Chapter 13
Trade, free trade agreements and tourism in the Indian Ocean rim
The Indian Ocean rim is made up of a number of countries
whose point of similarity is primarily geographic...What can draw the region
together is a focus on the flow of goods and services across the Indian Ocean
itself and the economic benefit that follows.[1]
Australia's trade in the Indian Ocean rim
13.1
In its submission, DFAT summarises the importance of the Indian Ocean rim
by noting the centrality of the Indian Ocean's sea trade routes to energy and
resource security for many countries:
Much of the world's trade in energy crosses the Indian Ocean
region, which also includes a large proportion of oil, iron ore, tin, bauxite,
gold, diamonds, manganese, uranium, chromium and hydrocarbons. Many countries
in the region will also be increasing their consumption of these resources in
the future.[2]
13.2
In addition to the above, it is estimated that in total the Indian Ocean
carries around two thirds of the world's oil shipments. In fact the countries
of the Indian Ocean region hold over half the world's resources of crude oil,
one fifth of coal supplies, and 40 per cent of natural gas.[3]
As noted in previous chapters, with the emphasis on security of sea-borne trade
in the Indian Ocean rim, piracy and naval power are key concerns. Likewise the
eco, adventure, and maritime tourism industry, particularly important for
smaller countries in the Indian Ocean, is also affected by piracy.
13.3
Submissions emphasize that the Indian Ocean rim is of significant economic
and strategic significance to Australia. Approximately one third of Australia's
exports originate from Western Australia.[4]
Five of Australia's major trading partners—India, Singapore, Thailand, Malaysia
and Indonesia—are located in the Indian Ocean rim.[5]
Submissions also note that the strategic importance of the Indian Ocean rim is
likely to increase substantially into the future. The countries of the Indian
Ocean rim are Australia's neighbours, trade and security partners. Much of the
world's trade in energy resources and major minerals passes through the Indian
Ocean rim, including oil, iron ore, tin, bauxite, gold diamonds, manganese,
uranium, chromium and hydrocarbons.[6]
13.4
DFAT noted that Australia trades with all Indian Ocean rim countries—'Australia’s
total merchandise trade with Indian Ocean rim countries was around $90 billion
in 2011. This was up from around $84.4 billion in 2010 and $78.7 billion in
2009, representing growth of around 15 per cent over this two year period.'[7]
DFAT identified India, Singapore, Thailand, Malaysia and Indonesia as key
Indian Ocean markets for Australia.[8]
The following tables show the extent of Australia's merchandise exports and
imports to the Indian Ocean rim countries are taken from the DFAT submission.
13.5
Although not a littoral Indian Ocean rim country, China recurs
throughout submissions as a key influence on the Indian Ocean rim countries.
China's growth and its demand for resources makes it a large market for all
Indian Ocean rim resource mining countries, including Australia.
13.6
In the 2012-13 Budget, the Australian Government provided $52.6 million
over five years to boost DFAT's overseas network from 95 to 97 posts. One of
the new posts will be in Dakar, Senegal. Funding will also be provided to
increase Australia's international diplomatic presence. Budget Paper No.2
explained that 'this increase in Australia's presence will support trade,
investment and diplomacy in key locations around the world.'[9]
13.7
The DRET's submission explained that:
[M]ultilateral engagement on energy will become ever more
important as our energy markets become increasingly linked and or integrated
into the global energy system. This has occurred for oil and is becoming
increasingly so for gas. In an increasingly global market it will be important
for Australia to understand its international influence and the implication of
emerging trends such as global energy diversification, shifting energy
demand-supply patterns, increasing adoption of new clean energy policies.[10]
Table (extract): Australia's Exports to Indian Ocean rim
countries[11][12]
Country
|
CY2009
|
CY2010
|
CY2011
|
Major
|
|
A$000
|
A$000
|
A$000
|
exports
|
Bangladesh
|
409,232
|
582,102
|
578,934
|
Wheat, Cotton
|
India
|
14,472,829
|
16,424,865
|
15,264,974
|
Coal, Gold, Copper
|
Indonesia
|
4,139,364
|
4,491,439
