in the UN Millennium Development
Goals. Australia ranks seventh overall in the Center for Global Development's 2008
Commitment to Development Index.

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ECONOMY
The economy of Australia is a developed, modern market economy with a GDP of
approximately $1 trillion USD. In 2009, it was the 13th largest national economy by nominal
GDP and the 18th largest measured by PPP adjusted GDP , representing about 1.7% of the
World economy. Australia was also ranked the 21st largest importer and 23rd largest
exporter.

Australia has also entered into free trade agreements with ASEAN, Chile, New Zealand,
Singapore, Thailand, and the United States[10]. The ANZCERTA agreement with New Zealand
has greatly increased integration with the New Zealand economy.

The Australian economy is dominated by its service sector, representing 68% of Australian
GDP. The agricultural and mining sectors (10% of GDP combined) account for 57% of the
nation's exports.

The Australian dollar is the currency of the Commonwealth of Australia and its territories,
including Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is also the official
currency of the independent Pacific Island nations of Kiribati, Nauru and Tuvalu.

The Australian Securities Exchange is the largest stock exchange in Australia.

Australia's per-capita GDP is slightly lower than that of the UK, Germany, and France in terms
of purchasing power parity. The country was ranked second in the United Nations 2009
Human Development Index and sixth in The Economist worldwide quality-of-life index 2005.

The emphasis on exporting commodities rather than manufactures has underpinned a

significant increase in Australia's terms of trade during the rise in commodity prices since
2000. Australia's current account is more than 7% of GDP negative: Australia has had
persistently large current account deficits for more than 50 years. Australia has grown at an
average annual rate of 3.6% for over 15 years, well above the OECD average of 2.5%.
Australia's average GDP growth rate for the period 1901-2000 is at 3.4% annually.

Australia is ranked third in the Index of Economic Freedom (2010), Australia's per capita GDP
is slightly higher than that of the United States, United Kingdom, Germany, and France. The
country was ranked second in the United Nations 2009 Human Development Index.

Australia ranks third highest as an OECD countries as far as percentage of investment as to

GDP. The Reserve Bank of Australia has created a direct link between expenditure and
Australia's strong productivity growth. The growth of e-commerce is supposed to add an
additional 2.7 percent to Australia's GDP total within the next ten years.

As of December 2009, there were approximately 10,844,000 people employed, with an

unemployment rate of 5.5%. Over the past decade, inflation has typically been 2–3% and the

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base interest rate 5–6%. The service sector of the economy, including tourism, education and
financial services, constitutes 69% of GDP.

Australia's largest export markets are Japan, China, South Korea, India and the USA.

Economic liberalisation
From the early 1980s onwards, the Australian economy has undergone a continuing economic
liberalisation. In 1983, under Prime Minister Bob Hawke, but mainly driven by Treasurer Paul
Keating, the Australian dollar was floated and financial deregulation was undertaken.

In 2000, the introduction of a goods and services tax (GST) sought to encourage the level of
saving amongst lower income earners. To combat the consequential reduction in
consumption for low income earners, income taxes were lowered as a trade-off for the
introduction of the GST. The overall level of taxation in Australia has since been consistently
reduced to encourage private consumption and investment, as opposed to higher
government expenditure.

TAXATION
Taxation in Australia is levied at the federal, state and local government levels. Taxes vary
from state to state due to their different needs, populations, economics and budgetary
positions.

The Commonwealth raises revenue from personal income taxes and business taxes. Other
taxes include the goods and services tax (GST), excise and customs duties. The
Commonwealth is the main source of income for state governments. As a result of state
dependence on federal taxation revenue to meet decentralised expenditure responsibilities,
Australia is said to suffer from a vertical fiscal imbalance.

BALANCE OF PAYMENTS
In trade terms, the Australian economy has had persistently large current account deficits for
more than 50 years. One single factor that undermines balance of payments is Australia's
narrow export base.

Dependent upon commodities, the Australian government has endeavoured to redevelop the
Australian manufacturing sector. This initiative, also known as microeconomic reform, has
helped Australian manufacturing to grow from 10.1% in 1983-1984 to 17.8% in 2003-2004.

There are other factors that have contributed to the extremely high current account deficit
that Australia has today. Lack of international competitiveness and heavy reliance on capital
goods from overseas might increase Australia's current account deficit in the future.

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CURRENT AREAS OF CONCERN
Current areas of concern to some economists include Australia's large current account deficit,
Australia’s current account deficit for the 2007- 2008 financial year was up 4% to $19.49
billion (according to the Australian Bureau of Statistics), the absence of a successful export-
oriented manufacturing industry, an Australian property bubble, and high levels of net foreign
debt owed by the private sector. Professor Steve Keen has written extensively about
consumer/household indebtedness and the level of home prices relative to income. While
there is some talk about increasing levels of government debt as a result of increased federal
government deficit caused by falling tax revenues and stimulus during 2008 and proposed to
continue through 2010, Australia has one of the lowest levels of government debt as a
proportion of GDP among developed countries, largely as a result of the debt repayment
program pursued by then Treasurer Peter Costello and the then Howard government. The
coal, electricity generation and agricultural industries have concerns about the impact of
requirements to reduce carbon emissions under the proposed Carbon Pollution Reduction
Scheme -- Which, partly in response, has been shelved until 2012. The price of housing in
terms of median incomes has been highlighted by a recent Demographia survey with
Australian capital city residential housing being among the most expensive in the world. A
long drought and its impacts on retail food costs and export volumes of crops and meat and
the possible impacts of climate change on agriculture has also been of concern.

