DEPARTMENT OF FOREIGN AFFAIRS AND TRADE MARCH 2016

Also in this issue:

Trade and Investment Minister

The Hon Steven Ciobo MPForeword – p2

Cables from postDispatches from

Australia’s global diplomatic network – p4

A win for Australian farmersThe World Trade Agreement that eliminates agricultural

export subsidies – p13

North Asia Free Trade Agreements

An analysis of Japan and Korea FTAs one year on – p14

Connecting DFAT’s diplomatic network to Australian business

Iran re-opening for businessTrade with the second-largest country in the Middle East, and its population of 78 million people, is back on the agenda after the lifting of a range of sanctions. The removal of sanctions will reduce barriers on exports and imports to Iran and improve Australian businesses’ access to Iranian markets, ensuring that Australian business is not disadvantaged in pursuing opportunities in Iran.

Sectors identified for good early prospects for Australian exporters include agriculture and food; water sustainability and management; education and skills training; and the health care and well-being sectors.

In the medium term there are also likely to be opportunities for Australian companies in mining and oil and gas-related areas.

Twenty years ago, Iran was Australia’s biggest export destination in the Middle East with the export of agriculture

products dominating, along with post-graduate education and mining, oil and gas services.

Since 2006, Australia had implemented successive rounds of UN Security Council sanctions against Iran for its nuclear program, and since 2008 had also implemented autonomous sanctions.

Continues page 2

For more on Iran turn to:Ambassador’s Dispatch – p7Iran looking west – p8Implementation day and sanctions changes – p12

Contents

Trade liberalisation and reform on the agenda

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Cables from post Dispatches from Australia’s global diplomatic network

4

Ambassador’s DispatchMr Paul Foley, Australian Ambassador to Iran

7

Iran looking west 8

Implementation day and sanctions changes

12

The WTO agreement A win for Australian farmers

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North Asia Free Trade Agreements building our business ties with North AsiaAn analysis of Japan and Korea FTAs one year

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Strong growth in Australia-UAE tradeReturning Ambassador to the UAE Pablo Kang shares his business and trade insights from post

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Events on the trade and investment calendar

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Foreign Minister Julie Bishop announced in January that Australia was lifting autonomous economic sanctions on Iran, such as those targeting the oil and gas sector, most banks and the transport sector. Also many Iranian individuals and entities that were designated under autonomous sanctions have been removed from the Australian Consolidated List, which means that Australian business can undertake business activities with these previously specified individuals and entities.

While market conditions have changed significantly, a growing middle class – including Greater Tehran, with a population of

around 15 million and large cities including Mashad, Esfehan and Tabriz – are demanding higher quality goods and services.

Despite recent international sanctions Iran has maintained a large and sophisticated market with its young and well-educated population, a resilient private sector and a diverse economic base. These factors combined with its strategic geographic location have Iran poised to re-engage with the international business community.

Iran re-opening for business(Continued from page 1)

From the MinisterThe Hon Steven Ciobo MP

Welcome to the first edition of a new look business envoy for 2016.I am delighted to have been appointed Australia’s Minister for Trade and Investment at a time when there are so many exciting opportunities for Australian businesses.

The Government’s recent conclusion of free trade agreements with our major trading partners China, Japan and South Korea has been a boon for Australian exporters.

I am focused on furthering export opportunities for Australian businesses. This edition of business envoy is focused on Iran, a country that is now emerging from years of international isolation.

The removal of sanctions opens up the real possibilities for trade and investment with the second biggest country in the Middle East, with a population of 78 million people, and which was once

Australia’s biggest export destination in the Middle East region.

This edition outlines an assessment of the early prospects for Australian business to re-enter the Iranian market and sets out a snapshot of the Iranian economy.

There are some unique challenges to doing business in Iran and international competition will be stiff, so it is imperative businesses prepare carefully on the basis of sound advice.

I wish you well in exploring new opportunities for your business.

Department of Foreign Affairs and Tradebusiness envoy

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Trade liberalisation and reform on the agenda

We are committed to pursuing the Government’s ambitious and multifaceted program to secure global trade liberalisation and reform. We look forward to building a close partnership with our incoming senior Minister for Trade and Investment Steve Ciobo as well as assisting Andrew Robb in his role as Special Trade Envoy. We are also continuing our work with Senator Richard Colbeck, the Minister for Tourism and International Education and Minister Assisting Minister Ciobo, in particular as he leads the negotiations for a Pacific Agreement on Closer Economic Relations (PACER Plus).

Bilateral and regional free trade negotiations remain front and centreWe are coming off an historic high point in concluding free trade negotiations, but there is more to be done. We will continue to work towards the conclusion of negotiations with India for a Comprehensive Economic Cooperation Agreement. And following on from Prime Minister Malcolm Turnbull’s recent meeting with President Joko Widodo, we are resuming negotiations with Indonesia for a bilateral Free Trade Agreement and hope to agree on a roadmap in the coming months.

Of equal importance to these bilateral efforts is the conclusion of negotiations by the end of the year for the Regional Comprehensive Economic Partnership, which covers the ASEAN grouping and its six regional partners, China, Japan, Republic of Korea, India, Australia and New Zealand. RCEP has the potential to be another plank in a future free trade area of the Indo-Pacific region – following the conclusion of the Trans– Pacific Partnership Agreement negotiations. As announced by the Prime Minister in November 2015, we have also started a joint FTA scoping process with the EU, which we hope will be a prelude to the formal launch of negotiations. We are striving to conclude the PACER Plus negotiations this year.

DFAT Acting Deputy Secretary Justin Brown discusses the Department’s trade and investment priorities for 2016

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Department of Foreign Affairs and Trade

Lifting business utilisation of our FTAs is an ongoing priorityFree trade agreements include many provisions with commercial relevance. One of our key aims is to expand the rate at which the export and investment community utilise these agreements. Since the conclusion of the negotiations on the three North Asia FTAs, we have undertaken a range of activities to assist business to understand the agreements and maximise their value, notably through seminars held across the country, online guides and a north Asia FTA hotline for enquiries. On top of that, the department and Austrade have also cooperated in delivering a nation-wide advertising campaign to lift public awareness and support for the agreements.

An emerging priority for us will be to step up our work with other government agencies, including at the state and territory level, to improve government regulatory systems and processes that impact on the export sector. We want to ensure that our regulatory systems are competitive and do not add unnecessary costs to our exporting and investing community.

Foreign investment in Australia, and by Australians overseas, remains key to our economic futureAustralia has historically been reliant on foreign investment and is also a major investor overseas. Foreign investment, two-way trade and economic growth are all closely linked; each supports and facilitates the other. Liberalising the investment environment between Australia and its trading partners helps to grow our export industries by giving Australian businesses confidence to establish a presence in emerging markets. Attracting productive foreign investment remains a critical part of the department’s economic diplomacy agenda, one that engages our entire diplomatic network, working in tandem with Austrade. We want to ensure that global perceptions of

Australia as a destination for foreign investment remain accurate and positive, including recognition of our strong governance arrangements and economic stability. As the mining boom comes to an end, a big focus for Australia must be on investment to diversify the economy and develop new sources of wealth and employment.

The department has a role to play in promoting the benefits of foreign investment domestically to ordinary Australians. We want to ensure that the facts of foreign investment are clearly understood, including its benefits in terms of wealth creation, exports and employment. We see the department as having a role to support the Government’s narrative and encourage a balanced debate in the community.

The Government has a strong emphasis on promoting investment in northern Australia, so clearly a lot of effort is underway to promote the potential of the region to foreign investors and governments.

