WORLD TRADE
ORGANIZATIONWT/TPR/M/41
26 October 1998
(98-4155)
Trade Policy Review Body
30 June and 2 July 1998
TRADE POLICY REVIEW
AUSTRALIA
Minutes of Meeting
Chairperson:  H.E. Mr. Ali Said Mchumo (Tanzania)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON    3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF AUSTRALIA    4
III. STATEMENT BY THE FIRST DISCUSSANT    9
IV. STATEMENT BY THE SECOND DISCUSSANT   11
V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY   13
VI. REPLIES BY THE REPRESENTATIVE OF AUSTRALIA AND ADDITIONAL
COMMENTS   24
VII. CONCLUDING REMARKS BY THE CHAIRPERSON   35WT/TPR/M/41
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The Chairman (H.E. Mr Ali Said Mchumo), introducing the third Trade Policy Review of
Australia, welcomed the delegation from Australia, led by Mr Peter Hussin as well as Ambassador Raby,
the discussants (Mrs Elaine Feldman, Canada and Ambassador Krirk-Krai Jirapaet, Thailand) and
members of the Trade Policy Review Body.  The discussion was to be based on two documents whichhad already been circulated, WT/TPR/G/41 and WT/TPR/S/41.  Several countries had submitted
questions in advance.WT/TPR/M/41
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF AUSTRALIA
2. The representative of Australia welcomed the Review and said that Australia was committed to
creating a more productive and outward looking econo my.  The Australian Government would continue
to liberalize its trade regime in an orderly and coherent fashion and Australia would remain a staunch
advocate of an open, multilateral, rules based trading system.
3. Since its previous Review, Australia had implemented significant liberalization in goods and
services.  Tariff reductions had been announced even in the sensitive sectors of textiles, clothing and
footwear (TCF) and passenger motor vehicles (PMV) and Australia would continue to work towards free
trade and investment by 2010 in the context of the APEC timetable.  Australia would also be active in
forthcoming mandated negotiations in agriculture and services.
Economic Situation
4. Australia's outward looking policies were underpinned by sound macroeconomic policies and
continued domestic regulatory reform.  In 1998/99, the underlying budget balance was estimated to be in
surplus by $A 2.7 billion or 0.5% of GDP and was e xpected to be around 2% of GDP in 2001/2002.  The
stronger fiscal outlook would reduce the Government's net debt to GDP ratio to the lowest level in 20
years.  The 1998/99 budget, moreover, had not introduced new taxes or tax increases.
5. Australia now had one of the lowest inflation rates among OECD countries with a modest rise
expected for 1998/99.  The underlying inflation rate, while higher because of recent increases in import
prices brought about by currency movements, was forecast to be in the target range of 2-3%.  The current
account deficit was expected to rise to 5.25% of GDP in 1998/99 due to lower export and higher import
growth.  The debt service ratio fell from 12% in 1995 to 11.2% in 1997.
6. The Government was committed to microeconomic reform to enhance the international
competitiveness of Australian companies.  It had tackled labour market reform by introducing legislation
to improve labour flexibility and adaptability through provision for enterprise bargaining and to prevent
secondary boycotts.  A measure of the success of these reforms was that industrial disputes in 1997 were
at their lowest level in 85 years.
7. The severe deterioration in trading conditions in East Asia, which accounted for 57% of
Australia's merchandise exports, had presented challenges and opportunities for the Australian economy.
Fiscal consolidation and domestic reform, combined  with sound macroeconomic fundamentals, would
ensure less severe effects from East Asian instability.  The effects of slower East Asian growth would not
be uniform across all sectors.  Around two-thirds of Australian sales to East Asia were intermediate inputs
into export production and the weaker Australian dollar would help Australian exporters to compete
against North American and European suppliers in Asia and elsewhere.  Exports had grown by 11.8% in
the ten months to April compared with the same period the year before.  Sales to the United States and theEuropean Union increased by 40% and 21%, respectively, during this time.
8. Australia's exports were still mainly primary products, minerals, metals and energy.  However,
manufactures and services were providing a greater proportion of exports as a result of economic
restructuring.  Tourism, for example, was Australia's single largest export industry in 1997.WT/TPR/M/41
Page 5
APEC and Regional Commitments
9. The representative said that despite questioning among some Australians, the need for further
trade and economic reform was generally accepted in Australia.  The Prime Minister and the Trade
Minister had stressed this commitment to reform at  the recent Australia Summit in Melbourne.  Trade
policy reform was taking place in an orderly and predictable manner.  In APEC, this was provided by the1994 Bogor Declaration goal of free trade and invest ment by 2010 for industrialized countries.  APEC
liberalization would take place in the context of open regionalism.
10. APEC was supportive of the multilateral trading sy stem rather than being a discriminatory trade
bloc.  Early Voluntary Sectoral Liberalization (EVSL) was being examined in 15 sectors, including two
put forward by Australia (food and energy) and one co-sponsored by Australia (chemicals).
Liberalization of 9 sectors, including energy and chemicals, was to be fast-tracked for implementation in
1999 and Australia was taking an active role in this.
11. The Australia-New Zealand Closer Economic Rela tions Agreement (CER) provided yet another
framework for trade liberalization.  Since the previous Review, the negative inscription list in the CER
Protocol on Trade in Services had been shortened, wi th Australia removing telecommunications from the
list and amending its air and postal services inscriptions.  The Trans-Tasman Mutual Recognition
Agreement on Goods and Registered Occupations, signed in 1996, would allow for freer movement ofgoods and registered professionals across the Tasman.
Tariffs
12. Australia's tariff on most goods had fallen to 5% by 1996, compared with 9-12% in 1993 and its
average applied tariff was lower than the OECD average.  In addition, 85% of all tariff lines had rates of
5% or less, significantly higher than 44% in 1993.  Australia bound around 96% of its tariff lines as aresult of the Uruguay Round and unilaterally brought its final tariff commitments forward by one year on
a number of products with the final bound rates being reached on 1 January 1998.  Australia also
participated in the Information Technology Agreemen t which reduced tariffs on those products to zero.
Here too, Australia had brought forward its commitments.
13. Tariffs in the sensitive TCF and PMV sectors remained above the average but were falling.  The
Government had decided to give these sectors additional time to strengthen their capital base and enhance
their international competitiveness in the lead up to the APEC target of free trade by 2010.  The
reductions would be made in an orderly and predictable fashion and reduction plans would be legislated
to ensure implementation.  Productivity and exports were growing in both sectors.
14. Tariffs in the PMV sector would fall to 10% by 2005.  A new Automotive Competitiveness and
Investment Scheme (ACIS) would commence on 1 January 2001 to encourage long term industry
commitment to production, investment and research a nd development.  Tariffs on clothing and finished
textiles would fall gradually to 17.5% by 2005 and to 5-10% for other textiles and footwear.  Australia, he
added, did not have textiles quotas.  The existing Import Credit Scheme would cease in 2000 and post
2005 arrangements for both TCF and PMV would be re viewed in 2005.  This review would take into
account APEC commitments and progress on market access.
15. With regard to the Government's commitment to  predictable reform of these sectors, the
transparency of the policy-making process was important to industry and to the public.  In April 1998 theWT/TPR/M/41
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Government passed legislation establishing the Productivity Commission (incorporating the former
Industry Commission, the Bureau of Industry Ec onomics and the Economic Planning and Advisory
Commission).  It took this step because it wanted gr eater public scrutiny and understanding of the factors
driving Australia's productivity performance.  The new body would continue the activities of the Industry
Commission such as examining the benefits of trade and regulatory reform.
16. He emphasized that tariff liberalization and improved market access were two fundamental
reasons for the WTO's existence, and high tariff rates, especially tariff peaks, continued to obstruct
international trade.  As Members would be aware, Australia believed that a further round of
comprehensive trade negotiations, including industrial tariffs, would benefit all WTO Members.
Agriculture
17. Protection and support levels for Australian agriculture were low.  The degree of import
penetration showed that the agricultural market was open.  In line with Australia's WTO obligations,reform had continued since the early 1990s with further reductions in tariffs, subsidies and price support
programmes.  The tariff on sugar had been removed in 1997;  the tobacco industry had been deregulated
and assistance removed;  and effective rates of assistance for the citrus industry had been reduced.  He
pointed out that these had been difficult decisions for the Government to take.  In addition, the reform of
statutory marketing boards and other government-related agencies had been continued, including bysubjecting them to the requirements of the national competition policy regime.
18. Australia took a prudent approach to sanitary and phytosanitary regulations.  Quarantine was vital
given its geographical isolation, its relative freedom from many pests and diseases and its dependence on
exports of high-quality agricultural and food products.  Australia took its obligations under the Agreement
on Sanitary and Phytosanitary Measures very seriously, including the need to base SPS measures onscience.  The Government had initiated a number of reviews of quarantine policy, including on fisheries,
and an additional amount of $A 75 million had been allocated since 1997 to improve the operation of the
system, including strengthening science-based risk analysis.
Services and investment
19. Australia had been significantly liberalizing and deregulating the sector, in particular financial
services, telecommunications, transport and utilities.  Those reforms added to what was already a liberal
base and, in most cases, these were reflected in WTO commitments.
20. In telecommunications, the previously 100% government owned carrier had been partially
privatized and there were plans for a complete privatization.  Foreign equity restrictions on the second
carrier, Optus, had been lifted.  In financial services, a further package of reforms had been passed by
Parliament, which would streamline the sector, improve regulatory oversight and allow possible mergers
between, and increased foreign ownership of, the majo r banks and insurance companies.  Since the last
Review the formerly 100% government-owned Co mmonwealth Bank had been privatized.  The
Government planned to continue opening and deregulating the transport and utilities sectors.  Australian
professions were keen to see further liberalization of trade in services and Australia would continue to
push that agenda vigorously.
21. Since the last Review competition reform agreements had been signed between the
Commonwealth, State and Territory Governments.  Co mpetition laws were being extended to achieve
universal coverage.  All Commonwealth, State and Te rritory legislation dealing with competition was
being reviewed to identify anti-competitive elem ents and those that imposed costs on business.WT/TPR/M/41
Page 7
Government enterprises previously excluded from co mpetition rules were now being subject to the same
rules as private business.  Australia had been described by the World Economic Forum's Competitiveness
Report as having one of the world's best competition policy settings.
22. Australia was heavily dependent on foreign investment.  Its liberal investment policies were
reflected in inflows accounting for 4.6% of GDP in 1996/97.  The Foreign Investment Review Board(FIRB) was charged with examining foreign inve stment proposals.  Investment proposals above
$A 5 million and investment in sensitive sectors, namely real estate, civil aviation, media and
telecommunications, were examined on a case by case basis.  In practice, very few applications were
rejected (2.5% in 1997) and even in sensitive sectors many applications were approved.
23. In 1997 the government established a national investment agency called Invest Australia to attract
foreign investment.  Australia's investment attraction policy had very strict guidelines.  The
Representative assured Members that incentives would not be granted as a matter of course and any thatwere granted would be subject to strict case by case evaluation according to published eligibility criteria.
Incentives would be considered in limited and special circumstances for major strategic projects that
would not otherwise be likely to occur in Australia and where a significant net economic and employment
benefit was expected to result.  Australia's foreign investment legislation was being reviewed as part of
the reviews of legislation that imposed costs on business.
Trade remedies
24. Australia would continue to make use of its trade remedy rights in full conformity with its WTO
obligations.  New anti-dumping legislation, which was consistent with WTO requirements, introduced
streamlined procedures facilitating matters for all intere sted parties.  The main features were:  abolition of
the Anti-Dumping Authority;  reduction of the investigation period from 215 to 155 days;  andestablishment of a new independent appeal mechanism.  Provisional measures could be imposed after
60 days, following a public determination indicating grounds for such measures, as required by the WTO
Agreement.  Since the last Review, the number of anti-dumping cases initiated declined from 51 in
1993/94 to 36 in 1997/98.  The number of anti-dumping and countervailing measures had fallen from 101
at end 1995 to 54 at end 1997.
