Inquiry into Australia's Relationship with Malaysia

21 Pages·2006·1.43 MB·English

Submission No 23
Inquiry into Australia’s Relationship with Malaysia
Organisation: Department ofAgriculture, Fisheries and
Forestry
Contact Person: Ms GaeI Macnaughtan
02 6272 4365
Address:
Joint Standing Committee on Foreign Affairs, Defence and Trade
Foreign Affairs Sub-Committee
Australian Government
Department ofAgriculture, Fisheries and Forestry
Submission
by
The Australian Government Department of
Agriculture, Fisheries and Forestry
to the
Inquiry into Australia’s Relationship with Malaysia
by the
Joint Standing Committee on
Foreign Affairs, Defence and Trade
November 2006
DEPARTMENT OF AGRICULTURE, FISHERIES AND FORESTRY
DAFFSubmission totheJSCFADT Inquiryinto
Australia’sRelationshipwithMa/aysia
Table of Contents
ExecutiveSummary 3
1. Bilateral GovernmentRelations 5
1.1. Ministerial Engagement 5
1.2. Formal and Informal Mechanisms 6
1.3. CooperativeActivities 7
1.4. Shared Engagementthrough Multilateral Fora 7
2. Trade Relationship 9
2.1. BilaterialPortfolio Trade 9
2.2. TradeIssues 15
2.3. Malaysia-AustraliaFree TradeAgreementNegotiations 16
2.4. PortfolioIndustry Cooperation 17
3. ScientificCooperation 18
3.1. Technical CooperationandCapacityBuilding 18
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Australia’sRelationshipwithMalaysia
Executive Summary
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Thebilateral agricultural relationshipbetweenAustraliaandMalaysiais apositive one,
supported by constructiveworking relationshipsbetween governmentofficials and cooperative
engagementatthe Ministerial level. TheAustralian Government DepartmentofAgriculture,
Fisheriesand Forestry(DAFF) contributes tothe bilateralrelationship througharange of
consultativeand cooperativemechanismswith Malaysia andregional capacitybuilding activities
in sanitary andphytosanitary (SPS)-related areas.
The Malaysia-Australia FreeTradeAgreement(MAFTA) negotiations,launched inApril 2005,
providean importantopportunity togain preferential access tothe Malaysianmarket, as wellas
addressa numberofotherissues thataffect our tradewithMalaysia. MAFTAwillfurther
developtradebetweenAustralia andMalaysia inthe agricultural, food, fisheries, and forestry
sectors.
Ministerial engagementon bilateral portfolio issuesand cooperation isvery activewith anumber
ofsuccessful visits by both Malaysianand Australianportfolio Ministers overrecentyears that
have further strengthenedthe growingties between ourtwo countries.
At officials’ level,there area rangeofconsultativemechanisms whichfacilitateopen dialogue,
improved understanding andcooperation. DAFF officials engageconstructivelywiththeir
Malaysian counterparts on a broadrange ofportfolio issues, including biosecurity, SPS capacity
building and internationaltrade issues. Consultation andcooperationis carried outthrough both
formalarrangements and informal networks. Amajorcooperativemechanism is the
Malaysia-AustraliaAgricultural Cooperation WorkingGroup, animportant forum for
progressingagricultural trade andmarket access issues whichcontributes tothe positive bilateral
agriculturalrelationship. Australia andMalaysiaalso engage inannualtechnical discussions at
officials’ level regarding bilateralplantquarantine and market access issues.
WhileAustraliahas anoverall tradedeficit with Malaysia,Australia has a significanttrade
surplus with Malaysia in agricultureand food. Australian agriculturaland food exports
(including fishand seafood) toMalaysia werevaluedatover$910 million in2005-06,
comprising approximately40 percent ofAustralia’s totalexports to Malaysia. Themajor
products exportedwere sugar, dairy andgrains. Malaysianagricultural and foodexports to
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Australiawere valuedat $228 million in 2005-06,the majorexportsbeing oil andfat
($117million) and seafood ($26 million).