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Cables from postDispatches from Australia’s global diplomatic network

From Guangzhou High-tech startups choose Shenzhen Among the many cities claiming to best exemplify China’s push for innovation-led economic transformation, Shenzhen stands out. With a critical mass of R&D-intensive tech industries, a vibrant private sector, strong supporting financial and logistical infrastructure, and a culture of bottom-up innovation, Shenzhen is China’s poster child for economic reform. The city is now home to 30,000 science and tech enterprises, with more than 4,700 rating as “national level” high-tech companies. Where industry has gone, young educated professionals have followed. About 95 per cent of the city’s population comes from elsewhere in China, with a median age of just 30. Shenzhen represents an enormous opportunity for Australian business, but has remained largely off the radar as a result of outdated perceptions and an understanding of China that is still heavily Beijing and Hong Kong centric. In reality, Shenzhen has long since taken its place as a ‘Tier One’ city in mainland China, joining Beijing, Shanghai and Guangzhou.

From Rome Encouraging investment through reformA combination of competitive asset prices and domestic reforms is making Italy a more attractive place to do business. Having emerged from one of the longest recessions in Europe, Italian asset prices have decreased, appealing to investors looking for good value for money in the region. At the same time, the new reform-minded Italian Government led by Matteo Renzi has introduced business-friendly reforms such as the Jobs Act (removing some of the rigidity of the labour market, including in hiring and firing), tax cuts (including forthcoming cuts in residential property and corporation taxes), and a reduction in red tape (such as removing the provincial layer of local government). The Australian Embassy in Rome has reported increased Australian interest in the Italian market and has been actively assisting current and potential investors to explore opportunities in areas such as real estate, infrastructure, energy and mining. Key stakeholders in the Italian system have welcomed the potential for increased investment by Australian companies, which are seen as reliable and stable partners.

From Lima Kangaroo meat jumps into Peru’s booming food sceneIn Peru, the Australian Embassy has prepared the way for the first commercial shipment of kangaroo meat to a Latin American country. After six years of negotiation and promotion through Australia Day and other Embassy events, the owner of Peru’s largest supermarket chain imported 1,000kg of kangaroo meat during 2015. The ‘roo meat’ was quickly sold and the company has now ordered a second shipment. Using the kangaroo meat, local recipes were created at a promotional event at the Embassy Residence, including ‘tataki’, ceviche and ‘lomo saltado’, and widely promoted through local media.

Trade liberalisation and reform on the agenda

Strengthening the multilateral system remains crucial Maintaining a strong and effective multilateral trading system remains a core trade policy objective, reflecting the twin realities that Australia has global trade and investment interests and it is not possible for us to conclude free trade agreements with all of our trading partners.

The long running Doha Round of WTO negotiations reached a fork in the road at the major ministerial meeting in Nairobi in December 2015. The outcome from the conference reflected divisions within the membership on the Doha Round. Australia and most developed countries have reached the view after 15 years of negotiations without significant results that Doha cannot be successfully concluded using the existing negotiating model.

A debate is now getting underway on how best to rejuvenate the WTO’s negotiating function. Australia want to see a more flexible negotiating model in the future, one that enables negotiations to move forward on new issues among like-minded nations. At the same time, we intend to keep up the pressure for progress to address distortions in agricultural trade. The agreement in Nairobi to end agricultural export subsidies was a positive outcome and welcomed by our agriculture sector, but more work is needed to reduce subsidies and open up global markets. WTO reform will be a long term effort, but one that is worth the effort given that progress in this area can be a major force multiplier of our efforts.

Trade success is linked to a competitive, high performing domestic economyThe department remains an active contributor to the policy process within government to promote competitiveness and lift productivity. With the success of the Government’s trade negotiations agenda, the challenge is to ensure that our economic settings more broadly are consistent with the goal of ensuring our companies are well-equipped and incentivised to seize new commercial opportunities in the fast-growing markets to our north.

The department is constantly striving to address the needs of Australian business in the global marketplace and to be as responsive as we can be to their real world commercial needs. Free trade agreements have been a very successful instrument in opening markets, improving transparency and reducing risks associated with exporting and investing overseas. A priority moving forward will be to ensure that we are geared up to help business to translate those agreements into real commercial opportunities, particularly through our offshore diplomatic network and DFAT offices across Australia.

(Continued from page 3)

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Rome Photo: Joshua Newton

From New Delhi Lifting of import restrictions on apples Following extensive advocacy through the WTO and by various diplomatic missions, including the Australian High Commission in New Delhi, in December India announced it would amend an earlier directive that had restricted the import of apples to a single channel, the Nhava Sheva port in Mumbai. Apple importers and exporters had been concerned the decision, imposed in September 2015, could restrict trade and increase costs for consumers, as the Mumbai facility lacked capacity to meet 100 per cent of India’s apple import needs. Under the revised policy, apples can now be imported into India through multiple channels, including the seaports and airports of Kolkata, Chennai, Mumbai and Kochi, the land port and airport in Delhi, and over India’s land borders.

From Jakarta Developments in domestic cattle breeding and beef productionIndonesia intends to import up to 50,000 head of productive heifers and distribute to smallholders in 2016, as part of an ambitious government program to increase domestic cattle breeding and beef production. In February, officials from Indonesia’s Ministry of Agriculture visited northern Australia to assess possibilities for the purchase and delivery of the cattle. The visit, facilitated by Meat and Livestock Australia, LiveCorp and the Department of Agriculture and Water Resources, provided an opportunity to inspect the whole supply chain and included meetings with key Australian exporters, producers, industry associations and Northern Territory and Queensland state government representatives. The establishment of a successful breeding industry in Indonesia would provide a new and valuable market for cattle from northern Australia, complementing the existing markets for Australian feeder and slaughter cattle and boxed beef. The Indonesia-Australia Partnership on Food Security in the Red Meat and Cattle Sector is separately supporting Indonesia’s aspirations to build its breeding herd by funding an $8 million, three year program that will trial best practice models to sustain herds on a commercial scale.

From Brussels New EU data protection rules The European Union has finalised new data protection rules for individuals and businesses operating in the EU, harmonising data protection requirements across all EU member states. The new rules will also apply to Australian companies offering goods or services in the EU, regardless of whether a payment is made for those goods or services, and regardless of whether they have a commercial presence in the EU. Key components of the new rules include the creation of a single supervisory data protection authority, a requirement for companies to notify the supervisory authority of any breaches of personal data privacy, and penalties on companies that breach the rules of up to 4 per cent of the company’s global turnover. Companies whose business involves regular and systematic monitoring of data will also be required to designate a data protection officer, who will be responsible for ensuring the organisation’s compliance with data protection rules. SMEs will be exempted from a number of these administrative requirements. Following a transition period, the rules will come into effect in 2018.

From Buenos Aires Extractive industries, attractive opportunitiesArgentina’s growing extractive industries sector presents opportunities for Australian companies, including those in the mining, equipment and technology services sector. Argentina is particularly keen to exploit its shale gas and oil reserves, the second and fourth largest globally, and an estimated 75 per cent of areas with significant mining potential remain unexplored. Foreign investment in the sector is expected to soar following the election of the Macri government in late 2015, which in its first weeks has reversed a number of the heterodox economic policies of its predecessor, such as currency controls and import restrictions, although challenges including high inflation and low economic growth remain. Australian officials in Buenos Aires are assisting Australian companies operating in the sector by advising on opportunities, facilitating contacts with key government and industry figures, and through promoting and attending industry events (such as Latin America Down Under in Australia, Argentina Mining in Argentina, and Expomin at a regional level).

