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PRESS/TPRB/202
25 September 2002
(02-5132)
TRADE POLICY REVIEW: AUSTRALIA
Sound macroeconomic policies and far-reaching structural
reforms, behind Australia’s im pressive economic performance
Australia’s impressive economic performance during the past decade or so is due in large part to
sound macroeconomic policies in combination with some far-reaching structural reforms that have
reinforced past unilateral trade liberalization, according to a WTO Secretariat report on the trade
policies and practices of Australia.
The WTO report, along with the policy statement by the Government of Australia, will serve as a
basis for the fourth Trade Policy Review (TPR) of Australia by the Trade Policy Review Body of theWTO on 23 and 25 of September 2002.
Since its previous Review in 1998, Australia has su ccessfully weathered the Asian financial crisis,
despite the severe slowdown elsewhere in the region. Real GDP growth, generated largely by
domestic demand and rising multi-factor productivity, remained strong until 2001, when a
temporary decline in residential construction activity and the global economic slowdown adverselyaffected Australia’s short-run outlook for growth and employment. Nonetheless, unemployment
has continued to fall and inflation has remained low.
The patterns of foreign trade and direct investment have hardly changed. Australia has remained
largely dependent on commodity exports and manufactured imports. Most of its merchandise trade
has continued to be conducted with Asia-Pacific Economic Cooperation (APEC) partners, with somereinforcement of trade with East Asia in the wake of the Asian crisis.
Since its previous Review, Australia has continued to implement trade reforms so as to strengthen
competition in the domestic market and thus impr ove economic efficiency, according to the report.
These reforms were undertaken partly in line wi th the scheduled implementation of Australia’s
WTO commitments, but also unilaterally in accordance with domestic policy goals.
The customs tariff remains Australia’s main trade policy instrument, albeit a minor source of tax
revenue (accounting for 2.3% of total tax revenues). Some 96.2% of tariff lines are bound,thereby imparting a high degree of  predictability to the tariff. The average applied MFN tariff is
currently 4.3%, down from 5.6% in 1997/98; furthe r unilateral reductions in the rates applied to
passenger motor vehicles and textiles, clothing and footwear are envisaged by 2005. Whereas thePRESS/TPRB/202
Page 2 of 12
average applied MFN tariff for agricultural products is 1.2%, that for industrial products is of the
order of 4.7%. The tariff rates applied to passenger  motor vehicles, textiles, clothing, and footwear
are two to three times higher than the average for industrial products. On the other hand,
unilateral tariff reductions have brought about 86% of tariff rates within the zero to 5% range. The
customs tariff has also been considerably simplified through the reduction in the number of rates.However, these changes have done little to reduce tariff escalation. Applied tariff rates currently
fall short of bound rates by an average of 6. 2 percentage points; while the consequent gap
between bound and applied MFN rates provides considerable scope for the authorities to increaseapplied tariffs within bindings, this does not appear to have happened during the period under
review. Indeed, the widening of this gap since 1997/98, despite the reduction in bound rates, is
the result of even greater unilateral reductions in applied rates; applied rates have been increasedin very few, if any, instances.
Perhaps the most important structural policy de velopment during the period under review has
been tax reform, notably implementation of The New Tax System, which has inter alia involved the
rationalization and simplification of the indirect tax structure, thereby rendering it more neutral,
especially with respect to international trade. The centrepiece of this reform involved thereplacement of the Wholesale Sales Tax (WST) levied on manufactured goods by a broad-based
Goods and Services Tax (GST). However, the special Luxury Car Tax, which seems to be biased
against imports, remains in place.
The overall level of government assistance to agriculture, livestock, forestry and fisheries has
remained low since 1998. Average nominal applied MFN tariff protection has remained negligible.
Total support (TSE) to agriculture amounted to only 0.3% of GDP in 2001, the lowest percentage
among all OECD countries, while Australia’s overall producer support estimate (PSE) was 4%, the
second lowest. Around 96% of domestic support involves so-called “green” subsidies that havelittle, if any, distorting effect on production or trade; such support was predominantly general
services (e.g., infrastructural, extension, advisory and R&D services and environmental
programmes).