Many countries have chosen to invest in Australia in recent years, due to its incredibly stable
economic, political, and social environments. Because of the large amount of diversification in
Australia's export base recently, Australia has expanded from being merely a commodity
exporter to having sophisticated manufacturing and service industries. These both attract
investors, thereby increasing global trade. Australia is one of the most open and innovative
economies in the world; the government of Australia is quite committed to maintaining this
achieved goal. Strong economic growth over the last ten years or so have been accompanied
by low inflation and low interest rates as well as a strong productivity performance. In the
years 2002-2003, the Australian economy performed very well; in contrast with weaker global
conditions, Australia recorded a 2.7% growth, making it one of the strongest in the developed
world. Growth in the future is imminent

5
Brief Profile of Australian Trade
Australia
has a diverse export base and is a major exporter of food, resources, fuels and education. In
2008, Australia’s two-way trade totalled $561 billion, up from $456 billion in 2007. Japan,
China, the United States and Singapore were the nation’s top four trading partners in 2008.
About 70 per cent of Australia’s trade was with the member economies of the Asia-Pacific
Economic Cooperation (APEC) forum. Australia is an active and successful global trader of
goods and services.

Australia’s Trade
Performance
Australian exports of goods and services grew 27.6 per cent in 2008, to $278 billion. The
strong growth was led by resources exports which were in very high demand, reaching $121.2
billion. Education services exports rose 23 per cent to $15.5 billion and around two-thirds of
Australia’s farm production was exported. Imports increased 18.9 per cent to $283 billion.
Strong consumer demand, high oil prices and imports of capital goods by business contributed
to this growth in the first nine months of the year. The fall in the value of the Australian dollar
from a peak of 97 US cents in July 2008 to below 70 US cents at the end of the year also
increased the value (in Australian dollar terms) of imports priced in foreign currencies.

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AUSTRALIA AND THE WTO
Australia became a member of the WTO on January 1, 1995. The World Trade Organization
has benefited Australia in a lot of ways since its entrance to the group. In turn, Australia has
contributed a lot to countries and affairs all around the world since its admission to the World
Trade Organization clan. They have really done their part to help other countries as much as
they possibly can. Trade has been taking place between Australia and other prestigious
countries around the world for many years now.

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Agriculture and the WTO
Agriculture is an important part of the Australian economy. Australia is a competitive net
agricultural exporter, with around two thirds of total production being exported. Over the last
ten years, exports of agricultural goods, including processed food and beverages, have grown
and in 2006 Australia accounted for 2.3% of all global agricultural exports. In 2006-07,
agricultural products, including processed food and beverages, accounted for 16.1% of
Australian merchandise exports.

Value of Australia's top agricultural exports – 2009 (calendar year)

Major agriculture export products CY2009 Share of Total 
A$m Rank
Total Agriculture (excluding fish, forestry and 27,985   100.0
rubber)a %
Beef 4,764 1 17.0%
Wheat 4,756 2 17.0%
Wine 2,297 3 8.2%
Wool 1,809 4 6.5%
Lamb and mutton 1,455 5 5.2%
Animal feed 1,234 6 4.4%
Live animals 1,152 7 4.1%
Milk and cream 940 8 3.4%
Barleyb 766 9 2.7%
Hides and skind (excl furskins) raw 764 10 2.7%
Fruit and nuts fresh or dried (not incl oil nuts) 763 11 2.7%
Vegetables, fresh or frozen 702 12 2.5%
Cheese and curd 701 13 2.5%
Canola 678 14 2.4%
Sugara 664 15 2.4%
Edible products and preparations 565 16 2.0%
Cotton 537 17 1.9%
Cereal preparations 498 18 1.8%
Malt 412 19 1.5%

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 Value of Australia's top agricultural exports – 2009 (calendar year)
Major agriculture export products CY2009 Share of Total 
A$m Rank
Animal fats and oils 272 20 1.0%

a
 Deficient the confidential sugar component July-December 2009

b
 Deficient the confidential barley component September-December 2009

Australia's major exports of agriculture by destination – 2009 (calendar

year)
Major agriculture export markets CY2009 A$m Rank Share of Total
Total All countriesa 27,985   100.0%
Japan 4,271 1 15.3%
China 3,122 2 11.2%
United States 2,670 3 9.5%
Indonesia 1,931 4 6.9%
Republic of Korea 1,440 5 5.1%
New Zealand 1,402 6 5.0%
United Kingdom 910 7 3.3%
Malaysia 774 8 2.8%
Singapore 699 9 2.5%
Taiwan 590 10 2.1%
Hong Kong (SAR of China) 574 11 2.0%
Thailand 570 12 2.0%
Saudi Arabia 561 13 2.0%
United Arab Emirates 526 14 1.9%
Vietnam 483 15 1.7%
a
 Deficient the confidential sugar component July-December 2009.
Note: the country totals exclude any confidential items.
Sources: DFAT STARS database consistent with ABS catalogue 5368.0, Feb 2010; ABS special data service for sugar.
Australia provides competitive agricultural produce to world markets without the high levels
of financial support, protection and other trade-distorting practices used by many other
countries to prop up their agricultural sectors.