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Colombo Investment opportunities in the services sectorsThe information and communication technology sector in Sri Lanka is a quiet achiever: the software and hardware that runs the London Stock Exchange and forty other stock exchanges globally is built by a Sri Lankan company, Millennium IT (now owned by LSE). Its campus on the outskirts of Colombo resembles California, with break out spaces, gyms and swimming pools. It wins contracts on quality, not price. The Sri Lankan Government is keen to emulate this success story, in part to keep Sri Lanka’s best young graduates local, and to entice diaspora talent to return. Aside from the ICT sector, the Sri Lankan Government is keen to facilitate investment in other services sectors, such as tourism. With Sri Lanka considering new trade agreements with India and others, there is also potential for Australian companies to establish facilities to value-add in Sri Lanka and export to the larger India market, as the economies become more integrated.

From Dili Navigating the local investment environmentCompanies considering investing in Timor-Leste can sometimes be overwhelmed by the challenges of doing business locally, including accessing finance, securing land tenure, and understanding the legal and regulatory environment. This fact is reflected in the World Bank’s Doing Business index, where Timor-Leste ranks 173 out of 189 countries. Australian officials are working with business to encourage and support Australian investment in Timor-Leste, including by forging links with the local private sector and other international investors. While the environment remains tough, there are some encouraging recent examples of genuine foreign and local investment and entrepreneurship. TL Cement, an Australian consortium, will soon commence construction of a multimillion dollar clinker (cement) production facility in Baucau. Construction has also commenced on a new Heineken brewery near Dili, with new resorts planned for sites east and west of Dili. A new sea port to be built at Tibar, a short distance west of Dili, will present opportunities for Australian businesses, make doing business in Timor-Leste easier and strengthen Timor-Leste’s infrastructure connections to northern Australia and South-East Asia. The Tibar port is Timor-Leste’s first public-private partnership and the project has received significant support from the World Bank and the Australian Government.

Islamabad Harvesting opportunities in agriculture Agriculture remains a significant economic sector - and major employer - in Pakistan. About 90 per cent of farmers in Pakistan do not have access to modern farming implements, in an agriculture sector dominated by small to medium scale businesses with little rural outreach. According to Pakistan’s Ministry of Planning, Development and Reform, in order to improve local agricultural productivity, farmers will need equipment, technology and support, as well as skills training in the operation and maintenance of machinery for production, processing, value addition,

Cables from postDispatches from Australia’s global diplomatic network

food engineering and renewable energy technologies. This creates prospective commercial opportunities for engaging Australian expertise, technology and service providers. There is potential to capitalise on Australia’s existing foothold in Pakistan’s dairy sector and invest in meat production, as well as to develop the high-protein fodder industry. Australian dairy cows, first exported to Pakistan in 2007, now number more than 50,000. With the increase in demand for milk, other players are entering the market, with the Pakistan Government recently agreeing to the import of US dairy cattle. Austrade in Pakistan is exploring opportunities for Australian firms across the entire agribusiness sector.

From Tokyo Opportunities in regenerative medicine Prime Minister Abe’s reforms to funding of medical research, commercial development of medical solutions and delivery of medical services have created opportunities for the commercialisation of Australian medical research and technologies. Japan’s regenerative medicine sector, with applications related to population ageing, looks to be a particularly prospective area. In December, Austrade coordinated a mission by five Australian regenerative medicine companies to showcase their capability at events in Tokyo and Kobe, supported by the Victorian Government. A combined audience of over 150 Japanese companies participated in the events. Two of the participating Australian firms were able to build on their market entry strategies successfully. More broadly, strong interest was expressed in future collaborative research and partnering to bring Australian stem cell therapies to market in Japan, and to conduct clinical trials for Japanese solutions in Australia. The emerging commercial opportunities are complemented by a Memorandum of Understanding between Austrade and Japan’s Forum for Innovative Regenerative Medicine. The MoU, signed during Prime Minister Turnbull’s recent visit to Tokyo, will encourage greater collaboration between Australia and Japan on the commercialisation of medical research.

Chengdu Making inroads into Chongqing Despite a slowing national economy, southwest China’s megacity Chongqing is still seeing double digit growth, buoyed by a strong secondary industry in automobiles and IT. Recording China’s fastest provincial-level growth in 2014, it looks likely to repeat the performance in 2015, with the city growing at 11 percent in the first three quarters. Chongqing was the first city in China to import live slaughter cattle from Australia. Local leaders are keen to see this relationship grow and for Chongqing to become an agricultural hub that distributes Australian beef around the country. Chongqing’s economic and political importance presents opportunities for Australia, and not only in agriculture. The Australian Consulate in Chengdu has now placed an officer permanently in Chongqing to support growing Australian interests across sectors.

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The lifting of nuclear sanctions against Iran following the announcement of the 17 January Implementation Day of the Joint Comprehensive Plan of Action should see the return of Iran to the international trade mainstream.

Ambassador’s Dispatch

Mr Paul Foley Australian Ambassador to Iran

During the period of international sanctions Iran’s volumes and value of international trade declined significantly and many international companies, including Australian companies, left Iran.

The lifting of the nuclear sanctions will present increased opportunities for Australian businesses. Despite the tense international situation in recent years Iran remains a large and sophisticated market with a young and well-educated population, a resilient private sector, a diverse economic base and an important geographic location. It will remain an important player in world hydrocarbon markets.

Australia and Iran have traditionally maintained a solid trade relationship, although bilateral trade, similar to that of most other countries, has fallen in recent years. While market conditions have changed significantly, it is worth recalling that 20 years ago, Iran was Australia’s biggest export destination in the Middle East. This was based predominantly on the export of agriculture products, along with niches in post-graduate education and, historically, mining and oil and gas services.

There will be strong international competition for business in Iran as is already evident from the interest shown from a range of countries, particularly from Europe.

However, a number of factors may assist Australian businesses in their efforts. These include a long-standing presence by Australia in the market, a familiarity and respect between the business

communities of both countries, the strong reputation for the quality of our products and a positive view of Australia and Australians by many in Iran.

As this business envoy feature on Iran demonstrates, there is good potential for increasing exports to Iran. But this will require a hard-headed focus by business on areas of Australian competitive advantage and complementarity.

In considering whether to pursue opportunities in Iran there are a number of issues that Australian business will need to factor in.

Businesses that were previously active in Iran will wish to update their market knowledge on what may have changed in the Iranian market and regulatory environment during the period of international sanctions.

Businesses will also need to pay careful attention to the terms and implications of sanctions relief under the JCPOA and how this may affect them. This will need to include an understanding of sectors where sanctions may still apply and the approach of countries, including the United States, which will maintain a range of sanctions against Iran.

In this context, it may take a little time for international banking arrangements to become clear as international banks work through the implications of the changed sanctions environment. Australian businesses will want to have an understanding of how banking arrangements may affect their business. Talk to your bank.

The Iranian economy has been sluggish in recent years, and is sensitive to low global oil prices. Some of the associated economic challenges are likely to take some time to work through. However, the Iranian economy has retained and developed a number of substantial capabilities. In this environment, Iran is more likely to be looking for particular products, services or skills rather than looking for international companies to undertake large green field projects.

As in any market, finding the right local business partner will be important. Building and developing a relationship of trust over time with business partners will remain a key aspect for success. Iran is not a short-term gold rush but a market where rewarding business can be developed and grow over time.

With the number of flights between Australia and the region now running into the hundreds every week, access to Iran from Australia from Middle East airline hubs has never been easier.