While Malaysiaexports considerably more forestproducts toAustralia thanAustraliaexports to
Malaysia ($181 million vs $46.4 million in2005-06), Malaysia’s net importer status ofpaper and
paper productsrepresents asignificantmarket opportunity forAustralia.
AlthoughMalaysia and Australiashare abroadlypositive bilateralagricultural relationship, there
are asmall number ofareaswhereimprovements could furtherfacilitatetradeinportfolio
products. Theseinclude tariffs, Malaysia’s proposedimplementationoftariffratequotas, Halal
certification andimport licensing. MAFTA negotiationsprovide an opportunity to address these
issues.
DAFF is also involved inanumber ofregional capacitybuildingactivitiesin SPS-related areas
that benefitMalaysia’sagriculture sector. Cooperative efforts inthisarea facilitatecloser
relationships between Australianand Malaysianofficials ontechnicalissues. Technical
cooperationandcapacity buildingactivities alsohave a positive impacton the overall bilateral
relationship.
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Australia’sRelationshipwithMalaysia
1. Bilateral Government Relations
Australia andMalaysia have apositive bilateral relationshipon issuesrelevantto the agriculture,
fisheries and forestryportfolio, supported by constructive working relationships between
government officials andcooperativeengagementand mutualgoodwill atthe Ministerial level.
DAFF isinvolved inarange ofbilateral consultativeandcooperativemechanismswith Malaysia
atofficials’ level and supportsMinisterial engagementbetween our twocountries.
1.1. Ministerial Engagement
Ministerial Visits
Overthe past twoyears,during a timeofsignificantresurgencein the bilateral relationship,a
range ofsuccessful visits by portfolio Australian and Malaysian Ministers has further
strengthenedthe growingties betweenour two countries. Malaysia hasactivelysoughtto build
upon its relationship withAustraliaandagriculturalcooperation hasbeen partofthis resurgence.
A cleardemonstration ofthe improvedrelationship was thevisit to AustraliainApril 2005 by
MalaysianPrime MinisterAbdullahBadawi, togetherwith keyMinisters including Agriculture
and Agro-Based Industry Minister, MuhyiddinYassin.
The then Minister forAgriculture, Fisheries and Forestry,theHon Warren Truss,visited
Malaysia in June/July 2005. This was thefirst visitto Malaysia on recordby aportfolio
Minister. MinisterTruss had bilateral meetings withhis Malaysiancounterpart, Minister
Muhyiddin, as well as the MalaysianMinisterofPlantation Industriesand Commodities, Peter
Chin, and the MalaysianMinister ofInternational Tradeand Industry,RafidahAziz.
Minister Muhyiddin alsovisited Australiain March 2006. A key outcome ofthisvisit was the
signing by Ministers ofthe MemorandumofUnderstanding(MoU) forthe Enhancement of
AgriculturalCooperation inCanberra. Most recently, the Minister forAgriculture, Fisheries and
Forestry, theHon Peter McGauran MP, met withMinister Muhyiddin during avisit toMalaysia
inAugust 2006.
There hasalso been Ministerial-level engagement on forestry issues andcooperationincluding
through Minister McGauran’s discussionswith MinisterChin andrelevant officialsduringhis
visit toMalaysiain August2006. The formerMinisterforFisheries, Forestryand Conservation,
Senatorthe HonIan Macdonald, also hadbilateral discussions with MinisterChin inApril 2005
during the visitto Canberraby Prime MinisterAbdullali andhis delegation.
Malaysia has also shown aninterestin Australia’s approach towater resourcemanagement and
MinisterMeGauran andthe Ministerfor the EnvironmentandHeritage, Senator the Hon Ian
Campbell, both metwith the then Malaysian Minister ofNatural Resources and Environment,
Adenan Satem, duringhis visit to Australia inSeptember 2005.
