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COMMONWEALTH OF AUSTRALIA Official Committee Hansard JOINT STANDING COMMITTEE ON FOREIGN AFFAIRS, DEFENCE AND TRADE TRADE SUBCOMMITTEE TRADE SUBCOMMITTEE Reference: Inquiry into Australia’s Trade and Investment Relations with Asia, the Pacific and Latin America FRIDAY, 28 NOVEMBER 2008 CANBERRA BY AUTHORITY OF THE PARLIAMENT INTERNET Hansard transcripts of public hearings are made available on the inter- net when authorised by the committee. The internet address is: http://www.aph.gov.au/hansard To search the parliamentary database, go to: http://parlinfoweb.aph.gov.au JOINT STANDING COMMITTEE ON FOREIGN AFFAIRS, DEFENCE AND TRADE Trade Subcommittee Friday, 28 November 2008 Members: Senator Forshaw (Chair), Mr Hawker (Deputy Chair), Senators Arbib, Mark Bishop, Ferguson, Fifield, Johnston, Ludlam, Moore, O’Brien, Payne and Trood and Mr Baldwin, Mr Bevis, Mr Danby, Ms An- nette Ellis, Mr Gibbons, Ms Grierson, Mr Hale, Mr Ian Macfarlane, Mrs Mirabella, Ms Parke, Ms Rea, Mr Ripoll, Mr Robert, Mr Ruddock, Ms Saffin, Mr Bruce Scott, Mr Kelvin Thomson and Ms Vamvakinou Trade Subcommittee members: Ms Saffin (Chair), Mr Bruce Scott (Deputy Chair), Senator Forshaw (ex officio) and Mr Gibbons, Mr Hale, Mr Hawker (ex officio), Mr Ian Macfarlane, Mrs Markus, Mr Ripoll and Ms Vamvakinou Members in attendance: Senator Forshaw and Ms Saffin and Mr Bruce Scott Terms of reference for the inquiry: To inquire into and report on: Opportunities for expanding Australia’s trade and investment relations with the countries of Asia, the Pacific and Latin America, with particular attention to: • the nature of existing trade and investment relations; • likely future trends in those relations; • the role that these countries might play in advancing the Doha round of multilateral trade negotiations in the WTO; and • the role of the Government in identifying opportunities and assisting Australian companies, especially those in rural and regional areas, to maximise opportunities in these regions. WITNESSES BETANCUR, Mr Diego, Ambassador, Embassy of Columbia.................................................................... 12 de la PUENTE, Ambassador Claudio, Head of Mission, Embassy of Peru in Australia............................. 2 FORERO, Mr Carlos Arturo, Counsellor, Embassy of Colombia.............................................................. 12 JILANI, Mr Jalil Abbas, High Commissioner, Ministry of Foreign Affairs, Government of Pakistan ............................................................................................................................................................ 21 Friday, 28 November 2008 JOINT—Standing FADT 1 Subcommittee met at 9.36 am CHAIR (Ms Saffin)—I declare open this public hearing into Australia’s trade and investment relations with the nations of Asia, the Pacific and Latin America which is being conducted by the Trade Subcommittee of the Joint Standing Committee on Foreign Affairs, Defence and Trade. This is the first public hearing for this inquiry. Today the subcommittee will be taking evidence from the ambassadors for Peru and Columbia and the High Commissioner for Pakistan. The submissions to the inquiry from each of these countries have highlighted the opportunities and challenges facing us in seeking ways to widen and improve our trade and investment relations. The subcommittee is delighted to welcome all of the witnesses this morning and we anticipate a lively and interesting discussion of the trade issues under discussion. Trade and investment links with the countries covered by this inquiry are of growing importance and we will be examining ways to widen and improve those links and to assist Australian companies to make the most of current and developing opportunities. Finally, I remind any members of the media who come to observe the public hearing of the need to report the proceedings of the subcommittee fairly and accurately, as required by the Senate order concerning the broadcasting of Senate and committee proceedings. FOREIGN AFFAIRS, DEFENCE AND TRADE FADT 2 JOINT—Standing Friday, 28 November 2008 [9.38 am] de la PUENTE, Ambassador Claudio, Head of Mission, Embassy of Peru in Australia CHAIR—On behalf of the subcommittee I welcome His Excellency the Peruvian Ambassador to Australia and representatives from the embassy of Peru and also the counsellor from the embassy of Argentina. Although the subcommittee prefers that all evidence be given in public, should you at any stage wish to give any evidence in private you may ask to do so and the committee will give consideration to your request. Although this committee does not require you to give evidence on oath, you should be aware that these hearings are legal proceedings of the parliament and therefore have the same standing as