With Iran beginning to emerge from the period of international nuclear sanctions, there is considerable potential to take advantage of opportunities in Iran.

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business envoy Department of Foreign Affairs and Trade

Iran: Looking West In a post sanctions environment Iran will be looking to reduce its reliance on China and Russia for foreign investment and trade and opportunities for Australian business will emerge.

The Iranian Government, lead by President Hassan Rouhani, has an ambitious plan to deliver growth by liberalising the economy and creating the conditions for greater private sector participation.

Iran has many inherent advantages including a strategic location, abundant natural resources, an educated labour force, a large domestic consumer market, and good infrastructure. Its population is around 78 million, of whom 40 percent are under 35. Greater Tehran, with a population of around 15 million, and large cities such as Mashad, Esfehan and Tabriz are the centre of a middle class demanding higher quality goods and services.

However, the effects of sanctions, the need for economic reform, high inflation, unemployment, low levels of economic activity, ageing infrastructure, a need to improve housing affordability and secure water provision, all represent ongoing challenges, both for Iran and Australian business wanting to establish or grow in this market.

This article and accompanying graphic sets out the current state of the Iranian economy and the sectors offering early export prospects for Australian business.

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Business environmentLabour forceIran’s senior business leaders are sophisticated, well educated, well-travelled and knowledgeable about the West. Compared to some other Middle Eastern countries, Iran has fewer migrant workers, with most of those being Afghans working informally in agriculture or construction. Iranians, both men and women, participate at every level of the workforce. As a result, Iran has an employee and SME capability with a willingness and capacity for international economic re-engagement. However, it is generally recognised that elements of management capability needs updating, and significant reskilling is needed to meet the demands of the global economy.

Internet and communications Iran is a tech savvy country. The use of mobile phones, Internet (40% penetration) and Wi-Fi are widespread but is more focused towards domestic use rather than business, so some aspects of international access – such as data roaming for international phones – can be more challenging. State restrictions on Internet usage officially block access to nearly 50 per cent of the top 500 global websites, including YouTube, Facebook and Twitter but access to these

sites and others such as Telegram, in reality, are widespread. Despite these challenges, there is a real sense that the younger generation is keen and well-equipped to quickly engage with the global digital economy.

Financial system Iran has state and privately owned banks. Iran’s banking sector faces some significant problems including a heavy exposure to poorly performing domestic real estate and corporate investments. Accordingly, bank financing is currently difficult to access and expensive, with interest rates upwards of 25 per cent. The current situation where banks are burdened by a high rate of non-performing loans is a result of directed lending and easy access to capital under the previous administration. A restructuring of the banking sector will be required to meet the future demands of the economy.

The US Office of Foreign Assets Control still enforces a range of sanctions between US entities and Iran, including Iranian banks. This is affecting the willingness of international banks to provide trade financing for Australian exporters to Iran. International transactions may take some time to normalise as banks come to understand the nature of US enforcement of its sanctions. International cash transfers and the use of international ATM and credit cards in Iran currently remain restricted, but this is likely to begin to improve.

business envoyDepartment of Foreign Affairs and Trade

A small number of private banks, such as Middle East Bank and Saman Bank, are promoting their ability to fully comply with international banking regulations. Fully compliant Iranian banks are seeking Australian banking partners to help perform due diligence and complete transactions from Australian companies.

Iran has a domestic stock exchange with 500 listed companies and a market capitalisation of around $US90 billion. As this relatively low capitalisation figure suggests, the stock exchange has not yet developed to provide a source of investment funds for Iranian business.

Investment regimeThe Iranian Government is keen to attract foreign investment in industries that will create exports, create jobs and promote technology transfer. The intent of a new Foreign Investment Protection Law is to guarantee investments against nationalization. Local investment firms believe an opportunity exists for foreign companies to buy undervalued local companies, as investors are allowed full ownership of local entities. While some investment by international companies in sectors such as autos has been foreshadowed, international companies may wait to see how Iran is able to engage in the international economy before committing to investment decisions.

Consumer marketIn modern retail outlets and supermarkets targeting Iranians with high discretionary incomes, product offerings are similar to those found in Australia, though mostly domestically produced. Much of the retail sector remains small-scale and neighbourhood based, particularly for food. The concept of a local pharmacy is similar to Australia. New high-end retail malls and hyper-markets have recently been completed in major cities with more planned, and consumers are waiting for international brands to participate directly in the market, rather than through local intermediaries. Iran is largely a cash economy but Iranians are increasingly using online banking. Local firm Digikala dominates the online shopping market.

Sectoral overviewsThe following sectors offer good early prospects for Australian exporters:

• Agriculture and food

• Water sustainability and management

• Education and skills training

• Health care and well-being

In the medium term there are also likely to be opportunities for Australian companies in mining and oil and gas-related areas.

Agriculture and foodIran’s major agricultural imports include wheat, sugar, rice, vegetable oil, barley and sheep meat. The Government Trading Corporation imports wheat, rice, vegetable oil and sugar while the Ministry of Agriculture imports meat and barley. The private sector also imports in its own right.

Bread is a staple food for Iranians and the Government subsidises wheat prices. The Ministry of Agriculture is pursuing domestic self-sufficiency in wheat. In recent years it has made progress on this but ongoing water issues may increasingly call this objective into question. In 2015, demand for wheat was 13 million tonnes, of which 9.5 million tonnes was produced domestically. Australia is a traditional supplier of premium white wheat, although export volumes can swing substantially from year to year. Australian wheat is highly regarded and can attract a premium price.

Long grain rice is the preferred rice variety. Australian rice is not considered suitable or available in the quantities Iran needs, or at a price Iran is prepared to pay. Brazil dominates Iran’s sugar imports.

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Specific Iranian Halal conditions for imported sheep meat make Iran a less attractive destination for products than some other markets. The need for an Iranian religious representative to oversee each slaughter is unlikely to be changed readily. Nevertheless, there is demand for premium chilled product, and beef shipments also offer some potential. Iran is not considering live animal trade at this time due to a lack of facilities at ports and its focus on domestic production.

Water security Sustainable water availability is recognised as a critical issue for the development of agriculture, mining, and other industries in Iran. Hydrologically and environmentally, Iran is similar to Australia – both are situated in the same latitudes and face the same issues with surface, ground water and river systems as well as urban, agricultural and environmental requirements.

While Iran has well-developed strategies and procedures for the management of its water resources it faces challenges in balancing competing imperatives in implementing effectively its water policies.

Australia has world’s best practice in relation to water resource management and this is an area in which Iran is keen to cooperate.

Education, training and researchCurrently around 3,500 Iranian post-graduate students are studying in Australia. Each year Australia receives just over 1,000 new enrolments from Iran. International education particularly at the post-graduate level is a deeply entrenched concept in Iran. Australian universities are highly regarded in Iran and Iranian universities are seeking greater student mobility and research collaboration with Australian universities. Iran also has 35 science and technology parks that are interested in cooperation with foreign research institutions, especially in energy and water.

There is likely or be a demand for expanded management training delivered in Iran as it rejoins the international economic mainstream.

Health careMiddle class Iranians are very interested in personal health, beauty and well-being products, and many international companies are active in this sector. And while Iran’s health sector accounts for just five percent of GDP, and non-urban health delivery is very poor, it is likely that expenditure in this sector would increase in line with any broader improvement in economic growth post-sanctions.

