Export Council of Australia- Trade Policy Reforms

A key undertaking of the Export Council of Australia (ECA) is to play an important role in representing to Government and other decision makers, the SME sector, members of allied associations and those who play a role in the process of international trade. Members of the Export Council of Australia will be invited to join industry and issue specific advisory committees and the Boards Industry & Government Relations sub-committee. These forums will provide an important forum for dialogues and the formation of Export Council of Australia policy.

The Export Council of Australia currently advocates the following Trade Policy reforms:

Trade Finance

The Export Council of Australia supports an enhanced mandate for the Export Finance and Insurance Corporation. In 2009 as a result of the last EFIC Review (2006) it was deemed appropriate to introduce legislation which would expand the role of EFIC in order to allow it to provide financial support to a wider range of transactions for Australian SME’s exporting or investing overseas, including those establishing global supply and distribution chains.

Although receiving bipartisan support, the legislation, due to a range of circumstances, was not put to Parliament.

The Australian Institute of Export strongly supported the Governments plan in 2009 and under the Export Council of Australia continues to support this change to the EFIC Act.

Export Market Development Grants Scheme (EMDG)

On the condition that the overall scheme be capped at $200million, under the Australian Institute of Export in 2010 we supported the following changes to the EMDG scheme legislation.

a. Lifting the threshold from $10,000 to $20,000

b. Capping the maximum grant to $150,000

c. Bringing the number of years back from eight to seven

d. Capping the amount claimable for Intellectual Property to $50,000

While these precise elements are now contained in the legislation brought to Parliament on 26th May 2010 and will remain until the 30th June 2015, the overall cap, despite the agreement, was reduced to $150 million (the overall cap is not contained in the legislation). 

The Export Council of Australia is currently reviewing all key elements of the scheme with the view to having a submission completed by August 2012. The review will include but not be confined to:

a. Split payment system

b. Eligibility of applicants: for example the inclusion of new markets, the number of grants claimed in previous years, launching new products in overseas markets

c. Eligibility of activities: promotion of investment services

d. Eligibility of expenditure: including allowance for costs associated with export education and training

e. Years of eligibility versus one lump sum spread over a number of years

f.  Criteria and capping legislation

The cost of Trade Facilitation

In a paper submitted to the Mortimer Review by Tradegate in 2008 it was claimed that:
“The World Bank ranks Australia as the 34th easiest economy for trade access.  Many of our trading partners are significantly lower, while others are ranked higher.  This provides significant opportunities for a whole of government trade facilitation approach to improve exporters’ access to international markets”.

The Export Council of Australia suggests that the cost of trade facilitation remains high and remains a huge factor in reducing Australia’s international competitiveness.

The Export Council of Australia supports the establishment of a “task force” led by a non government expert to examine the all key elements in the cost and process of trade access and facilitation. 

Industry/Government approach to winning major projects

When researching the concept of establishing the Export Council of Australia, one of the overriding issues raised by exporters, largely from the services sector was Australia’s inability to compete with the UK and USA due to what was described as “their industry/government approach to winning major international projects”.

Examples cited included Australian companies bidding for contracts in Brazil and South Africa when the World Cup Soccer was announced.

Further hindering Australia’s tender bids is the strong export push from the UK, USA and Germany who are particularly driving “export led recoveries” and penetrating key Asian markets at the highest levels of Government.

The Export Council of Australia recommends creating a closer relationship between industry and Government particularly where major projects are concerned and that senior Ministerial Trade Missions are put back on the agenda.

Building closer relationship between Industry & Government

One initiative of the Obama Government is the formation of two councils to provide advice on trade related matters.

• Industry Trade (and possibly investment) Advisory Council

• Government Trade Advisory Council

The former is self explanatory and if properly constructed will provide valuable input to Government. The second is quite different but equally important.

Trade touches a significant number of Government portfolios including Agriculture, Industry, Defence, Education, Customs and Transport to name just a few.

The Export Council of Australia supports the establishment of mechanisms whereby Government agencies and/ or Ministers can interface to identify strategies and plans for addressing key trade related issues that individually or in isolation fail to get on to the agenda.

WTO and FTA’s

The Export Council of Australia is a strong supporter of free market access but is a realist when it comes to Doha.  The field of greatest importance in trade agreements to the Export Council of Australia is trade facilitation issues and addressing the cost and difficulties surrounding ease of access to markets.

The biggest issue we see in the FTA discussion process is the communication of benefits to exporters. The argument that US companies get more out of the USAUS FTA is probably true because the companies are bigger and therefore able to afford consultants to evaluate the benefits.

If you have any opinion on any of the above ideas outlined by the Export Council  or if you have any other recommendations on areas you would like the Export Council of Australia  to address we would love to hear from you. Please contact us on 02 8243 7400 or e-mail your thoughts through to info@export.org.au

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