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Trade Policy Review Mechanism Australia RESTRICTED GENERAL AGREEMENT C/RM/S/43 6 January 1994 ON TARIFFS AND TRADE Limited Distribution (94-0020) COUNCIL TRADE POLICY REVIEW MECHANISM AUSTRALIA Report by the Secretariat In pursuance of the CONTRACTING PARTIES' Decision of 12 April 1989 concerning the Trade Policy Review Mechanism (BISD 36S/403), the Secretariat submits herewith its report on Australia. The report is drawn up by the Secretariat on its own responsibility. It is based on the information available to the Secretariat and that provided by Australia. As required by the Decision, in preparing its report the Secretariat has sought clarification from Australia on its trade policies and practices. Document C/RM/G/43 contains the report submitted by the Government of Australia. NOTE TO ALL DELEGATIONS Until further notice, this document is subject to a press embargo AustraIiaAustralia C/RM/S/43 . g CONTENTS Page SUMMARY OBSERVATIONS vii (1) The Economic Environment vii (2) Institutional Framework vii (3) Trade Policy Features and Trends viii (i) Evolution since the initial review viii (ii) Type and incidence of trade policy instruments ix (iii) Temporary measures ix (iv) Sectoral policy patterns x (4) Trade Policies and Foreign Trading Partners xi I. THE ECONOMIC ENVIRONMENT (1) Recent Economic Performance and Policy Objectives 1 (2) Trade Performance 7 (3) Outlook 12 II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 14 (1) Introduction 14 (2) Structure of Trade Policy Formulation and Implementation 14 (i) Institutional structure at Commonwealth level 14 (ii) Commonwealth-State relations 16 (iii) Legal status of GATT obligations 21 (iv) Advisory and review bodies 21 (3) Trade Policy Objectives 23 (4) Preferential Trade Relations and Regional Cooperation 24 (i) Preferential trade 24 (ii) Regional cooperation initiatives 29 C/RM/S/43 Trade Policy Review Mechanisim Page iv III FOREIGN DIRECT INVESTMENT AND TRADE 30 (1) General Policy Direction 30 (2) Legal Framework and Procedures 31 (3) Trends in Inward and Outward Foreign Direct Investment 31 IV. TRADE POLICIES AND PRACTICES BY MEASURE 35 (1) Overview 35 (2) Measures Directly Affecting Imports 36 (i) Tariffs, import levies and charges 36 (ii) Import prohibitions, restrictions and controls 44 (iii) Quarantine regulations 46 (iv) Import licensing procedures 47 (y) Trade sanctions 48 (vi) Emergency trade measures 48 (vii) Anti-dumping measures 48 (viii) Countervailing actions 54 (ix) Government procurement 54 (x) Standards and other technical requirements 58 (xi) State-trading enterprises 61 (xii) Countertrade 62 (xiii) Local content schemes 63 (xiv) Rules of origin 63 (3) Measures Directly Affecting Exports 64 (i) Duty drawbacks and remissions 64 (ii) Export promotion and assistance 64 (iii) Export incentive schemes 67 (iv) Export finance and insurance 69 (y) Export taxes 71 (vi) State-trading enterprises 72 (vii) Export restraint arrangements 73 (viii) Export prohibitions 73 (ix) Export restrictions and controls 73 Australia C/RM/S/43 Page v (4) Measures Affecting Production and Trade 75 (i) Competition policy 75 (ii) Subsidies (including marketing arrangements and stabilization schemes) 85 (iii) Sales taxes 96 (iv) Regulatory exemptions and other privileges of a sector-specific nature 97 ANNEX IV. 1 98 V. TRADE POLICIES BY SECTOR 104 (1) Recent Trends 104 (2) Agriculture, Forestry and Fisheries 105 (i) Overview 105 (ii) Livestock production 110 (iii) Crops 116 (iv) Forestry and wood products 124 (v) Fisheries 126 (3) Mining 128 (i) Overview 128 (ii) Regulatary issues 131 (iii) Energy products 132 (4) Developments in Main Manufacturing Industries 136 (i) Basic policy direction 136 (ii) Food products 139 (iii) Textiles, clothing and footwear 139 (iv) Chemicals, chemical products and pharmaceuticals 144 (v) Iron and steel 149 (vi) Metal products and machinery 151 (vii) Communications and information technologies 152 (viii) Transport equipment 158 Cl/M/S/43 Trade Policy Review Mechanism Page vi Page VI. TRADE DISPUTES AND CONSULTATIONS 163 (1) Cases under the General Agreement 163 (2) Cases under the Tokyo Round Agreements 165 (i) Agreement on Interpretation and Application of Articles VI, XVI and XXIII of the General Agreement (the Subsidies Code) 165 (ii) Agreement on Implementation of Article VI of the General Agreement (the Anti-Dumping Code) 166 (3) Dispute Settlement in Other Fora 166 REFERENCES 163 APPENDIX TABLES 173 Àustralia C/RM/S/43 Page vii SUMMARY OBSERVATIONS I. Since its first Trade Policy Review in the adverse impact on export demand of a 1989, Australia has pressed ahead with itsfar- faltering world economy and a secular decline reaching, ambitious programme of economic in the terms of trade. reform. Tariffs have come down and are being reducedfurther under a