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WT/TPR/M/396 27 May 2020 (20-3829) Page WT/TPR/M/396 27 May 2020 (20-3829) Page: 1/53 Trade Policy Review Body 11 and 13 March 2020 TRADE POLICY REVIEW AUSTRALIA MINUTES OF THE MEETING Chairperson: H.E. Mr Manuel A.J. Teehankee (Philippines) CONTENTS 1 INTRODUCTORY REMARKS BY THE CHAIRPERSON ........................................................ 2 2 OPENING STATEMENT BY THE REPRESENTATIVE OF AUSTRALIA ................................. 4 3 STATEMENT BY THE DISCUSSANT ................................................................................. 7 4 STATEMENTS BY MEMBERS .......................................................................................... 10 5 REPLIES BY THE REPRESENTATIVE OF AUSTRALIA AND ADDITIONAL COMMENTS .... 46 6 CONCLUDING REMARKS BY THE CHAIRPERSON .......................................................... 51 7 ELECTION OF THE NEW CHAIRPERSON OF THE TPRB .................................................. 53 Note: Advance written questions and additional questions by WTO Members, and the replies provided by Australia are reproduced in document WT/TPR/M/396/Add.1 and will be available online at http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/396 • Australia - 2 - 1 INTRODUCTORY REMARKS BY THE CHAIRPERSON 1.1. The eighth Trade Policy Review of Australia was held on 11 and 13 March 2020. The Chairperson, H.E. Mr. Manuel Teehankee (Philippines), welcomed the delegation of Australia, headed by Mr. George Mina, First Assistant Secretary, Office of Trade Negotiations at the Department of Foreign Affairs and Trade; H.E. Ambassador Frances Lisson, Permanent Representative of Australia to the WTO; the rest of the delegation from Canberra and to other colleagues from the Mission in Geneva; and the discussant, H.E. Mr. Julian Braithwaite (United Kingdom). 1.2. As indicated in document WTO/AIR/TPR/94/Add.1, TPRB Members were invited to elect the new Chairperson, H.E. Mr. Harald Aspelund (Iceland), on the second day of the meeting. Given that Australia's TPRB meeting took place on a virtual basis, the election of the new Chairperson was also considered in the same manner. 1.3. The Chairperson recalled the purpose of TPRs and the main elements of procedures for the meeting. The report by Australia was contained in document WT/TPR/G/396 and that of the WTO Secretariat in document WT/TPR/S/396. 1.4. Questions by the following delegations were submitted in writing before the deadline: Republic of Korea; Canada; Israel; Switzerland; Costa Rica; European Union; Hong Kong, China; Chinese Taipei; Brazil; Colombia; Argentina; United States; Japan; Dominican Republic; Chile; China; Mexico; United Kingdom; Ukraine; Singapore; India; and Indonesia. The following delegations submitted written questions after the deadline: Russian Federation; Iceland; Malaysia; New Zealand; Peru; Turkey; Thailand; Guatemala; and the Philippines. 1.5. At the last Review in 2015, Australia had been praised for its inter-related trade openness, growth and living standards. It had been noted that Australia had experienced more than 20 years of uninterrupted growth, due in good part to sound macroeconomic principles and policies. Australia had been congratulated for trade-related reforms in a number of areas. Nevertheless, Australia had been facing challenges relating to terms of trade effects, currency appreciation, an ageing population and continued over-reliance on the mining sector. It had also been noted that, although Australia encouraged foreign investment, it was also maintaining restrictions in certain sensitive sectors. 1.6. Australia had been commended for its commitment to the rules-based multilateral trading system and its active engagement in trade and investment liberalization activities within and outside of the WTO. Australia's strong WTO notification record had also been highlighted. Noting Australia's increasing involvement in RTAs, particularly with its partners in Asia, some Members had stressed the importance of outcomes that would complement and strengthen the multilateral trading system. 1.7. Some Members had urged Australia to rethink taxes such as the tax on luxury cars with due consideration to the potential negative effect on trade. Many Members had noted that Australia was a relatively frequent user of anti-dumping measures, and that it was planning further improvements to its legislative framework, inter alia, to address procedural transparency and delays. In reforming its biosecurity system, Australia had been encouraged to simplify it, to align with international standards, recommendations and guidelines to the extent possible, and to strike a good balance between trade facilitation and import risk management. Members had welcomed Australia's intention to accede to the revised WTO Government Procurement Agreement and open its procurement market further, particularly at the sub-federal level. Recognizing services as the main pillar of the Australian economy, several Members had noted progress made in this area and had encouraged Australia, inter alia, to liberalize maritime cabotage. It was to be interesting to hear from Australia what developments had taken place since the last Review with respect to some of these issues. 