WTO and US FTA WTO and US FTA Benefits to Benefits to BusinessBusiness

In the era of globalization:In the era of globalization:

• Economic integration is more than Economic integration is more than free tradefree trade

• Free movement of capital may be Free movement of capital may be more important than free trademore important than free trade

• We have just seen the beginning of We have just seen the beginning of the information age the information age

The new importance of The new importance of investmentinvestment

Global value of Global value of foreign assets foreign assets and affiliatesand affiliates

19951995

Global sales of Global sales of foreign affiliatesforeign affiliates

19921992

tradetrade

Global arms Global arms length trade length trade

19921992

US$ 2.6 trillUS$ 2.6 trill US$ 5.2 trillUS$ 5.2 trill

(+ $ 2 trill linked (+ $ 2 trill linked sales)sales)

US$ 3 trillUS$ 3 trill

investmentinvestment

What WTO offersWhat WTO offers

• Further opening of world food marketsFurther opening of world food markets

• Reduction of barriers in developing Reduction of barriers in developing countriescountries

• Global liberalization of servicesGlobal liberalization of services

• Global reduction of investment barriersGlobal reduction of investment barriers

Limits to WTO programLimits to WTO program

• Partial liberalizationPartial liberalization

• No certainty when it will finishNo certainty when it will finish

- currently stalled- currently stalled

What US FTA offersWhat US FTA offers

• Remove foreign investment barriersRemove foreign investment barriers

• Increased agricultural exportsIncreased agricultural exports

• More Secure access to US marketMore Secure access to US market

• Increased total exports Increased total exports

Can deliver complete accessCan deliver complete access

Can be completed within 2 yearsCan be completed within 2 years

US/Australian economic US/Australian economic interestsinterests

• Rising exports of manufacturesRising exports of manufactures

• Importance of servicesImportance of services

• New importance of investmentNew importance of investment

Australian exports – a new Australian exports – a new patternpattern

0% 20% 40% 60% 80% 100%

1984

2000

Food Wine Manufactures Other

Exports to the US (A$ mill)Exports to the US (A$ mill)

19841984 20002000

FoodFood 777777 23232323

WineWine 1111 422422

ManufacturesManufactures 485485 49144914

TotalTotal 30003000 1098310983

US - our healthiest marketUS - our healthiest market

• Fastest export growth 1995-2000Fastest export growth 1995-2000

• Best growing market for Best growing market for ManufacturesManufactures

• Largest market for services exportsLargest market for services exports

Two way investmentTwo way investment

US into US into AustraliaAustralia

Australia into USAustralia into US

ValueValue A$ 215 bA$ 215 b A$ 98 bA$ 98 b

Rate of Rate of growth growth

95-00 (%)95-00 (%)

25 %25 %

(other FDI : (other FDI : 17% )17% )

500 %500 % 1111thth largest, largest,

88th th largest largest foreign owner of foreign owner of US assetsUS assets

Share of Share of total foreign total foreign directdirect

51 %51 % 4 %4 %

Same as Mexico, Same as Mexico, bigger than bigger than France or JapanFrance or Japan

Strategic benefitStrategic benefit

• Strengthen the relationshipStrengthen the relationship

- new strategic uncertainties- new strategic uncertainties

- new era of globalization- new era of globalization

- new competition for US interest- new competition for US interest from Latin America from Latin America

Dynamic benefitsDynamic benefits

• More competitive Australian More competitive Australian economyeconomy

• Aligning economic reference points Aligning economic reference points with the US – leader of the with the US – leader of the Information AgeInformation Age

• Integration with global (mostly US) Integration with global (mostly US) business modelsbusiness models

*Alcoa *Alcoa

AMCHAMAMCHAM

*Australian Food & *Australian Food & Grocery CouncilGrocery Council

Australian Chamber of Australian Chamber of Commerce & IndustryCommerce & Industry

Australian Industry Australian Industry GroupGroup

*Australian Dairy *Australian Dairy CorporationCorporation

Australian Internet Australian Internet AssociationAssociation

*Australian Meat *Australian Meat CouncilCouncil

*BHP Steel*BHP Steel

Bonlac Foods LtdBonlac Foods Ltd

*Business Council of *Business Council of AustraliaAustralia

CargillCargill

CaterpillarCaterpillar

CBA LtdCBA Ltd

EDS AustraliaEDS Australia

*Effem Foods*Effem Foods

*Esso Australia Pty *Esso Australia Pty LtdLtd

*Holden’s*Holden’s

*Mobil Oil Australia *Mobil Oil Australia Pty LtdPty Ltd

IBMIBM

KelloggsKelloggs

*Medicines Australia*Medicines Australia

*Minerals Council of *Minerals Council of AustraliaAustralia

*News Limited*News Limited

Proctor and GambleProctor and Gamble

*Southcorp*Southcorp

*Telstra*Telstra

*Visy (Pratt Industries)*Visy (Pratt Industries)

*Westfield Holdings*Westfield Holdings

Western Mining Western Mining Corporation LtdCorporation Ltd

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