Australia is on of the world’s most efficient agricultural producers, as indicated by the

Producer Subsidy Estimate (PSE) produced by the Organization for Economic Cooperation and

9
Development (OECD). The PSE estimates the percentage of farm income arising from
government support. Australia’s PSE for 2005-2007 was only 6%, the second lowest among
OECD countries after New Zealand. In contrast, the 2005-2007 PSEs showed the highest levels
of assistance in three of the highest per capita GDP economies in the world: Norway (62%),
Switzerland (60%) and Japan (50%). This means that farmers in Norway and Switzerland
received nearly two-thirds of their income from government support, and Japanese farmers
received over half their income from government support. The average PSE for other OECD
countries for the same period was 26%.

World Agricultural Markets – unfair and distorted

Globally, agricultural trade is the most distorted sector of trade in goods. It is characterised by
very high tariffs and high levels of government support to primary producers.

Average tariffs for agricultural goods are more than 3 times higher than for non-agricultural
goods — some agricultural tariffs are as high as 800%.

In no other area does domestic support distort international markets to the extent that it
does in agriculture, with over US$268 billion in 2006 provided in support and protection for
agriculture by rich developed countries worldwide.

Export subsidies, the most trade-distorting form of subsidies, are tolerated in the agricultural
sector — in contrast to other sectors, such as manufacturing, where they have long since
been prohibited.

Australia has reduced its own tariff levels on agricultural and food products since the early
1970s through a series of across-the-board measures and as the result of inquiries into
particular industries and commodities. General tariffs have been phased down to 5% and
assistance to import-competing industries has been substantial reduced.

Millions of farmers around the world, including in developing countries, are unfairly
disadvantaged in the world market. Agricultural subsidies in many developed countries
generate excess production, which puts downward pressure on international markets. In
particular, the reduction of long-standing distortions to global agricultural production and
trade is critical to achieving food security in developing countries.

The Australian Government is working hard through the WTO to make global agricultural
trade fairer.

World Trade Organization (WTO) and Agriculture

The WTO, which was established in 1995, is the successor organisation to the General
Agreement on Tariffs and Trade (GATT). For most of the post-war period, agricultural products
were largely excluded from the multilateral trade liberalisation which took place during GATT

10
negotiations. In the early 1980s, it was widely acknowledged that agriculture had become the
most heavily protected and distorted sector in the world economy, with consequent
substantial negative effects on international trade and particularly on those developing
countries that are heavily reliant on agriculture for their economic development. Reform of
the global rules covering agricultural trade began with the Uruguay Round of GATT
negotiations that concluded in 1996. The Uruguay Round Agreement on Agriculture provided
for increased market access through tariff cuts (over six years for developed countries and ten
years for developing countries), for the conversion of non-tariff measures to more transparent
tariff protection, and for a progressive reduction in export subsidies and trade-distorting
domestic support measures. 

Agriculture in the Doha Round

As the most heavily protected sector in world trade, agricultural reform stands to deliver the
greatest development benefits. Rules and disciplines in the WTO for agriculture are less
developed than for industrial products. WTO members agreed to launch the current “round”
of WTO negotiations in November 2001, in Doha, Qatar. The Doha mandate on agriculture
calls for ambitious reform. Members agreed to achieve “substantial improvements in market
access; reductions of, with view to phasing out, all forms of export subsidies; and substantial
reductions in trade-distorting domestic support.”

The July 2004 Framework Agreement included a ground-breaking commitment to eliminate

agricultural export subsidies. It also outlined a broad structure for reductions in trade
distorting domestic support.

However, the July 2004 Framework provided less guidance on how to address the critical issue
of market access. Two important market access principles were agreed: that higher tariffs be
subject to deeper cuts; and an agreed number of sensitive tariffs could be subject to lesser
tariff cuts so long as the tariff rate quotas associated with those quotas were expanded.
The Hong Kong Ministerial Meeting in 2005 saw further progress and was followed by a
period of intense work leading to the release of draft negotiating texts from July 2007.

Discussions and subsequent revisions of this text continued throughout the rest of 2007 and
to mid 2008. The July 2008 Package reflected the considerable progress that has been made
by the WTO’s 153 Members over the last years.

The meeting of WTO Ministers in Geneva 21-29 July was the largest WTO Ministerial Meeting
since 2005. Convergence had been reached in nearly all outstanding issues before the talks
failed to reach agreement over a handful of elements in the package – in particular, the
Special Safeguards Mechanism (SSM) for developing countries. Despite this setback, the
meaningful gains that had been negotiated remain on the table and ongoing negotiations
have further refined the overall package. Australia remains committed to resolve the SSM
issue and will work closely with other members to find a solution.

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The Cairns Group coalition of 19 agricultural fair traders, chaired by Australia, played an
instrumental role in framing the Doha mandate and subsequent WTO negotiations seeking
agricultural reform. A diverse coalition bringing together developed and developing countries
from the Americas, Africa, Asia and the Pacific region, the Cairns Group has been an influential
voice in the agricultural reform debate since its formation in 1986.

The Australian Government is also working to achieve freer and fairer agricultural trade
through the negotiation of WTO-consistent Free Trade Agreements (FTA).

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Non-Agricultural Market Access
(Industrial Products)
In the WTO context, non-agricultural products include forestry, fish, minerals and energy
products, as well as other industrial products. The Doha mandate on non-agricultural market
access (NAMA) provides for negotiations aimed at reducing or eliminating non-agricultural
tariffs, including tariff peaks and tariff escalation. All non-agricultural products are covered by
the negotiations, with no exclusions. The negotiations are to take into account the needs and
interests of developing countries, including through the principle of ‘less than full reciprocity’
in tariff reduction commitments. The mandate also provides that special consideration is to be
given to market access for environmental goods.