Ministerial-levelForums
A key bilateral Ministerial Forumofrelevance tothe portfolio is the Malaysia-AustraliaJoint
Trade Committee (JTC), co-chaired by the AustralianMinister for Tradeandthe Malaysian
MinisterofInternational Tradeand Industry. The JTC meetsannually, providing ahigh-level
consultativemechanismfor thediscussion oftrade and economic issues andto exploreavenues
forexpanding the bilateraltrading relationship. The JTCalso provides a forumto progress
cooperation and work towards resolvingparticulartradeissues.
In relation toportfolio-related bilateral cooperation, JTC initiativeshave included: the
reactivationoftheMalaysia-Australia Agricultural Cooperation WorkingGroup (see below); a
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jointHalal FoodProduction andMarketing Initiative; and processed foodseminars for
Malaysian exporters.
1.2. Formal and Informal Mechanisms
Australian andMalaysianofficials worktogether cooperativelythroughboth formal and
informal mechanisms to enhance mutuallybeneficial cooperation andprogress specific trade
issues.
Malaysia-AustraliaAgriculturalCooperationWorking Group
The Malaysia AustraliaAgricultural CooperationWorking Group (MAACWG)providesthe
mechanism to managebilateral agricultural andrelatedissues inasystematic andcoordinated
manner. It is an important forum forprogressingagricultural tradeand marketaccessissues and
contributes to the positive bilateral agriculturalrelationship. The Groupoversees and facilitates
regular and comprehensiveconsultationandcooperationon agriculture,fisheries, agri-food,
Sanitaryand Phytosanitary (SPS) and operationalquarantine matters.
The MAACWG is alsothe mechanismfor implementing activitiesunderthe MoUforthe
Enhancement ofAgriculturalCooperation, signed by MinisterMcGauranandhis Malaysian
counterpart, MinisterMuhyiddin, inMarch 2006. TheMoU encourages mutually beneficial
cooperationand implementationofactivities thatwillprovide commercial opportunities and/or
tangible benefitsto the private sectorsofbothcountries.
The MAACWGwas established inDecember 2000by the then MalaysianMinisterof
Agriculture, EffendiNorwawi, andthe then Australian MinisterforTrade, the HonMarkVaile,
to cooperatein areas ofagriculture for mutual benefit. At that timethe Groupoperated ona
relatively informal basis, with participationby officials fromthe Malaysian Ministry of
Agricultureand Agro-BasedIndustry (MoA),related Malaysianagencies andthe Australian
HighCommissionin KualaLunipur. Threemeetings ofthe Group were held in2001 and 2002.
The decisionbyTrade Ministers in2004toreactivate the MAACWGreflects the positive
developments inthe bilateral agriculturalrelationship. TheMAACWG is nowco-chairedby
seniorofficials from DAFF andMoA. lndustryinvolvementhasbeen endorsed byMinistersand
will beimportantto the future successoftheGroup.
Since its revitalisation, twomeetings oftheMAACWGhave beenheld: in August2005 inKuala
Lumpur andJuly 2006 in Canberra. The secondmeeting includedinauguralmeetings of
sub-working groups on livestock, crops and fisheries. Thenext meeting ofthe Groupis
scheduledto beheld inMalaysia in mid-2007.
While forestry lies outside the portfolioresponsibilitiesofMoA, Malaysia has agreed
in-principle todiscuss forestry issues andcooperation at future meetingsofthe MAACWG,
subject to agreementby relevant Malaysianministries.
Malaysia-Australia Bilateral Plant Quarantine TechnicalDiscussions
Australia andMalaysiaengagein annualtechnical discussionsregardingbilateral plant
quarantine and marketaccess issues. Threemeetings have been held since2003, with the most
recent being28-30November 2005 inMalaysia. The discussions involveseniorofficials from
Biosecurity Australiaand the Crop Protection and Plant Quarantine Division oftheMalaysian
Department ofAgriculture. The fourth Technical Discussions arescheduledtobe heldin
Australia inDecember2006.
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Informal Mechanisms
Outside ofthe formal mechanismsoutlinedabove, officials fromDAFF and theMalaysian
MinistryofAgriculture and Agro-Based Industry liaise regularly toprogress cooperative
initiativesandtradeandmarketaccess issues. Thesestrong people-to-people links are
strengthenedand enhancedby thework ofofficials from theAustralian High Commissionin
KualaLumpur andthe recentappointment in2006 ofanAgricultural Counsellorto Bangkok,
who is also accredited toMalaysia.
