Minister for Jobs, Investment, Tourism and Western Sydney Stuart Ayres said the India Australia Business and Community Awards (IABCA) would complement other activities designed to promote greater links with the Asia-Pacific giant.

There are over 12,000 Indigenous businesses in Australia, that contribute as much as $6 billion to the economy. While these numbers are growing, they are not growing fast enough.

Indigenous businesses can grow much more and make even more significant contribution to the Australian economy, including by engaging in international trade and expanding their markets overseas. They just need some extra capacity-building, supportive networks and a conducive trading environment.

Recognising this potential, the Export Council of Australia (ECA) and the Indigenous Network for Investment Trade and Export (IGNITE) have formed a strategic partnership.

Under a recently signed memorandum of understanding, both have committed to support Indigenous entrepreneurs and businesses in their efforts to undertake international trade and attract investment.

ECA and IGNITE will work together to deliver export readiness courses, establish supportive ecosystems, provide ongoing mentoring and access to relevant up-to-date information to boost Indigenous businesses’ competitiveness and sustainability.

Also, with government partners, ECA and IGNITE will urge relevant international organisations to incorporate Indigenous issues in their agenda, so that Indigenous peoples everywhere can participate in and benefit from international trade.

There are opportunities, including from trade agreements, such as the Australia-UK FTA currently under negotiation. The UK is a huge market. For example, the e-commerce segment of ‘food & beverages’ alone is expected to reach a revenue of US$8.5 billion in 2020. Just a small slice of that would be more than satisfying for Indigenous Australian businesses.

Indigenous Australian businesses with the potential to make their mark on the global stage, include manufactured goods that feature Indigenous botanicals and active ingredients, design and fashion labels, international aid contractors into the region, as well as defence industry contractors.

Enterprises exposed to international markets tend to be more innovative and competitive. So, we applaud and encourage the success of Indigenous businesses here and overseas. The pay-off can be significant – new jobs created, skills upgraded, and incomes increased.

Authors:

Darren Godwell, a/Executive Officer, Indigenous Network for Investment, Trade and Export Arnold Jorge, Executive Director, ECA Edge, Export Council of Australia

The Export Council of Australia therefore welcomes the 2020-21 Budget allocation of $28.6 million to implement a simplified trade system.

Australian exports by value (of both goods and services) fell by 4 per cent in the month of August. That drop, however, does not fully capture the difficult struggle many small and medium sized exporters are currently facing.

Minister for Trade, Tourism and Investment Simon Birmingham said the program would acknowledge the remarkable efforts of Australian exporters to diversify to the challenges brought on by the COVID-19 pandemic.

“In what has been a challenging year, many businesses around Australia have had to adapt, adjusting to COVID-19 restrictions or pivoting to develop new products entirely,” Minister Birmingham said.

“With over 53,000 exporting businesses across Australia we want to recognise and celebrate the incredible strength and resilience our exporters have shown in the face of major disruptions.

“We’ve seen businesses from all sectors show an ability to face these challenges head on, with distilleries switching to hand sanitiser, packaging producers to face masks and mining equipment manufacturers to hospital-grade ventilators.

“Exporters make an enormous contribution to our economy in helping to create millions of jobs across the country and will play a major role in our economic recovery from COVID-19.

“The benefits of exporting are well known, with Australian businesses who export hiring 23 per cent more staff, paying 11 per cent higher wages, and having labour productivity that is 13 per cent higher than non-exporting businesses.

“I urge communities to take advantage of this opportunity to recognise their local businesses and engage with this year’s unique program to continue sharing the success stories that remind all Australians of the exceptional work our exporters do.”

The Australian Trade and Investment Commission and the Australian Chamber of Commerce and Industry will run the program that will replace this year’s Australian Export and Investment Awards. For more information, visit: www.exportawards.gov.au.

Many businesses, including small and medium sized exporters, have already shut down permanently and others are close to doing the same. As the Australian Government considers an economic recovery package, it must seriously take account of trade as a priority area.

Two factors will determine the strength of our recovery—one, how quickly the pandemic is brought under control; two, the policy choices governments make.

Australia faces many challenges. We can encourage enterprises to grow quickly to take advantage of new markets, especially as domestic spending continues to contract, and help them to adapt to a changed world. This means governments must revisit their policy and regulatory approaches, including ensuring these are further simplified and supportive of business objectives.

We need to make businesses more internationally competitive and ensure those taking commercial risks are adequately supported and rewarded. We need to focus on maximising growth, efficiency and productivity and encourage workforce participation.

Australia is not alone. The rest of the world are also suffering. The World Bank estimates that the global economy will shrink by 5.2 per cent this year, resulting in a 3.6 per cent decline in per capita income and millions of people falling back into extreme poverty.

The COVID-19 pandemic is inflicting high and rising human costs worldwide, with over 26,198,095 people infected by the virus and over 865,467 deaths to date, we at the ECA are profoundly saddened by the loss of life that has occurred around the world. This health crisis has quickly evolved to become an economic crisis, with millions of people around the globe losing their jobs and income. In April 2020, concerning projections from both the IMF and the WTO predicted the global economy will contract by 3 per cent and that international trade will fall sharply in 2020. Even with an ‘optimistic’ scenario, WTO economists predict the volume of global merchandise trade will fall by a staggering 13 per cent compared to 2019.