|
5,398,180
|
Wheat, Crude Petroleum
|
Iran
|
594,830
|
168,366
|
150,449
|
Meat, Medicaments
|
Malaysia
|
3,129,503
|
3,638,633
|
4,491,205
|
Copper, Crude Petroleum
|
Oman
|
374,803
|
477,387
|
417,804
|
Motor Vehicles, Wheat, Milk
|
Pakistan
|
527,717
|
540,141
|
413,798
|
Vegetables, Cotton, Coal
|
Singapore
|
5,360,208
|
4,853,132
|
6,399,208
|
Crude Petroleum, Gold
|
South Africa
|
1,496,366
|
1,803,219
|
1,644,409
|
Coal, Medicaments
|
Thailand
|
4,235,545
|
5,854,660
|
6,758,680
|
Gold, Crude Petroleum
|
United Arab Emirates
|
2,107,569
|
2,146,929
|
2,247,297
|
Motor Vehicles, Meat
|
IOR Total
|
38,014,226
|
42,297,118
|
45,084,031
|
|
Total
|
196,560,596
|
231,160,964
|
262,448,427
|
|
per cent of Total
|
19%
|
18%
|
17%
|
|
Table (extract): Australia's Imports
from Indian Ocean rim countries[13][14]
Country
|
CY2009
|
CY2010
|
CY2011
|
Major
|
|
A$000
|
A$000
|
A$000
|
Imports
|
Bangladesh
|
147,961
|
143,191
|
244,366
|
Clothing,
Linen
|
Burma (Myanmar)
|
25,628
|
15,701
|
12,894
|
Fish,
Clothing
|
India
|
2,031,097
|
1,973,533
|
2,234,681
|
Pearls,
Gems, Jewellery
|
Indonesia
|
4,558,750
|
5,320,572
|
5,906,363
|
Petroleum,
Gold
|
Iran
|
50,133
|
184,982
|
63,240
|
Propane
, Butane
|
Kenya
|
11,525
|
18,190
|
13,072
|
Vegetables,
Coffee
|
Malaysia
|
7,553,074
|
9,099,318
|
8,546,121
|
Petroleum,
Electronics
|
Oman
|
97,230
|
35,045
|
61,887
|
Fertilisers,
Plastics
|
Pakistan
|
162,939
|
162,526
|
172,625
|
Linen,
Clothing, Rice
|
Singapore
|
11,173,403
|
10,619,608
|
14,166,035
|
Petroleum
|
South Africa
|
912,652
|
1,102,767
|
841,349
|
Motor
Vehicles, Iron
|
Thailand
|
11,627,179
|
11,004,716
|
8,444,105
|
Motor
Vehicles, Gold
|
United Arab Emirates
|
2,146,767
|
2,229,536
|
4,133,040
|
Petroleum,
Propane
|
IOR Total
|
40,627,159
|
42,057,086
|
44,998,313
|
|
Total
|
200,604,101
|
210,065,035
|
227,106,890
|
|
per cent of Total
|
20%
|
20%
|
20%
|
|
13.8
As the extracted tables above demonstrate, Australia's trade in the
Indian Ocean rim region is varied—ranging from resource commodities and motor
vehicles to agricultural produce. The Western Australian government advised the
committee that they see the Middle East in particular as an important growth
area for agricultural produce export. As a result, the Western Australian government
has a trade office which looks after the Middle East and the North African
region.[15]
13.9
DFAT nominated the United Arab Emirates as Australia's largest
merchandise trading partner in the Middle East, with two-way trade valued at $A6.4
billion in 2011. DFAT noted that merchandise trade with Iran has decreased
since the late 1990s, largely due to the impact of UN Security Council mandated
and Australian autonomous sanctions.[16]
13.10
DFAT's submission described the Gulf Cooperation Council (comprising
Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates) as an
important economic partner. Two-way merchandise trade with the Gulf Cooperation
Council in 2011 was valued at $A11 billion. DFAT lists Australia's main exports
to the Gulf Cooperation Council as 'passenger motor vehicles, meat (excluding
beef), barley and live animals.'[17][18]
Commodities trade
13.11
Both DFAT and the DRET identified the Indian Ocean rim as the area of
majority of Australia's resource trade. DRET describes Australia's commodities
trade relationship with the Indian Ocean rim as falling into four broad
categories:[19]
- Trade with South East Asian nations as part of their ongoing
industrial development, including export of crude petroleum and importation of
crude and refined petroleum products.
- Commodity exports to the very large and rapidly developing Indian
economy, with significant potential for growth across a wide range of products.
- Competition with the Middle East and South East Asia in LNG
production.
- Competition with minerals and coal production in Africa, however
there are also significant opportunities for Australian firms in African
investment in the commodities sector.[20]
Port Hedland Port—on the left
salt stacked for shipping is moved with a bulldozer; on the right ships enter
the port for loading.
13.12
During the visit to the Pilbara region, committee members were able to
view for themselves the scale of Australia's resource exports from the North
West and the significance of this region to Australia's trade with the Indian
Ocean rim. Issues specific to mining and resources were outlined in the
previous chapter.