NAMA negotiations are being handled by the Negotiating Group on Market Access.
Negotiations have focused particularly on the development of a general tariff reduction
formula. The ‘Framework Package’ of July 2004 specified that Members should work on a
non-linear (or harmonising) formula for tariff reductions, in order to cut high tariffs by more
than low tariffs, thereby better addressing high tariffs and tariff peaks as required under the
Doha mandate. Negotiations on the detail of this formula continue.

The Framework Package also allows the formula to be supplemented by sectoral initiatives,
aimed at the elimination or harmonisation of tariffs in particular product sectors, particularly
on products of export interest to developing countries. Discussions of specific proposals are
taking place in informal Member-driven processes, based on a ‘critical mass’ approach,
meaning that any proposal must attract a critical mass of Member support before being
implemented.

The Doha mandate also addresses non-tariff barriers (NTBs) to trade in non-agricultural
products. NTBs are measures, other than tariffs, which affect trade in some way; common
examples are import licensing restrictions, labelling requirements and product testing
standards. Many NTBs serve legitimate purposes, but others are unnecessary burdens on
trade. Numerous proposals to reduce non-tariff barriers, either generally or in specific sectors,
have been made in the negotiations, and any proposals able to attract a consensus of support
will be incorporated into the final NAMA outcome.

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The importance of services trade to
Australia
Australia is a world-class provider of a range of services, such as telecommunications, travel,
banking and insurance. Services exports play a significant role in our economy and represent
71 per cent of Australia's gross domestic product (GDP) and employ four out of five
Australians.

Services also play an increasingly important role in our international trade, with services
exports growing over the last five years by an average of 6.1 per cent. In 2007 Australia’s
services exports outperformed this average, increasing by 9.4 per cent to $48 billion (22 per
cent of a record total exports of $218 billion). Services imports were valued at $46 billion.

There are multiple ways (called "modes" in the World Trade Organization) for services to be
delivered in international trade:

1. Cross-border supply: where a service is supplied from one country to another, for
example, an international phone call uses telecommunications services in both the
caller's and the receiver's countries.
2. Consumption abroad: where consumers from one country purchase a service in
another country. The best examples of this mode are education and tourism services.
3. Commercial presence: where a company from one country establishes a subsidiary,
branch or office and provides a service in another country.
4. Movement of natural persons: where individuals travel to another country to provide
a service, such as a business consultant undertaking an IT contract overseas.

The composition of Australian trade in services

Australia’s services exports have broadened recently, reflecting strong growth in education,
professional and other services.

In 2007, our six largest services exports were:

1. Education - $12.2 billion

2. Tourism - $11.8 billion
3. Financial and insurance services - $1.7 billion
4. Computer and information services - $1.5 billion
5. Architecture and engineering services - $1.5 billion
6. Legal, accounting and management consultancy services - $1.1 billion
7. Agricultural and on-site mining services - $379 million

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Australian experience and skills in environmental services such as waste-water treatment,
recycling, energy efficiency and pollution prevention present promising future services export
prospects.

Negotiations to improve conditions for global services trade are an important part of the
World Trade Organisation’s Doha Round. Given the importance of this sector to the Australian
economy, Australia takes a leading role in the negotiations. Australia also promotes improved
services exports through APEC and the negotiation of comprehensive Free Trade Agreements.

Services trade and the WTO

Trade in services is an increasingly important part of global trade and in coming years, the
services sector is likely to be the most strongly growing sector in global trade. Developing and
developed countries alike have recognised that efficient services industries are central to
vibrant and resilient economies, making the World Trade Organization's (WTO) current Doha
Round of negotiations an important opportunity to increase prospects for economic growth.

Why is it important to open services markets?

Services play a major role in all modern economies. Indeed, it would be difficult for any
economic activity to take place without services such as telecommunications, banking and
freight logistics. Services trade accounts for 40-50% of GDP for developing countries and
around 80% for developed countries.

An efficient services sector is critical to trade and economic growth

Encouraging greater trade in services through open markets and non-discriminatory

treatment can lead to higher employment levels, higher incomes and higher standards of
living.

The opening of certain sectors to competition provides consumers with access to a broader
range of services and a greater depth of expertise from here at home and overseas. Freer
trade also encourages local providers to be more innovative and efficient in delivering
competitive services.

How is trade in services regulated?

The rules for international trade in services are set by members of the WTO and are contained
in the General Agreement on Trade in Services (GATS). Under the Agreement, individual WTO
members make specific undertakings on the degree of access foreign service providers will
enjoy in their market, and whether they are treated differently than local service providers.

The GATS is different to other WTO Agreements, in that there is not one rule to which all
Members must adhere. Under GATS, each WTO member makes their own individual
commitments on opening up their markets to competition from foreign service suppliers.  The
15
Australian Government, like other WTO members, retains the right to regulate and fund
public services, such as water supply, public health and public education.

Negotiations on individual services commitments are conducted on a request-offer basis,

whereby a WTO member requests better access to a particular services sector in another
WTO member's economy. This is followed by an offer to grant all, some or none of the
additional access requested. The process upholds the voluntary nature of GATS commitments,
whereby each member is entitled to decide their own levels and sectors of liberalisation. An
important element of the process is that any offer made is non-binding and can be amended
or withdrawn at any time during the negotiations.