1.3. Cooperative Activities
Overrecent years, Australia and Malaysia haveengaged ina numberofportfolio-related
cooperativeactivitiesandareas forfurthercooperation are currentlyunder consideration.
The Ninth MalaysiaPlan, acomprehensiveblueprint approvedby theMalaysian Cabinetwhich
outlines howthe budget will beallocatedtoall economic sectors from 2006-2010,identifies
agricultureas one ofMalaysiats mainengines ofgrowthover thenext fiveyears. Malaysiais
interested inAustralian expertise toassist withprojectsto furtherdeveloptheiragriculture
sectorandfacilitateachievement ofthese goals.
Inlinewiththese objectives, Malaysiaproposed arange ofcooperativeactivities at the second
meetingofthe revitalisedMAACWGinJuly 2006, including inthe areas ofquarantine,
e-certification,pesticide registration,pestcollectionand livestock identification. DAFF is
currentlyfinalising consideration oftheproposals withMalaysia, with a viewto implementing a
firsttranche ofactivities underthe MoU for theEnhancement ofAgricultural Cooperationprior
to the nextmeetingofthe Group (scheduled formid-2007).
The MAACWGhas previouslyfacilitatedcooperation activities including quarantine education
and training, supply chainmanagement, qualityassurance and food safety.
DAFFhas also been involved withactivitiesundertakenbyvisitingMalaysiandelegations, such
as a successfulstudy tourby officials fromtheMalaysian MinistryofAgriculture andrelated
agenciesto the Leeton/Narranderra ricegrowing region in2001, in conjunctionwiththe
AustralianHighCommission inKuala Lumpurandthe Rice Growers Association ofAustralia;
and AustralianQuarantineand InspectionService (AQIS)presentations on Australia’s Ilalal
food certification system.
A key area ofDAFF’s involvementinbilateral cooperation withMalaysia isin theareaof
SPS-relatedtechnical cooperation and capacity-building. Activitiesin this area includethe
Australian FumigationAccreditation Scheme Malaysia, the SPS CapacityBuilding Programme
—
and collaborationon Screw Worm Fly research and development. Theseactivities are discussed
under Section 3. ScientificCooperation. Australian industryhas alsoengaged inmutually
beneficial cooperativeactivitieswith Malaysia. Examplesofsuchactivitiesare discussed under
Section 2.4 PortfolioIndustry Cooperation.
1.4. Shared Engagementthrough Multilateral Fora
Australiaand Malaysiaare bothproponents ofmultilateral tradeliberalisation for agricultural
products andalso workcooperatively in a numberofinternational standard setting bodies (in
relation to foodstandards and quarantine) whichimpact onagricultureand foodtrade.
World TradeOrganization andCairns Group
Malaysia is a strongproponent ofthe World TradeOrganization(WTO) rules-based systemand
both Australia and Malaysiaare membersofthe Cairns Group, which plays animportantrole in
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advocatingfurther internationalagriculturaltradereform in WTO negotiations. Bothcountries
share the view that the greatestprospects for agricultural tradeliberalisationwillcome froman
ambitious outcome fromthe WTO Doha Roundofnegotiations(currently suspended)and so
share amajorstake in anearlyresumptionto thenegotiations.
A delegationofseniorMalaysian officials, including theDeputy Secretary General
(Development) ofthe Ministry ofAgricultureand Agro-BasedIndustry, aftendedthe recent 20th
Anniversary meeting ofthe Cairns Group, held20-22September2006in Cairns.
United NationsFood and Agriculture Organisation
In additionto commoninterests in the WTO,as Cairns Groupmembers, AustraliaandMalaysia
also cooperatecloselyinother internationalforaon primaryindustry issues,includingthe Food
andAgriculture Organisation(FAO)oftheUnited Nations. Thisincludes throughthe
international standard-setting bodies ofFAO, such as the Codex AlimentariusCommission
(Codex) and international Plant ProtectionConvention(IPPC), whose standard-setting inrelation
to food safety andplant quarantine impactson globaltrade.
