Australian Embassy, Lisbon

Press Release - 18 January 2007

Australia's trade and exports show positive outlook for 2007

As Australia moves into 2007, the country’s trade and export status has been boosted by new statistics on strong commodity forecasts.

 The Australian Government’s key economic research agency (ABARE) said in its December report on Australian Commodities that earnings from Australia’s commodity exports were forecast to rise by 13 per cent to around $140 billion in 2006-07.

ABARE said that while farm sector exports would be adversely affected by the long-running drought, higher export earnings from mineral resources would continue to underpin commodity sector performance.

Executive Director of ABARE, Mr Phillip Glyde, said that the value of Australia’s minerals and energy exports was forecast to be around $111 billion in 2006-07, a rise of 20 per cent from $92 billion in 2005-06.

The price outlook across mineral resources was positive, reflecting continued strong world demand and modest growth in supply. Following significant rises in 2005-06, further price increases in 2006-07 are forecast for many mineral commodities, including iron ore, gold, aluminium, nickel, copper and zinc. In addition to higher prices, the volume of Australian mineral resources exports, in aggregate, was forecast to rise markedly in 2006-07.

Reflecting the harsh impact of the drought, with 2006 being the driest year on record (back to 1900), across parts of the country, Australia’s farm export earnings were forecast to be down 8 per cent to $25.4 billion in 2006-07. The fall mainly reflects lower export volumes for most crops. Agricultural commodities for which export earnings are forecast to fall significantly in 2006-07 include canola, cotton, barley, dairy products and lamb.

However, Australia’s overall exports increased in November to a near record while imports fell, leading to a significant narrowing of the trade deficit. Exports of goods and services reached $18 billion, the second highest level on record, and over the year to November, amounted to $208.5 billion, up 17 percent on the previous 12 month period.

Australia’s Minister for Trade, Mr. Warren Truss, said that in general, the trade deficit fell by $665 million to $843 million in November. In the first five months of the 2006-07 financial year, the trade deficit of $4.1 billion was a substantial reduction on the $6.9 billion recorded in the first five months of 2005-06.

The strongest rise was in manufactured exports, increasing by 3 percent to $3.8 billion in November 2006.

Rural exports also rose by 2 percent. The ongoing volatility in gold imports and exports again had a noticeable effect, with a 29 percent fall in November dragging down the “other goods” exports sector by 20 percent to $836 million.

Mr. Truss said that Australia’s exports to North East Asia continued apace, rising 20 percent in the 12 months to November. Exports to China led the way and were up by 31 percent.

Looking to the future of world trade negotiations, including the Doha Round, Mr. Truss said that the US Farm Bill was the next critical piece of legislation to be faced in the global trade liberalisation process. He said that if the US were to lock in farm subsidies at a high level, then that would clearly provide no incentive for other countries to respond in a positive way.

“The US Bill was a critical piece of discussion occurring and it’s good to see some constructive proposals under consideration,” Mr. Truss said.

“We’re looking for an ambitious outcome to this round and we want substantial cuts to US farm protection, we want substantial cuts in tariffs, but in addition to that, we also want considerable improvements in the market access arrangements so that world trade can indeed be freer and more open. Now the fact that these discussions are occurring is constructive and I think is a positive response to our proposal,” he said

The Minister emphasised that Australia’s highest priority focus was a worldwide multilateral agreement. “Discussions at a bilateral level can be constructive in developing solutions to some of the problems to be faced globally,” he said. “So I think that our work in relation to the bilateral agreements and the successes achieved helps to pave the way for a global agreement,” he said. “It’s still going to be tough to achieve an outcome in the world trade talks. But it’s such an important goal and we will be putting a lot of effort in over the next few months to ensure the Round has the very best possible chance of success.”

And, as Australia prepares to host the Asia-Pacific Economic Cooperation (APEC) forum, this year, a series of meetings from January to September 207, is set to focus on areas of interest to the 21 member economies of APEC, including economic growth and prosperity issues, as well as cooperation, trade and investment in the Asia-Pacific region. More than 100 days of ministerial, officials-level and business-group meetings have been scheduled for APEC delegates in various centres throughout Australia.

The APEC year would culminate in Sydney on 8-9 September with the APEC Economic Leaders Meeting, bringing together the leaders of all major regional economies as well as thousands of delegates, support staff and the international media, and is one of the most important annual meetings of world leaders.

An independent report has found that Australia is on target to achieve its APEC goals of free trade and investment. Citing Australia's 15th consecutive year of uninterrupted economic expansion, which is the longest in Australia's history, the report said that “Australia has made steady progress in trade liberalization and facilitation and it will be able to achieve the APEC goals set in Bogor, Indonesia in 1994, which set a target of free and open trade for industrialised economies by 2010 and developing economies by 2020.

Canberra, 18 January 2007