Australia’s SPS and quarantine requirements have been criticized by a number of its trading
partners on the grounds that they are unduly stringent and therefore protectionist. But withAustralia heavily dependent on agriculture and a major exporter of agricultural commodities and
agri-food products, which receive relatively little government assistance and are sold at world
market prices, these measures are believed to be  necessary to ensure that Australia’s reputation
as a reliable exporter of high quality agricultural products is not jeopardized by pests and diseases.
Nevertheless in the period under  review, Government support to  the services sector, through
direct financial assistance, tax expenditures, and funding to public-sector institutions, has risen;
the main recipients have been finance and insurance, cultural and recreational, transport and
storage, property, and business and communication services. Several access restrictions haveremained in force.
Note to Editors
Trade Policy Reviews are an exercise, mandated in the WTO agreements, in which membercountries’ trade and related policies are examined and evaluated at regular intervals. Significant
developments which may have an impact on the global trading system are also monitored. For
each review, two documents are prepared: a policy statement by the government of the memberunder review, and a detailed report written independently by the WTO Secretariat. These two
documents are then discussed by the WTO’s full membership in the Trade Policy Review Body
(TPRB). These documents and the proceedings of the TPRB’s meetings are published shortlyPRESS/TPRB/202
Page 3 of 12
afterwards. Since 1995, when the WTO came into force, services and trade-related aspects of
intellectual property rights have also been covered.
For this review, the WTO’s Secretariat report, together with a policy statement prepared by the
Government of Australia, will be discussed by the Trade Policy Review Body on 23 and 25September 2002. The Secretariat report covers the development of all aspects of Australia’s trade
policies, including domestic laws and regulations, the institutional framework, trade policies and
practices by measure, and developments in selected sectors.
Attached to this press release are the Summary Ob servations of the Secretariat report and parts of
the government policy statement. The Secretaria t and the government reports are available under
the country name in the full list of trade policy reviews at
http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm . These two documents and the minutes
of the TPRB’s discussion and the Chairperson’s summing up, will be published in hardback in duecourse and will be available from the Secretariat, Centre William Rappard, 154 rue de Lausanne,
1211 Geneva 21.
Since December 1989, the following reports have been completed:  Argentina (1992
and 1999), Australia (1989, 1994, 1998, 2002), Austria (1992), Bahrain (2000) Bangladesh (1992
and 2000), Barbados (2002), Benin (1997), Bolivia (1993 and 1999), Botswana (1998), Brazil(1992, 1996 and 2000), Brunei Darussalam (2001), Burkina Faso (1998), Cameroon (1995 and
2001), Canada (1990, 1992, 1994, 1996, 1998 and 2000), Chile (1991 and 1997), Colombia
(1990 and 1996), Costa Rica (1995 and 2001), Côte d’Ivoire (1995), Cyprus (1997), the CzechRepublic (1996 and 2001), the Dominican Republic (1996), Egypt (1992 and 1999), El Salvador
(1996), the European Communities (1991, 1993, 1995, 1997, 2000 and 2002), Fiji (1997), Finland
(1992), Gabon (2001), Ghana (1992 and 2001), Guatemala (2002), Guinea (1999), Haiti (2002),Hong Kong (1990, 1994 and 1998), Hungary (1991 and 1998), Iceland (1994 and 2000), India
(1993, 1998 and 2002), Indonesia (1991, 1994 and 1998), Israel (1994 and 1999), Jamaica
(1998), Japan (1990, 1992, 1995,1998 and 2000), Kenya (1993 and 2000), Korea, Rep. of (1992,1996 and 2001), Lesotho (1998), Macao (1994 and 2001), Madagascar (2001), Malaysia (1993,
1997 and 2001), Malawi (2002), Mali (1998), Mauritania (2002), Mauritius (1995 and 2001),
Mexico (1993, 1997 and 2002), Morocco (1989 and 1996), Mozambique (2001), New Zealand(1990 and 1996), Namibia (1998), Nicaragua (1999), Nigeria (1991 and 1998), Norway (1991,
1996 and 2000), OECS (2001), Pakistan (1995 and 2002), Papua New Guinea (1999), Paraguay
(1997), Peru (1994 and 2000), the Philippines (1993 and 1999), Poland (1993 and 2000),Romania (1992 and 1999), Senegal (1994), Singapore (1992, 1996 and 2000), Slovak Republic
(1995 and 2001), Slovenia (2002), the Solomon Islands (1998), South Africa (1993 and 1998), Sri
Lanka (1995), Swaziland (1998), Sweden (1990 and 1994), Switzerland (1991, 1996 and 2000(jointly with Liechtenstein)), Tanzania (2000), Thailand (1991, 1995 and 1999), Togo (1999),
Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 and 1998), the United States (1989,