Cooperation in InternationalForestry Fora
Australiaand Malaysia are bothmembers ofanumberofinternational forestryfora including:
United Nations Forum on Forests (UNFE);
• International Tropical TimberOrganisation(iTTO);
• AsiaForest Partnership(AFP);
• Asia-PacificForestry Commission (AFPC) ofthe FAO; and
• AsiaForest Law EnforcementandGovernanceTask Force (AsiaFLEG).
Althoughthese aremultilateral fora, Australiaworks withMalaysiaon a range ofissues within
them. As adonor, Australia has contributedto the funding ofa rangeofMalaysian forestry
projectsthroughthe ITTO, including oneon improvingfurnituremanufacturinginMalaysiain
2005.
Cooperationin International Fisheries andAquaculture
Australia andMalaysiahave a positive relationship onfisheries and aquacultureissues, There
are fourmultilateral fisheries and aquaculturemultilateralfora where both Australiaand
Malaysiaaremembers:
• IndianOcean Tuna Commission (IOTC);
NetworkofAquaculture Centres inthe Asia Pacific (NACA);
APECFisheries WorkingGroup; and
Fisheries Support Unit, which isconstitutedunder theauspices ofthe Indian Ocean Rim
—
Association forRegional Co-operation.
The principal focus ofthesefora is the sustainable developmentofwildcapture fisheries and
aquaculturein the Indian OceanandtheAsia-Pacific region. These fora are responsible for
conservation andmanagement ofresources, development ofcooperativeactivities and capacity
building througheducationandtraining, research andcommunicationnetworks, Malaysia has
also been approached to engagein aregional forumon Illegal, Unreported and Unregulated
fishingto be convened in2007. Malaysia hasa largeaquacuituresectorand, through
NACA, Australia is workingwith Malaysia to increasethe productivity ofthat sector.
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2. Trade Relationship
2.1Bilateral Portfolio Trade
AlthoughAustraliahad an overalltrade deficit withMalaysiaofapproximately$4,212 million in
2005-06, Australia has a significanttradesurplus with Malaysiainagricultureand food. This
surplus was approximately$682 million in 2005-06.
Australian Agricultural and Food Exportsto Malaysia
Malaysiais an important regional market forAustralian agriculturalproducts andis amongour
top five markets fordairy,horticultureproducts,wheat and sugar. Australianagricultural and
foodexports(including fish and seafood) toMalaysia werevaluedatover $910 million in
2005-06, comprising approximately40 percentofAustralia’s total exports to Malaysia. Ofthese
exports, sugar was the largestcomponent (estimatedat $281 million), followed by dairy ($210
million), grains($167million), and processed meat ($46million).
Malaysian foodandagricultural exportsto Australia wereworth$228 million in2005-06,
includingoiland fat($117million) and seafood ($26million).
MajorAustralian AgriculturalandFood ExportstoMalaysia
400
350
300
S
250 Sugar
——
Liveanimals
-
E Fruit& nuts
o 200 ~-0airy
—*--Grains
I—.—
150 Processed Mea
100
50
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Year
Source: ABARE (2006)
Trade in Sugar
Australia is a majorsupplier ofraw sugarto MalaysiaandMalaysiawas Australia’s principal
marketinthe 2003-04and 2004-05 financialyears.
Sugarimports into Malaysia operate underan importlicensing arrangement managedby the
Malaysian Ministry ofInternational TradeandIndustry (MITI). Imports arepartlyunder long
term sugarcontracts (LTCs) andpartlyspot sales. LTCs are negotiatedby MITIon behalfofthe
four Malaysian sugarrefiners. Foranumberofyears, Malaysia hasmaintained LTCswith
Australia, Thailand andFiji. InrecentyearsBrazil (ortraders sourcing fromBrazil) andSouth
Africa have enteredthe market.
S