Supporting Australian Smes Go Global
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PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA From little things big things grow: Supporting Australian SMEs go global Inquiry into access to free trade agreements by small and medium enterprises Joint Standing Committee on Foreign Affairs, Defence and Trade February 2019 CANBERRA © Commonwealth of Australia ISBN 978-1-74366-955-6 (Printed Version) ISBN 978-1-74366-956-3 (HTML Version) This work is licensed under the Creative Commons Attribution- NonCommercial-NoDerivs 3.0 Australia License. The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/. Contents Foreword ......................................................................................................................................... xiii Members ........................................................................................................................................... xv Terms of Reference ....................................................................................................................... xxiii Abbreviations ................................................................................................................................. xxv List of Recommendations ............................................................................................................ xxix The Report 1 Introduction .............................................................................................................. 1 Conduct of the inquiry ......................................................................................................... 1 Geographical scope of the inquiry ...................................................................................... 3 Definition of SMEs ................................................................................................................ 3 Australian Bureau of Statistics data on SME exporters ................................................... 5 SMEs exporting goods and utilising FTAs ........................................................................ 8 SMEs exporting services ........................................................................................ 10 Australia’s free trade agreement agenda and SMEs ...................................................... 10 Free trade agreements in force .............................................................................. 11 FTAs concluded but not yet in force ................................................................... 12 FTAs under negotiation ......................................................................................... 12 Prospective FTA negotiations ............................................................................... 12 Government aim to support SMEs benefit from FTAs .................................................. 12 Overview of the inquiry ..................................................................................................... 14 iii iv 2 SMEs' experiences, challenges and opportunities with FTAs ...................... 17 SMEs’ experiences with FTAs and most targeted markets ........................................... 17 Australian exporters’ most targeted markets ..................................................... 18 Impact of trade liberalisation on Victoria businesses ........................................ 28 Australia’s growing wine exports into Asia .................................................................... 30 FTAs raise awareness of Australian wine in new markets ............................... 34 Grape variety and Geographical Indication protection ..................................... 37 Challenges for SME exporters to utilise FTAs ................................................................. 39 Australian pork exporters ...................................................................................... 41 Government fees and charges on medical device exports ................................ 42 Finding customers for Australian exports ........................................................... 44 Capabilities required by Australian exporters.................................................... 45 Leadership and management skills for exporting ............................................. 47 Capacity and competency required by SMEs to export .................................... 48 Protection of intellectual property ........................................................................ 48 Tariff market access and rules of origin ........................................................................... 51 Export documents such as Rules of Origin and Certificates of Origin ............ 55 Rules of Origin ............................................................................................ 58 Certificates of Origin .................................................................................. 59 Non-tariff barriers and SMEs ............................................................................................ 61 Compliance and export inspections ..................................................................... 62 Harmonisation codes for exports ......................................................................... 63 Growing cost of documentation ........................................................................... 63 Australia’s standards and conformance infrastructure ......................... 66 Reducing ‘behind the border’ costs in APEC economies ...................... 68 Opportunities for SMEs with FTAs .................................................................................. 69 Impact of preferential tariffs on pricing and competition ................................. 69 Digital opportunities for SME exporters ............................................................. 70 Digital trade and e-commerce ............................................................................... 72 v More than 2000 Australian brands retailing on Alibaba ....................... 74 International standards for digital trade ............................................................. 78 ASEAN-Australia Digital Trade Standards initiative ........................................ 79 Growing trade for Australian SMEs in the EU, France and Germany ............ 80 Challenges for Defence industry exports ............................................................ 81 3 Consideration of what issues, products and services are negotiated in FTAs ......................................................................................................................... 83 Negotiation process for FTAs ............................................................................................ 83 Importance of economic evaluations of FTAs..................................................... 90 FTA prioritisation for advanced technology and services............................................. 92 Defence industries .................................................................................................. 92 Strengthening intellectual property protections in FTAs .................................. 93 Accommodating the growth in e-commerce ....................................................... 95 Trade in services ..................................................................................................... 95 Financial services providers ...................................................................... 98 Tariffs .................................................................................................................................... 99 Tariffs and quotas on Australian sugar ............................................................. 100 Enforcing compliance with the rules of trade agreements ................. 102 Lowering tariffs on Australian wine exports .................................................... 103 Accessing Certificates and Declarations of Origin ..................................................... 103 Non-tariff measures .......................................................................................................... 106 Non-tariff measures impacting on grain growers ............................................ 109 China’s demand for animal testing on imported cosmetics ........................... 110 Harmonisation of NTBs impacting on SME wine exporters ........................... 111 Certification and conformity assessment for wine .............................. 113 Industry, Innovation & Science Department role in FTAs .......................................... 115 Jobs and Small Business Department advice on FTAs ................................................. 115 Consultation on FTAs with business community ........................................................ 116 Feedback from businesses in Queensland ......................................................... 120 vi Consultation on FTAs by other government departments.......................................... 121 Harmonising Australia’s free trade agreements ........................................................... 122 Addressing the needs of SMEs in FTAs ......................................................................... 124 Chapter on SMEs in the Peru–Australia Free Trade Agreement .................. 127 Market access protocols for food in FTAs ...................................................................... 128 Victoria wants improved access for agriculture ............................................... 130 Some