1992, 1994, 1996, 1999 and 2001), Uganda (1995 and 2001), Uruguay (1992 and 1998),Venezuela (1996), Zambia (1996) and Zimbabwe (1994).PRESS/TPRB/202
Page 4 of 12
TRADE POLICY REVIEW BODY
AUSTRALIA
Report by the Secretariat — Summary Observations
Australia’s trade and trade-related policies as well as their formulation are, by and large, highly
transparent. In the interests of public accountability, information on the nature, if not the effects,of various policies is usually available in pub lished documents and from web sites operated by
most public sector entities, many of which are re ferenced in this Report. Moreover, the Freedom of
Information Act allows public access to non-confidential government documents. The transparencyof policies, practices, and measures is further enhanced by organizations such as the Productivity
Commission, the main independent review and ad visory body, which reports on and conducts
evaluations of the economic impact and/or effectiveness of protection, government assistance, andregulations. The Secretariat has drawn heavily on such publicly available documents in preparing
its Report for this fourth Trade Policy Review of Australia.
Economic Environment
Since its previous Review in 1998, Australia has su ccessfully weathered the Asian financial crisis,
despite the severe slowdown elsewhere in the region. Real GDP growth, generated largely by
domestic demand and rising multi-factor productivity, remained strong until 2001, when atemporary decline in residential construction activity and the global economic slowdown adversely
affected Australia’s short-run outlook for growth and employment. Nonetheless, unemployment
has continued to fall and inflation has remained low.
Australia’s impressive economic performance is due in large part to sound macroeconomic policies
in combination with some far-reaching structural reforms that have reinforc ed past unilateral trade
liberalization. Fiscal surpluses have dropped, however, as a result of outlays growing faster than
tax revenues, the latter reflecting the budgetary cost of the major taxation reform package.
Australia has proceeded with the corporatization and/or privatization of government-ownedfacilities in electricity, natural gas, and telecommunications. Other noteworthy structural reforms
have been undertaken in competition po licy, labour markets, and technology.
The steep fall in world commodity prices, which followed the weakening of global demand after the
outbreak of the Asian crisis, put considerable downward pressure on the Australian dollar
exchange rate, thus improving Australia’s international price competitiveness and benefitingimport-competing sectors. The outcome was an ex port driven shift in the trade account from a
deficit to a surplus. Concurrently, the current account deficit fell to its lowest annual level in 20
years, reflecting the recent narrowing of the saving-investment gap. Net foreign debt hascontinued to grow as a consequence of increased borrowing by the private sector.
The patterns of foreign trade and direct investment have hardly changed. Australia has remained
largely dependent on commodity exports and manufactured imports. Most of its merchandise trade
has continued to be conducted with Asia-Pacific Economic Cooperation (APEC) partners, with some
reinforcement of trade with East Asia in the wake of the Asian crisis. Despite the Australia NewZealand Closer Economic Relations Trade Ag reement (ANZCERTA), New Zealand’s share of
Australia’s merchandise trade has dropped. As re gards FDI, some effort has been made to ease
remaining barriers in sensitive areas and to improve notification and examination requirements.PRESS/TPRB/202
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Trade Policy Framework
Since its previous Review, Australia has continued to implement trade reforms so as to strengthen
competition in the domestic market and thus improve economic efficiency. These reforms were
undertaken partly in line with the scheduled implementation of Australia’s WTO commitments, but
also unilaterally in accordance with domestic policy goals.
Australia has maintained its preferential trad ing arrangements with New Zealand and other
countries in the South Pacific, Canada, and developing and least developed countries (under theAustralian System of Tariff Preferences). The value of preferential tariffs has been eroded in recent
years, however, as Australia’s applied MFN tariffs have been reduced. Recently, more emphasis
has been placed on exploring the prospects of br oadening and deepening Australia’s bilateral trade
relations with Japan, Korea, Singapore, Thaila nd, and the United States, as well as regional
relations through the Closer Economic Partnership linking ASEAN and CER economies, and the
trans-Pacific regional agreement.