Education, tourism and export of
services
13.13
DFAT also identified key Indian Ocean rim countries for Australian trade
in services. It noted that although the statistics available on service trade
for Indian Ocean rim members were limited, it had figures for the countries
identified in the tables extracted below.[21]
Australia's services
exports to selected Indian Ocean rim countries
Country
|
2008-09
|
2009-10
|
2010-11
|
A$million
|
A$million
|
A$million
|
India
|
3,406
|
3,556
|
2,501
|
Indonesia
|
1,269
|
1,616
|
1,227
|
Malaysia
|
1,626
|
1,576
|
1,665
|
Singapore
|
3,184
|
2,698
|
2,823
|
South Africa
|
448
|
448
|
397
|
Thailand
|
1,013
|
1,038
|
978
|
Total
|
52,948
|
52,011
|
50,570
|
Australia's services
imports from selected Indian Ocean rim countries
Country
|
2008-09
|
2009-10
|
2010-11
|
A$million
|
A$million
|
A$million
|
India
|
746
|
615
|
691
|
Indonesia
|
1,269
|
1,616
|
2,065
|
Malaysia
|
1,011
|
1,043
|
1,242
|
Singapore
|
4,277
|
3,289
|
3,724
|
South Africa
|
409
|
406
|
401
|
Thailand
|
2,007
|
2,152
|
2,036
|
Imports
|
56,328
|
53,388
|
57,360
|
13.14
The ACCI also noted the importance of movement of people between
countries, particularly in context of the export of services. ACCI argued in
its submission that one of the biggest challenges in the trade in services was
the effect of 'behind-the-border' restrictions:
- lack of recognition of cross border qualifications;
-
restrictions on rights to practice;
-
constrains on commercial presence;
- poor quality intellectual property rules; and
- protections and tax rules.[22]
13.15
The ACCI argued in its submission for resources to be dedicated to:
- a detailed analysis of 'impediments to our services exports to
the Indian Ocean Rim region';
- conduct work to overcome any barriers identified; and
-
promote what ACCI marks as Australia's two biggest services
export income earners: tourism and education.[23]
13.16
The below extract from a table in DFAT's submission, goes to highlight
the point made by ACCI that education services are an important and growing
sector for Australia, particularly given the market provided by growth in
Indian Ocean rim countries such as India. It pointed out that India was our
second largest services export market, worth 2.5 billion, with the largest
categories in education-related travel.[24]
13.17
Austrade noted in its submission that there was a growing demand in the
Indian Ocean rim for services that will address education, training and skills
gaps—'for example, the Indian Government's stated aim of skilling 500 million
people by 2020'.[25]
Austrade believes that Australia has a role in providing education services to
the countries of the Indian Ocean rim.
13.18
The Western Australian government advised in their submission that in
2011, enrolments from Indian Ocean rim countries accounted for over a third of
international student enrolments in Western Australia. The main countries from
which these enrolments were drawn were: India, Malaysia, Singapore, Indonesia
and Thailand.[26]
Further, the Western Australian government noted that an increasing number of
students from the Middle East are now coming to study in Western Australia.[27]
13.19
DFAT too noted that the United Arab Emirates is emerging as an important
market for Australian education, financial, health and construction related
export services.[28]
Further, the Gulf Cooperation Council is similarly becoming a growing market
for export of Australian services.[29]
Table (extract):
Student visa holders from Indian Ocean rim countries[30]
Country
|
As at 30 June 2009
|
As at 30 June 2010
|
As at 30 June 2011
|
Bangladesh
|
5460
|
5001
|
4636
|
Burma (Myanmar)
|
630
|
808
|
738
|
India
|
92490
|
79699
|
50103
|
Indonesia
|
11570
|
12080
|
11402
|
Iran
|
1670
|
2175
|
2447
|
Kenya
|
1580
|
1618
|
1430
|
Malaysia
|
15920
|
16130
|
15203
|
Mauritius
|
4870
|
4046
|
2641
|
Oman
|
460
|
484
|
430
|
Pakistan
|
4770
|
5436
|
6276
|
Singapore
|
5050
|
5184
|
4911
|
South Africa
|
770
|
898
|
856
|
Sri Lanka
|
7580
|
6864
|
5496
|
Thailand
|
13460
|
13147
|
11805
|
United Arab
Emirates
|
610
|
998
|
829
|
Total IOR
|
167620
|
155315
|
119920
|
Total
|
386266
|
382716
|
332709
|
Per cent of total
|
43%
|
41%
|
36%
|
Foundations, Councils and
Institutes—people-to-people links
13.20
DFAT explained in its submission that a vital part of Australia's
relationship with other Indian Ocean rim countries is the people-to-people
links built by 'Australians working, living and travelling abroad, or the
people of the Indian Ocean rim doing the same in Australia.'[31]
For instance, people-to-people links with some countries have
benefited from the strong growth of direct air links (such as the UAE) , a
large number of expatriate in Australia or expatriate Australians living and
working in the country (such as India), or when Australians work and volunteer
in areas such as education, mining, business, missionary work and tourism (such
as Tanzania).[32]
13.21
A key part of maintaining and building on people-to-people links is the
foundations, councils and institutes. Of the ten foundations, councils and
institutes supported by DFAT, there are five that promote links to countries in
the Indian Ocean rim:
- Australia-India Council (established in 1992 in response to a
recommendation by the Senate Standing Committee on Foreign Affairs, Defence and
Trade)
- Australia-Indonesia Institute (established in 1989)
- Australia-Malaysia Institute (established in 2005)
- Australia-Thailand Institute (established in 2005)
-
Council for Australia-Arab Relations (established in 2003)
13.22
The above councils and institutes promote bilateral relations between
Australia and their focus country; raise awareness and understanding between
the peoples of the two countries; and create people-to-people,
business-to-business and institution-to-institution links.