Since 2006, WTO members have also been pursuing sectoral plurilateral initiatives, whereby a
number of WTO members with similar sectoral interests approach, as a group, one or more
other members from whom they are seeking higher commitments.  Australia is a co-sponsor
of 12 sectoral requests: air transport, architecture/engineering/integrated engineering,
computer and related services, construction, education, energy, environmental, financial,
logistics, legal, maritime transport and telecommunications services.  Australia is a recipient of
sectoral plurilateral requests in eight sectors, most notably audio-visual and Mode 4.  

The importance of services to global trade

Services are an important driver of growth, especially in developing countries.  Developing
countries are increasingly aware that efficient services industries, supported by good domestic
regulatory systems, are an integral part of economic growth. Services sectors already make
major contributions to the GDP of many developing countries. Services trade, such as tourism,
is also an important income source in the economies of the 50 least developed countries
(LDCs).

The Organisation for Economic Cooperation and Development (OECD) has found that the
potential gains for developing countries from services liberalisation are five times the
potential gains from goods liberalisation.

While overall services trade is currently dominated by developed countries, developing

countries have considerable expertise in a number of fields, such as port and shipping services
and construction services. With their lower labour costs, developing countries have a
comparative advantage in many of the more labour-intensive services.

Services negotiations in the Doha Round offer important opportunities for developing
countries. By opening their own services industries to foreign suppliers, they are able to
increase the efficiency of their economy. This is especially important in sectors such as freight
logistics, power and financial services, which are all critical to inducing greater foreign
investment, and economic growth. Developing countries also benefit from the market access
commitments made by other WTO members.

16
Intellectual Property and International
Trade
Intellectual property includes patents, trade marks, copyright and related rights, geographical
indications, industrial designs, know-how and trade secrets. 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 over $30 billion.

As a trading nation with a strong research tradition and a need for access to new
technologies, Australia has interests in the agreed international standards on the protection
and exploitation of intellectual property rights.

Consequently, Australia protects those interests, notably in its work within the World Trade
Organization (WTO) to promote the effective and balanced implementation and development
of the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

The Office of Trade Negotiations (OTN) within the Department of Foreign Affairs and Trade
(DFAT) is responsible for the overall coordination of Australia's engagement with the WTO.
Within OTN, the International Intellectual Property Section (IPS) has particular responsibility
for intellectual property issues

WTO and TRIPS

The World Trade Organization was established in 1995 at the conclusion of the Uruguay
Round of multilateral trade negotiations, building on the earlier General Agreement on Tariffs
and Trade system. The WTO, under the direction of its Member economies, administers a
wide-ranging system of rules for international trade, aimed at liberalising and expanding trade
under agreed and enforceable rules for reciprocal benefit. This system has led to significant
benefits for Australian exporters, yielding improved market access and lower tariffs in many
sectors..

What does TRIPS do?

TRIPS is intended to maximise the contribution of intellectual property systems to economic
growth through trade and investment by:

· establishing minimum standards for intellectual property rights protection in the

national systems of WTO members
· prescribing agreed elements of an effective mechanism for administration and
enforcement of intellectual property rights

17
 · creating a transparency mechanism - each WTO member is required to provide details
of their national intellectual property laws and systems, and to answer questions
about their intellectual property systems
· creating a predictable, rules-based system for the settlement of disputes about trade-
related intellectual property issues between WTO members
· allowing for mechanisms that ensure that national intellectual property systems
support widely accepted public policy objectives, such as stamping out unfair
competition, facilitating transfer of technology, and promoting environmental
protection

TRIPS and WTO dispute settlement

TRIPS established a binding, transparent and rules based dispute settlement mechanism. The
WTO Understanding on the Rules and Procedures Governing the Settlement of
Disputes enforces the commitments made by WTO Members under TRIPS. The availability of a
binding dispute settlement mechanism to enforce obligations under TRIPS helps to ensure
that Australian exporters can continue to expand and diversify trading opportunities in
intellectual property and value-added products.

DFAT's WTO Trade Law Branch has responsibility for managing and advising on all WTO
Disputes.

Asia Pacific Economic Cooperation Forum (APEC)

The APEC Intellectual Property Experts' Group (IPEG), formed in 1995 under the auspices of
APEC's Committee for Trade and Investment, plays a valuable supporting role in promoting
efficient, TRIPS-consistent intellectual property protection among our APEC trading partners.
Part of the TRIPS package is an undertaking by member economies to provide technical
assistance for the implementation of TRIPS. Australia has supported the development of
TRIPS-consistent intellectual property systems in developing countries in our region.

18
Trade Remedies
Trade remedies are trade policy tools that allow governments to take remedial action against
imports which are causing material injury to a domestic industry. Such remedies are divided
broadly into:

· anti-dumping action;
· countervailing duty measures; and
· safeguard action.

These remedies are triggered in response to different situations and circumstances which may
be causing material injury to a domestic industry. Recourse to these tools is initiated by the
domestic industry. The following outlines the relevant WTO rules and also provides a short
summary of the circumstances which give rise to recourse to such remedies and the
procedures for activating their use.

Anti-dumping and the WTO Anti-Dumping Agreement

Article VI of GATT 1994, elaborated by the WTO Anti-Dumping Agreement, allows countries to
take action against imports from countries allegedly exporting at dumped prices. Anti-
dumping action is undertaken in response to an application from industry concerning injurious
dumped imports.

An exporting company is said to be "dumping” when it exports its product at a price lower
than its normal value (that is, the price at which that product is sold on the domestic market
in the exporting country). When dumping causes or threatens to cause material injury to a
domestic industry, remedial action may be taken.