Australia’s highly transparent legal and institutional framework for trade and investment has been
further improved through a legislative review under taken to ensure that the regulatory framework
(marketing of agricultural products, food labelling, finance and insurance, trades and professions,
and gambling regulation, and local government pla nning processes) does not restrict competition.
Action has also been taken to reinforce the means available for increasing public awareness (andinteraction) and taking advantage of the market  opening and defence possibilities available under
the rules-based multilateral trading system. For this purpose, a WTO Disputes Investigation and
Enforcement Mechanism under the Department of Foreign Affairs and Trade (DFAT) and a WTOAdvisory Panel (comprising representatives from industry, community NGOs, academia, and the
media) have been established. Australia has continued to participate actively in all aspects of WTO
work, favouring the launching of a round focused on further liberalization of agriculture,manufacturing, and services. The Council of Australian Governments (COAG) has continued to
facilitate consultation, cooperation, and policy coordination between the Commonwealth, States,
and Territories with a view to avoiding potential inconsistencies. As of April 1998, the ProductivityCommission has replaced the Industry Commission as the principal review and advisory body on
structural policy and regulation.
Trade Policy Developments
The customs tariff remains Australia’s main trade policy instrument, albeit a minor source of taxrevenue (accounting for 2.3% of total tax revenues). Some 96.2% of tariff lines are bound,
thereby imparting a high degree of  predictability to the tariff. The average applied MFN tariff is
currently 4.3%, down from 5.6% in 1997/98; furthe r unilateral reductions in the rates applied to
passenger motor vehicles and textiles, clothing and footwear are envisaged by 2005. Whereas the
average applied MFN tariff for agricultural products is 1.2%, that for industrial products is of theorder of 4.7%. The tariff rates applied to passenger  motor vehicles, textiles, clothing, and footwear
are two to three times higher than the average for industrial products. On the other hand,
unilateral tariff reductions have brought about 86% of tariff rates within the zero to 5% range. Thecustoms tariff has also been considerably simplified through the reduction in the number of rates.
However, these changes have done little to reduce tariff escalation. Applied tariff rates currently
fall short of bound rates by an average of 6. 2 percentage points; while the consequent gap
between bound and applied MFN rates provides considerable scope for the authorities to increase
applied tariffs within bindings, this does not appear to have happened during the period under
review. Indeed, the widening of this gap since 1997/98, despite the reduction in bound rates, isthe result of even greater unilateral reductions in applied rates; applied rates have been increased
in very few, if any, instances.PRESS/TPRB/202
Page 6 of 12
WTO-related agricultural tariff quotas for five cheese items and non-manufactured tobacco have
apparently been applied in a flexible/liberal manner. Recourse to non-tariff protection has been
confined mainly to agricultural, livestock, and food products.
Documentation requirements have remained mini mal, and computerized customs clearance has
facilitated virtually all imports and exports. Self-assessment is allowed for import duty and export
clearance. The transaction value has been mostly used for customs valuation purposes.
Import prohibitions and restrictions in the form of stringent quarantine or technical requirements
have remained in place to preserve, inter alia, public health, safety or security. Efforts have beenmade to align certain compulsory standards to international standards (including for motor
vehicles) as well as to improve international coordination and cooperation through WTO
notification and mutual recognition agreements. Despite the Commonwealth/State Agreement onMutual Recognition, it seems that there are re sidual areas where regulations power concerning
standards certification (including  State-based point of sale re quirements, banning orders under
consumer protection legislation) differs between the Commonwealth and States. Followinginstitutional and procedural changes, recourse to anti-dumping and countervailing actions has
dropped; no safeguard measures were ad opted during the period under review.
Australia has remained a non-signatory of th e WTO Government Procurement Agreement (GPA).
Commonwealth and state governments continue to use their procurement as a major instrument
of economic policy with the aim of fostering industrial development (e.g., information andtelecommunications technology) by means of pref erence margins (10% or 20% depending on the
State) for local (and New Zealand) suppliers, compulsory sourcing from small and medium-sized
enterprises (SMEs) and local-content requirements (which have also been attached tobroadcasting).