13.23
On 20 March 2013, the former Parliamentary Secretary for Foreign
Affairs, Richard Marles MP, launched the report by the Australia-India
Institute on security, stability and sustainability in the Indian Ocean. Asked
about how the conclusions reached in the report might affect government
consideration of the use of IOR-ARC as a forum for developing relations with
India and Indonesia, DFAT responded in writing:
The report does not represent government policy and is
intended as a contribution to debate. We welcome debate about the future
directions of Australian policy in the Indian Ocean region. Like other reports,
analysis and judgments contained in the report may be drawn on in regional and
bilateral discussions on Indian Ocean regional security.[33]
Australia's approach to trade in the Indian Ocean rim
13.24
DFAT described Australia's approach to free trade agreements in the
Indian Ocean rim:
Australia supports complementary approaches to regional and
bilateral Free Trade Agreements (FTAs) to expand liberalisation to as many
parties as possible on a non-discriminatory basis that supports the
multilateral system. Consistent with the Government's April 2011 trade policy statement,
in negotiations with trading partners Australia advocates comprehensive, high
quality, truly liberalising bilateral and regional FTAs that do not detract
from, but support, the multilateral trading system. Australia's FTAs promote
stronger trade and commercial ties between participating countries, and create
opportunities for Australian exporters and investors to expand their business
into key markets.[34]
13.25
Further to the aim described in DFAT's submission, Australia has free
trade agreements with three Indian Ocean rim countries: Malaysia, Singapore,
and Thailand. Free trade agreements presently under negotiation with Indian
Ocean rim countries include: the Australian-Gulf Cooperation Council Free Trade
Agreement, the Australia-India Comprehensive Economic Cooperation Agreement,
and the Indonesia-Australia Comprehensive Economic Partnership Agreement.[35]
The growing number of free trade agreements with Indian Ocean rim countries is
evidence of the growth in markets in the region.
13.26
Some submitters disagreed with DFAT's approach to trade. The Australian
Chamber of Commerce and Industry are proponents of a greater focus on the
Indian Ocean rim and on regional trade agreements. Mr Clark told the committee
that ACCI was concerned about the government's current focus on the
Asia-Pacific, the 'eastern and northern aspects of Australia's trade rather
than the western and northern aspects'. ACCI believes that although much has
been achieved with bilateral trade agreements, the possibility of regional
agreements needs to be explored, particular in the Indian Ocean.[36]
13.27
Telstra's submission outlined the concerns it had with the way in which
DFAT conducts free trade agreement negotiation—in particular, Telstra argued
that free trade agreements such as that with Thailand are incomplete because
they do not include telecommunications:
Foreign investors face significant barriers to entering
telecommunications services markets of key Indian Ocean countries such as
India. Bilateral trade agreements offer one path towards addressing these
restrictions, however the agreements must be genuinely liberalising, by
eliminating or substantially reducing barriers to trade. Australia's Free Trade
Agreement with Thailand falls short of this test because it does not include a
telecommunications services chapter and undertakings to add commitments on
telecommunications services in the Thailand-Australia Free Trade Agreement have
not been fulfilled.[37]
13.28
DRET's submission noted that '[f]or tourism to date FTAs have had
limited impact on tourism outcomes for Australia with aviation services the
most relevant area for tourism in most agreements'.[38]
Austrade
13.29
Austrade lists its value-adding capability to Australian mining
interests in the Indian Ocean rim region as:
- the ability to identify and access business opportunities in Indian
Ocean rim markets;
- providing advice on doing business in these markets;
-
networks of key decision makers, customers and contacts;
- market information and insight; and
- the ability to leverage the 'badge of government' for the benefit
of Australia.[39]
13.30
Specifically, Austrade will continue to provide targeted trade
facilitation and development activities across those markets, where:
- language and business culture, as well as genuine security
concerns and perceptions of doing business can prove a barrier;
- there is less openness of regulatory frameworks and transparency
of business processes—governance, transparency and business ethics are all
issues across the Indian Ocean rim;
- there are difficulties assessing distribution channels and commercial
connections; and
- the value of the 'badge of government' is highest.[40]
13.31
Austrade currently has 181 staff based in Indian Ocean rim countries; of
these, 21 are Australia-based staff posted overseas, and 160 are overseas
employed staff.[41]
The majority of these staff are in South-East Asia (82), followed by South Asia
(60), Middle-East (32) and finally Sub-Saharan Africa (7).[42]
Given the growing Australian investment in resources in African countries, the
committee is concerned that Austrade, and indeed DFAT, have so few posts on the
continent.
13.32
Submissions have also noted Australia's involvement in this competitive
marketplace as not exclusively defined by bilateral trade arrangements, but
increasingly by more complex Foreign Direct Investment (FDI) activities.[43]
Increasingly, FDI is fundamental to international competition, and Australian
companies and interests are becoming a larger and more influential presence in
this space, along with many larger and more dominant global entities.[44]
13.33
On this issue, the Western Australian Department of Premier and Cabinet
noted:
- Australian direct investment to countries in the Indian Ocean rim
totalled more than $15 billion in 2010, in particular to countries like
Singapore ($7 billion direct investment abroad from Australia), Malaysia and
Indonesia ($3 billion each).