25. The recently introduced safeguard procedures were fully consistent with the WTO Agreement on
Safeguards.  Any investigations under these proc edures and any subsequent decisions on whether
measures should be imposed would also be WTO-consistent.
Multilateral trade framework
26. As a medium sized trading nation, Australia de pended heavily on the WTO's framework of fair
and predictable rules.  These rules offered protection from unilateral and arbitrary behaviour and created a
framework in which Australia could pursue market liberalization.  However, while greater transparency indispute settlement procedures offered opportunities and benefits, it was important to recall that the dispute
settlement mechanism was about settlements between WTO Members, rather than judicially imposed
outcomes.  Australia did not favour turning panels into court rooms.
27. From Australia's perspective, for the WTO to remain "real" to business and the public, it had to
deliver real benefits to the consumer.  Notwithstanding current difficulties in East Asia and the adjustmentproblems for parts of the Australian community, Australia did not believe that increased protectionismWT/TPR/M/41
Page 8
was the answer but that the appropriate response was further liberalization and domestic reform.
Australia remained committed to an open and liberal trade policy regime and to global trade liberalization
efforts and looked forward to continue to play its part in upholding WTO principles.
The Trade Policy Review
28. The representative referred finally to speculation in the Secretariat Report concerning the
implications of Australian Government trade and invest ment policy.  On industry policy, for example, the
Report said that the Government's new policy suggested a trend towards more proactive support of
Australian industry.  It also stated that although the measures were not as interventionist as recommended
in reviews, nevertheless, this might herald a more interventionist and selectively targeted industry policy
in the immediate future, reversing the trends of the past four years.
29. Similarly, on the tariff pause for TCF and PMV, th e report suggested that it might signal the
Government's increased susceptibility to pressure from  vested interests in certain sectors and implied that
such treatment could eventually be extended to other sectors.  The report also questioned the seemingly
enhanced role of local industry in the new anti-dumping investigative process, signalling that this might
facilitate use of anti-dumping as a protective mechanism.
30. In all three cases, and in other references  in the Report, the implication was that the Australian
Government might be moving towards greater protectionism and interventionism.  In fact there was noevidence to support these hypotheses and this had been spelt out in the Australian Government's Policy
Statement.  Like all other members, Australia asked to be reviewed on actual policy implementation and
outcomes, not on supposition.  In fact, the Australian  Government continued to move ahead with broad
trade liberalization and market opening, as was well documented in the Secretariat's report, and in
reducing the role of Government in the economy.  Au stralia's performance in this regard had been well
ahead of that of most other members of the WTO.WT/TPR/M/41
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III. STATEMENT BY THE FIRST DISCUSSANT
31. The first discussant said that for the most part Australia had continued its unilateral trade
liberalization programme complemented by internal structural reforms.  Its growth rate as a result had
been one of the highest in the OECD since the early 1990s. Although unemployment remained high, it
had declined from a peak of 11% in 1992/93 and was expected to reach 8% by the end of 1997/98.
32. The first issue she discussed was the impact of the Asian crisis on the Australian economy.  She
noted that the overall pattern of Australia's trade had changed little since the 1994 review.  Exports were
dominated by agriculture and other primary products, accounting for almost 74% of merchandise exports
in 1996, rising from 67% in 1992.  The Asia-Pacific region remained the main destination for exports,
accounting for almost 60% of Australia's merchandise exports in 1996;  Japan alone accounted for 21% of
this total.
33. Australian export growth as well as the value of the Australian dollar had been falling because of
the deepening economic problems of Japan and other countries in the Asian region.  Even though
Australian economic fundamentals remained strong, the Australian dollar appeared to be suffering from
too high a dependence on commodity exports.  A rece nt OECD study showed that stronger economic
growth in Australia in 1997, after some slowing in 1996/97, had been driven by domestic demand.  Until
recently most forecasts had pointed to further solid growth in private consumption and investmentexpenditures.  However, growth projections had been revised downwards, with the 1998 budget
projecting growth of about 3.75% in 1997/98 and 3% for 1998/99, as a direct result of the slowdown in
east Asia.  She asked whether the budget targets in the current fiscal year would be met and for an update
on the target for the following fiscal year.  She unde rstood that some private forecasters were predicting
growth of only around 2.2% this year.
34. Recent press accounts indicated deteriorating business confidence due to continuing weakness in
Asian economies.  In addition, the Australian Bur eau of Agricultural and Resource Economics had
projected a 1.2% fall in commodity exports in 1998/99, the first fall since 1990.  She said that in this
situation it was important to ensure that pressure to use export credits and direct export subsidies to
maintain market share did not dilute Uruguay Round co mmitments.  Similarly, it was important to ensure
that the projected rise in the current account deficit did not lead to actions that would be inconsistent with
Australia's WTO commitments or its trade liberalization programme, especially the APEC goal of free
trade by 2010.  According to the press, while the Government projected a current account deficit of 5.25%
of GDP for 1998/99, some economists were projecting a deficit of 6.5% or higher, because of falling
commodity prices, declining exports and a weaker Australian dollar.
35. The second point related to Australia's tariff reduction programme.  According to the Government
it was committed to the multilateral trading system and to a rules based, free and open global tradingenvironment.  However, while applied tariffs for most products declined to a general level of 5% in 1996,
and were expected to fall further until the year 2000, recent actions with respect to the PMV and TCF
industries sent different signals.  The Government's policy statement noted that the industries were
important employers, including in regional Australia.  Contrary to independent advice it had itself
commissioned, the Government, in 1997, decided in favour of a tariff pause between 2000 and 2005 for
these two industries.  While the Government stated that these pauses did not signal a change in the
commitment to trade liberalization generally, it was te lling that two sectors that had enjoyed a greater
degree of protection than average, had been granted a tariff pause.WT/TPR/M/41
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36. Similarly, as a leading member of the Cairns Gr oup, Australia had been at the forefront of actions
to put agriculture on the same footing as other areas in the multilateral trading system.  However,
Australia's quarantine regime restricted imports of a number of agricultural and food products, often on
tenuous scientific grounds.  She suggested that it might be politically difficult for governments to resist
calls from traditionally protected industries for continued protection.  Other countries had experiencedsimilar pressure for protectionism in recent years as their industries struggled to deal with the challenges
of globalization.  Often such calls came precisely from those industries which had not adapted to these
challenges.  While they received a certain amount of public support, she said that it was important that
Governments respond by increasing public awareness of the benefits of trade.
37. In the second WTO Ministerial declaration in May 1998, Ministers recognized the importance of
enhancing public understanding of the benefits of the multilateral trading system, in order to build support
for it, and agreed to work towards this end.  They agreed to consider improving the transparency of WTO
operations.  The Australian Government clearly believed that making the case for the benefits of trade
liberalization was important in the domestic context.  She cited a recent Government publication which
explained why Australian jobs and living standards now  depended more than ever on how well Australia
performed in the international  marketplace.  She asked the views of the Australian delegation on the issue
of greater transparency in the operations of the WTO.
38. Finally, she asked about the federal structure of Australia, especially in the services area.
Australia's federal structure of States and Territories, each having had its own Constitution prior to
federation, created a complicated relationship, particularly since States had general legislative
competence on all matters.  The Secretariat report pointed to the importance of the services sector which
accounted for around 70% of Australia's GDP and also the need for competitive services inputs for
manufacturing and agricultural activities.  Recent reforms in important services sectors, in which
Australia had undertaken substantial WTO commitments, were highlighted.  She asked whether these
commitments had caused internal difficulties between the Commonwealth and States and whether it was
an issue of concern in the ongoing negotiations on disciplines in accountancy and professional services.
She also asked whether the federal structure was relevant to the fact that Australia was not a member ofthe Agreement on Government Procurement.
39. On investment, Australia's foreign investment screening procedures required that foreign
investment in sensitive sectors and above certain threshold levels in non-sensitive sectors had to be
notified.  The Government's policy statement noted that proposals for investment were normally approved
unless judged contrary to the national interest.  She asked whether there was a federal/state dimension to
the determination of national interest and whether the Australian delegation had an update on when the
review of Australia's foreign investment policy would be completed.WT/TPR/M/41
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IV. STATEMENT BY THE SECOND DISCUSSANT
40. The second discussant said that he planned to assess the evolution, development and
implementation of Australia's trade policy and measures in light of its commitment in the Uruguay Round
and the WTO, particularly with respect to tariff and non-tariff barriers.  He said that since no country hada clear record on trade policy, he would raise specific issues meriting attention.
41. He noted that although tariffs for raw materials were low across almost all sectors, with a simple
average of 0.8%, the average rose to 5.9% and 6.9% for semi-processed and finished products,
respectively.  The peak was most apparent in textiles and clothing with the simple average ranging from
16-25%.  Another sector was passenger motor vehicles with an average tariff of 20%.
42. The Government had a number of schemes to boost exports, such as, the Export Market
Development Grant, which was available to all exporters, reimbursing up to 50% of their export marketexpenses if they met certain export performance and local content requirements; and the Export
Facilitation Scheme in the PMV sector that provided duty free imports of automotive products and parts
costing approximately $A 220 million in duty forgone in 1997.  The Export Facilitation Scheme would be
replaced by the Automotive Competitiveness and Investment Scheme (ACIS) which would provide duty
concessions to car assemblers and upstream companies.  While the scheme would have no exportrequirements, it was evident that the measures encouraged either exports of PMVs or the consumption of
domestically produced, rather than imported, PMVs.
43.  Despite being a relatively small economy, Australia had been a frequent user of anti-dumping
and countervailing measures.  Australian anti-dumping legislation was said to be one of the most
efficient, recently amended to reduce the investigation time, from 245 to 155 days, with the abolition ofthe Anti-Dumping Authority.  The time to consider pr ima facie evidence for initiating an investigation
had been reduced from 25 to 20 days, and to 85 days for the imposition of provisional duties.
44. He said that while the shorter investigation time might be beneficial to exporters because of the
shorter period of uncertainty, it might also result in an inaccurate assessment and could be viewed as an
attempt by the Australian Government to expedite the imposition of anti-dumping measures.  Chart III.5of the Secretariat report showed that the total impact of anti-dumping measures had not changed over
time.  Even though the number of measures in force declined, the number of initiations increased between
1995 and 1997.  In addition, available data ranked Australia fifth among all WTO members on the
number of reported investigations between 1994 and 1996.  Australia had also become the first country to
request another member to initiate an anti-dumping investigation.
45. The authorities stated that they would adopt international standards for imported goods where
possible, but in the absence of a suitable internatio nal standard, the Technical Committee, represented by
a number of interests, would prepare a draft Australian standard.  Of over 5,700 standards issued by
Standards Australia, only 49% resembled existing international standards, with only 30% of those issued
since 1994 having international standards with the same scope.  He asked how "suitable" international
standards were determined;  whether the involvemen t of domestic interests encouraged the adoption of
more restrictive standards; and whether public comments was taken into account in the formulation ofstandards.WT/TPR/M/41
Page 12
46. While it was difficult to compare the international equivalence of quarantine standards,
Australia's stringent SPS measures and a commitment to increase funds to strengthen quarantine raised a
number of concerns, including the consistency of restrictions with international agreements;  and the
question of transparency during the consultation process which could be detrimental to Australian
imports.  While recognizing Australia's geographical need to prevent pest and disease encroachment,questions remained as to how Australia decided on the suitability of established quarantine restrictions,
especially those beyond internationally acceptable norms, and how domestic industries without scientific
knowledge, contributed to the process.  He asked for comments on a recent panel report, in circulation but
not yet adopted, which had found that some Australian SPS measures may be inconsistent with WTO
Agreements.