Export controls or quantitative restrictions operated by public sector entities affect certain primary
and therapeutic goods; they are intended, inter alia, to ensure adequate domestic supply and to
enforce standards. Australia has maintained th e export ban on merino ewes and embryos for
breeding purposes except to New Zealand under ANZCERTA and for approved scientific purposes.
State involvement in the economy has been mainta ined with a view to promoting and regulating
trade in certain agricultural goods.
Export assistance, consisting of direct grants  (through Export Market Development Grants,
Supermarket to Asia Strategy) and tax concessions (Tradex, Passenger Motor Vehicle Export
Facilitation Scheme), has been maintained and revised. Export finance is conditional upon local-content requirements as well as “national interest” and environmental protection criteria; export
credit terms seem to be in line with OECD guidelines. Incentives in free-trade zones are tailor-
made for each project and may, inter alia, include establishment or relocation subsidies.Support for trade and production has been provided through tax and non-tax incentives with
increased emphasis on export pr omotion and investment, especially in R&D. During the period
under review, Australia’s schemes for the concessional entry of imports have become moregenerous. Non-tax assistance has been increased in certain broad areas (notably export
promotion, investment, and R&D) and maintained for several specific activities. Low energy prices
to producers have been ensured through state invo lvement in electricity and increased presence of
private sector operators, as well as through tax exemptions and grants for several categories of
diesel fuel users. Price controls have seemingly been reduced so that they now cover air
navigation, airport, postal, and harbour towage services; certain pharmaceuticals have also been
subsidized.PRESS/TPRB/202
Page 7 of 12
Perhaps the most important structural policy de velopment during the period under review has
been tax reform, notably implementation of The New Tax System, which has inter alia involved the
rationalization and simplification of the indirect tax structure, thereby rendering it more neutral,
especially with respect to international trade. The centrepiece of this reform involved thereplacement of the Wholesale Sales Tax (WST) levied on manufactured goods by a broad-based
Goods and Services Tax (GST). However, the special Luxury Car Tax, which seems to be biased
against imports, remains in place. Personal and corporate income taxes have also undergone
substantial reform as a consequence of The Ne w Tax System. Their bases have been broadened
and the rates of tax cut. As a consequence, the top personal tax rate has been reduced from 43%
to 30%, while the corporate tax rate has been cut from 36% to 30%, thereby bringing it more into
line with rates in several neighbouring countries. Insofar as high personal tax rates constitute a
disincentive both to work and save, cuts in the top rates could lead to increased work effort and
higher personal saving, thereby reducing the savi ng-investment gap. The combination of a broader
corporate tax base and lower tax rates would tend to reduce the assistance delivered through the
corporate tax system, thereby rendering it more neutral, and thus potentially less distorting, with
regard to firms’ investment decisions. However, special deductions for companies involved inmineral exploration and development have been maintained.
Australia has sought to strengthen protection of intellectual property rights (IPRs) by expanding its
international commitments and ensuring the enforcement of such protection at the border. At the
same time, parallel imports have been further liberalized.
Australia’s competition policy framework has also been updated and put into effect so as to
ensure, inter alia, that the regulatory framework does not restrict competition and that the
majority of Government Business Enterprises adhere to the principle of “competitive neutrality”.
Sectoral Policy Developments
The overall level of government assistance to agriculture, livestock, forestry and fisheries has
remained low since 1998. Average nominal applied MFN tariff protection has remained negligible.
Total support (TSE) to agriculture amounted to only 0.3% of GDP in 2001, the lowest percentage
among all OECD countries, while Australia’s overall producer support estimate (PSE) was 4%, the
second lowest. Around 96% of domestic support involves so-called “green” subsidies that havelittle, if any, distorting effect on production or trade; such support was predominantly general
services (e.g., infrastructural, extension, advisory and R&D services and environmental
programmes).
Australia’s SPS and quarantine requirements have been criticized by a number of its trading
partners on the grounds that they are unduly stringent and therefore protectionist. But withAustralia heavily dependent on agriculture and a major exporter of agricultural commodities and
agri-food products, which receive relatively little government assistance and are sold at world
market prices, these measures are believed to be  necessary to ensure that Australia’s reputation
as a reliable exporter of high quality agricultural products is not jeopardized by pests and diseases.