- Direct investments from the region to Australia totalled more
than $25 billion, chiefly from Singapore ($19 billion direct investment in
Australia in 2010), Malaysia ($4 billion) and South Africa ($2 billion).[45]
13.34
Mr Nunis, Western Australian Government, advised the committee that the
Western Australian Government has, in his view, the most extensive trade
offices in the Indian Ocean rim out of all of the states—he listed offices in
Dubai, India, Japan, Korea, the UK, China, Indonesia and Singapore and noted
that the West Australian government was keen to establish a trade office in
Africa.[46]
13.35
While Nr Nunis maintained that the Western Australian Government did
work with DFAT and Austrade, he noted some coordination problems:
When we talk about coordination, it is actually a little bit
embarrassing out in those regions, because the same people—whether they are in
business or government—are getting visits from people from Western Australia,
visits from DFAT and visits from Austrade and then the Victorians send a
delegation of 300 people to talk to them as well.[47]
13.36
The committee put the comments from the Western Australian Government to
Mr Landers, Austrade. Mr Landers believed that the coordination between Austrade
and the state governments was very good—he explained that through the Senior
Officials Trade and Investment Group (SOTIG), a deputy secretary level group
which meets monthly, Austrade is having active discussions with the states. The
committee notes however that SOTIG is a relatively new group—Mr Landers advised
that it had been running for six months in December 2012. Mr Landers did
maintain that SOTIG had been useful in terms of practical discussion, for
example:
We are having active discussions with each of the states
around, for example, offering them the opportunity to place embedded business
development managers into our network. India would be one of the first cabs off
the rank, so to speak, where the South Australian government is looking quite
seriously at having a representative work on their behalf out of our Mumbai
office, although it is not a done deal yet.[48]
Australia's key competitors in the Indian
Ocean rim
13.37
The following paragraphs summarise the status of key Indian Ocean rim
countries, in particular noting their relationship to Australia, and Australian
mining interests in the region.
13.38
India is central to the Indian Ocean rim in several ways. It is located
centrally to major transcontinental shipping routes. Already a major global hub
for industry, economic forecasts predict further substantial growth and broad
scale development within India, which will drive greater need for imported
energy and mineral resources.[49]
India's already vast requirements necessitate strong interests in Indian Ocean
rim trade routes and in particular, energy security. India is actively involved
in regional engagement, as current chair of the IOR-ARC. India is also
instrumental in the forming the Indian Ocean Naval Symposium (IONS) to discuss
regional security measures. Regional issues are also discussed through the East
Asian Summit (EAS), SAARC, the Asian Regional Forum (ARF) and the G20.[50]
Importantly, India is one of Australia's largest trade partners, with a growing
need for resources. India is also very active in the Indian Ocean rim, and
beyond, in terms of FDI activity.
13.39
Submissions are often silent regarding Australia's links or competition
with South Africa, a country which is similar in climate to parts of Australia
and is similarly rich in resources. South Africa is one of the most influential
political nations in the Indian Ocean rim, and particularly within Africa. It
is the only African country in the G20, giving it substantive presence in
international negotiation. South Africa is also a substantial presence in the Indian
Ocean rim because of its maritime security interests, making it well-placed to
influence counter-piracy efforts in the region. South Africa is a major
exporter of minerals with significant foreign investment interest across Africa
in particular.[51]
South Africa competes directly with Australia as an exporter of mineral and
energy resources.
13.40
South Africa cannot boast the same level of trade with Australia, as
India. South Africa, however, is Australia's largest export and investment
destination in Africa, with 28 per cent of Australia's total merchandise trade
with Africa.[52]
Given South Africa's prominence in the Indian Ocean rim both politically and
economically, it is central to Australia's ongoing fortunes in the region, both
as a trade partner and competitor.
13.41
The middle-eastern nations that are part of the Indian Ocean rim have
significant interests in maritime security given the very high levels of energy
exports and general trade from this region. As part of its regional engagement,
Iran hosts the IOR-ARC Regional Centre for Science and Technology Transfer
(RCSTT) which conducts research, provides training and liaises to assist member
countries in developing disseminating, and acquiring new technologies.[53]
(See chapter 9.)
13.42
Submissions have also been generally silent on the development of
Australia's relationship with Indonesia. But as Indonesia develops a stable political
and economic environment, opportunities will increase for Australia to work
with its closest neighbour in a relationship other than aid and military
assistance. In 2012, Indonesia foreign Minister noted that cooperation in the
Indian Ocean as being amongst Indonesia's foreign policy priorities, noting
Indonesia's intention to accord more attention to maritime cooperation in the
Indian Ocean rim.[54]
Along with Australia, South Africa and India, Indonesia holds influence as a
political and economic operative as member nation of the G20.
Other international interests
beyond the Indian Ocean rim
13.43
China's rapid growth and development has an impact across the entire Indian
Ocean rim. China's trade relationships in, and beyond the region, are
extensive, and the value of Chinese trade for individual Indian Ocean rim
countries is very substantial. China's consumption of energy and mineral
resources to support its development is integral to Australia's on-going
economic fortunes. China is Australia's major export destination accounting for
22.4 per cent of all exports.[55]
China is also one of the biggest participants in FDI in the Indian Ocean rim
and globally.[56]
13.44
The European Union (EU) has significant trade relationship with the Indian
Ocean rim; in particular, since 2004 the EU has a 'strategic partnership' with
India.[57]
This partnership was reaffirmed in 2012 at the thirteenth annual India-EU
summit, where leaders committed to cooperation on trade, trade security,
energy, economic development, sustainable development, research and innovation.[58]
Such agreements are significant, as Australia negotiates its own trade
alliances in the region, particularly considering valuable export markets such
as India.