proceedings of chambers themselves. Before proceeding to questions, I invite you to make a short statement. A PowerPoint presentation was then given— Ambassador de la Puente—I would like to start by thanking the joint subcommittee for giving me the opportunity of sharing with its distinguished members some thoughts about Peruvian-Australian relations and their perspectives. Peru has presented a submission to this inquiry. We are convinced that bilateral trade and investment links with Australia have very good prospects to continue growing and diversifying, as it is the case with other important APEC partners. We are particularly pleased to see some of the proposals included in our submission already adopted as a result of the high-level bilateral meetings held at the APEC summit in Lima last week. Our expectations for even better forecasts are based on the outstanding economic performance of Peru over recent years. In fact, Peru has become the fastest growing, the best performing and a stable economy of Latin America—in short, a truly reliable partner to the Australian region. In these initial remarks I would like to provide you with some details of this process. Peru is a country that offers a stable and open economy with sustained economic growth over 89 consecutive months in which exports and investment have grown sharply. It is a country rich in natural resources, with a world-leading position in mineral resources and output, and also natural gas, fish and forestry services. It is an idea climate for selected agribusiness products and huge hydro energy potential. It is a country with a strategic location in the central South American Pacific Coast bordering five countries with ongoing mega infrastructure projects to connect the giant Brazilian economy with the Peruvian Pacific Coast. It also has good ports and infrastructure facilities that, added to its strategic geographical position, may serve as a South American connection from and to the Asia-Pacific region. It is an economy committed to global trade processes with a natural role through WTO and APEC, and also with a wide access to regional blocs and increasing participation in a global market through regional and bilateral free trade agreements. It is a stable and foreseeable climate and attractive legal framework for investments based on international principles. The country risk is well below the regional average. Regionally this was successfully proven during the APEC summit just concluded in Lima and the Latin American and European summit held also in Lima last May. Last, but not least, certainly the country has political stability and rule of law. FOREIGN AFFAIRS, DEFENCE AND TRADE Friday, 28 November 2008 JOINT—Standing FADT 3 Peru’s outstanding economic expansion has been driven mainly by trade and public and private investments. Investment has been growing by 20 per cent in recent years. Peru’s economy shows solid and sustained growth, reaching a remarkable 8.9 per cent in 2007 and even jumping up to an estimated 9.2 per cent this year, along with a substantial growth in various economic sectors such as mining, manufacturing, housing, construction, agribusiness, fishing, tourism and a very strong increase in domestic demand. Export value has multiplied over three or even four times in recent years. The estimates for 2008 are 20 per cent growth to approximately A$53 billion. Proven and serious finances have allowed us to improve our fiscal position with a surplus of about three per cent this year, all this in a framework of macroeconomic stability, with the lowest inflation in the region and a very stable exchange rate. This solid economic condition has been internationally acknowledged. Peru has received three investment ratings in the last year. Also, it is important to note that this year Peru joined the OECD investment committee. Our legal system on investments grants national treatment to foreign companies with freedom to invest in all economic activities with free transfer of investment capital, freedom to purchase stock and so on. On top of that, foreign companies are entitled to sign a 10-year stability agreement with the government. Peru is part of a network of multilateral conventions on investment protection and has signed 32 bilateral agreements, including one with Australia back in 1995. As we can see in the chart, first-class companies are investing in Peru, including some leading Australians, while FDI has grown 55 per cent in 2008. Peru has shown a strong commitment to trade liberalisation at bilateral, regional and multilateral levels. We have worked side by side with Australia in our efforts to see the Doha round talks move ahead, supporting in Geneva the proposal presented last July by WTO Director-General, Pascal Lamy. Both

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