Resources (oil, gas and mining)Iran will remain a major hydro-carbons producer with among the world’s largest oil and gas deposits and a well-developed and long-standing industry backed up by a skilled technical workforce. The Iranian government has announced it will offer more than 50 projects for energy exploration and production. Its aim is to lift oil production by 500,000 barrels per day immediately following the lifting of sanctions, rising to one million bpd within a year and ultimately to return to pre sanction levels of four million bpd. Iran is also looking to accelerate gas production, including to provide feedstock for the petrochemical industry.

Iran has made it clear that international investment in the sector is welcome and has unveiled a new Iran Petroleum Contract, to attract investment from international oil companies.

Iran has significant mineral resources but the country’s mineral potential still remains largely undeveloped. Despite current low world commodity prices, the Government sees mining as a significant industry that will generate foreign investment and export revenue.

Given the similarity with Australian conditions, Australian miners and METS companies could play a major part in this sector – especially in drilling, pit-to-port infrastructure, mine remediation, water management, and corporate social responsibility.

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Economy

Iran: Ready for re-engagement

78M Population (2014) DFAT Country Fact Sheet

5.8%Iran growth forecast (2016) IMF

100

200

300

500

400

2009 2010 2011 2012 20142013

600

A$mImports

Exports

Australia’s merchandise trade with Iran

Recent economic indicators 2010 2011 2012 2013 2014 2015

GDP (US$bn) (current prices) 464.0 564.5 418.9 380.3 404.1 393.5

GDP per capita (US$)

6,241 7,511 5,512 4,941 5,183 4,983

Real GDP growth (% change yoy)

6.6 3.8 -6.6 -1.9 3.0 0.6

Current account balance (% GDP)

5.9 10.5 6.3 7.4 3.8 0.8

Goods & services exports (% GDP)

24.9 26.1 17.1 21.8 23.6 21.4

Inflation (% change yoy) 12.4 21.5 30.5 34.7 15.5 16.5

Major Australian exports 2014–15 (A$000)

1 Wheat 85,709

2 Wool & other animal hair (incl tops) 10,074

3 Milk, cream, whey & yoghurt 6,776

4 Medical instruments (incl veterinary) 2,764

Major Australian imports 2014–15 (A$000)

1 Fruit & nuts 8,214

2 Floor coverings 5,933

3 Furniture, mattresses & cushions 3,527

4 Lime, cement & construction materials 3,242

DFAT Country Fact Sheet

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Department of Foreign Affairs and Trade

Sanctions relief followed the implementation of steps agreed in the Joint Comprehensive Plan of Action between China, USA, France, UK, Russia, Germany and Iran, which promised Iran phased sanctions relief in exchange for nuclear reforms. The agreement was endorsed by the United Nations in UN Security Council Resolution 2231 (2015). Following Implementation Day, certain UN Security Council sanctions on Iran were amended to commence the process of phased sanctions relief. However, certain sanctions on military and nuclear equipment and Iran’s ballistic missile program remain in force.

Australia has taken steps to suspend autonomous sanctions targeting the oil and gas sector, most banks and the transport sector. Many Iranian persons and entities that were designated under autonomous sanctions have been removed from the Australian Consolidated List, which means that Australian business can undertake business activities with these previously specified individuals and entities.The Autonomous Sanctions Regulations 2011 as they relate to Iran are being amended to permanently remove the suspended provisions.

Implementation day and sanctions changesInternational sanctions on Iran changed as the result of January 16 Implementation Day.

Some Australian autonomous sanctions remain in place, including:

• restrictions on the export of arms and related materiel;

• restrictions on some metals and software; and

• a revised list of designated persons and entities.

Australia is also obliged to implement the provisions of UN Security Council Resolutions into law. New legislation is being drafted to take into account Australia’s obligations under UN Security Council Resolution 2231. In the meantime the previous provisions will not be implemented until the revised legislation is introduced. The changes are reflected in the Consolidated List of entities and individuals that DFAT maintains on its website.

Businesses wanting to engage with Iran should seek independent legal advice on the good or service that you wish to export to, or perform in, Iran. DFAT also provides comprehensive information on its website (dfat.gov.au/international-relations/security/sanctions) which is updated as legislative changes take effect.

Should you have any doubt about a particular export or service to Iran or any other countries with Australian or UN sanctions measures, you are welcome to create an account on the Online Sanctions Administration System (OSAS) website at sanctions.dfat.gov.au and submit an inquiry. DFAT will then assess your good or service and provide you with written advice as to whether it is permissible under Australian sanctions law, or would require authorisation.

It is also important to note that other countries (including both the EU and the US) retain some sanctions on Iranian companies and individuals. Where relevant, businesses should consult the relevant EU and US authorities for more information.

For the EU, refer to the website of the European Union External Action service (Eeas.europa.eu/iran)

For the US, refer to the website of the Office of Foreign Assets Control of the US Department of the Treasury (treasury.gov/resource- center/faqs/Sanctions/Pages/faq_iran.aspx)

For risk management and financial advice contact Efic, Australia’s export credit agency: www.efic.gov.au

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business envoyDepartment of Foreign Affairs and Trade

Notes: 1. ‘Other’ includes live animals (excl seafood), wool, cotton, barley.2. Converterd to A$ on 21/12/2015.Source: WTO notifications.

Total Global Reported Scheduled Export Subsidy Expenditure Since 2005 in Australia’s Top Agriculture Exports

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

A$mDAIRY MEAT (excl beef)

BEEF WHEAT OTHERWINE

The WTO agreement A win for Australian farmers The WTO agreement to eliminate trade-distorting agricultural export subsidies is a coup for Australian farmers

The agreement will end more than A$15 billion worth of agricultural export subsidy entitlements worldwide and has been a core objective of Australian trade policy since the 1970s. The historic agreement was signed at the 10th WTO Ministerial Conference in Nairobi, Kenya, 15-18 December. Export subsidies include payments and financial measures offered by governments to enhance artificially the competitiveness of a country’s exports in world trade. They are amongst the most trade-distorting forms of support and have been banned in industrial trade since the 1950s.

Export subsidies, which can artificially depress commodity prices, have long threatened the livelihoods of Australian farmers. The elimination of agricultural export subsidies will permanently remove a long-standing source of distortion that still impacts on global agricultural markets. While many of those entitlements are not currently being used, they could be used at any time, with negative consequences for world prices across a range of agricultural commodities. Since 2005, more than A$6 billion worth of export subsidies have been used by European and North American exporters on products of significant export interest to Australia including: beef, dairy, wine, wheat, other meat, with significant impact on prices. For example, the European Union last used export subsidies in skim milk powder trade in 2009. EU export

prices fell as much as 40 per cent in contrast to the 23 per cent overall decline in the skim milk powder indicative price.

The outcome includes the elimination of export subsidy entitlements by developed WTO Members (however Canada, Norway, Switzerland and the EU will have time to abolish their entitlements) and by developing countries by end 2018 (or 2020 and 2022 respectively in limited defined cases). There was also agreement on a standstill on unscheduled export subsidy entitlements held by developing WTO Members and elimination by 2023, or 2030 for the poorest WTO Members.

In addition to export subsidies, the package included new disciplines on state-backed export financing in agricultural trade; this will limit the ability of Members to use export finance programs in ways that distort agricultural trade. Members also agreed to establish new disciplines on the trade related aspects of international food aid, and on state trading enterprises.

This outcome is the first major WTO agriculture deal since 1994 underscores the need to rejuvenate the WTO’s negotiation function, which is cumbersome and slow. Agile negotiating models are needed to get results in a shorter time-frame and drive ambitious outcomes. Addressing agricultural trade distortions will remain a major priority for the Government in the WTO, in FTAs and elsewhere.