In Australia, anti-dumping investigations are conducted by the Australian Customs Service.

Countervailing Measures, Subsidies and the WTO Subsidies Agreement

The WTO Subsidies and Countervailing Measures Agreement (the Subsidies Agreement)
disciplines the use of subsidies, which are generally permissible under GATT 1994 and the
WTO Agreements.

The Subsidies Agreement also regulates the actions countries can take to counter the trade
effects of subsidies. A country may remedy the trade effects of a subsidy multilaterally
through dispute-settlement procedures and thereby seek the withdrawal of the subsidy or the
removal of its adverse effects. Alternatively, a country may unilaterally launch its own
investigation (known as a countervailing duty investigation) whereby an extra duty
(“countervailing duty”) may be imposed on subsidized imports to offset the injury to domestic

19
producers. Where industry faces material injury from subsidised imports, industry may lodge
an application for the initiation of a countervailing investigation.

In Australia, countervailing duty investigations are conducted by the Australian Customs

Service.

Safeguards
Safeguard action is “emergency action”. Emergency “safeguard” action may be taken where a
surge of imports causes or threatens to cause, serious material injury to a domestic industry.
It allows a country to respond to unexpected and unforeseen increased imports which have
caused serious material injury. Imports must be recent enough, sudden enough, sharp enough
and significant enough.

Where the reasons for injury are not limited to increased imports, these other factors must be
distinguished. That is, the impact of other factors cannot be attributed to the impact of
increased imports.

Safeguard action may involve the restriction of imports of a product temporarily to help the
domestic industry adjust. Safeguard measures are applied on a global basis and may take the
form of tariffs, tariff rate quotas, or quantitative restrictions (import quotas). These measures
must be temporary, product-specific and they must be applied to all imports irrespective of
the source.

Safeguard action can only be imposed after a full inquiry by a competent authority, which is
the Productivity Commission in Australia. Australian industry wishing to activate Australia’s
safeguard procedures should contact the relevant portfolio Minister responsible for the
product involved. Positive evidence that unforeseen or unexpected surges in imports are
causing serious injury to the industry needs to be provided for the Australian Government’s
consideration. Such evidence may have been investigated or researched by the affected
domestic industry or the government agency as a result of ongoing concerns expressed by the
affected domestic industry.

If the Australian Government decides to initiate a safeguard investigation, a reference is sent

to the Productivity Commission by the Treasurer— possibly also asking for an early report on
the issue of provisional safeguards which are allowed under WTO rules only in special
circumstances.

Public notice of the initiation of a safeguard investigation is given by the Productivity

Commission and the investigation would involve public hearings or other appropriate means
to enable importers, exporters and other interested parties to present evidence and their
views. Under WTO rules, Australia is also required to notify immediately the WTO and
affected countries of the initiation of a safeguard investigation and its outcome. The WTO
Safeguards Committee has agreed on notification formats and standards Bilateral free trade

20
agreements (such as, for example, the Thailand-Australia Free Trade Agreement) may also
have additional safeguard processes covering preferential trade where the injury caused by
increased imports is due to the tariff reductions under the particular FTA. These safeguards
are referred to as “transitional safeguards” or “bilateral safeguards” and are not global
safeguards. The process for Government consideration of bilateral safeguards is essentially
the same as for WTO safeguards as described above.

21
WTO Rules
At the Fourth WTO Ministerial Conference, held in Doha in November 2001, WTO Members
agreed to negotiations dealing with WTO rules on four specific issues: anti-dumping, subsidies
and countervailing measures, fisheries subsidies, and regional trade agreements.

Anti-Dumping, Subsidies and Countervailing measures

The Doha Ministerial Conference agreed to negotiations aimed at clarifying and improving
disciplines under the Agreements on Anti-dumping and on Subsidies and Countervailing
Measures, while preserving the basic concepts, principles and effectiveness of the
Agreements. The mandate in paragraph 28 of the Doha Declaration calls for a two-phased
process. The first phase was essentially exploratory. The second phase was to seek to clarify
and improve the provisions, including disciplines on trade-distorting practices. During these
phases, WTO Members submitted an extensive range of proposals with more than 150
proposals submitted on anti-dumping. 

Fisheries subsidies
The mandate for the fisheries subsidies negotiations is to clarify and improve WTO disciplines,
taking into account the importance of this sector to developing countries. The negotiations
are also to enhance the mutual supportiveness of trade and environment and seek to develop
new WTO rules to prohibit subsidies specific to the fishing sector.

Hong Kong Ministerial Declaration of December 2005 noted that there is broad agreement
that disciplines on fisheries subsidies should be strengthened and that certain forms of
fisheries subsidies that contribute to over capacity and over fishing be prohibited. The
Ministerial Declaration called on WTO Members to promptly undertake further detailed work
to, inter alia, establish the nature and extent of disciplines on subsidies in the fisheries sector,
including transparency and enforceability. The Declaration also noted that special and
differential treatment for developing and least-developed Members should be an integral part
of these negotiations.

Proposals have been divided between those preferring a broad-based prohibition with limited
exceptions and others favouring limited, specific prohibitions. The Chair issued his draft text
on fisheries subsidies on 30 November 2007.

22
Singapore issues: Trade Facilitation
At Doha, it was agreed that a decision on how to proceed with the four Singapore issues of investment, competition
policy, transparency in government procurement and trade facilitation, would be made at the time of the fifth
Ministerial Conference, subsequently held in Cancún, Mexico in September 2003. Following the breakdown of the
trade talks in Cancún, mainly over some Members' resistance to the Singapore issues, it was decided (at the July
2004 General Council Meeting) that negotiations would proceed only on trade facilitation, with the remaining issues
being referred to the WTO's working groups, but outside the Doha Round of negotiations.