47. Finally, he turned to the statutory marketing boards which administered and promoted orderly
export marketing of Australian products.  He noted that 5 new marketing boards had been notified to theWTO since the previous Review, making a total of 15 marketing boards.  While welcoming the news that
the Government would be distancing itself from the operations of these boards, he said that 12 of them
conducted export promotion activities which might result in domestic market distortions, causing a
misallocation of resources.  Individual states also maintained sub-federal marketing boards.  He requested
information on their activities and their relationship with the federal marketing boards.
48. To conclude, he stated that Australia had been a champion of liberal trade since the mid-1980s
and had benefited from such policies.  Australia had also consistently pressed for greater liberalization in
various fora.  However, the process had never been easy as vested interests pressed for protection.  He
commended the Government's efforts and urged it to continue.  There was no room for complacency and
ample areas for improvement remained.  He was concerned about non-tariff barriers, the enhanced role ofbusiness leaders in the policy-making process, the possible abuse of the support programmes available for
exporters and the stringency of standards and sanitary and phytosanitary measures.  Notwithstanding this,
he believed that Australia had been doing well and urged it to continue its reforms.WT/TPR/M/41
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V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
49. Members commended Australia on its unilateral economic reforms which included trade
liberalization and domestic regulatory reforms.  The results had been strong economic growth for
Australia, accompanied by high productivity rates and low inflation.  Australia's contribution to the
multilateral trade agenda was also acknowledged and Members hoped reforms would be continueddespite any adverse effects of the current economic crisis in the region.  Members also thanked the
Government and the Secretariat for their reports and the discussants for raising important issues.
50. The representative of Hong Kong, China said that Australia had made enormous strides over the
last decade to deregulate its economy and reduce trade barriers and welcomed the unilateral nature of
these reforms.  The result had been higher GDP and productivity growth than most other OECD
countries.  Hong Kong, China warmly welcomed th is approach which strongly reflected its own.
51. Trade between Hong Kong, China and Australia had grown by 11% per year on average between
1993 and 1997.  Although the current turmoil in Asia might have temporarily dampened this expansion,
he looked forward to its long term continuation.  Australia was Hong Kong, China's fourteenth largest
trading partner in 1997, while Hong Kong, China was Australia's eleventh largest.  Two way trade flows
were over US$2 billion in each direction.  Australia was Hong Kong, China's thirteenth largest foreign
investor while Hong Kong, China was Australia's fourth largest source of foreign investment.  Totalinvestment as at June 1996 was over US$ 10 billion.
52. The representative warmly welcomed Australia's strong reaffirmation of its support for the
multilateral, rules based trading environment.  Australia's contribution to the WTO was positive and wide
ranging.  Its commitment to openness and transparency in its domestic regime was laudable and was
evident from its contribution in many areas to the WTO's work.
53. While Hong Kong, China shared many of the objectives and policies of Australia, there were
areas of concern.  Although Australia had signific antly reduced tariffs on manufactured imports, high
tariffs, and long time frames for reducing them, remained in textiles, clothing and footwear.  This regime
did not fit in with Australia's general policy and it was time that it was brought into line.  He also noted
that a "national interest test" was a part of the in vestment regime in several sectors and suggested that
such tests might not be in the national interest at all in that they might allow protection to less productive
parts of the economy.  He welcomed further reform in this area.
54. Given events in the Asian region and their effect on Australia, he believed that there would be
increasing pressure to adopt a more defensive stance.  However, Australia had earned a lot of respect for
its adherence to multilateral disciplines and trade liberalization and it would be short sighted to change
this posture in response to any immediate pressures, especially given the generally sound macroeconomic
fundamentals which would stand Australia in good stead.
55. Hong Kong, China shared Australia's vision of broad based multilateral trade negotiations in
2000 and would work with Australia and other Members to secure a balanced package of issues of
interest to all.  It would also work closely with Australia in APEC to fulfil the goal of open and free trade
by 2010 and 2020 for developed and developing economies, respectively.
56. The representative of Canada said that Australia played an important role in the WTO and for the
cause of multilateral trade liberalization more generally.  He welcomed its efforts to implement unilateralWT/TPR/M/41
Page 14
tariff reductions and to liberalize and deregulate its economy.  Canada had been pleased to work closely
with Australia in support of broad-based trade liberalization efforts, including in regional fora such as
APEC, where Australia played a leading role, in the Cairns Group and in the WTO.
57. Australia and Canada enjoyed a strong and mature trade and investment relationship.  In 1997,
two way merchandise trade totalled US$ 2.2 billion according to Canadian statistics.  Two wayinvestment flows were also significant with cumulative  direct Canadian investment in Australia exceeding
US$ 3.3 billion and Australian investment in Canada nearing US$ 300 million.
58. The overwhelming majority of bilateral trade and investment flowed freely and without dispute.
However, Canada was concerned that domestic pressures had sometimes lessened the Government's
enthusiasm for trade liberalization.  He hoped that by raising some concerns, the Government of Australia
would be encouraged by Canada's support to respond to these pressures in a manner consistent with its
trade liberalizing philosophy of recent years.
59. The elimination of non-tariff barriers, for example, was an important component in any effort to
liberalize trade and investment and the application of such measures by Australia remained, in Canada's
view, susceptible to protectionist pressure from domestic interests.  Australia's quarantine regulations
were a persistent and serious impediment to Canadian exports to Australia.   In particular, market access
for Canadian pork products and salmon was of serious concern.  The recent WTO panel finding thatAustralia's ban on fresh chilled and frozen salmon imports was inconsistent with its WTO obligations
should encourage Australia to re-examine its approach to quarantine issues and he looked forward to
Australia's response to the panel's findings.
60. Australia had announced that it would be creating an emergency safeguard mechanism.  While
recognizing Australia's rights under the WTO Agreement on Safeguards to establish such a mechanism,he expressed concern that the first inquiry would ta rget the pigmeat industry.  Since Canada was the
major foreign supplier of pork to Australia, Canadian exporters were concerned that such a proposal
undermined market confidence and might constitute another vehicle for impeding legitimate Canadian
efforts to export pork to Australia.  He noted that previous anti-dumping and countervailing duty
investigations on pork had concluded that there was no evidence of injury.
61. Notwithstanding these comments, he acknowledged that in recent weeks the Australian
Government had resisted pressure to take immediate action to restrict the modest level of Canadian pork
exports to Australia.  In this case the authorities had clearly understood the dangers of responding to
protectionist demands from a local industry which blamed its competitiveness problems on imports and
he encouraged the Government to continue to resist such unsubstantiated demands.
62. Other non-tariff barriers in Australia that were of concern included changes to the country of
origin food labelling requirements.  Recent amendments to the Trade Practices Act suggested thatAustralian requirements for country of origin labellin g deviated from international standards.  In addition,
during the process of amending the labelling requirements, certain products appeared to be the major
targets of the policy changes, suggesting a discrimi natory intent and undermining the confidence of
exporters.  The decision to adopt these new regulations was curious given that Australia had opposed, and
continued to oppose, the introduction of similar regulations by other WTO Members on grounds that theywould discriminate against Australian exports.  As  a major agricultural exporter, Australia should be
sensitive to broader trade policy implications when considering measures that could be construed as
discriminatory against imported products.WT/TPR/M/41
Page 15
63. While the general applied tariff level for most goods was 5% or less, there were some exceptions
notably the PMV and TCF sectors.  Moreover, the Australian Government had decided to institute a tariff
pause for these goods between 2000 and 2005.  He asked for an explanation for this decision and its
implications, as well as an indication of Australia' s future intentions with respect to these important
industries.  He also remarked that the Secretariat's report did not address professional services andbelieved that an overview of this key services sector should be included in all of the Secretariat's trade
policy reviews.  Canada noted Australia's keenness to see further liberalizing market access concessions
in this area as well as in other services industries.
64. In conclusion, he said that Canada recognized and appreciated the important steps that Australia
had taken in pursuing trade liberalization and addressing the remaining anomalies in its generally open
trade policy regime.  He hoped that the authorities would recognize that there were areas where further
action was needed and looked forward to Australia's responses to questions posed.
65. The representative of the United States noted that Australia had provided sustained leadership and
dedication to the WTO and its principles.  The Secretariat's report underscored its pursuit of trade
liberalization and highlighted one of the most transparent and predictable systems of trade rules of any
WTO Member.  The United States was pleased that Australia had moved ahead with unilateral trade
liberalization and structural reforms.  The Secretariat's report noted that Australia's strong economicperformance since 1990 was closely associated with these reforms.  The United States supported
Australia's economic and trade policies and encouraged it to press on in this direction.
66. However, there was concern about different messages emerging from Australia that were not
always consistent with these policies.  Longstanding trade issues remained unresolved and new ones had
emerged.  The Secretariat's report noted that despite higher GDP and productivity growth rates, theGovernment appeared hesitant in pushing economic refo rms further, particularly with respect to industries
that had received questionable protection.  The United States realized that there might be practical
difficulties in sustaining the momentum of reforms and trade liberalization.
67. The direction of Australia's trade policy became more critical as it faced disturbing economic
trends in its region that could affect its own environment.  Because it was important to sustain itsmomentum of trade liberalization, the United States wished to raise questions and concerns about
Australia's policies and plans on industry policy, investment, sanitary and phytosanitary practices and
intellectual property protection.
68. The United States was concerned whether Government assistance provided to the automobile and
textiles sectors was consistent with the WTO Agreement on Subsidies and about the lack of predictability
in foreign investment review procedures, particularly as it affected foreign services providers.  She also
expressed concern about the lack of clear and predictable rules governing the essential aspects of riskassessment contained in the SPS Agreement that affect livestock and poultry imports.  The same was true
for regulations that affected salmon imports.
69. In agriculture, the United States was concerned about the role of commodity boards and the effect
of their activities on prices and availability of products.  Finally, she noted that several intellectual
property rights issues, including action on software decompilation, protection of test data and parallel
importation, remained unresolved.  She looked forward to discussing these issues with the Australian
delegation and acknowledged that whatever its problems, Australia remained a pillar of the international
trading system and a reliable leader in preserving the integrity of the WTO.WT/TPR/M/41
Page 16
70. The representative of the Philippines, representing ASEAN, thanked the Australian Government
for its informative report and comprehensive statement on the development of its economic and trade
policy since the previous Review.  He said that ASEAN had had good economic and trade relations with
Australia, both bilaterally and regionally.  He recognized Australian leadership in the creation of APEC
which represented more than 50% of global trade.  Bilateral trade between ASEAN countries andAustralia was increasing, but the balance of trade continued to be in Australia's favour.  According to the
Secretariat's report, Australia's exports to ASEAN in 1996 were around US$8,544 million or 14.9% of its
total exports, while imports amounted to US$5,648 million or 9.2% of its total imports.  ASEAN,
nonetheless, believed that trade could be further in creased, particularly with regard to imports from
ASEAN.
71. Since 1994 the Australian economy had made significant progress, benefiting from a stable
macroeconomic environment and achieving sustained growth and a relatively low rate of inflation.  Hebelieved that the role of the Australian economy in the region was greater than it appeared to be,
especially in light of the financial crisis in Asia.  Australia's response to the financial problems of the
region should, therefore, not only be one of complementing IMF programmes but also of keeping its
markets open.  ASEAN believed that the policies to be adopted by Australia in response to regional
challenges were extremely important, and assured Australia that the financial crisis would not bepermanent, especially because of an ASEAN commitm ent to institute corrective and timely measures.
72. He acknowledged and accorded importance to the exemplary role played by Australia in
liberalizing world trade in agriculture and its continued support for this quest, including through the
Cairns Group.  Nonetheless, ASEAN had some concerns.  It was generally recognized that the overall
level of Australian tariffs was relatively low.  Howe ver, the tariff structure was complex and for products
of interest to ASEAN nations, such as textiles, clothing and footwear, tariff peaks and tariff escalation
continued to provide protection.  The matter became even more serious given that Australia had removed
these products from its preferential tariff concessions.