JAEPA Japan-Australia Economic Partnership Agreement

Fresh beef Up 22% to $1.09 billion

Beef tongue (frozen) Up 89% to $67.4 million

Fresh table grapes Up 1025% to $6.5 million

Shelled almonds Up 1413% to $5.4 million

Rolled oats Up 53% to $10.5 million

Fresh asparagus Up 23% to $19.2 million

Bulk wine Up 140% to $5.5 million

Australia–Korea + Australia–Japan trade

KAFTA Korea-Australia Free Trade Agreement

Fresh beef Up 37% to $396.6 million

Frozen beef Up 30% to $847.9 million

Fresh cherries Up 1105% to $4.3 million

Chipping potatoes Up 64% to $7 million

Shelled macadamias Up 132% to $10.4 million

TiO2 Pigments/preparations containing titanium dioxide Up 121% to $74.1 million

Bottled wine Up 54% to $11.4 million

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Department of Foreign Affairs and Trade

North Asia Free Trade Agreements building our business ties with North Asia

Amongst the myriad of forces that influence trade flows, Free Trade Agreements can provide a key competitive edge for products where high tariffs still remain, particularly in agriculture and processed foods.So while major commodity prices are weak and the value of overall trade flows with Korea and Japan are falling, this article takes stock of what the Korea-Australia Free Trade Agreement (KAFTA) and the Japan-Australia Economic Partnership Agreement (JAEPA), have helped to accomplish in their first year of operation.

On the day KAFTA entered into force, 12 December 2014, 84 per cent of Australia’s goods exports to Korea received duty-free access, and further tariff cuts since have seen this proportion grow. As a result, Australian horticultural producers, who have counter-seasonal production cycles relative to South Korean producers, have been quick to take advantage of this better access. Some stand-out results include:

• exports of fresh cherries dramatically increased in value from $354,000 to $4.3 million, as the tariff immediately dropped from 24 per cent to zero on entry into force;

• exports of chipping potatoes jumped almost 64 per cent from $4.3 million to $7 million, as the high 30 per cent tariff was eliminated for Australia during the December-April Australian growing season; and

• shelled macadamia exports more than doubled from $4.5 million to $10.4 million, as the tariff dropped from 30 per cent to 18 per cent.

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Department of Foreign Affairs and Trade

There has also been growth in some of Australia’s larger export categories, such as fresh and chilled beef, which saw a 37 per cent increase in value, and frozen beef, which increased by almost 30 per cent, when tariffs on both dropped from 40 per cent to 34.6 per cent on 1 January 2015 (on 1 January 2016, these tariffs were reduced further to 31.9 per cent and will reduce each year until set at zero). Elsewhere, exports of bottled wine jumped by more than 54 per cent, as the 15 per cent tariff was eliminated. And exports of pigments and preparations containing titanium dioxide – used in products ranging from paint to sunscreen and cosmetics - more than doubled in value, to more than $74 million, after the 6.5 per cent tariff was eliminated.

JAEPA, the first liberalising trade deal that Japan has concluded with a major agricultural exporting country, is also delivering significant results since it entered into force on 15 January 2015. Agricultural enterprises in particular have made the most of substantial tariff cuts. For example:

• exports of fresh table grapes rose more than ten-fold, from $0.6 million to $6.5 million, when JAEPA cut the seasonal tariff (November to February) from 7.8 per cent to 5.9 per cent;

• shelled almond exports also rose more than ten-fold, from $0.4 million to $5.4 million, as tariffs on shelled almonds were eliminated;

• exports of fresh beef grew by 22 per cent, with tariffs falling from 38.5 per cent to 31.5 per cent;

• exports of frozen beef tongue – a delicacy in Japan – saw remarkable gains, jumping by 89 per cent when the tariff dropped from 12.8 per cent to 7.6 per cent;

• exports of rolled oats and fresh asparagus increased 53 per cent and 23 per cent respectively, all under the tariff reductions delivered by JAEPA; and

• tariff reductions on wine have seen the value of bulk wine exports more than double, to $5.5 million.

Australian exporters will reap further gains as both Korean and Japanese tariffs are cut again in early 2016 (1 January and 1 April respectively) with continuing cuts in subsequent years.

Detailed information on ChAFTA, JAEPA and KAFTA can be found at: dfat.gov.au/fta, austrade.gov.au, or openforbusiness.gov.au

Australian exporters will reap further gains as both Korean and Japanese tariffs are cut again in early 2016…

* All figures in this article are from DFAT STARS database, and compare data from the 2014 calendar year to the 2015 calendar year.

Not only have KAFTA and JAEPA served to open up goods trade opportunities, they have also created new opportunities in services and investment. For example, the KAFTA Audio Visual Co-production Memorandum of Understanding, witnessed by Minister Robb in Korea in October 2014, offers the opportunity for the Australian and Korean film and television industries to work closely together. The Mutual Recognition Agreement between the Korean Government and Engineers Australia, signed in May 2015, will enhance professional recognition of Australian engineers in Korea, and facilitate closer collaboration between engineers from both countries in international markets. These developments point to new trade opportunities for Australian services providers, as North Asian countries continue the transition from manufacturing-led growth to services.

Keen interest is being shown in what the China-Australia Free Trade Agreement (ChAFTA), which entered into force on 20 December 2015, might bring. China itself says this deal is by far the best it has entered into with any trading partner to date. China is expected to account for nearly half of global growth in food demand in coming years, and Australia, with its reputation for clean green food production, is well placed under the free trade agreement to reap the benefits. ChAFTA has already delivered two rounds of tariff cuts in rapid succession, ensuring the benefits flow on quickly to local businesses.

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Department of Foreign Affairs and Trade

What is the size of Australia’s trade and investment relationship with the UAE?The UAE is Australia’s largest trading partner in the Middle East by far. Two-way goods and services trade totalled nearly $9.3 billion in 2014-15, with Australian merchandise exports to the UAE growing 21 per cent over that same period, making the UAE our 13th largest country destination worldwide. The UAE was also our tenth largest source of foreign direct investment in 2014, with investments valued at nearly $15 billion.

What are the key priorities for the region in relation to trade and investment from your perspective?Currently around 2,000 Australian companies export their products to the UAE and more than 360 have registered their business in the UAE itself. A key ongoing priority for the government is to encourage the Gulf as a bloc to resume our Free Trade Agreement negotiations, which have been suspended since 2009. A successfully concluded FTA would open up even more opportunities for Australian businesses, especially in a further liberalised services sector. On the investment side, the key ingredient to more investment from the region, including a nascent interest from Qatar, is to regularly “sell” information about attractive project opportunities to the various sovereign wealth funds in the Gulf, all of whom have extensive assets to deploy for international investments. We’ve already seen quite a lot of investment from the Gulf in Australia, such as Transgrid in New South Wales, or Queensland Motorways, or the Accor hotel chain, but potential investors like to have as much detail about individual projects, rather than sit through and listen to a general description of Australia as an attractive investment destination. At the end of the day, it is the commercial return and the stability/certainty of the specific investment project which will woo potential overseas partners.