Changes have been introduced to SPS and quaran tine requirements to cover, inter alia, animal
diseases, genetically modified organisms and biotechnology; a stringent import-risk assessmentrequirement has also been introduced, further re ducing access to the market for agricultural
products.
Production and exports of certain items (meat, grain, horticulture, dairy, fishery, and forestry) are
subject to levies earmarked for the funding of R&D and other sectoral activities. Trade distorting
domestic support albeit with de  minimis levels, for wheat (direct payments for shipping costs toPRESS/TPRB/202
Page 8 of 12
Tasmania), pigmeat, and lamb meat, has va ried but remained far below WTO reduction
commitments. Particular emphasis has been pl aced on support for biotechnology. Exports of
almost all wheat, barley (until 2001), rice, and su gar have remained under the exclusive control of
statutory authorities or public firms operating under single-desk arrangements. By contrast, the
dairy sector has been deregulated, and producers have received a structural adjustment package;they have apparently thrived as a consequence. In forestry, it would appear that reforms of the
public forest agencies have improved competitiv e neutrality, although anti-competitive practices
seem to persist.
Mining remains one of Australia’s most efficient and least assisted sectors as well as a major
contributor to exports. The sector receives hardly  any tariff protection (except for certain stones
subject to 5% tariff) and the little domestic support it does receive has been declining. A
Petroleum Products Freight Subsidy Scheme, a Diesel Fuel Rebate Scheme, and a Diesel and
Alternative Fuels Grants Scheme have been operated in line with different policy objectives. Acentralized wholesale electricity market is being put in place progressively, with increased private
sector involvement; the mandatory purchase of increasing amounts of electricity generated from
renewable energy sources has been in force since 2001.
Since 1998, border protection for the manufacturing sector has been reduced so that the average
applied MFN tariff rate is only 4.6% (based on the ISIC) and further tariff cuts on sensitive itemsare envisaged. Nonetheless, the tariff rates applied to passenger motor vehicles (PMVs), textiles,
clothing and footwear (TCF) are two to three times higher than this average for industrial
products. Government support, in the form of direct financial assistance (certain export incentives,input subsidies) and tax expenditures, has been maintained and reinforced not just for PMVs and
TCF, but also for other specific industries (such as printing pharmaceuticals, shipbuilding, and
information and telecommunications technology), and for manufacturing activities in general. Inseveral instances, namely PMVs, TCF, and pharmaceuticals, industry-specific support schemes
have been revised or replaced with similar programmes. However, such assistance is expected to
fall in line with announced tariff cuts and revised support plans.
In the period under review, Government support to  the services sector, through direct financial
assistance, tax expenditures, and funding to public-sector institutions, has risen; the mainrecipients have been finance and insurance, cultural and recreational, transport and storage,
property, and business and communication services. Several access restrictions have remained in
force. Financial services reforms (e.g. prudential rules, institutional) have been pursued in severalareas in the light of recommendations made in 1997. Liberalization of telecommunications has led
to further privatization of state-owned firms, increased entry of private sector operators, and lower
tariffs; however, operational costs relating to the universal service obligation have been a concern.Support for domestic advertisement and film producers has been maintained through local-content
requirements in television broadcasting as well as film production funding. As regards maritime
services, state involvement seems to have been reduced; financial assistance to shippers of freightbetween Tasmania and the mainland has been maintained. Maritime road, and rail transport have
also benefited from tax rebates on fuels. Efforts have been made to reduce air transportation costs
and improve the quality of services through more operators and airport leasing. E-commerce isbeing promoted through network fu nding and bilateral arrangements.
Since its previous Review, Australia’s comprehensive commitments in its GATS Schedule have
remained unchanged. The Schedule covers 90 activities within the financial, business,
communication, construction, distribution, transportation (including maritime, road, air, and
pipeline transport), tourism, recreational, health, educational, and environmental services sectors.Australia’s GATS Article II MFN exemption remain s with respect to arrangements with Canada,PRESS/TPRB/202
Page 9 of 12
France, Israel, New Zealand, and the United Ki ngdom for co-production of film and television
programmes.