73. Australia's strict quarantine and phytosanitary regulations made it difficult to gain access to the
Australian market, especially for food and agricultural products such as fresh mangoes, bananas,pineapples, poultry and cut flowers.  He recalled that the WTO SPS Agreement established that Members
should, when determining their sanitary or phytosanitary level of protection, take into account the
objective of minimizing negative trade effects.  ASEAN believed that, considering the existence of
adequate alternative phytosanitary measures and also taking into account technical and economic
feasibility, the standards imposed by Australia on certain agricultural products did not seem to be the least
restrictive measures required to achieve its own level of SPS protection.  Concern was also expressed
about the restriction on imports of all food produc ts through strict quarantine laws which had been
criticized by major trading partners.
74.  ASEAN was also concerned about the non-adherence of the state authorities to the provisions of
both the Agreements on SPS and Technical Barriers to Trade with respect to the issue of labelling
especially for processed food.  He viewed it as the primary responsibility of the Federal Government to
ensure that all levels of government fully adhered to the provisions of all WTO Agreements.
75. The representative noted that Australia was one of the active users of anti-dumping measures,
including by proxy.  Since East Asia, includin g ASEAN, was the most affected region, ASEAN
counselled restraint and asked that Australia consider the broader economic welfare implications of
repeated recourse to trade defence measures.  ASEAN also sought confirmation from Australia that
changes to anti-dumping regulations, shortening the period of investigation from 215 days to 155 days,would be sufficient to enable the Australian Customs Service to properly conduct its analysis.WT/TPR/M/41
Page 17
76. To conclude, he expressed appreciation for Australia's continued and constructive partnership
with ASEAN, its commitment to support countries facing financial problems in the region and the
significant role it played in the WTO.
77. The representative of Japan expressed appreciation for Australia's initiatives to develop a more
open multilateral trading system under the WTO, including support for a further comprehensive trade
round.  It was noteworthy that since the present Government had come to power, Australia had been
implementing trade liberalization, deregulation and privatization.  Japan commended its policies, such as
the liberalization of mining exports, except uranium, and the removal of the restriction to 3 mines of
uranium production.  Privatization was also under way in public sectors such as electricity, gas, air
transport, airports, railways and telecommunications.
78. Japan, as the largest importer from and the third largest exporter to Australia, as well as an
important partner in fora such as APEC, welcomed Au stralia's trade liberalization, which gave priority to
the multilateral trading system.  In light of the proliferation of regional trade agreements, Japan welcomed
and encouraged Australia's trade policy, which upheld the multilateral trading system, and looked forward
to working with Australia on enhancing the non-discrimination principles of the multilateral system.
79. Japan was, however, concerned about several issues.  Australia's anti-dumping laws enabled
comparison between the actual export price and the domestic price, in cases where an exporter did notordinarily sell on the domestic market.  As long as any product was ordinarily sold on the domestic
market, the domestic price could be used for establishing the normal value used for comparison.
However, he pointed out that the principle of the WTO Agreement was that anti-dumping duties were
levied on the sales of individual exporters and it was doubtful whether the interpretation by the Australian
Government was consistent with the Agreement.  It also appeared that products from New Zealand werenot subject to anti-dumping actions due to common competition legislation and prosecution procedures.
He asked whether the competition regime, to which products from New Zealand were subjected, assured
equal treatment.  Japan was concerned that products from New Zealand might receive preferential
treatment as a result.
80. According to the Secretariat Report, Australia continued to provide facilitation and marketing
support to companies and a number of export and investment incentives.  The report also stated that
recent policy decisions suggested an intensification of these programmes, as well as of export assistance
which had previously been declining.  The representative requested Australia's view on the apparent
contradiction between its policy of intensified export promotion while it asked for a reduction in domestic
support and export subsidies provided by its trading partners.
81. He urged Australia to accede to the Agreement on Government Procurement promptly.  A report
by the Industry Commission concluded that the conditional MFN treatment of the Agreement detractedfrom the overall benefits of joining.  However, Australia would benefit from joining and seeking more
comprehensive coverage in the Agreement with fewer derogations.  He asked why Australia believed it
was not beneficial to join a plurilateral, non-discriminatory agreement and negotiate improvements as a
participant.
82. The representative appreciated Australia's efforts to reduce its tariffs.  However, tariff rates for
some products such as textiles and clothing, glass, etc., as well as tariff escalation in some products,
remained high.  On state trading, although the Australian Wheat Board was being privatized, it would stillWT/TPR/M/41
Page 18
be a statutory export monopoly, suggesting that this could distort trade and he asked for the Australian
delegation's view on this.
83. Other questions raised by the representative of Japan included Australia's intentions about making
commitments in the audio-visual and in the financial services sectors;  the complicated and high rate of
fringe benefit tax, which was cumbersome as well as financially burdensome;  the issuing of class 457visas which, despite reforms, took a long time;  and the non-transparency of superannuation exemption
procedures.
84. The representative of Korea said that Australia's GDP and total factor productivity growth rates
had been among the highest in developed countries.  These achievements were attributable to the internal
structural reforms implemented by the Australian Government.  The Australian case had proved that
internal structural reforms had also been important in supporting trade liberalization.  Financial reforms,
deregulation and privatization, in addition to comprehensive competition policy reforms, would not onlycontinue to help Australian industry, but would also make Australia a better trading partner.  It was also
notable that Australia had made efforts to liberalize trade and investment through the WTO and open
regionalism in APEC and through its unilateral trade liberalization programme.  Korea, also a member of
the WTO and the APEC, would pursue, like Australia, further trade liberalization and encourage the
promotion of these fora.
85. He said that recent policy recommendations designed to support specific industries had been
submitted to the Government.  The recommendations, which were implicitly sponsored by interest
groups, were reflected in the new industry policy.  There was concern that some of the recommendations
were not consistent with Australian reforms, particularly on deregulation and competition policy and even
the competent organization in Australia had pointed to problems arising from these recommendations.  Heasked about the Government's position on these issues.
86. He noted that most of Australia's applied tariffs declined to a general level of 5% in 1996 and
were expected to fall further until the year 2000 under a unilateral programme which began in 1991.  In
spite of this low average rate, tariffs on PMV and TCF remained high, ranging from 20% to 30%.  As this
was of concern for the Korean Government, he asked why the Government had decided on a pause intariff reductions for PMV and TCF which would involve rates being held at 15% and 25%, respectively,
between 2000 and 2005.  Korea believed that, compared with other OECD member countries, Australian
tariffs in these sectors were very high and that the pause should therefore be viewed as a departure from
Australia's stance on trade liberalization.  It also seem ed that the pause was an attempt to shelter declining
industries from a more open trade regime.  The fact that the level of assistance to PMV and TCF was
three times that of the manufacturing average, seemed  to provide evidence of this.  The complex tariff
concession system tended to increase the level of tariff protection, especially for industries such as textilesand clothing.  Although the Industry Commission had ad dressed this matter, its recommendations had not
been adopted by the Government and he asked if an y other initiative to decrease this level of tariff
protection was envisaged.
87. The Government recently proposed changes to anti-dumping procedures which would abolish the
Anti-Dumping Authority and reduce the investigation period.  There were concerns that the changeswould have adverse effects on Australia's trading partners; that the dissolution of the ADA and the
shortened investigation period would affect the thoroughness of the investigation; and that the greater role
of local industries in the investigation process would allow biased interpretations.  In addition, the
elimination of the "25% or more" element in determin ing local content might weaken the eligibility of an
application and create a danger of frequent appeals.  He requested clarification of the eligibility criteriaWT/TPR/M/41
Page 19
used and asked Australia to respect the criteria set out in the WTO Agreement when initiating an
investigation, to minimize possible misuse of the new procedures.
88. The representative noted that although Australia participated in the Working Group on
Transparency in Government Procurement at the WTO, it was not a signatory to the Agreement on
Government Procurement.  Australia's regulations and practices, especially at the local level, appeared todiscriminate against foreign suppliers and were thus inconsistent with WTO rules.  He said that
Australia's unwillingness to accede to the Agreement, while it advocated and pursued trade liberalization
in many sectors, appeared contradictory especially when government procurement practices in Australia
significantly restricted market access.
89. Australia had one of the strictest quarantine and sanitary and phytosanitary regimes which
restricted imports of many agricultural and related food products.  Its stringent testing requirements, based
on scientific assessment and consultation with scholars and industry-based advisory groups, had beencriticized by its trading partners who requested shorter quarantine reviews.  He pointed out that the review
of Korean pear imports had not been concluded after nine years.  Korea considered that this protracted
review could be regarded as a breach of Australia's commitments under the SPS Agreement and asked
Australia to address the matter.
90. The representative of Switzerland expressed his appreciation that Australia had continued to
liberalize since the previous Review.  Nevertheless, he noted that tariff liberalization in Australia was
taking place on an autonomous basis rather than as a result of multilateral negotiations.  Other policies
such as concessional rates (the TCS system), the by-law system and the TCF Plan had also been
maintained by Australia and appeared to protect domestic industry and to maintain tariff peaks.  These
policies perhaps also caused certain inefficiencies and a lack of international competitiveness.
91. Switzerland failed to understand why Australia was not a member of the Agreement on
Government Procurement and hoped that it would change its attitude in this respect.  He also took note of
the new industry and export assistance policy which were perhaps not transparent enough to judge to what
extent they were protectionist and/or trade and investment distorting.  He requested further information on
the mutual recognition agreement with the EU, the new industry policy and export guarantees.  He alsorequested information on details of the individual action plan for the nine sectors designated in APEC as
well as the phasing out of the tariff quota for cheese.  On restrictions on cheese he remarked that, besides
the question of its WTO compatibility, Australia's sanitary and phytosanitary policy left the impression
that it was being misused for protectionist purposes.  The excessive measures, including an outright
prohibition of imports of cheese made from non-pasteurized milk, were in complete disregard of the
interests of Australian consumers and its trading partners.  He hoped that this policy would soon be
brought in line with the policies of other WTO Members.
92. The representative of India said that the Government and Secretariat reports clearly showed that
the complementarity between internal structural refo rms and trade liberalization was firmly entrenched in
Australia's current economic programme.  Australia had consolidated, in some measure, its budget
deficits through privatization and reductions in subsidies and sought to increase competition by extending
the scope of competition rules to Government enterprises and the services sector, deregulation, andgreater transparency regarding the nature and effect of various distortions to competition.  Since the last
Review, Australia had achieved some success in lowering its general tariff and in tariffying its
quantitative restrictions in agriculture.  India complemented Australia on these and other achievements.WT/TPR/M/41
Page 20
93. She noted that trade between India and Australia had seen some growth during the last few years,
with Indian imports from Australia currently 1.7% of total imports and Australian imports from India
around 0.5% of total imports.  It appeared that the initiatives of the Australian Government had been
aimed at eliminating barriers to trade identified duri ng past interactions.  It was also evident that the
growth trajectory could be higher and that the initiatives could be more directed so that the benefitsrealized were far-reaching and visible.  From 1 July 1994 residual tariff preferences under Australia's
system of tariff preferences for developing countries had been phased out so that MFN rates largely
applied, with some exceptions for least developed countries.  The total value of imports entering Australia
under preferential rates had, as a result, declined substantially.  At the same time there were tariff and
non-tariff barriers on products of interest to developing countries, such as India, such as textiles and
clothing, leather and leather products, automotive products, agriculture and services.  These sectors had
traditionally enjoyed relatively high protection.
94. While the general tariff level for most products had declined to 5% by 1996, there were some
exceptions, notably TCF and PMV.  Contrary to independent advice, the Government decided in favour
of a pause in tariff reductions for these industries between 2000 and 2005, which might be giving the
wrong signal to these industries and to manufacturing in general.  Although Australia in its opening
statement suggested that there was no evidence supporting this, India believed that the fallout was alreadyvisible.  Following a protest by farmers, import tariffs on pork had been frozen.  India felt that the existing
situation created an uncertain tariff regime not just fo r manufacturing but also for agriculture.  In addition,
frequent changes in quarantine policy and procedures and the setting of standards that were not fully
equivalent to international standards added to th e lack of transparency in the import regime for
agricultural products.  India believed that standards and quarantine could be science-based, transparentand, more importantly, non restrictive and hoped that the Government would eliminate these
uncertainties, allowing greater transparency and market access.
