Inquiry into access to free trade agreements by small and medium enterprises
Joint Standing Committee on Foreign Affairs, Defence and Trade
Australia should be proud of its extraordinary track record as a free trading nation and its demonstrable capacity to conclude free trade agreements (FTAs).
In recent years we have enjoyed an extraordinary run of success in negotiating FTAs with important north Asian trading partners such as China, Japan, Korea, and more recently the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between 11 countries including new trade partners such as Canada, Mexico and Peru.
While these FTAs have opened a host of new markets for Australian businesses, unfortunately small and medium enterprises (SMEs) have not enjoyed the same growth in exports to FTA markets as large enterprises.
Why is this so? Why have Australian SMEs not leveraged FTAs as much as larger companies and how can they better leverage FTAs in the future?
After 153 submissions and 16 public hearing roundtables across metropolitan and regional areas, I am confident that this report helps answer these questions and that our 10 recommendations are worthy of adoption by the Government.
I thank our Committee Chair Senator Ian Macdonald, my Sub-Committee Deputy Chair Graham Perrett, my fellow committee members and the hard working Secretariat. But most importantly I thank the owners and operators of the wonderful small and medium businesses who generously gave us their time and insight.
Mr Ted O’Brien MP
List of recommendations by the Committee
2.25 The Committee recommends that the Australian Government continues to embrace an ambitious free trade agenda with an expanding network of high quality free trade agreements (FTAs), while acknowledging that FTAs are only one way of enabling international trade for Australian businesses.
2.89 The Committee recommends that the Australian Government seek to minimise non-tariff barriers to trade by identifying and addressing the range of non-tariff barriers that adversely affect trade outcomes for Australian small and medium enterprises (SMEs), and by:
- Providing more tailored advice from IP Australia, and business chambers or other qualified advisers, to SMEs to help them navigate complicated frameworks protecting intellectual property (IP) in overseas markets; and
- Assessing the level of disclosure required for compliance purposes across different FTA jurisdictions with a view to helping SMEs avoid unnecessary IP disclosures and mitigate risks of IP leakage and theft.
3.147 The Committee recommends that the Australian Government seek to make free trade agreements (FTA) more relevant to Australian small and medium enterprises (SMEs) by:
- Including specific SME chapters or specific obligations to assist SMEs to access trade opportunities in future FTAs;
- Improving consistency between overlapping FTAs to reduce complexity for business users where the same exported product, for example, may receive different treatment depending on which trade agreement is applied; and
- Strengthening support for a robust system of Certificates of Origin that are accepted globally and for other reputable bodies to issue Certificates of Origin, as long as standards are not compromised.
4.140 The Committee recommends that the Australian Government trials a grant programme in selected regional areas for clusters of businesses that wish to collaborate in pursuit of export opportunities, anchored to either geographical provenance or specific sectors.
6.79 The Committee recommends that the Australian Government review the resourcing of agencies and programmes to assist Australian small and medium enterprises (SMEs) trade internationally as follows by:
- Reviewing the current funding arrangement for the Australian Trade and Investment Commission with a view to ensuring it is adequately funded to continue to deliver high quality services and in line with the recommendations of the report;
- Assessing the current funding arrangements for the Export Market Development Grant (EMDG) scheme to ensure it meets the growing demand and maintains the real value of individual grants under the EMDG scheme, including investigating strategies to better target the scheme towards high-growth SMEs; and
- Evaluating the potential for using improved digital technology to reduce the administrative burden of the Export Market Development Grants scheme for applicants.
6.156 The Committee recommends that the Australian Government makes its free trade agreements (FTA) more user-friendly for Australian small and medium enterprises (SMEs) by:
- Developing closer linkages between the Export Finance and Insurance Corporation (Efic) and municipal councils and local chambers of commerce so their networks can help promote Efic’s services to Australian SMEs; and
- Establishing a ‘single trade window’ for SME exporters to guide them to education, products and services that meet their needs, and improve the access of SMEs to a centralised source of trade resources, from government agencies such as the Department of Foreign Affairs and Trade, Australian Trade and Investment Commission, Department of Home Affairs, Department of Agriculture and Water Resources, Export Finance and Insurance Corporation, Department of Industry, Innovation and Science, and the Department of Jobs and Small Business.
6.202 The Committee recommends that the Australian Government strengthen its Team Australia approach in target markets by:
- Supporting an increase in the number of smaller, non-Ministerial, industry-focused trade delegations with an emphasis on one-on-one business meetings to achieve more tangible trade outcomes; and
- Undertaking a joint study with state and territory governments of Australia’s trade promotion efforts internationally, with a view to pursuing reforms that will ensure a better coordinated, unified and coherent approach for businesses, including SMEs, to better engage with all tiers of Australian government promoting Australia’s commercial interests.
6.211 The Committee recommends that the Australian Government adopts a more holistic approach to encouraging Australian small and medium enterprises (SMEs) to trade internationally and utilise free trade agreements (FTA) by:
- Targeting service delivery of FTA awareness and education programmes to SMEs based in regional areas by matching the content of seminars and workshops to the specific economic profile of the regions, drawing upon local success stories and providing direct advice about market access and promotion relevant to the key industries of those regions;
- Inviting the active participation of industry representative bodies, such as those representing customs agents and freight forwarders, in FTA awareness and education programs to educate SMEs about the export services their members provide;
- Strengthening capacity development of SMEs so they become more import/export ready, including knowing how to assess destinations and business partners, and using technology to support international engagement and trading activities; and
- Adopting a tiered pricing structure for service delivery by the Australian Trade and Investment Commission and the departments of Agriculture and Water Resources and Home Affairs that takes into account business size and export volumes.
7.29 The Committee recommends that the Australian Government makes better use of data and technology for identifying and helping Australian small and medium enterprises (SMEs) capture international trade opportunities by:
- Embracing e-commerce as a key enabler of trade and including e-commerce as a key feature in future FTAs;
- Delivering simplified, user-friendly digital resources and trade technologies to assist SMEs by making it easier to find the export information required for each trade agreement;
- Assessing how trade consultant advisory agencies, business chambers and industry representative bodies can provide greater assistance to SMEs in collaboration with governments, including consideration of joint pilots to build the readiness and technological capacity of SMEs; and
- Broadening the base and deepening the granularity of export data that is collected, analysed and published so it can better guide exporters and policy makers.
7.68 The Committee recommends that the Australian Government commissions an audit into the untapped human capacity of Australian nationals living and working overseas and Australia’s multi-ethnic diasporas living and working in Australia and their related chambers and associations with a view to formulating a strategy to unlock that capacity to advance Australia’s interests, including opportunities for Australian small and medium enterprises.