Trade facilitation
Trade facilitation refers
to the simplification and harmonisation of international trade procedures
to assist the movement of goods. For example, customs, licensing and transit formalities are
all areas which involve complicated administrative processes and burdensome documentation
requirements.  Businesses currently suffer significant losses as the result of these complicated,
and sometimes unnecessary, procedures. In recognition of the costs imposed on business
because of 'red tape', trade facilitation was added to the WTO agenda in December 1996.
Actual negotiations on trade faciltiation were finally launched in 2004.

Annex D of the General Council Decision of 31 July 2004 (the Framework Package) provides
the modalities for the negotiations on trade facilitation, aimed at improving the efficiency of
the global movement of goods, for example through improved and streamlined customs and
border control procedures. This will be achieved by "clarifying and improving" relevant
aspects of Articles V (goods in transit), VIII (fees and formalities) and X (publication and
administration of trade regulations) of the GATT 1994.

Annex D also recognises the particular difficulties faced by developing countries in having the
financial and technical capacity to undertake such improvements and includes commitment
by developed country members to provide technical assistance and support for capacity
building. This includes support for developing and least-developed countries to participate
effectively in the negotiations themselves. The extent and timing of commitments by
developing and least-developed countries is to be linked to their implementation capacity.

The negotiations have made good progress, and WTO Members have so far submitted some
50 proposals covering all aspects of the mandate. The Ministerial Declaration from the 6th
WTO Ministerial Conference held in Hong Kong in December 2005 lays down clear markers for
the path ahead in the trade facilitation negotiations. WTO Members endorsed moving to text-
based negotiations with a view to concluding binding commitments on trade facilitation as
part of the Doha Round outcome. Special and differential treatment and provision of technical
assistance and capacity building for developing and least-developed countries were
highlighted as key elements of the negotiations.

23
The World Trade Organization (WTO) &
Free Trade Agreements
A key rule of the multilateral trade system is that reductions in trade barriers should be
applied, on a most-favoured nation basis, to all WTO members. This means no WTO member
should be discriminated against by another member's trade regime. However, regional trade
agreements (RTAs) are an important exception to this rule. Under RTAs reductions in trade
barriers apply only to parties to the agreement. This exception is allowed under Article XXIV of
the General Agreement on Tariffs and Trade (GATT) for trade in goods, in Article V of the
General Agreement on Trade in Services (GATS) for Trade in Services and in the Enabling
Clause.

There are two major types of regional trade agreements under the WTO - customs unions and
free trade areas. Some countries may also sign interim agreements, which operate during a
transition period, ultimately leading to the creation of a customs union or a free trade area.

RTAs must be consistent with the WTO rules governing such agreements, which require that
parties to a regional trade agreement must have established free trade on ‘substantially all’
goods within the regional area within ten years, and that the parties cannot raise their tariffs
against countries outside the agreement. Compliance with the WTO rules is important to
ensuring an agreement is beneficial to all parties in the multilateral system.

Regional Trade Agreements and the Doha Round of negotiations Rules

Negotiations for RTAs
WTO members have agreed that some of the existing WTO rules governing RTAs need
clarification. This lack of clarity has hindered the work of the Committee on Regional Trade
Agreements (CRTA) in considering individual RTAs against these rules.

At their meeting in Doha in 2001, WTO Ministers agreed "to negotiations aimed at clarifying
and improving disciplines and procedures under the existing WTO provisions applying to
regional trade agreements".

The other key issue in the RTA rules negotiations relates to improved procedures for the
examination of RTAs. WTO members formally adopted a new Transparency Mechanism for RTAs
on 14 December 2006. The mechanism establishes a standardised review process for all RTAs.

Committee on Regional Trade Agreements

The Committee on Regional Trade Agreements (CRTA) was
established following the Uruguay Round of
negotiations to monitor the consistency of RTAs with the WTO Rules. The CRTA plays an
important role in ensuring regional agreements do not undermine the multilateral system.

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WTO members are required to notify regional trade agreements to the CRTA. The adoption of
the Transparency Mechanism in December 2006 has improved the notification procedures and
examination of all RTAs including those between developing countries.

Once an agreement has been notified to the WTO, the WTO Secretariat prepares a detailed
analysis of the RTA (called a factual presentation) which is used by other WTO members to
examine and scrutinise the agreement against WTO rules.

The Thailand-Australia Free Trade Agreement and the Australia-United States Free Trade
Agreement were among the first agreements to be examined under the Transparency
Mechanism following its introduction in 2007. WTO members have welcomed the increased
information provided by the factual presentations and the opportunity to question parties to
the RTA.

25
WTO Trade Policy Review Mechanism
The trade policies and practices of all World Trade Organization (WTO) Members are reviewed
regularly, under the auspices of the WTO Trade Policy Review Mechanism (TPRM). The TPRM
was provisionally established at the Montreal Mid-Term Review of the Round in December
1988.  Article III of the Marrakesh Agreement, agreed by Ministers in April 1994, placed the
TPRM on a permanent footing as one of the WTO’s basic functions and, with the entry into
force of the WTO in 1995, the mandate of the TPRM was broadened to cover services trade
and intellectual property.