95. The representative of the European Union said that the EU was Australia's largest economic
partner, with the aggregate of trade in goods, services and investment income accounting for about $A 48
billion.  The EU was Australia's largest partner in terms of trade in services, and Australia's leadinginvestment partner.  In addition, the recently signed bilateral Mutual Recognition Agreement (MRA) on
conformity assessment, certificates and markings would facilitate trade by allowing conformity testing
and certification of products traded between the two to be undertaken in the exporting country rather than
at destination.  The Agreement would deliver significant benefits to European and Australian industry,
affecting around one-third of trade in indu strial products, ranging over 7 sectors.
96. Australia's trade policy had evolved positively since the last Review.  As a result of its Uruguay
Round commitments and of unilateral tariff reductions, the general tariff on most goods had fallen to 5%or less, while about 96% of Australian tariffs were bound.  He also welcomed Australia's strong support
for a comprehensive approach to multilateral trade negotiations and looked forward to cooperating on
this.  However, effective protection was abnormally high in areas of interest to the EU, including TCF and
PMV where tariffs would remain unchanged between 2000 and 2005 at least.
97. He welcomed Australia's recent quarantine policy review and believed that this was an area that
required much closer attention by the authorities.  Australia's very strict quarantine regulations resulted in
an import ban for around 150 products which had practically not altered market access notwithstanding
the November 1997 decision to allow im ports of cooked chicken and pigmeat.
98. In public procurement local preference schemes operated at a State level and the offset
requirements at all levels of procurement constituted significant market access barriers.  Six States stillhad rates favouring domestic suppliers for public procurement tenders.  He asked what steps were beingWT/TPR/M/41
Page 21
taken by the Federal Government to induce these States to remove this practice which was at odds with
the WTO principle of non-discrimination.  He questioned Australia's non-participation in the Agreement
on Government Procurement which he regarded as disappointing and effectively in contradiction with
Australia's status as an industrialized country.
99. He expressed concern at Australia's failure to comply with the notification requirements under
Article 25 of the WTO Subsidies Agreement, which required all Members to notify specific subsidies
granted by all levels of Government.  In the EC's vi ew, Australia had failed to notify most of its federal
subsidies and completely failed to notify subsidies granted at the sub-Federal level.  The level of subsidy
provided to industry by State, Territory and Local Governments in Australia was large, in most cases
discretionary and selective, and would therefore seem to be specific and accordingly notifiable to the
WTO.
100. Although the nominal rate of assistance provided at the Federal level for agriculture was only 4%,
the effective rate of assistance (including Federal and State assistance) was 20%.  With regard to state
trading enterprises, such as the Australian Wheat Board, he said that their exclusive export monopoly
status should be adjusted to allow parallel exports.  He asked about Australia's position on removing
restrictions on parallel imports of compact disks, and if consideration was being given to allowing foreign
bank branches to conduct retail deposits in the same way as foreign bank subsidiaries.
101. To conclude, the representative said that the EC was heartened by Australia's adherence to
liberalization, which had been an important characteristic of its commercial policy, without interruption
over the last 10 years.  However, he noted that EU exports of industrial and especially agricultural
products were confronted by a number of non-tariff barriers.  The EC considered that a sophisticated
economy such as Australia's did not need such barriers and hence, while its overall judgement waspositive, it remained tinged with a note of concern.
102. The representative of New Zealand commended Australia's commitment to economic
deregulation and trade liberalization undertaken over the last 15 years.  Economic reform had resulted in
GDP and productivity growth rates among the high est in the OECD.  New Zealand also appreciated
Australia's demonstrated commitment to a rules-based, free and open global trading environment.Australia's membership in APEC and support for the Early Voluntary Sectoral Liberalization Initiative
was valued by New Zealand and he shared Australia's belief that such well conceived regional initiatives
complemented the WTO's multilateral liberalization objectives.
103. Under the Australia New Zealand Closer Economic Relations Trade Agreement (CER), economic
opportunities for both countries, and for other trading partners, had expanded as trade barriers were
reduced.  He noted the importance of such initiatives, working closely in tandem with the WTO's
multilateral framework, in helping both economies weather the current economic shocks.
104. In the Cairns Group, which Australia chaired, member countries sought to further multilateral
reforms in agriculture.  Improved access to foreign markets and stronger disciplines on domestic support
and export subsidies, including the removal of the latter on agricultural products, as for other goods, were
important objectives in today's globalizing economy.  However, he pointed out that explicit barriers to
trade such as export subsidies were not the only impe diments to agricultural and food trade.  Quarantine
regimes afforded countries with a means of restricting trade if they so wished.  New Zealand was pleased
to see the explicit commitment in the Australian Government's Report to a transparent and expeditious
science-based risk analysis process.WT/TPR/M/41
Page 22
105. He noted that, according to the Secretariat Report, although the benefits of economic reform had
been evident in higher productivity and GDP growth rates, Australia continued to face significant
economic challenges including unemployment and the need for structural adjustment of traditional
industries.  He looked forward to Australia foll owing through on its well demonstrated commitment to
economic reform to further improve the competitiveness of its industry.  To this end he was pleased to seethat tariffication and the removal of non-tariff barriers  had continued since the last Review, resulting in a
fall in Australia's effective rates of assistance.  New Zealand was supportive of Australia's efforts to
reduce tariff levels and applauded the fact that almost 85% of tariff lines had duties of between 0-5%
compared to only 44% in 1993.  He also noted that Australia had bound 96% of industrial tariff lines and,
as required, 100% of agricultural tariff lines.
106. He noted, however, that the Secretariat's Report pointed to considerable variation in Australia's
overall tariff structure.  Given the Report's overall conclusion that Australia's post-1991 tariff reforms hadhad a positive effect on economic growth, he encouraged Australia to maintain its tariff reduction
programme in the interests of enhanced long-term prosperity.  Similarly, further liberalization of the
services sector would also improve Australia's prospects for long-term prosperity.  He welcomed reforms,
notably in the financial and telecommunications sectors, undertaken since the previous Review.  The
services sector accounted for around 70% of Australian GDP and in moving to further free up this sectorAustralia reaffirmed its commitment to the global tradin g system.  In closing, he reiterated the value New
Zealand attached to the Trans-Tasman economic partne rship and to working closely with Australia in the
interests of advancing the fundamental trade liberalization objectives of the WTO and its rules-based
approach.
107. The representative of Norway said that since the previous Review, Australia's overall economic
performance had been positive and inflation had declined, although unemployment remained high.
Norway's trade with Australia accounted for less than 0.3% of total Norwegian trade.  Bilateral trade
consisted mainly of maritime services and Norway noted  with interest recent reforms in shipping.  The
Shipping Reform Group published its recommendations in 1997 to which the Government was still
considering its response except for an initial package announced in late 1997 to liberalize coastal trade.She asked for information on plans for implementing these and other reforms.
108. While mining and energy received the least amount of protection, the same could not be said
about other sectors such as textiles and Norway regretted the decision to have a tariff pause between 2000
and 2005 rather than continue tariff reductions.  This would effectively increase the adjustment time for
the sector and freeze high tariffs for clothing and finished textiles at 25%.
109. The shortened investigation procedure for anti-dumping, if it were too short, would increase the
burden on the exporter or producer under investigation, particularly those from non-English speakingcountries.  It would also reduce the possibility of finding a solution through dialogue.  A shorter period of
investigation should not be an aim in itself.  If th e period of investigation were too short, it might be
necessary to place a stricter burden of proof on the complaining party.
110. Norway welcomed the fact that total export assistance had declined during the period under
review.  The total level, however, still seemed high and the new industry policy suggested a reversal inthis decline.  Norway was concerned that the Govern ment intended to spend an additional $A 1.26 billion
for export promotion until 2001/2002 and welcomed comments on this issue.
111. The automobile sector was one of the most assisted sectors, including through the Export
Facilitation Scheme and she asked how this was being organized and the level of support provided.WT/TPR/M/41
Page 23
112. She welcomed the fact that Australia was an observer to the Agreement on Government
Procurement, but would have preferred it if Australia joined the Agreement.  She invited Australia to
participate actively in the review process in the Committee which would result in a more simplified and
streamlined agreement to which Australia could also be a party.
113. The representative of Chile noted that Australia had been unilaterally reducing its tariff level by
significant amounts as well as binding tariffs in the WTO.  This gave Australia great legitimacy in its
position in favour of trade liberalization as it had stressed in various fora, including APEC.  This policy
was consistent with the leadership it held in the Cairns Group.  He also appreciated the establishment of a
position on trade issues currently under discussion, such as electronic commerce, investment and
competition.  The fact that positions like these had been established helped in the debate because it
allowed these issues to take on more specific shape in the multilateral arena.
114. Australia had stated that it was in favour of promoting more strict multilateral disciplines within
the framework of regional agreements and that liberalization should occur more in the multilateral sphere
because there might be discriminatory elements in regional agreements.  Chile believed that it was
positive to set policies and establish positions.  Ho wever, while recognizing th at the multilateral forum
would be the only legitimate forum in the long run, he believed that bilateral negotiations had many
purposes in addition to trade liberalization and could therefore not only be seen in reference to tradeliberalization.  Hence he did not necessarily agree that bilateral agreements were discriminatory especially
since they were allowed by the multilateral trade system, thereby giving them legitimacy.
115. Australia referred explicitly to a decline in anti-dumping cases.  At the same time it was evident
that the level of anti-dumping and countervailing measures in force was much lower than for other major
users of the measures.  He asked if this implied that Australia would be more cautious with regard to tradedefence measures and whether the measures would be applied in rare cases.WT/TPR/M/41
Page 24
VI. REPLIES BY THE REPRESENTATIVE OF AUSTRALIA AND ADDITIONAL
COMMENTS
116. Replies by the representative of Australia were divided into three main themes, (i) the economic
environment, (ii) trade and investment measures and (iii) sectoral issues.  Answers to questions submittedin advance were also provided in writing and circulated to all Members.
(i) Economic performance and institutional framework
117. The representative of Australia expressed overall satisfaction with the comments made by the
discussants and delegations.  He noted the recognition that Australia had continued to implement, on an
autonomous basis, significant trade liberalization since 1994 covering tariffs, services, competition policy
and other areas.  The contribution made by Australia to the multilateral trading system, particularly in the
call for comprehensive multilateral negotiations in 2000, was also acknowledged.
118. He welcomed appreciation of Australia's strong economic fundamentals and its sound
macroeconomic policy settings which had resulted in one of the lowest inflation rates and one of the
highest growth rates of OECD countries.  It had al so been observed that Australia's trade liberalizing
measures, including domestic regulatory reforms, had promoted important changes in the structure of
exports which in turn had contributed to maintaining and improving living standards.
Impact of the Asian Crisis
119. On the question of an update of forecasts on gr owth, budget surplus and current account deficits,
the representative replied that despite press speculation, the forecasts contained in his opening remarks
remained current.  It was important to remember that Australia's current account deficit did not reflect
imbalances in trade flows but rather payments for borrowings made in the 1980s and early 1990s.  Thepolicy of fiscal consolidation had been directed at this problem which had, in turn, enhanced Australia's
capacity to withstand the effects of the financial crisis in Asia.
120. He assured Members that in the face of what seemed likely to be a slowdown in export growth,
the Government remained committed at the highest levels to keeping Australia's markets open and
continuing the process of overall economic reform while taking into account the legitimate needs ofindividual sectors for adjustment assistance.  The East Asian crisis had only strengthened Australia's
determination to push for comprehensive trade negotiations in 2000 with tangible results in market access
for Australian exporters of services, agricultural and industrial products.