predetermined agenda 4. With a structural savings-investment up to the year 2000; subsidies are being cut; gap, Australia records a persistent current andderegulation andprivatization are injecting account deficit. As a result, the external debt - competition into inany formerly shielded areas much of it on private account - has risen to of goods and services. Mile Australia is some 55 per cent of GDP. To case the external consolidating many ofits trade reforms through constraint, the authorities Iook toimproving binding commitments and acceptance of new productivity growth, which has long been Uruguay Round disciplines, the spur for trade trailing other OECD countries. ln consequence, and domestic reform has been, throughout, successive Governments have promoted essentially autonomous and independent of the regulatory changes in basic infrastructural multilateral negotiation process. With a legacy services, remove administrative shackles and of distortive import replacement policies in remedy distortion in the incentive system. manufacturing, Australia sees trade and internal liberalization as complementary tools to improve 5. Trade liberalization has been central to the sectoral balance of the economy, increase Australia's reform process. In 1991, even multi-factor productivity and, thus, promote though the economy was still in difficulty and international competitiveness. to current account weak, a new liberalization package was launched which is projected to Environmnent reduce the average effective rate of assistance front Il per cent now to 5 per cent by 2000. 2. Since 1989, theAustralian economy has come through a recession, ushered in largepart (2) Institutional Framework by monetary measures taken to correct earlier overheating. In 1990-91, private investment 6. Thescope of Australia's structural contracted, real GDP shrank and unemploynment reform programme extends to areas within state rose. A sluggish recovery proved insufficient and territorial competence, including standards, to prevent unemployment from rising further, procurement policies and marketing board to Il per cent in '992. Inflation is currently practices, where uncoordinated policies in the around 1 per cent. Net exports and business past have resulted in obstacles to internal trade. investment are now, however, expected to pick In this connection, a recently concluded up, and growth in 1993-94 may exceed the Commonwealth/State Agreement on Mutual 2. 7per cent recorded for 1992-93. Recognition, akin to the European Communities' Internal Market programmne, seeks to ensure that 3. The speed of recovery has been goods legally put into circulation in any part influenced by the prudent financial policies of Australia can be soldfreely throughout the adopted in the recession; fiscal policy has, country, irrespective of their origin. Uniform rather than seeking to stimulate the economy, national standards are being developed in areas aimed to support longer-term budgetary balance, where essential health andsafety considerations in order to help narrow Australia's national come into play, except when a national market savings-investment gap. Further, the economy is not considered appropriate, for example, has continuedto sufferfrom the lingering effects under genuine quarantine requirements. of a speculative investment boom in the late 1980s, which led to a large capacity overhang 7. Many agricultural marketing boards in real estate and equipment, as well as from have recently been restructured, with their C/RM/S/43 Trade Policy Reviewv Mechanism Page Viii responsibilities reduced in scope and coverage, of 10 or 15 per cent, with exceptions mainly for in order to promote commercial efficiency. passenger motor vehicles (PMV) and textiles, Restrictive supply and purchase arrangements clothing and footwear products (TCF). lhe and state quota régimes have been trimmed. overall unweighted tariff cerage fellby about Exclusive purchase arrangements continue, one-third to around 12 per cent by March 1992; however, in areas such as wheat, eggs and currently, close to 50 per cent of all imports sugar in Queensland, oilseeds in New South enter the Australian marketfree of duty and an Wales, and warepotatoes in Western Australia. additional 20 per cent qualfifies forfree entry under an extensive system of tariff concessions 8. Internal harmonization has not always for specified industries or purposes. been equally beneficial to domestic and foreign suppliers. While the 1991 Agreemernt on .12. A new tariff reduction programme, Government Procurement prohibits its initiated in March 1991, provides for further signatories, the Commonwealth, theAustralian cuts, subject to the samte sectoral exceptions, States and Territories and New Zealand, from to 5 per cent or zero by 1996. Tariffs
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