Prospects
Trade liberalization measures together with far- reaching internal structural reforms that were
begun in the mid-1980s have undoubtedly contributed to Australia’s impressive economicperformance during the past decade or so. As a consequence of both unilateral and multilateral
trade liberalization, Australia is a relatively op en economy. For example, its average applied MFN
tariff is only 4.3% and most rates are between zero and 5%. This means that, except in the caseof tariffs on passenger motor vehicles and textiles, clothing, and footwear, the economic benefits
from further reductions are likely to be modest . During the last review period, the Government
announced unilateral phased reductions in PMV an d TCF tariffs, with a five-year pause in between
2000 and 2005; it remains to be seen whether the final 5% reductions of 7.5 percentage points
(TCF)PRESS/TPRB/202
Page 10 of 12
TRADE POLICY REVIEW BODY
AUSTRALIA
Report by the Government of Australia — Part II
Australia’s trade policy objectives
Australia pursues a pragmatic and outcomes-focused  trade policy integrating multilateral, regional
and bilateral approaches to maximise market access opportunities for Australian exporters of
goods and services. As an export-dependent country whose economy has benefited greatly from
trade liberalisation and deregulation over the years, Australia has a major stake in maintaining ahealthy and open world trading system. The successful launch of the Doha Development Round
was Australia’s top trade policy priority in 2000 and 2001; bringing the negotiations to a timely
and successful conclusion is central to Australia’s current trade policy agenda.Australia welcomes the emphasis the Doha Declaration gives to market access and development
issues, which hold the key to genuine trade liberalisation from which all WTO members stand to
benefit. Australia’s overall objective for the negotiations is to achieve significant improvements inmarket access across the board in agriculture, industrial products and services; to that end, it is
working constructively to help take the negotiat ing process forward as quickly and productively as
possible. (Further information on Australia’s multilateral trade policy approaches is set out inSection III of this report, ‘Australia and the WTO’.)
Regional and Bilateral Approaches
Australia’s regional trade policy efforts complement and reinforce its bilateral and multilateraltrade policy activities and objectives. An important component of this policy is Australia’s active
involvement in the Asia Pacific Economic Cooperation forum (APEC). APEC’s wide-ranging agenda
of trade and investment liberalisation, business facilitation, and economic and technicalcooperation, is central to Australia’s efforts to promote sustainable regional economic growth and
development. It is also an important element of Australia’ s wider bilateral and multilateral trade
endeavours.
Australia is an active member of APEC and is committed to achieving the Forum’s Bogor Goals of
free and open trade and investment by 2010 in developed APEC economies and 2020 indeveloping ones. To this end, Australia has been instrumental in developing a number of key APEC
initiatives including the trade facilitation target of a 5% reduction in transaction costs over five
years, and the pathfinder approach, which will enable those economies that are ready and willingto move faster in specific areas to do so collectively. Both these initiatives were key components of
the APEC Leader’s 2001 Shanghai Accord, which sets forth APEC’s second decade agenda and aims
to accelerate progress towards the Bogor Goals.
Australia has also played a leading role in APEC in building political commitment to take forward
the WTO Doha Round negotiations. APEC aims to support the WTO negotiations through capacity-building initiatives to help developing economies participate in the new round and implement
existing WTO agreements. Australia will continue to build support amongst APEC member
economies for the timely and successful conclusion of the new WTO round negotiations.
In 1997 the Australian Government undertook a review of its policy on regional trading
arrangements (RTAs) which concluded that consideration should be given to future RTA options inthe context of Australia’s continuing strong support for the WTO and for regional trade and
economic integration efforts in APEC. Since that time, Australia has pursued a range of activities to
implement the outcomes of the review and foster stronger regional trade and economic linkages,PRESS/TPRB/202
Page 11 of 12
including through exploring possibilities of develo ping closer bilateral trade and investment links
with important trading partners and regional groups.
The ASEAN Free Trade Area (AFTA) — Australia-N ew Zealand Closer Economic Relations Trade
Agreement (ANZCERTA also known as CER) linkage provides the focus for the coordinateddevelopment of trade and investment flows between the two regions. In 2000, ASEAN and CER
Ministers tasked officials to work towards a Closer Economic Partnership (CEP), which in 2001
resulted in an agreement on a comprehensive Framework for the CEP and the establishment of anAFTA-CER business council. Australia also continues to engage regionally through its membership
of the Indian Ocean Rim-Association for Regional Cooperation (IOR-ARC).