121. He pointed out that the response by the Government to the crisis had been positive and proactive,
exactly the opposite of the concerns expressed by some Members.  Australia was one of the few countries
to assist East Asian economies through financial support for IMF loan packages.  Australia had also
strengthened its aid programme, particularly those parts directed toward institution building in theaffected East Asian economies, and had encouraged further economic reform and liberalization in Asian
economies and discouraged protectionism.  To encourage exports, the Government had consulted with
exporters, provided information on market developments and alternatives, urged companies to undertake
planning and risk assessment and had stepped up promotion of tourism.WT/TPR/M/41
Page 25
Open Regionalism
122. Australia's determination to push ahead with gradual and predictable trade liberalization had to be
seen in the context of the commitment to achieve free trade and investment by 2010.  Early Voluntary
Sectoral Liberalization (EVSL) in 15 sectors would create momentum towards meeting this goal.
Australia was one of the strongest advocates in APEC of the gains from such MFN-based liberalization,not least because of their potential contribution to multilateral trade liberalization.  Tariff liberalization
end-dates had been developed for some EVSL sectors, while for others, such as environmental goods and
services, further technical work was required to finalize basic parameters.
Transparency and predictability of trade and economic policy
123. Concern had been expressed about actions that might suggest a departure from the high levels of
transparency and predictability in Australian trade policy formulation.  The representative reiterated that
Australia asked to be judged on its record.  Tariff reductions in sensitive sectors would continue in apredictable and deliberate manner.  Australia's industry policy was based upon sound macroeconomic
policy setting and the vigorous pursuit of microeconom ic reform, with the smallest number of sectoral
initiatives necessary to encourage efficient structural adjustment.
124. The transparency of Australia's policies was attested to by the comprehensive and detailed nature
of the Secretariat Report.  Australia had a long history of policy-making based on open inquiry andrigorous analysis of economic costs and benefits.  The formation of the Productivity Commission, whose
focus would be on improving overall economic perfor mance, reducing the regulation of industry, and
facilitating adjustment to structural change, was th e latest manifestation of this.  The Commission would
also continue to argue for the interests of the cons umer on regulatory and trade reform.  However, this
was not to say that all recommendations of such bodies  had to be followed or that they were the only
source of advice.  But the process remained rigorous and transparent and decisions were taken in the
knowledge of all.
125. Similarly, Australia's procedures on trade remedi es and in other areas, such as quarantine, were
open for input from all interested parties.  He found it ironic that at a time when there was a call for WTO
processes to be more open to comment by all players and stake-holders, Australia faced questioning forallowing industry to make its views known and to participate in the process.  He said that it was surely
preferable for national governments to keep themselves open to stakeholders than to deflect these interests
onto international government-to-government bodies.  This degree of transparency was a guarantee of
continuing predictability in Australia's trade regime.  The Australian Government was prepared to go
beyond this and would introduce a legislated progra mme for tariff reductions in Parliament, ensuring
security and predictability in the process.
126. The Government was keenly aware of the beneficial impact of trade and investment liberalization
for Australia and its partners.  Domestically, in APEC, the OECD and the WTO, Australia had been
active in ensuring greater transparency and awareness about the results of trade liberalization.  Australia
had widely disseminated a booklet within the community, building support for trade liberalization by
highlighting the concrete benefits that had already resulted.  A programme was also being developed to
explain the benefits of trade liberalization in Australian schools and universities.
127. The Australian study had been an important i nput into OECD work on the results of trade
liberalization, which he hoped would be used by others in explaining the benefits and costs ofWT/TPR/M/41
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liberalization to industries, consumers and non-govern mental organizations.  Within APEC, Australia had
called for and built agreement on undertaking similar work, in order to spread the message that trade
liberalization and economic reform ultimately benefit all.  He urged the WTO Secretariat to spare no
effort in analyzing and publicizing the benefits of trade and investment liberalization.
128. At the same time, it was important not to overlook the fact that liberalization meant difficult
adjustment for some.  Support, training and wider micro-economic reforms had to be included in any
broad package of liberalization to assist the adjustment process.  The Government recognized that long
term gain involved costs and that it was the respons ibility of governments to ensure that the community
understood the nature of, and was able to bear, those costs.  This was particularly important at a time
when international developments threatened Au stralian export growth and when sound economic
fundamentals were, at least in the short term, irrationally discounted by markets.
129. The second discussant stated that the responses from the Australian representative had made very
clear the determination of the Government to proceed with liberalization and to ensure transparency in the
process.  Members had a lot to learn from the Australian experience.  He wondered to what extent
Commonwealth policies had been adopted at the State level and to what extent they took Commonwealth
government commitments at the WTO into account.  On the issue of stakeholder involvement in the
policy-making process, he noted that it was the danger  of the influence of vested interests that was of
concern.
130. The first discussant noted that the Australian delegation had not made any reference to growth
projections for the Australian economy for the coming year.  However, she assumed that official
projections for 1998/99 were around 3% as compared to private projections which were lower.  Her
second point was on transparency.  It was evident from the Secretariat Report, the Government policystatement and the remarks by the Australian representativ e, that Australia took its role in making the case
for trade liberalization domestically very seriously.  She was therefore concerned by remarks that it was
surely preferable for governments to keep themselves open to stakeholders than to deflect these interests
on to international government to government bodies.  She asked for clarification on why Australia
seemed to differentiate between domestic and international transparency.
131. The representative of Australia explained that the Commonwealth/State relationship was based on
the fact that each State had constitutional responsibility in a number of areas.  It was therefore important
that both the Commonwealth and State levels moved towards openness and trade liberalization.  He
believed that in general this had worked well, particularly since there had been a bipartisan consensus in
favour of openness and reform over the last 15-20 years in Australia.  There were also areas of close
cooperation between the Commonwealth and States, fo r example the National Competition policy regime
which was being applied by the States as well as the Commonwealth in close consultation.  There wasalso consultation in the formulation of national trade policies.
132. On the comment on vested interests he reiterated that it was perhaps better to have a system that
took into account the views of the interests involved in decision-making and it was up to governments to
ensure that vested interests did not dominate the process.  He did not think that that was a reason for
governments not to consult the opinions of interested parties.
133. He confirmed the 3% growth forecast for the Australian economy while acknowledging that the
situation was fluid and that it was being kept under review.  On transparency he said that he did not
suggest that there was no room for greater transparency in the WTO process but thought that it was the
responsibility of Members to make sure that the firs t level of transparency in the positions taken in the
WTO, and conveying the decisions back to their stakeh olders, rested with Members rather than with theWT/TPR/M/41
Page 27
WTO in general.  The prime responsibility of the Government was to ensure that their stakeholders were
aware of the decisions they were taking with regard to the WTO.
(ii) Trade measures
Tariffs
134. In responding to questions about Australia's pause in tariff reductions for TCF and PMV
industries, the representative said that the Governme nt was committed to further tariff reductions and to
the removal of non-tariff barriers.  This had been demonstrated by the removal of tariffs on raw and
refined sugar, thus opening an important and sensitive sector to international competition.
135. The tariff cut that would be made in 2005 in the TCF and PMV sectors would be significant,
lowering tariffs to the point that would have been reached at that time if gradual reductions had been
continued.  The tariff reductions were unilateral, a nd the pause did not imply that Australia was reneging
on a WTO commitment.  Scheduled tariff reductions would continue until 2000, reaching 25% forclothing, 15% for textiles and footwear and 15% fo r the PMV sector.  In 2005 tariffs on clothing would
fall to 17.5%, 10% for textiles and footwear and 5-7.5% for other TCF products.  PMV tariffs would fall
to 10%.  Both TCF and PMV tariffs were programmed to move to free trade by 2010, consistent with
Australia's APEC commitment.
136. On the issue of preferences for developing country exporters, he pointed out that most of
Australia's tariffs were at, or less than, 5%, a level at which preferences for developing countries became
largely meaningless.  Preferences for least developed countries remained and this would be of
considerable value in the TCF sector where tariffs were higher than the general average of 5%.  Australia
did not maintain quotas on textiles, and tariffs were falling in a predictable way to the benefit of
developing country and other textile exporters.  By the time other developed countries had removed theirquotas in 2005, Australia would be implementing the next stage of deep tariff cuts.
Passenger motor vehicles
137. The automotive tariff would have fallen from a peak of 57.5% to 15% by 2000 and would decline
to 10% in 2005, representing a sustained, decisive reduction.  He added that 55% of the Australian market
was supplied by overseas manufacturers, representing one of the most open markets for an automotivemanufacturing economy.  Moreover, no non-tariff barriers to imports were maintained.
138. The new Automotive Competitiveness and Investment Scheme, which would operate from 2001,
would raise the existing duty free allowance for PMV manufacturers from 15% to 25%;  extend the range
of eligible PMV production to include engines and engine components and to include all production for
all markets;  provide a 10% investment allowance for PMV manufacturers;  and an allowance of 25% and
45% for investment and R&D, respectively, for eligible component manufacturers and service providers.
The new scheme was not linked to export performa nce.  Instead the focus was on production, investment
and research and development.  It would motivate the industry to continue progress towards global
competitiveness and a self-sustaining future in the context of trade liberalization and the globalization of
the car industry.WT/TPR/M/41
Page 28
Anti-dumping
139. Australia's anti-dumping system had always been consistent with its WTO obligations.  The
investigation process was clearly set out in legislation and highlighted Australia's commitment to ensuring
transparency.  The legislative changes, including immediate transitional arrangements, were passed by
Parliament in June 1998 and continued to maintain this consistency and commitment.  He pointed out thatthe former arrangements had had a considerable degree of duplication in the investigation process.  The
new legislation enabled quicker, more efficient resolution.  Australia's policy and administration
continued to require high standards of professionalism and performance throughout the investigation
process which remained the same as before.  The investigation would be conducted only once, but
thoroughly.  He also said that, contrary to suggestions, the private sector did not have an enhanced role in
the investigative process.  Moreover, concerns about an investigation could be raised before the Trade
Measures Review Office (TMRO), which was a statut ory office, independent of the Australian Customs
Service.  If the TMRO, which was an additional appeal mechanism previously not available, had
sufficient doubt about any aspect of the investigation, it could recommend that that aspect of the
investigation be remitted to the ACS for reconsideration.
140. He re-emphasized that the primary objective of the change was to achieve greater efficiency and
to remove duplication.  There had been no shortening of the time interested parties had to prepare andpresent their views.  In addition the appeal process through the TMRO provided affected parties with 30
days in which to prepare any basis for appeal.
Safeguards and subsidies
141. Australia did not require new legislation to take  safeguards action.  There had been, however, a
need to establish procedures as  required under the Agreement on Safeguards.  These had been notified to
the WTO.  The first safeguard investigation was initiated in June 1998, on imports of frozen pork, and
was being carried out by the Productivity Commission.  He emphasized that no safeguard action had been
taken.  Instead, Australia had joined other Members in establishing a mechanism consistent with its WTO
rights.  If any action were to be taken, it would be consistent with WTO obligations.
142. Australia disagreed that it had failed to notify some Commonwealth subsidies as required under
the Agreement on Subsidies.  He noted that very few Members had been able to complete the process
required to notify sub-national subsidies in full.  Australia agreed that such subsidies were notifiable
under the Agreement and was in the process of liaising with sub-federal entities in order to identify any
relevant sub-national subsidies, for notification.
Export assistance
143. Several delegations had suggested that the Government's new industry policy appeared to indicate
a reversal of the declining trend in assistance to exports.  In fact, Australia had not increased its exportpromotion measures and did not have an intensified export promotion policy.  Total Commonwealth
export assistance had declined between 1993/94 and 1997/98, while the new industry policy did not
indicate a reversal of this declining trend.  New assistance would be significantly lower than in the past.