The objective of the TPRM is to contribute to improved adherence by all Members to WTO
rules, disciplines and commitments.  The TPRM promotes transparency in trade policy making.
It provides a forum for Members to openly discuss and provide objective analysis of each
other’s trade policies and practices. Reviews take into account the Member’s wider economic
and developmental needs, policies and objectives as well as the external trading environment.
They are not intended to serve as a basis for the enforcement of WTO obligations, for WTO
dispute settlement procedures, or to impose new trade policy commitments.

The frequency of the reviews depends on the Member’s share in world trade. The four largest
traders (the European Communities, the United States, China and Japan) are reviewed every
two years; the next 16 largest traders (including Australia) every four years; and the remaining
Members every six years, with a longer interval for least-developed countries. By the end of
2008, a total of 264 reviews had been conducted, covering 135 Members.

The review process includes:

· a detailed report on the Member under review’s trade policies and practices prepared
by the WTO Secretariat;
· a report by the government of the Member under review;
· a written question and answer process, whereby the Member under review must
respond to detailed questions from other Members regarding its trade policies and
practices; and
· a formal meeting in Geneva of the WTO Trade Policy Review Body (TPRB).

All review documents, including the WTO press release, minutes of the meeting, questions
and answers by Members and review reports (both by the Member under review and the
Secretariat), are made available on the WTO website shortly after the formal meeting of the
TPRB (refer link below).

26
WTO accessions and how Australia
stands to benefit
Market Access
Market access is a very important aspect of WTO accession. The WTO membership expects
new Members to make binding commitments on tariffs and services that provide security of
existing access and appropriate liberalisation. These commitments are determined by
separate bilateral negotiations. The results of the market access negotiations are extended to
all WTO Members through the application of the MFN principle (most favoured nation).

Applicants are expected to give commitments that broadly match the liberalisation to which
existing Members have committed over the life of the GATT and WTO and, for this reason, the
negotiations are non-reciprocal. However, the overall level of commitment expected also
depends on the applicant’s level of economic development.

Through these market access negotiations, Australia has negotiated secure access and
liberalisation for a very wide range of products of interest to Australian industry. Market gains
have been made for live animals, meat, offals, seafood, dairy products, fruit, vegetables,
legumes, grains, flour, oilseeds, animal feed, animal fats, vegetable oils, sugar, processed
foods, alcoholic and non-alcoholic beverages, minerals, chemicals, medicaments, chemical
preparations, hides and skins, leather, textile fibres (including wool and cotton), textile yarns
and fabrics, metals (ferrous and non-ferrous), precious metals and stones, machinery
(including electrical), motor vehicles (including components, parts and accessories) and
scientific, technical and medical equipment, as well as in other areas.

Australia has also negotiated improved access for exporters of services such as legal, banking,
insurance, accountancy, architectural, engineering, computing, telecommunications,
construction, distribution, education, environmental and transport, including through
deregulation of restrictions on the scope of business operations and conditions of entry.

Australia has also pursued and secured the reform of many different kinds of non-tariff
measures that give rise to trade problems and has succeeded in achieving their modification
or removal. Market access gains made in this area include, for example, removal of import
bans, simplification of import formalities, reductions in import fees, elimination of point of
sale restrictions that discriminate against Australian products, replacement of unreasonable
packaging and labelling requirements with more reasonable requirements, and elimination of
unnecessary requirements relating to conformity with standards.

27
Agricultural Subsidies
Australia participates actively in joint efforts within the Cairns Group and with other like-
minded WTO Members to ensure that new WTO Members will participate meaningfully in the
multilateral reform process for trade in agriculture, including by giving commitments to limit
the subsidisation of the agricultural sector. This involves new WTO Members capping
domestic support at recent levels and applying phased reductions from those levels. Australia
expects new Members to eliminate agricultural export subsidies. Australia takes a lead role in
these negotiations.

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Trade Indicators

Export Specialization Index

  Australia's trade with China  
Crude Petrolium
Xij Exports of product $10,360,000,000
$161,500,000,00
Xit Exports of Australia 0
mkj Imports of Product $17,905,000,000
$160,900,000,00
mkt Imports of Australia 0
 
Export Specialization Index 0.576459695
Gold
Xij Exports of product $14,702,000,000
$161,500,000,00
Xit Exports of Australia 0
mkj Imports of Product $9,732,000,000
$160,900,000,00
mkt Imports of Australia 0
 
Export Specialization Index 1.505073938
Coal
Xij Exports of product $46,403,000,000
$161,500,000,00
Xit Exports of Australia 0
mkj Imports of Product $1
$160,900,000,00
mkt Imports of Australia 0
 
Export Specialization Index 46230604954

  Relative Growth Rates of Australia's top five Merchandide Exports  

  (A$ Millions)

2006- 2007- 2008- Relative

Grotwh Rate
Rank Commodity 07 08 09 (Gi)
1 Coal 21,845 24,416 54,672 250.3%
2 Iron ore & Concentrates 15,512 20,511 34,234 220.7%

29
 3 Gold 10,740 12,272 17,507 163.0%
4 Education Related Travel Services 11,109 13,538 16,610 149.5%
5 Personal Travel (excl education) Services 11,538 12,004 12,004 104.0%

Trade Intensity Index

  Australia's trade with China  
 
Xij Australia's Exports to China $116,811,479
$1,010,000,000,00
Xwj Total Imports of China 0
Xit Exports of Australia $161,500,000,000
Xwt Imports of Australia $160,900,000,000
 
Trade Intensity Index = 0.000115225

30