These trade projections come on the backdrop of existing global trade tensions, volatility in commodity prices, and increasing protectionist sentiments. The imposition of restrictions to trade and freedom of movements, as well as other barriers – though necessary to respond to the current health crisis – may become more permanent protectionist measures that will prove disastrous in the longer term.

Let’s talk Australia

Australia is officially in its first recession for almost three decades, with the June quarter GDP numbers showing the economy went backwards by 7 per cent — the worst fall on record, and worse than most economists had predicted.

As a consequence of the biggest downturn since the Great Depression, Australia’s seasonally adjusted unemployment rate edged up to 7.5 per cent in July 2020, from 7.4 pef cent in June, and compared with market consensus of 7.8 per cent. This wasthe highest jobless rate since November 1998. According to Trading Economics, ‘Looking forward, we estimate unemployment rate in Australia to stand at 7.90 per cent in 12 months’ time.‘

Trade, a key sector of the Australian economy – representing 21 per cent of GDP – while having dropped, has kept the economy slightly afloat. And while recent ABS trade numbers are still encouraging, the numbers hide the real pain, especially among SME exporters.

Where we go from here

In Australia, we have seen our Government – both at the Federal and State level – taking early decisive action to protect Australians and the economy. We applaud key trade-focused initiatives like the International Freight Assistance Mechanism, the increased funding in the Export Market Development Grants (EMDG) and the initiative by Export Finance Australia. These are all critical to provide a lifeline to cash strapped businesses – many of them SMEs – to be able to remain afloat through this crisis.

Preliminary consultations with our members and the broader export community indicate that some key challenges our exporters are facing today relate mainly to:

• Freight and logistics – difficulties with availability, cancellation of most air freight routes and increased freight costs that further reduce already thin margins,
• Supply chain issues – with problems with sourcing, challenges managing the just-in-time system, cancellation of contracts and constant delays,
• Export documentation – the need to digitise all certificates and the many export-related documents have posed challenges, translating in goods and cargo being held and creating all sorts of issues across borders, which are hard to solve remotely,
• Trade barriers – which include several anti-dumping investigations by some of our trading partners on Australian exports – mainly Australian agricultural products. Whilst most of these investigations are being made by China, there are other countries also commencing investigations, which include Australia as a party in their claims.

We believe much more can be done, both at macro-Government level and at the firm level. For governments, there are ways to keep supporting our exporters including:

• Keeping trade lanes open and promoting avenues for freer trade,
• Ramping up multilateral collaboration and coordination between countries as the current restrictions ease, and communicate those measures to the trade community,
• Extending Government support in the freight and logistics area, to other exporters beyond perishables, and expand the discussions to include sea freight,
• Exploring the needs of the services export sector (e.g. education and VET) which have less visibility in the overall trade landscape.

For our exporters, some useful insights include:

• Take advantage of the current Government initiatives and seek support from industry bodies and relevant organisations to bring visibility to the issues that currently affect the Australian exporter,
• Start to rethink the geographic diversity of your supply chains and explore alternatives for sourcing, if available,
• Regroup to have a clear strategy to re-enter markets where recovery is on the horizon and where demand will be increasing.

While domestically we are still in a shutdown, some of our key trade partners are re-emerging from this crisis, and our exporters need to be ready to deliver and take advantage of these opportunities, especially as big export markets, such as the US and the EU remain in hibernation.

Economic recovery will require leadership in trade

As the voice of Australian exporters, the Export Council of Australia calls on the Government to lead on trade issues, here and internationally, and take decisive practical action. If economies do not start to open soon, many small and medium- sized businesses, family run/ owned business, SME exporters will shut down permanently.

The Export Council of Australia therefore encourages the Australian Government to develop and implement trade initiatives, including:

• convening key stakeholders to get transport and logistics systems operating at close to previous levels, ensuring routes are open and prices are brought down.
• facilitating the movement of goods across State borders if those goods are part of a global value chain.
• identifying and expediting negotiations of trade and travel bubbles with key economic partners.
• engaging with the finance industry to ensure exporters continue to have secure and affordable access to trade finance.
• enhancing funding assistance to SME exporters to reduce costs associated with exploring new markets and alternative supply chains, including expanding coverage of programmes such as Export Market Development Grants Scheme and SME Export Hubs programme.
• extending the innovative Seasonal Workers Program beyond its current pilot phase.
• increasing international development support to developing country trade partners, so that similar actions can be undertaken on their end. If our trade partners are not growing, we cannot do business with them.

Now more than ever, we all need to work together. We must abandon old excuses that constrain us from moving forward. We need to be flexible, innovative and bold.

The ECA looks forward to working constructively with the Australian Government and other stakeholders to assist our fellow Australians.

This article was first published and written for Shipping Australia’s Spring/Summer 2020 magazine

By DIANNE TIPPING, chair, and TAMARA OYARCE, National Trade Policy and Research manager, Export Council of Australia

Join us as we sit down with Dhiraj Kunwar, Managing Director – Business Banking with RAKBANK, as he talks us through the experiences of businesses, especially SME’s, over the past six months, before addressing future areas of innovation that have assisted businesses in coping with the challenges presented and, most importantly, what the landscape will look like moving forward from a post pandemic financial standpoint.

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