The Export Market Development Grants programme had been extended for an extra 2 years but
expenditure was lower than before;  the Manufacturing-in-Bond scheme was a different arrangement forduty draw-back and was a temporary measure until TRADEX was in place;  the APEC Market
Integration/Industrial Collaboration programme was a trade facilitation programme within APEC rather
than specific assistance for Australian exports;  the Export Access Programme offered assistance to smallWT/TPR/M/41
Page 29
and medium sized exporters;  and the Trade Start programme would improve access to export services for
new exporters in regional and rural Australia.
Sanitary and Phytosanitary issues and Standards
144. The claim that access to Australia's markets for agricultural products was severely restricted by
quarantine measures was not supported by the high levels of import penetration in Australia.  Australiadid not apologize for its conservative approach to sanitary and phytosanitary regulations and took its
obligations under the SPS Agreement very seriously, including the need to base measures on sound
science, risk assessment and a consistent approach to risk management.  Products which presented a
significant risk of introducing exotic pests or diseases into Australia were excluded, or permitted entry
under conditions which reduced risk to an appropriately low level.
145. He said that Australia was free of most serious animal and plant diseases.  As a geographically
remote island nation with a very favourable animal and plant health status, and as a very efficientproducer of high quality and safe food from plant and animal sources, Australia's quarantine policy aimed
to prevent the entry of exotic pests and diseases.  Quarantine conditions were determined through a
science-based, open and transparent process of import risk analysis.
146. There were currently 44 import risk analyses being undertaken.  The Australian Quarantine
Inspection Services (AQIS) consulted with all stakeholders indicating an interest in an import riskanalysis and this was an important part of ensuring that measures were based on sound science.  The
consultation was based on interested parties providing scientific information relevant to the quarantine
issues of the risk analysis.  He stressed that AQIS' consideration was limited to matters of science and did
not include economic or other matters unrelated to the assessment of quarantine risk.
147. He acknowledged that import risk analysis could not be conducted without an objective
comparison of pests and diseases present in the exporting and importing countries.  The identification of
risk management options also required information on effective risk control techniques.  Australia had
funded Australian technical experts to assist with this process for some developing countries.
148. Australia recognized that it was important for its trading partners to be aware of the reasons for its
strict quarantine regime.  Some of Australia's key markets in East Asia were also sensitive about foodquality and if Australia were to lower its food standards it would risk the closure of export markets.  The
concerns of trading partners were taken into account.  However, the scientific procedure had to be
followed correctly and the costs of not doing so co uld be high for Australia.  The Government had
initiated a number of quarantine policy reviews, in order to continuously improve policy.  Specific
initiatives resulting from these reviews had included ad ditional expenditure of more than $A 75 million to
improve the operation of Australia's quarantine system.
149. Australia was committed to aligning national voluntary standards with international standards to
the maximum extent possible and standards were already substantially aligned with relevant international
standards.  In some cases, not all parts of the compar able international standard had been incorporated, or
added to, to meet the needs of the Australian market.  While Australia supported the adoption of
international standards as national standards, there was concern at the push for international standards to
take on what seemed to be a dominant role in the area of technical regulations.  Australian Governmentpolicy was that regulations had to be written for the purpose of achieving specific policy objectives, and
should not be more burdensome than necessary.WT/TPR/M/41
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Investment measures
150. In response to questions about policies to attract investment, the representative said that the focus
of Invest Australia was primarily on providing information on Australia as an investment destination and
facilitating the necessary government approvals for new investment.  Investment incentives were
provided to both domestic and foreign firms, provided  that they met the eligibility criteria including that
the investment, would not be likely to occur without the incentive;  provided significant net economic
benefits;  complemented Australia's comparative advantage; and was viable in the long run without a
subsidy.  No separate funding had been provided for investment incentives.  All applications for
incentives were considered on merit, on a case by case basis, and had to be approved by the Government.
The Government had stated that it would consider  granting incentives only in limited and special
circumstances for projects which met these criteria.
151. Investment screening by the Foreign Investment Review Board (FIRB) was liberal, creating few
obstacles for genuine investment applications.  In general, for non-sensitive sectors, smaller proposals
were exempt from notification.  Larger foreign investment proposals were normally approved unless
judged contrary to the national interest.  Sensitive sectors, including real estate, civil aviation, media and
telecommunications, raised concerns in the community and were subject to more restrictive policies.
Proposals were generally approved unless judged contrary to the national interest.  He added that thenational interest test placed the onus on the authorities to show reason to reject a proposal rather than on
an investor.  The high level of foreign investment in Australia and the scarcity of complaints about
rejections by the FIRB attested to the fact that the alleged obstacles did not exist.
Industry policy
152. Several delegations had suggested that Australi a might be moving to a more interventionist
industry policy.  This was not the case.  There was a tight focus and limit to Australia's measures for
industry.  The Australian Government was not attempting to pick winners.
153. Australia's industry policy focused on improving the business operating environment through
sound macroeconomic policy settings and the pursuit of microeconomic reform.  Fiscal consolidation had
resulted in an expected budget surplus in 1998/99;  inflation was equal to or below that of major tradingpartners while interest rates were at their lowest in 30 years.  Microeconomic reforms continued to
remove structural rigidities in the economy.  These reforms included measures to increase labour market
flexibility, tax reform and competition policy in key sectors such as telecommunications, energy and
transport.  Privatization of the Commonwealth Bank, Qantas and part of Telstra had led to increased
competition and greater efficiency in key infrastructure and service industries.
Intellectual Property Rights
154. Australia had a world class intellectual property rights system which was essential to maintain
international competitiveness and to develop exports.  Australia had implemented all its TRIPS
obligations and continued to work actively for major new international treaties for intellectual property
protection.  A number of intellectual property reforms had been made recently, such as for parallel
imports, providing high standards of protection while avoiding unnecessary restrictions for consumers by
allowing legitimate copies of protected works.  All decisions on intellectual property reforms were takenin full conformity with Australia's international obligations.
155. Close attention was also paid to the enforcement of intellectual property rights, demonstrated by
recent increases in the penalties for dealing with pirated intellectual property products.  Australia was alsoWT/TPR/M/41
Page 31
committed to promoting improved protection for inte llectual property regionally through bilateral
assistance and also through assistance projects in WIPO, APEC and the WTO.
Government Procurement
156. Australia had not signed the Agreement on Government Procurement because it was felt that it
lacked commercial benefits for Australian export ers in its current form.  Market-access commitments
based on mutual reciprocity, complex administrative provisions, costs associated with statistical
requirements and the fact that the Agreement di d not necessarily encourage transparent government
procurement practices, had discouraged Australia from joining.  Some major industrialised countries had
acceded to the GPA on a highly conditional basis which potentially made those markets more restrictive
than Australia’s and this was also a factor in Australia’s decision.
157. Australia's national approach to activities in the WTO Committee on Government Procurement,
the WTO Working Group on Transparency in Government Procurement and the Working Party on GATSRules was being developed by a Consultative Group comprising the economic, government procurement
and industry agencies of Federal, State and Territory Governments and the Chair of the Australian
Procurement and Construction Council.  Business and industry were also consulted.  The Group had
agreed on work to identify the conditions and principles which Australia would wish to see in any future
instrument on government procurement, enabling it to make a positive contribution to governmentprocurement issues in the WTO.
158. Australia's federal structure was not relevant to the fact that it had not joined the Agreement.
Australia's position on membership was national and the Commonwealth and State Governments as well
as business and industry considered that the disadvanta ges outweighed the benefits of joining.  The focus
was therefore on the review rather than on joining.
159. The first discussant stated that most delegations recognized that tariff reductions in general, and
in the TCF and PMV sectors, were the result of unilateral action and did not relate to Australia's WTO
commitments.  However, the point that had been su ggested was that it might be difficult to reduce
protection in sectors such as PMV and TCF, where protection had been relatively high for a period of
time.  She recognized that the tariff pauses were no t implied to mean that the commitment to free trade
and investment by 2010 would not be met.  However, it could sometimes be difficult to move towards
goals such as these when protected industries were vocal at the political level.
160. The second discussant understood that it was Australia's legitimate right to have protection for
SPS and Standards.  However, the requirements were perhaps excessive, creating barriers for exporters.
For example, the amount of cooking required for chicken meat was excessive and would, he believed,
render the meat unfit for human consumption.
161. The representative of Thailand sought clarification on the use of third country anti-dumping
measures and asked whether this would be an additional trade impediment.
162. The representative of Canada remarked that the speed with which Australia initiated its safeguard
investigation had left insufficient time for Canada to examine the procedures.  He asked for information
on how long it took to complete the investigation;  how long interested parties had to notify their interest;
and the time-frame for conducting the investigation.WT/TPR/M/41
Page 32
163. The representative of Korea said that Korean products were fruit fly free and asked that the SPS
investigation concerning pears be completed in the very near future.
164. The representative of the European Communitie s said that the EU recognized the special
characteristics of the country and the need to be isolated from a series of diseases.  However, the
Community was finding it enormously difficult to export meat products, in particular, which theCommunity considered healthy and posed no risks.
165. The representative of the United States recognised the importance of appropriate SPS regulations.
He asked when policy changes resulting from the recent quarantine review would become available.  On
investment, while it might be correct that there had been few complaints about the review process, the US
entertainment industry, which would be classified as a sensitive sector, had been discouraged from
investing in Australia.  While understanding the politics behind Australia's investment review process, he
felt that the absence of specific cases put forward for the review process necessitated the removal of theplan.  Additional questions on intellectual property rights would be submitted in writing.
166. The representative of Australia said that the pause was being introduced because protection for
the TCF and PMV industries had declined considerably and the Government felt that it would allow the
industry to consolidate its position before facing the next series of deeper tariff cuts.  It was important to
point out that industry was fully aware that the cuts  would take place in 2005 and would therefore have to
begin adjustments now.  In response to comments made by the second discussant, he recognized concerns
that had arisen on SPS issues.  On chicken meat, AQIS commissioned independent laboratory testing for
specific diseases which concluded that there was a need for cooking the meat at higher temperatures in
order to eradicate those diseases.  The scientific study was being reviewed.  AQIS would consider
cooking times outside of those recommended if there was sufficient scientific data provided to show thatthe product was free of these diseases.
167. On the use of third party anti-dumping, he said that this option was available under the WTO
Agreement and countries were aware that it could be used.  On safeguards he understood that there was
no requirement for countries to notify procedures before  initiating an investigation.  The review period for
safeguards was 140 days and the guidelines accompanying the procedures would indicate the timelinefollowed in the process.
168. With regard to quarantine procedures, a new booklet would be available soon outlining revised
procedures for the conduct of quarantine risk analyses which he hoped would enhance transparency and
facilitate quicker completion of the process.  He was surprised that there had been complaints about
foreign investment screening procedures and if there were problems it would be useful to be made aware
of them.  He also noted the United States' additional questions on intellectual property rights and said that
Australian intellectual property rights regulations were entirely consistent with its TRIPS requirements.
169. The representative of Thailand sought further information on the relevant article relating to third
party anti-dumping measures.
170. The representative of Australia requested if this matter could be dealt with bilaterally outside the
meeting.WT/TPR/M/41
Page 33
(iii) Sectoral issues
Agriculture
171. Australia had, by any measure, one of the lowest measures of assistance to the agricultural sector.
In responding to comments that Federal and State assistance for agriculture together were considerably
higher than Federal support, the representative said that a comparison of nominal and effective rates ofassistance in itself was not particularly revealing.  Instead, the main benefit was in comparing support
across different sectors in one country and sectoral support across different countries.  Whichever
measure was used, Australian support was low.  Australia did not have export subsidies and domestic
support subject to reduction commitments measured only one-third of the levels to which Australia was
entitled.
172. Australia had continued reform of statutory marketing boards and other government related
agencies which fell under the WTO definition of state trading enterprises in order to make them morecommercially focused, more responsive to international markets and more accountable to stakeholders.