13.45
The United States maintains a strategic interest in the Indian Ocean rim
manifesting in trade and maritime security and counter-terrorism measures. The
US has a key bilateral engagement with India.[59]
13.46
France, Japan, Russia, the Republic of Korea, and the United Kingdom,
have all been identified in the DFAT submission, as being key foreign powers
with substantive interests in the Indian Ocean rim.[60]
These interests could stem from history in the case of France, which has
territorial and military presence in the region. Like many developed nations,
Japan has a heavy dependence on Middle Eastern Oil that transits the Indian
Ocean rim. Russia has close ties to India in particular, cooperating on
defence, space and nuclear energy. Korea is a growing presence due to strong
trade commitments across the region. Like France, the UK has colonial ties to
the region, and interests in seaborne passage of energy imports. The UK also
maintains territorial assets in the Indian Ocean rim.[61]
IOR-ARC and trade
13.47
Mr Clark, ACCI, noted that his organisation had been involved with DFAT
to assist with a business voice inside the IOR-ARC for perhaps more than a
decade. He informed the committee that over that time, ACCI has been
disappointed that not all that much has been achieved:
We have proposed a number of things, including a free trade
agreement with the Indian Ocean Rim countries, which we would like to see
advanced. Recognising that that may take some time, we have also suggested that
a simple step forward might be the introduction of a card similar to the APEC
travel card to assist businesses just to do the simple border crossing process
a little more easily in that region and facilitate more business interaction.[62]
13.48
DFAT advised the committee on 22 March 2013 that the introduction of a
business card like the APEC Business Travel Card was a 'practical, useful
trade-facilitating measure in the Indian Ocean'[63]
which DFAT hoped could occur through the IOR-ARC. DFAT noted in its answers to
question on notice that:
Currently, preliminary discussions have taken place among
IOR-ARC trade officials about a feasibility study on whether or not a Business
Travel Card is a viable option for IOR-ARC member countries. Any future studies
would require business consultation.[64]
13.49
ACCI agreed with the idea of a business card, noting that the purpose of
the scheme was to assist business take up opportunity by removing time and
expense impediments.[65]
ACCI believes that
A scheme such as this [APEC business travel card scheme] for
the Indian Ocean Rim, perhaps modelled on the existing APEC card, would add
immediate value to Australian businesses seeking to expedite business travel
throughout the Indian Ocean Rim countries that wished to participate.[66]
13.50
Mr Mark Pierce, DFAT, noted that in ACCI's submission to the committee,
ACCI had suggested that the committee consider a preferential trade agreement
in the region. Mr Pierce explained:
That is not on the government's agenda. That proposal also
comes up regularly in the IOR-ARC. There is a constituency of members who would
actively support the ACCI proposal. The government does not.[67]
13.51
DFAT expanded on this statement in response to questions on notice from
the committee:
Australia's position is that an IOR-ARC PTA [Preferential
Trade Agreement] is not the most appropriate way to proceed with trade
liberalisation with in IOR-ARC. The heterogeneity of the membership of IOR-ARC
is a challenge in this regard. Australia already has or is negotiating our own
functional equivalent of preferential trading arrangements (that is, free trade
agreements or existing Least Developed Countries preferential treatment) with
around two-thirds of IOR-ARC countries. Australia already provides preferential
treatment (i.e. no duties or quotas) for all exports from Least Developed
Countries (LDCs) which includes IOR-ARC countries such as Bangladesh, Comoros,
Madagascar, Mozambique, Tanzania and Yemen. Australia values the importance of
ongoing trade facilitation among IOR-ARC countries and has organised programs
in 2012 to further this objective. It continues to be an Australian priority
area of cooperation in IOR-ARC.[68]
13.52
In relation to the IOR-ARC, Telstra's submission noted that business
would support, and sponsor, the IOR-ARC but only if the organisation and its
work is given greater promotion:
The challenge for Australian companies such as Telstra is to
justify the allocation of resources to support such activity in a meaningful way,
for example through participation in the IOR-AC Business Forum.
13.53
Telstra suggested in its submission that Australia should use its opportunity
as chair of IOR-ARC to work with the Australian business community (and other
sectors such as arts and education) to promote IOR-ARC and help business
connect with the association.[69]
Conclusion
13.54
In Chapter 5, the committee discussed the ways in which Australia may
engage with IOR-ARC as chair of the association—raised in part in this
discussion was the engagement IOR-ARC has with the business community. The
committee recommended that Australia as chair of IOR-ARC encourage the association
to strengthen its links with the business community (see Recommendation 1).
13.55
The committee notes that complementary to this recommendation is DFAT's
engagement with the Australian business in regards to IOR-ARC. DFAT noted in
its answers to questions on notice that it had contacted the ACCI, the AIG and
the BCA in 2011 to seek their engagement in IOR-ARC affairs—ACCI had attended
through a representative to the IOR-ARC Business Forums in 2011 and 2012.[70]
13.56
DFAT advised the committee that it continues to 'liaise with ACCI
closely on IOR-ARC initiatives', noting that DFAT has in 2013 attended an
internal ACCI international trade meeting to discuss IOR-ARC and that ACCI has
spoken at an
IOR-ARC inter-departmental committee meeting about business priorities and
views.[71]
13.57
The committee feels that Australian business groups would benefit from a
more formal structure for consultation with DFAT, particularly when Australia's
role as chair of IOR-ARC begins in 2013. The committee notes Telstra's point
above, and its own experience of some witnesses' lack of knowledge about
IOR-ARC as valid reasons why the association needs more promotion within
Australia.