Strong growth in Australia-UAE tradeReturning Ambassador to the United Arab Emirates Pablo Kang shares his business and trade insights from post

What are the key products Australia trades with the UAE?The main things Australia trades (in terms of merchandise goods) with the UAE are alumina, passenger motor vehicles, meat, dairy, fruit, seeds and office machinery. The UAE’s overwhelming export commodity to Australia is crude petroleum. It’s an AUD 6.4 billion-plus bilateral trade relationship, and it’s up nearly eight percent on 2013-14 figures. Australian companies are also very active in the services sector, whether it be aviation (Qantas and Virgin Australia both fly to the UAE), education (University of Wollongong and Murdoch University have campuses in Dubai), or real estate (L J Hooker and Raine & Horne have both set up in the UAE since 2013). Food retail is also strong, with identifiable Australian brands including Sara Lee, jones the grocer, The Coffee Club, Jamaica Blue and Gloria Jean’s Coffee. Many Australian companies entered the market since 2013, which I think was in part a reflection of the fact that Qantas started flying to Dubai in the same year, thereby opening the minds and horizons of other Australian brands.

What has helped trade in the region?I think the key catalyst to such strong trade growth has been the people-to-people and commercial links developed through the rapid expansion of bilateral aviation links. The first flights between Australia and the UAE commenced in 1996, when Emirates started a three-times-a-week service between Dubai and Melbourne. That figure has grown now to 133 flights, including by Etihad Airways, Qantas and Virgin Australia. This has led to more Australian visitors to the UAE (over 320,000 in 2014 alone) but critically more Australian companies setting up shop or otherwise entering into commercial contracts. An estimated 23,000 Australians live and work in the UAE, making that country in the top ten overseas hosts of expat Australians. Public awareness and marketing is also very important obviously.

The Australian Embassy in Abu Dhabi has worked very closely with Austrade on their annual trade and investment promotions both in the UAE itself (“Australia Unlimited”) and in Australia (the Middle East and North Africa Connect seminar series). These have respectively sought to raise the profile of Australia as an attractive investment and goods and services partner, and the Gulf as a place for Australian exporters to do business. I made sure I participated in all of these when I was Ambassador. Former Trade and Investment Minister Andrew Robb was also an active supporter and opened both the 2014 and 2015 editions of Australia Unlimited in the UAE.

What are barriers to trade in the region?I wouldn’t call it a barrier, but we do feel the absence of an FTA with the Gulf. Certainly a GCC-Australia Free Trade Agreement would act as a catalyst to even more enhanced bilateral trade and investment, as our experience with other FTAs has shown. In most services sectors in the UAE there are foreign ownership limits (usually 49 percent of a business) which may cause some Australian companies looking to do business with the UAE to give pause. It’s an issue we would be keen to revisit as part of any resumed FTA negotiations with the Gulf (noting that each Gulf country has different provisions around ownership laws). The more intangible barrier, especially in relation to Qatar, is one of profile. Australia is not a well-known commodity in Qatar and vice-versa, which means that businesses would not naturally look to each country as potential partners when considering more traditional developed markets such as the UK and the US. I am positive this will change in the near future, with the scheduled opening of our Embassy in Doha this year and with the doubling of Qatar Airways’ flights to Australia also in 2016 (new daily flights to Sydney commenced this month and daily flights to Adelaide commence in May, on top of existing daily services to Melbourne and Perth).

Heads of Mission moves

Ambassadors and High Commissioners taking up positions at selected posts in January and February this year:

Ms Jan Adams PSM Ambassador to the People’s Republic of China

The Hon Mr Joe Hockey Ambassador to the United States of America

Ms Harinder Sidhu High Commissioner to India and Bhutan

Ms Amanda Gorely Ambassador to the Philippines

Mr Arthur Spyrou Ambassador to United Arab Emirates and Qatar

Mr Paul Wojciechowski Ambassador to Poland, Czech Republic and Lithuania

Mr John Richardson Ambassador to Brazil

Ms Karen Lanyon Consul-General to Ho Chi Minh City, Vietnam

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In your time in the UAE what were the biggest trade gains?I think what might be the most important longer term gain is the fact that the Australia-UAE bilateral agreement on the peaceful uses of nuclear energy entered into force in April 2014. This agreement provides the framework for commercial negotiations around the export of Australian uranium to help power the UAE’s civilian nuclear energy program. Given also the imminent cessation of production (and therefore export) of Australian passenger motor vehicles, facilitating the export of uranium (Australia has the world’s largest known uranium reserves and is the third largest exporter worldwide) could end up contributing significantly to the expansion of our future trading base with the UAE.

Are there any insights you wish to share with business about doing business in UAE?As with many markets, Australian companies need to devote a lot of face time to develop personal relationships with potential business partners, as per cultural business practices in large parts of the Gulf. Patience is another commodity which it is important to have in large amounts, as some businesses might expect contracts to be signed in a very short period after the initial introductory meeting. In my experience, that is not usually the case. UAE business partners like to be assured that the people they are dealing with are trustworthy, have done their homework, are culturally sensitive and are investing in the region for the long haul, rather than for a quick profit. Sometimes it takes a while to get to that assurance, sometimes not. I would also advise Australian companies to ensure that they

Strong growth in Australia-UAE tradeReturning Ambassador to the United Arab Emirates Pablo Kang shares his business and trade insights from post

place appropriate emphasis on the contractual negotiations, because when there is a dispute or a delay or a contract extension gone awry with a local business partner, the wording of the contract will be the most obvious starting point to resolving the issue.

Share a highlight of your time in the UAE (not necessarily trade-related)?Many Australians visit the UAE and as the Ambassador I was fortunate enough to interact from a public/sports/cultural diplomacy perspective with some more well-known ones, including the Australian cricket team, the Socceroos, and the likes of Tina Arena, Darryl Braithwaite and Shannon Noll. But perhaps one of the most memorable highlights was being able to host a function and fashion show for a group of eight young Indigenous female fashion design students from the Pilbara region of Western Australia, and interacting with young female Emirati fashion designers through that event.

What did you miss most about Australia while you were away?Clear sunshine, without the filter of desert haze, and, strange to say it, rain. Although being back in Canberra in the summer now, I don’t miss the rain any more.

What are you looking forward to back in Australia? The UAE was a great posting filled with many varied and memorable opportunities both professionally and personally. Like most people, being close to family and long-standing friends is probably the best thing about being back, as well as the chance to work on some new and challenging issues in our south Pacific neighbourhood.

Returning Ambassador Pablo Kang

Open Territory, Northern Territory, March 1 – May 31A new program held by the Northern Territory Government, showcasing what Northern Territory businesses, suppliers and industries have to offer. The program will include expos, guest speakers, conferences, and sporting and cultural events across the Territory. For more information: www.openterritory.nt.gov.au/

Australia Future Unlimited Education Exhibition, Hong Kong, March 5 and 6Highlighting the Australian Government education brand ahead of the peak recruitment season between June and August. The exhibition will focus on Australian education excellence through mini-showcase and demonstration talks. The exhibition will also be promoted as an anchor event of the Australian Education Festival, a brand awareness campaign to promote the benefits of Australian education.

The 2016 Australian Graduate Job Fair, Jakarta, March 5Coincides with the Australia Awards information briefings in Jakarta on

March 5. The program highlights employment outcomes of graduates with Australian qualifications and investment returns generated with careers in areas such as science, technology, engineering and mathematics as well as commerce and business management.

Australia China Business Council Roadshow, Perth and then Adelaide, March 8 and 9Australia China Business Council’s Australia Week in China programme focusing on business opportunities for Australia. www.acbc.com.au/events_768-2

Speed Networking for New Exporters, Perth, March 8The Export Council of Australia will present the first of its quarterly events aimed at getting prospective and new exporters ready to embark upon their export journey.

Australia Future Unlimited Mission to Turkey and Azerbaijan, March 18-26Meeting with top high schools, universities, agents and government contacts in Turkey and Azerbaijan. For higher education institutions and vocational education providers.