The Wheat Board would be privatized by 1 July 1999 and state trading enterprises would be subject to the
national competition policy regime which would extend anti-competitive conduct provisions of the Trade
Practices Act to cover all government business activitie s.  The only government involvement in the Wheat
Board would be the provision of single desk exporti ng rights which would reviewed as part of the
National Competition Policy Review in 1999/2000.
173. Australia was a strong supporter of greater transparency in the WTO of state trading operations
and actively supported the finalization and recent adoption of the WTO Questionnaire on State Trade
enterprise operations.  The first notifications, which were due to be submitted by September 1998, would
provide the basis for greater transparency in the review process in the Working Party on State TradingEnterprises, including on the operation of subnational enterprises.
Services
174. The representative expressed appreciation for the recognition of the significant deregulation and
liberalization that had taken place in the services sector.  Progressive liberalization, he said, would
continue to be a major pillar of Australia's trade policy into the next round of trade liberalization.  Thepace of technological change and the pressures of increasing globalization were especially evident in
services as services fuelled the growth of world trade and investment.
175. Australia would continue to deregulate telecommunications services including, and subject to
Parliamentary approval, further privatization of the largest carrier Telstra.  Australia recognized the
importance of competition in the sector and reminded members that Australia's telecommunications
sector was now fully open to competition.
176. Deregulation would also continue in financial services including a new structure which, when in
place, would provide flexible, efficient, coordinated and consistent regulation in a highly competitive and
transparent environment.
177. Electronic commerce was high on the Government's agenda and Australia was pursuing a strategy
to ensure that it was at the forefront of developments in this area.  Australia was a proponent of the
examination of the trade-related aspects of electronic commerce through the comprehensive workWT/TPR/M/41
Page 34
programme that was established at the last WTO Ministerial Meeting.  Australia was also involved in
APEC and the OECD on this issue.  Finally, reform s in other services sectors would continue to be
characterized by a measured trend to greater liberalization.WT/TPR/M/41
Page 35
VII. CONCLUDING REMARKS BY THE CHAIRPERSON
178. The third Trade Policy Review of Australia was conducted by the TPR Body on 30 June and 2
July 1998.  These remarks, prepared on my own responsibility, are intended to summarize the main points
of the discussion; they are not intended as a full report.  Details of the discussion will be reflected in theminutes.
179. Members raised a large number of written questions, which have been answered in writing today.
180. The discussion developed under three main themes:  (i) the economic environment;  (ii) trade and
investment measures;  and (iii) sectoral issues.
i) Economic environment
181. Members welcomed Australia's strong and active participation in the multilateral trading system.
They commended the high degree of transparency in the conduct of Australia's trade and investmentpolicies.  Members also recognized that Australia's unilateral approach to trade liberalization, which
complemented internal structural and regulatory reforms, had greatly improved the country's overall
economic performance, leading to high rates of grow th in output and productivity together with low
inflation since the last Trade Policy Review, and contributing to a substantial fall in unemployment from
a peak of 11% in 1992/93 to near 8% at present.
182. Some Members noted that a slowdown in the process of liberalization had occurred in recent
months. They pointed to an increase in export assistance, slower unilateral reduction in tariff peaks, an
increasing threat of contingency measures and a more active industry policy as symptoms of the
slowdown.  In this connection, they expressed concer n about the likely impact of the continuing Asian
crisis on Australia's economic growth rate and current account deficit, sought reassurance concerning theGovernment's policy response, and encouraged Australia to continue to open and deregulate its markets.
183. In response, the representative of Australia emphasized that economic projections of 3% growth
in 1998/99 remained valid, although caution was required in the light of the continuing Asian crisis.  The
current account deficit did not so much reflect trade imbalances, as payments for previous borrowings,
and would therefore be addressed by fiscal consolidation, not by trade measures.  Delegates were assuredof the Australian Government's commitment to keeping its markets open and continuing to pursue overall
economic reform, while taking into account the legitimate needs of individual sectors for assistance in
adjusting to the challenges of globalization.
184. The representative reiterated the Government's determination to push ahead with autonomous,
gradual and predictable MFN trade liberalization under its WTO and APEC commitments.  In the latter
context, it remained committed to the achievement of free trade by 2010, including in textiles, clothing,
footwear and motor vehicles.
185. Delegations expressed concern that Australia might be moving to a more interventionist industry
policy.  The representative of Australia stressed that the Government was not attempting to pick winners.
Instead, policy focused on improving the business environment through a sound macroeconomic stance
and the vigorous pursuit of microeconomic reforms, including the pursuit of more labour marketWT/TPR/M/41
Page 36
flexibility, tax reforms and competition policy in key sectors like telecommunications, energy and
transport.
186. Questions were raised about relations between Commonwealth and State Governments, notably
the adherence by State authorities to the Commonwealth Government's trade and investment
commitments.  In response, Australia stressed that States did have constitutional responsibilities in severalareas and outlined the consultation mechanisms in existence to ensure consistency of State and
Commonwealth policies.
ii) Trade and investment measures
187. Members raised the following concerns over specific trade and investment measures:
- remaining tariff peaks and escalation, and the tariff "pause" in the textiles,
clothing and footwear and passenger motor vehicle sectors, which also remained
higher than average tariff protection; new export assistance policies in the PMVsector were also noted in this connection;
- the effects on developing countries of the "pause" combined with a phaseout of
GSP preferences;
- recently introduced changes in anti-dumping and safeguard legislation leading to
shorter lead times before introduction of such measures;
- the continuing restrictive nature of Australia's SPS system, under which import of
many food products was virtually impossible;
- measures seeking to increase "strategic" investment in Australia;
- concerns relating to Government procurement including local preference schemes
operated at the State level and offset requirements at both State andCommonwealth levels;  a number of Members questioned Australia's policy not to
participate in the WTO Agreement on Government Procurement;
- the application of intellectual property rights including on software
decompilation, protection of test data and parallel importation.
188. In response, the Australian representative said th at the pause in tariff reductions in the TCF and
PMV sectors would be followed by a significant autonomous cut in tariffs in 2005, lowering tariffs to the
same point as would have been reached under a gradua l reduction. He expressed the view that, as most of
Australia's tariffs were at or less than 5%, preferences for developing countries became largely
meaningless;  preferences for the least developed countries would, however, be maintained as tariffs
declined. The fall in 2005 in tariffs in the textile sect or would be also to the benefit of developing and
other textile-exporting countries;  moreover, he em phasized that Australia had no quotas in this area.
189. He stressed that the new Automotive Competitiveness and Investment Scheme was not linked to
export performance in any manner and, instead, encouraged competitive investment, research and
development and productivity improvements in the sector.WT/TPR/M/41
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190. The recently introduced changes in anti-dumping legislation would streamline the process further
and reduce the degree of duplication in investigations.  Furthermore, an additional appeal mechanism, not
available under the previous system, would now be available. It was also stressed that the private sector
will not have an enhanced role in the investigation process.
191. On safeguards, Australia had established, and notified to the WTO, a mechanism by which to
undertake actions required under the WTO Agreement.  The first investigation was initiated in June 1998
on imports of frozen pork.  He emphasized that no actions had yet been taken.
192. On quarantine, the representative said that Australia took its obligations under the SPS
Agreement very seriously, including the need to base SPS measures on sound science, risk assessment
and a consistent approach to risk management. Contrary to what was claimed by many delegations,
despite quarantine measures, import penetration in Australia's agricultural market was high.  He stressed
that in all risk analyses, the quarantine authorit ies consulted with all stakeholders, limiting their
consideration to matters of science and not economic or other unrelated matters.  However, the entry of
imported pests could have devastating and expensive consequences for production and trade.
193. Australia remained committed to aligning its stan dards with relevant international standards and
in fact there was already a substantial degree of alignment.  However, the representative expressed
concern at what seemed to be a push for international standards to take on a dominant role in the area oftechnical regulations.  The Australian Government's policy was that regulations should be written for a
specific purpose, and must not be more burdensome than is necessary to achieve their objectives.
194. In reply to questions about recent measures to attract foreign investment, the representative stated
that no separate funds had been set aside to provide investment incentives in the new policy.  Rather, the
Government would consider granting incentives only in limited and special circumstances for projectswhich met the eligibility criteria.  Screening policies through the Foreign Investment Review Board were
liberal, limited to proposals in sensitive sectors and for investment above a certain threshold. He stressed
that the "national interest" test placed the onus on the authorities to show reason to reject a proposal.
195. Australia's position on joining the Government Procurement Agreement was that the Agreement,
in its present form, did not necessarily encourage open and transparent government procurementpractices. The conditional basis for accession to the Agreement had potentially made the markets of
several major industrialized countries more restrictive than Australia's. Australia's approach to WTO
activities regarding government procurement was being developed by a Consultative Group comprising
agencies of Federal, State and territory governments.  Australia's federal structure was not relevant to the
fact that Australia had not joined the Agreement:  al l sectors considered that the present Agreement was
disadvantageous to Australia.
196. On intellectual property rights, the representative pointed out that Australia had implemented all
its obligations under the TRIPS Agreement:  in addition, a number of legislative reforms had been
introduced relating to parallel importation, maintaining high standards for protection while avoiding
unnecessary restrictions on the market for legitimate copies of protected works.  Australia also paid close
attention to enforcement, as demonstrated by recent increases in penalties for pirated intellectual property
products, and was involved in promoting improved in tellectual property protection throughout the region.WT/TPR/M/41
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iii) Sectoral issues
197. Members raised a number of questions regarding agricultural trade, in particular relating to levels
of protection as reflected in AMS and PSE data, and the role of federal and State marketing boards.
198. Questions were posed concerning the scope and effects of Government bounties in the machine
tool and shipbuilding sectors, and the operation of the "factor f" scheme in pharmaceuticals.
199. Many delegations raised issues relating to trade policies and conditions in services sectors,
including banking, telecommunications, coastal shipping, civil aviation, audio-visual services, and the
movement of persons, particularly in regard to Federal and State conditions for exercising professional
services.
200. In reply, the representative of Australia emphasized that whatever measure was used, Australian
agricultural support was low.  In addition, Australia did not use export subsidies and domestic support
measured only one third of the level to which Australia was entitled.
201. The Government had continued the reform agenda to make Australia's state-trading enterprises
more commercially focused, more responsive to international markets and more accountable to their
stakeholders.  He stressed moves to privatize the Wheat Board and bring all government business
activities subject to competition policy.  Australia also supported greater transparency in the WTO of state
trading activities and actively supported the new WTO questionnaire on state trading enterpriseoperations.
202. The representative expressed his appreciation of the acknowledgements, made by many
delegations, of the liberalization in Australia's services sector.  He stressed that progressive liberalization
would continue to be a main pillar of Australian trade policy and Australia would press its trading
partners to do the same in the next round of trade negotiations.
203. Australia would continue to deregulate its financial sector.  The new financial system structure,
when in place, would provide flexible, efficient, coordinated and consistent regulations in a highly
competitive and transparent environment.  In telecommunications, deregulation would continue,
including, subject to Parliamentary approval, further privatization of the largest carrier, Telstra; the
Australian telecommunications sector was now fully open to competition.  Another service area high on
the Government's agenda was electronic commerce, where Australia was pursuing a forward-looking
strategy to ensure that it remained at the forefront of developments in the area.  Australia would also
continue to make changes and push for greater market access as deregulation of the domestic economy
continued.
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iv) Conclusions
204. Australia's participation in this review has re flected its commitment to the WTO process.  The
statements made on Tuesday, and again this morning, have indeed been transparent and helpful to
Members.  I am sure that Members will also be grea tly assisted by the very full written answers provided
by Australia to questions.
205. I would agree with Ambassador Krirk-Krai that many WTO members have much to learn from
Australia's process of reform and liberalization.  I believe members can be reassured by the AustralianWT/TPR/M/41
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Government's replies regarding the status of the "pause" in tariff reductions in a few sectors and the clear
liberalization objectives set out up to the year 2010.  I thank Australia for its clear statements and its
helpful participation in the Review.
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