Recommendation 14
The committee recommends that DFAT establish a formal and
regular consultation panel in relation to IOR-ARC for Australian businesses and
industry, with a broad representation from all sectors. This consultation panel
should focus initially on:
- increasing Australian business and industry awareness of
IOR-ARC and its activities; and
- incorporating input from business and industry into
Australia's planning for taking on chair of IOR-ARC.
In due time, the focus of the panel can be extended to
broader discussion of issues in the Indian Ocean rim.
Recommendation 15
The committee notes the role played by the foundations,
institutes and councils in promoting business-to-business and people-to-people
links with countries in the Indian Ocean rim. The committee recommends that
DFAT coordinate a roundtable of Indian Ocean rim country foundations, institutes
and councils. The roundtable should focus on:
- ways to increase Australian community and business awareness
of
IOR-ARC and its activities; and
- any other relevant matters.
Recommendation 16
The committee notes that currently there is no
foundation, institute or council which covers the countries of Africa. The
committee recommends that DFAT work with existing business and community groups
to establish an appropriate organisation to enhance awareness and understanding
between the peoples and institutions of Australia and the African countries.
13.58
Noting the comments above in regards to the Senior Officials Trade and
Investment Group and the coordination between Austrade and the state and
territory governments, the committee feels that while there is obviously much goodwill,
more practical measures need to be taken to ensure efforts are not duplicated.
Recommendation 17
The committee sees significant benefit in improved coordination
between the state and federal governments on the promotion of Australian
business and trade in the Indian Ocean rim. The committee recommends that the
Australian government create a Council of Australian Governments (COAG) Select
Council to facilitate consultation and cooperation on trade and investment
initiatives for the Indian Ocean rim.
The Indian Ocean Rim COAG Select Council would continue for
the duration of Australia's role as chair of IOR-ARC, with the potential to be
made a Standing Council.
The committee believes that the Select Council would ensure
that coordination of efforts promoting Australia business in this growing
region is a priority for both state and federal government.
Tourism
13.59
The Department of Resources, Energy and Tourism's (DRET) submission described
the importance of tourism for the Australian economy, writing that tourism
contributes $34.6 billion in GDP, 2.5 per cent of Australia's total GDP
(2010-11):
Tourism is Australia's largest services export earner,
accounting for $24 billion in exports in 2010-11, which equates to around eight
per cent of total exports. The tourism industry employed over 500,000
Australians in 2010-11 (this is around one in every twenty employed
Australians). Continued growth is expected for Australia's tourism industry,
with total inbound economic value from tourism activity forecast to grow by 3.4
per cent each year between 2010 and 2020.[72]
13.60
DRET also advised that Australia has strong bilateral tourism
relationships with several Indian Ocean rim countries—particularly India,
Indonesia, Malaysia, Thailand and Singapore. DRET predicted that tourism from
India and Indonesia in particular is set to increase in coming years.[73]
Ms Tania Constable, DRET, explained that the department 'engages with a number
of Indian Ocean rim countries through other regional fora such as the East Asia
Summit, APEC and the G20'.[74]
13.61
Mr Nicholas Dowie, DRET, observed that Tourism Australia has offices in
a number of regions in the Indian Ocean rim, including India, Malaysia and
Singapore. Tourism Australia has identified these countries as having a high
growth potential, along with the Middle East, UAE and Saudi Arabia due to their
situation as financial hubs:
There is that degree of coherence there in terms of looking
at those markets in the region in tourism potential and looking at putting
resources in place to convert that potential into actual expenditure to assist
the Australian economy.[75]
13.62
Tourism Western Australia also noted that Indian Ocean rim countries are
going to be important tourism markets in coming years—Western Australia's
location puts it in a unique position to take advantage of growing tourism to
Australia. Tourism Western Australia argues that provision of infrastructure,
development of international air routes and ensuring opportunities for
investment will be critical to meet the anticipated growth in demand from
Indian Ocean rim markets.[76]
Mr Dowie noted that:
[O]utwards to 2020 we are forecasting that the rise in
tourism from South Africa will be an increase of 4.7 per cent over that period.
So there is a strong growth forecast coming, largely from South Africa. That
strength, though, has certainly not yet been reflected in other African markets
on the Indian Ocean Rim where, I guess with the exception of South Africa, most
of those other markets in Africa are very firmly in the emerging class.[77]
13.63
The table below is taken from the Tourism Western Australia submission
and shows the forecast growth of tourism from key Indian Ocean rim market
countries.[78]
Source Market
|
Forecast Average Annual Growth Rate (2010 – 2020)
|
Singapore
|
2.5%
|
Malaysia
|
3.2%
|
Indonesia
|
7.5%
|
South Africa
|
4.7%
|
Thailand
|
4.4%
|
India
|
8.0%
|
Note: The
above national forecasts are used as proxies for visitation growth to Western
Australia.
Source:
Tourism Forecasting Committee, Forecast 2011 Issue 2.
|
13.64
Reflecting the large predicted growth in tourism from India, Tourism
Australia has developed a 2020 India strategic plan. The plan outlines the strategy
to be used to promote the Australian tourism experience.[79]
13.65
DRET identified competition with other Indian Ocean rim countries as a
challenge for Australian tourism—for example South Africa (a strong competitor
for tourism from Europe and the US), Singapore and Malaysia (competitors for
Chinese tourism). As Australia is viewed as a long-haul destination for most
markets, direct flights and other competition measures will be needed for
Australia to compete effectively.[80]
Red Dog statute, Karratha –
the movie 'Red Dog' was filmed in Karratha and the story has generated
Australia-wide interest in the area.