1.8. The Secretariat and the Government reports confirmed that the economic expansion continued during the current review period, although at a more moderate pace recently, as a mining investment boom reached its end, and the domestic real estate market softened. The Australian Government provided economic stimuli in various forms, including lower taxes, higher public consumption, increased outlays on research and development, and major investments in infrastructure. Nonetheless, the federal budget balance improved and was currently in slight surplus. The economy was also aided by interest rate cuts by the central bank – to a new record low of 0.50% as at the Tuesday prior to the meeting - and a steady depreciation of the Australian dollar. As a result, per capita GDP continued to increase in the national currency, while, measured in US dollars, it was now WT/TPR/M/396 • Australia - 3 - around USD 55,000, a significant decline from almost USD 70,000 in 2012/13. All the same, these figures indicated a very comfortable standard of living overall. 1.9. Australia's current account deficit narrowed, in major part because the merchandise trade balance had been in surplus since 2016/17, while receipts from tourism and education-related services had also been on the rise. Net flows of foreign investment into Australia averaged AUD 60 billion per year in the period under review, and the stock of FDI now stood at close to AUD 1 trillion. Australia was also an active investor in other countries. 1.10. Mineral products still accounted for nearly 60% of Australia's exports, and the reliance on Asian markets continued to increase, particularly for imports. Asian markets currently absorbed about 84% of Australia's exports. The ongoing trade tensions between some of Australia's main trading partners were, no doubt, a matter of concern to the authorities in Canberra. 1.11. With respect to regional trade agreements, important changes took place for Australia in the period under review, in particular the entry into force of the Progressive Agreement for Trans-Pacific Partnership (CPTPP). Two bilateral FTAs – with Japan and China – also took effect. Further FTAs had been concluded, but were not yet in force, or were under negotiation. About 70% of Australia's two- way trade was now covered by FTAs, and, according to the Government report, the goal was to reach 90% by 2022. This was a massive change for a WTO Member whose share of FTA partners in total trade was well under 30% as late as 2013. 1.12. Against this background, Australia remained fully committed to a strong multilateral trading system and was actively engaged in ongoing negotiations to enlarge its scope. Australia's notification record was still exemplary. It joined the plurilateral WTO Agreement on Government Procurement in 2019 and ratified the WTO Trade Facilitation Agreement in 2015. Low MFN tariffs fell further as a result of Australia's implementation of the expanded WTO Information Technology Agreement (ITA) and unilateral tariff reductions on textile, clothing and footwear items. The maximum MFN rate was now 5%, and close to 50% of the tariff lines faced zero import duty on an MFN basis. However, these low rates also highlighted the discrepancy between Australia's present applied and bound regimes, including a simple average bound MFN rate of 9.8% and more than 200 six-digit tariff lines that remained unbound in full or in part. 1.13. Australia received more than 550 advance written questions for this Review. Many of these questions touched upon important legislative developments in the period under review, such as the entry into force of the Biosecurity Act of 2015, two basic regulations associated with it, and more than 100 additional legal instruments related to biosecurity; changes to Australia's competition legislation following the conclusion of the Harper Review in March 2015; new and amended legislation on intellectual property; financial services regulations; and amendments to the rules that govern anti-dumping and countervailing measures, of which Australia remains a relatively active user. 1.14. Australia's screening of foreign investment by its Foreign Investment Review Board (FIRB) had also attracted a lot of interest among Members, in particular the application of national interest criteria on a case-by-case basis, the application of "appropriate
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