In late 2000, Australia and Singapore commenced negotiations toward an FTA covering
liberalisation of trade in goods and services, which conforms to WTO rules and is comprehensive in
scope. On 30 May 2002, Australia and Thailand an nounced that they would begin negotiations
towards a bilateral free trade agreement, covering not only market access but also cooperation
and trade facilitation activities in a range of areas. Australia is also pursuing discussions on
launching a free trade agreement with the United States.
Consultations have started between Australia and Japan which will culminate in a report to Prime
Ministers in mid-2003 on initiatives that would strengthen and revitalise the trade and economicrelationship. Australia has also embarked on an intensive series of exchanges with China aimed at
building closer bilateral trade and economic linkages and setting future directions for the economic
relationship.
Trade Liberalisation: Australia’s tariff régime
More than 80 per cent of all tariff lines are now at a rate of 5 per cent or less, with around 45 percent at a free rate of duty. The average applied tariff rate is just 4.4 per cent (3.9 per cent fordeveloping countries and 1.72 per cent for Least Developed Countries). The average effective rate
of assistance to manufacturing (a measure of net assistance taking into account the costs and
benefits of government intervention on inputs, direct assistance to value-adding factors and outputassistance) was estimated by the Australian Productivity Commission as 4.8 per cent in 2000-01.
In contrast to most developed countries, Australia applies only one tariff rate quota, on cheese.
The following table outlines reductions in effective rates of assistance to the manufacturingindustry since 1970-71.
Effective Rates of Assistance, 1970-71 to 2000-01 (per cent)
1970-71 1983-84 1990-91 1996-97 1998-99 2000-01
Manufacturing 34.9 22.7 15.6 5.6 5.2 4.8
Agriculture 28.0 12.0 13.0 10.2 7.7 6.0*
*1999/2000.
Passenger Motor Vehicles (PMV) and Textiles, Clothing and Footwear (TCF)
The two industry sectors for which Australia maintains higher tariffs are passenger motor vehicles
and textiles, clothing and footwear. Australia is currently implementing a program of significant
unilateral tariff reductions for these industries  through to 2005, as outlined in the attached
schedules.
On 21 December 2001 the Government announced a review into post-2005 assistance measures
for the Automotive Industry. The review is being conducted by the Productivity Commission, and isPRESS/TPRB/202
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due for completion in September 2002. It is anticipated that a similar review of post-2005
arrangements for textiles, clothing and footwear will take place in the near future.
Nuisance Tariffs
In July 1998, the Australian Department of Industry, Science and Tourism undertook a review of“nuisance” tariffs — i.e. items that attracted a duty of 5 per cent or less, raised less than$A100,000 in revenue a year (in 1996-97), and applied to items where there were no local
producers. Following industry consultation, tariffs on 267 lines were reduced to zero in December
1999.
Anti-Dumping and Countervailing Measures
There has been a steady decrease in the number of anti-dumping and countervailing actions takenby Australia since the inception of the WTO. The number of anti-dumping and countervailinginvestigations in place has declined from 101 at the end of 1995 to 34 as of 30 June 2002.
Since the last review period, the Australian government made changes to its anti-
dumping/countervail legislation which had the effect of reducing the investigation period, providinga simpler and more predictable process for all parties and introducing a new appeal mechanism.
Australia’s Quarantine Régime
As an island continent (with a climate which varies from tropical to sub-temperate conditions),
Australia does not have many of the pests and diseases found in other countries. To safeguard
Australia’s vulnerable indigenous flora and fauna, Australia takes a conservative approach to
biosecurity consistent with the WTO SPS Agreement. Australia takes a “managed risk” approach tobiosecurity based on scientifically justified measures that are the least trade restrictive possible.
Australia published an Import Risk Analysis Process Handbook in 1998, setting out the
administrative and legal framework for implementing Australia’s quarantine policy. The import riskanalysis process is open and transparent keeping stakeholders, including the foreign country
requesting access, informed of developments with each import risk analysis. All IRAs can be
accessed on the website at www.affa.gov.au.
Biosecurity Australia is reviewing Australia’s IRA process further, and plans to finalise and
implement a new Framework in late 2002. The key elements of the new Framework include:
earlier and more regular consultation with stakeholders; a technical issues paper for all IRAs and
an independent scientific peer review.
END