Hunternet Mining & Energy Mission to Vietnam, March 28Through Austrade’s Asian Business Engagement Program, Hunternet is leading a mining and energy trade mission to Vietnam. Austrade and Hunternet are providing the opportunity for Australian industry to connect with the Vietnamese mining and energy industry and promote Australia’s capabilities to this high growth energy market.

BioKorea 2016, Seoul, March 30BioKorea, inaugurated in 2006 has grown to be the Asia’s premier event for global biotech industry. BioKorea 2016 will consist of a conference, business forum, exhibition, pharm fair, Medtech fair, invest fair and job fair where all the global professionals and experts gather together.

Australia Week in China, April 11-15 The second Australia Week in China will be delivered across multiple cities. AWIC 2016 will consist of trade, investment, education and tourism promotion events designed to highlight commercial opportunities underpinned by the rise of an affluent middle class and the China Australia Free Trade Agreement. Nine sector-specific programs will be held in cities including Hong Kong, Beijing, Chengdu, Hangzhou, Shenyang, Shenzhen, Guangzhou and Hohhot before all delegates come together in Shanghai.

Russia Mining Mission 2016, April 17-25The Austrade mining mission, supported by Austmine, will visit the cities of Yekaterinburg, Murmansk and Moscow, and will include meetings roundtables and networking in Moscow, as well as site visits to Ural Mining & Metallurgical Company, a Russian Copper company, mine site visits and site visits to Phosagro, Orica and Norilsk Nickel.

Taste of Australia in Vietnam 2016, April 19-22The DFAT, Austrade and AusCham Vietnam, will host a week-long celebration of Australian food and beverage products to promote premium, safe and high-quality Australian food and beverage products to Vietnamese retail outlets, distributors, importers, food service providers and processed food manufacturers.

Expomin 2016, Chile, April 25-29Expomin 2016 is one of the world’s most important mining exhibitions and the largest industry event for mining in Latin America. For many years, it has been the first step for Australian companies to learn about and enter the Latin American market.

www.austrade.gov.au/Events/events

Events on the trade and investment calendar

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business envoy Department of Foreign Affairs and Trade

Trade and investment statistics

TOP EXPORT & IMPORT COUNTRIES/REGIONS $ billion 2014–15

% Growth (YoY)

ExportsChina $ 98.2 vv 3.4Japan $ 50.2 vu 1.4Republic of Korea $ 22.0 vu 3.5United States $ 18.5 vu 16.8New Zealand $ 12.1 vu 9.0ASEAN(a) $ 40.1 vu 17.6EU28(a) $ 22.2 vv 0.8ImportsChina $ 54.3 vu 10.1United States $ 41.9 vu 6.1Japan $ 20.0 vv 6.9Singapore $ 18.1 vv 0.4Germany $ 13.9 vu 3.5ASEAN(a) $ 61.4 vu 4.5EU28(a) $ 61.8 vu 4.7

AUSTRALIA’S TRADE BY BROAD SECTOR$ billion 2014–15

% Growth (YoY)

Exports (total) $ 318.7 vv 3.8Rural $ 42.6 vu 7.0Minerals & fuels $ 143.0 vv 13.8Manufactures $ 43.5 vu 3.4Other goods $ 12.7 vu 6.0Gold $ 14.2 vu 0.5Services $ 62.8 vu 9.4Imports (total) $ 341.3 vu 0.7Two-way trade $ 660.0 vv 1.5Balance of Trade $ -22.6 ..

TOP EXPORTS & IMPORTS$ billion 2014–15

% Growth (YoY)

ExportsIron ore and concentrates $ 54.5 vv 27.1Coal $ 37.9 vv 5.2Education services $ 18.2 vu 14.5Natural gas $ 16.9 vu 3.7Personal travel (ex education) $ 14.8 vu 6.4ImportsPersonal travel (ex education) $ 24.3 vv 4.7Passenger motor vehicles $ 18.7 vu 4.9Refined petroleum $ 18.1 vv 5.9Crude petroleum $ 14.7 vv 31.9Telecom equipment & parts $ 11.0 vu 21.8

AUSTRALIA’S INTERNATIONAL INVESTMENT POSITION $ billion as at 2014

% Growth (YoY)

Foreign Direct investment in Australia: 2014United States $ 163.4 vu 12.8United Kingdom $ 87.4 vv 0.3Japan $ 66.1 vu 2.7World $ 688.4 vu 8.7ASEAN $ 42.3 vu 13.9EU28 $ 169.6 vu 8.8Australian Direct investment abroad: 2014United States $ 136.2 vu 8.7New Zealand $ 61.6 vu 30.1United Kingdom $ 55.2 vu 5.3World $ 540.7 vu 6.5ASEAN $ 29.1 vu 3.3EU28 $ 83.5 vu 6.4

Economic highlights

Source: ABS. For more Australian trade and investment statistics see: www.dfat.gov.au/trade

At the start of 2016, the IMF downgraded its outlook for the global economy for the third time in less than a year.

• It estimated global growth for 2015 at 3.1 percent, a decline from 3.4 per cent in 2014. Global growth is projected to pick up gradually in the next two years. It is expected to be underpinned by a modest and uneven recovery around the globe.

• Growth in emerging and developing economies will be weighed down by China’s slowdown, strains in some other large emerging market economies, and weak commodity prices. Australia’s economic growth remains below trend, but higher than in most advanced economies.

• China’s economy grew at 6.9 per cent in 2015, its slowest pace in a quarter of a century. Underscoring the economic rebalancing that is under way, services accounted for more than half of output for the first time, while manufacturing’s share dropped to 40.5 per cent.

• Against the backdrop of a weakening economy, China’s stock markets continued to experience turbulence this year. In addition, the yuan remains under pressure, partly because of the large amount of capital that is flowing out of the country. Since June 2015, it has depreciated by more than 7 per cent against the US dollar. In response, the central bank has sought to both boost liquidity in the financial system and prop up the yuan through market interventions.

• India has consolidated its lead as the world’s fastest-growing large economy, with real gross domestic product officially rising 7.3 per cent in the final quarter of last year. Prime Minister Narendra Modi’s pro-growth government has accelerated its “Make in India” campaign, aimed at attracting global manufacturers to set up shop in the subcontinent.

• The 20 month fall in global oil prices looks set to end with Russia, Saudi Arabia and Iran offering support for a production freeze. However, any agreement on a production freeze is unlikely to immediately eliminate the excess supply that is currently in the market. Oil prices had slid from above US$100 a barrel two years ago to below US$30 a barrel on the back of weaker global demand growth, surging production in Russia and North America and OPEC abandoning its production quota system.

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Department of Foreign Affairs and Trade business envoy

AcknowledgementsBusiness envoy brings insights from Australia’s global diplomatic network to the Australian business community. It considers global geopolitical events and trends, their economic implications and what they might mean for Australian business.

Business envoy is produced by the Economic Advocacy & Analysis Branch of the Department of Foreign Affairs and Trade (DFAT). Any views expressed within are those of DFAT officers and not the views of the Australian Government.

DFAT does not guarantee, and accepts no legal liability arising from or connected to, the accuracy, reliability, currency or completeness of any material contained in this publication. DFAT recommends that readers exercise their own skill and care with respect to their use of this publication and should obtain professional advice relevant to their particular circumstances.

With the exception of the Commonwealth Coat of Arms and where otherwise noted, all material presented in this publication is provided under a Creative Commons Attribution 3.0 Australia licence. Material in this publication can be shared or adapted for any purpose in accordance with the licence terms available on the Creative Commons website.

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