13.66
In its publication, Tourism 2020, Tourism Australia stated that the
industry's aim was to grow substantially by 2020. DRET's submission noted that
to achieve the aims of Tourism 2020, a large amount of foreign investment will
be required. The whole-of-government Investment Attraction Program is in its
infancy.[81]
In addition to playing an important role in supplying tourism
visitors, IOR countries can also play a role in funding the development of
tourism infrastructure needed to attract visitors of the future.[82]
13.67
Mr Dowie told the committee that the industry needs to recognise that
seven of the top 10 visitor markets for Australia are in Asia. The tourism
industry needs to make sure that its employees have skillsets in place to meet
this demand. Mr Dowie explained that the Tourism 2020 strategy sets out the themes
being worked through, in conjunction with state and territory governments that
will help Australia to capitalise on these markets.[83]
He outlined Tourism Australia's work to encourage investment:
We have a broad focus in terms of what our marketing partners,
Tourism Australia, are able to do. Tourism Australia promotes Australia as an
investment destination throughout the region. In terms of the immediate focus,
much of that is on China, where a lot of the growth is predicted to come from.
China at this stage is our largest market by value and our third-largest market
by visitors. By 2020 it is expected to be the largest for visitors by both
volume and value.[84]
13.68
Mr Dowie noted that earlier in 2012, Tourism Australia had released
their India 2020 tourism plan. He also drew the committee's attention to
developments since DRET had provided its submission to the inquiry:
[O]n 2 May 2012 Minister Ferguson announced a new investment
partnership between Austrade, Tourism Australia and the Department of
Resources, Energy and Tourism which, for the first time, now puts tourism front
and centre of the government's broader investment attraction agenda to ensure
that, consistent with the marketing campaign that we are putting forward to
increase visitation to Australia, we now have a coordinated approach to
attracting investment to ensure that we develop the product that will help
drive visitation into the future. It is important that we have a
whole-of-government approach working there...we have three agencies who have signed
a memorandum of understanding to work together to facilitate that objective, so
we are starting to see that coherence across government to ensuring that these
particular markets are targeted for their investment potential.[85]
13.69
DRET's submission noted the importance of direct air access in creating
market access to Australian tourism, and explained that the Tourism Access
Working Group had been formed to progress measures to secure market access. Mr Dowie
explained that the working group has so far:
- completed a mapping paper setting out future priorities for government
to consider in bilateral aviation negotiations;
- worked on measures to encourage international carriers to use
airports outside the four major gateways—the airports of Brisbane, Sydney,
Melbourne and Perth; and
- the group is working on a regional airports project identifying
commercial barriers faced by regional airports in attracting direct
international services[86]
13.70
Ms Tania Constable advised the committee that many Asian and Middle
Eastern airlines continue expanding aviation links with Australia, for example:
In the second quarter of 2012, AirAsia X commenced services
to Sydney from Kuala Lumpur, while Scoot and SilkAir both launched inaugural
international services into Australia from Singapore. Emirates has announced
that it will commence four direct services per week between Dubai and Adelaide
from November 2012, with possible expansion to daily by February 2013, and the
airline will add four direct services per week between Dubai and Perth from
December 2012.[87]
13.71
Ms Constable noted that the expansion of flight routes has helped to
drive investment in the Australian accommodation sector and has already
attracted interest from investors in Singapore, Malaysia and the Middle East.[88]
13.72
Further, Ms Constable noted that an important element of ensuring
Australian tourism products appeal to visitors from Indian Ocean rim countries
is ensuring workers in the tourism industry have the right skills, including
language.
Ms Constable explained that the government has allocated $48.5 million to a new
Asia Marketing Fund—the fund will promote Australia in growing markets and
encourage investment. Indian Ocean rim countries included under the fund are
India, Indonesia, Singapore, Malaysia and Thailand.[89]
13.73
To this end, as Mr Dowie outlined for the committee, the Labour and
Skills Working Group operating under Tourism 2020 has a number of focuses
relating to creating skillsets in the industry. The group has announced its
intention to work with industry in creating a campaign to promote the sector to
students. The group is also developing eight 'tourism employment plans' with
one in each jurisdiction, to ensure the creation of the skills needed to meet
existing and future market needs.[90]
Conclusion
13.74
The committee notes the importance of tourism for the Australian economy.
The committee has heard evidence that the Indian Ocean rim is a source of
current and potential tourism markets, as well as competition, for Australia.
Work undertaken to coordinate between Tourism Australia, DRET and the state and
territory tourism bodies is encouraging—this coordination is essential if
Australia is to have the skillsets and initiatives to attract the visitor
numbers needed to meet the goals in the Tourism 2020 White Paper.
13.75
The committee notes the points raised by ACCI in regard to the need for
consideration of what barriers there are to the continued growth of Australia's
tourism and education sectors (paragraphs 13.10 and 13.11) and sees significant
benefits in government working with industry to find was to mitigate these
barriers.
Navigation: Previous Page | Contents | Next Page