VZCZCXRO2057
PP RUEHPT
DE RUEHBY #0078/01 0220352
ZNR UUUUU ZZH
P 220352Z JAN 09
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC PRIORITY 0886
INFO RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEHDN/AMCONSUL SYDNEY 4141
RUEHBN/AMCONSUL MELBOURNE 5932
RUEHPT/AMCONSUL PERTH 4198
RHHMUNA/USCINCPAC HONOLULU HI
RUEHFR/AMEMBASSY PARIS 1504
RUCPCIM/CIMS NTDB WASHINGTON DC

UNCLAS SECTION 01 OF 14 CANBERRA 000078 
 
SYDNEY AND MELBOURNE ALSO FOR FCS 
CINCPAC FOR FPA AND JICPAC 
STATE FOR EAP/ANP AND EEB/IFD/OIA 
TREASURY FOR OASIA 
SINGAPORE FOR IRS 
PARIS FOR USOECD 
USDOC FOR 3132/USFCS/OIO/EAP 
USDOC FOR 4530/MAC/EAP 
USDOC FOR 6904/TIC/ASIA AND PACIFIC 
STATE PASS USTR FOR WEISEL/BELL 
 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: KTDB ETRD EINV ECON ELAB OPIC ETRD AS
SUBJECT:  2009 INVESTMENT CLIMATE STATEMENT - AUSTRALIA 
 
¶1. Following is the 2009 Investment Climate Statement for Australia. 
Note that the exchange rate between the US and Australian dollars 
fluctuated very widely over the year 2008; we have used the exchange 
rate as of January 21, 2009 (A$1 = US$.66) throughout. 
 
----------------------------------- 
A.1. OPENNESS TO FOREIGN INVESTMENT 
----------------------------------- 
 
¶2. The Australian Government welcomes foreign investment, and the 
United States is the country's largest source of foreign capital. 
Total U.S. investment in Australia, including both direct and 
portfolio investment, was A$446 billion (US$ 294 billion) in 2007. 
This accounted for about 27% of total foreign investment in 
Australia. Australia's foreign investment policy, as laid out in its 
general investment guidelines, is:  "to encourage foreign investment 
consistent with community interests. In recognition of the 
contribution that foreign investment has made and continues to make 
to the development of Australia, the general stance of policy is to 
welcome foreign investment. Foreign investment provides scope for 
higher rates of economic activity and employment than could be 
achieved from domestic levels of savings. Foreign direct investment 
also provides access to new technology, management skills and 
overseas markets." 
 
 
¶3. Takeovers of domestic firms by foreign investors, while sometimes 
generating nationalistic public reaction, are generally not 
interfered with, and are treated under the same guidelines as any 
other investment. There are no prohibitions on overseas investment 
or capital repatriation. 
 
a) The Foreign Investment Review Board 
--------------------------------------- 
 
¶4. The Federal Department of the Treasury regulates foreign 
investment through the Foreign Investment Review Board (FIRB) whose 
secretariat sits within the Treasury. The Board screens investment 
proposals for conformity with Australian law and policy. Regulation 
of foreign investment is based on the Foreign Acquisitions and 
Takeovers Act, (FATA) 1975 and the Foreign Acquisitions and 
Takeovers Regulations 1989. A full statement of Australia's foreign 
investment policy can be found at:  http://www.firb.gov.au 
 
¶5. The investment screening mechanism administered by the FIRB 
tracks foreign investment developments through a notification 
system. If certain criteria are present, specific proposals are 
examined. Under the Free Trade Agreement between the U.S. and 
Australia (AUSFTA), which entered into force on January 1, 2005, 
separate and more generous investment criteria and thresholds now 
apply to U.S. investors. 
 
¶6. Under the AUSFTA, Australia has committed to further 
liberalization of its foreign investment regime, as it applies to 
U.S. investors, while preserving the main feature of that regime, 
namely the ability to ensure that significant U.S. investment 
proposals are in the 'national interest'. The following changes to 
Australia's foreign investment policy were agreed under the AUSFTA: 
 
 
- exemption from the FATA of acquisitions in financial sector 
Q- exemption from the FATA of acquisitions in financial sector 
companies, as defined by the Financial Sector 
(Shareholdings) Act 1998; 
 
- the operation of a screening threshold of A$953 million (US$ 629 
million), indexed annually to the GDP implicit price deflator, of 
acquisitions in Australian businesses in non-sensitive sectors; 
 
 
- the operation of a screening threshold of A$110 million (US$73 
million), indexed annually to the GDP implicit price deflator, of 
acquisitions in Australian businesses in defined sensitive sectors. 
The sensitive sectors are: 
 
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-- media; 
-- telecommunications; 
-- transport (including airports, port facilities, rail 
infrastructure, international and domestic aviation and shipping 
services provided either within, or to and from, Australia); 
-- the supply of training or human resources, or the manufacture or 
supply of military goods or equipment or technology, to the 
Australian Defense Force or other defense forces; 
-- the manufacture or supply of goods, equipment or technology able 
to be used for a military purpose; 
-- the development, manufacture or supply of, or the provision of 
services relating to, encryption and security technologies and 
communications systems; and 
-- the extraction of (or holding of rights to extract) uranium or 
plutonium or the operation of nuclear facilities; 
 
 
- the operation of a minimum screening threshold of A$110 million 
(US$73 million), indexed annually to the GDP implicit price 
deflator, for acquisitions by entities in which the United States 
Government has a prescribed interest; 
 
- the operation of a screening threshold of A$953 million (US$629 
million), indexed annually to the GDP implicit price deflator, for 
acquisitions in non-residential developed commercial property; and 
 
- removal of existing policy-based screening requirements for the 
establishment of new Australian businesses other than where the 
investment involves the United States Government. 
 
¶7. The FIRB must be notified of investment proposals in the 
following categories: 
 
- Acquisitions of substantial interests (15% by a foreigner together 
with their associates or 40% in aggregate) in existing Australian 
businesses, the value of whose assets exceeds A$100 million or where 
the proposal values the business at over A$100 million. For U.S. 
investors a notification threshold of A$953 million instead applies, 
except for investments in prescribed sensitive sectors or by an 
entity controlled by the U.S. Government, which are subject to an 
A$110 million threshold. The FATA does not apply to investments by 
U.S. investors in those financial sector entities that are subject 
to the operation of the Financial Sector (Shareholdings) Act 1998; 
 
- plans to establish new businesses involving a total investment of 
over A$10 million or more. Proposals by U.S. investors, except an 
entity controlled by a U.S. Government, do not require notification 
but remain subject to other relevant policy requirements; 
 
- portfolio investments in the media of 5% or more, and all 
non-portfolio investments irrespective of size; 
 
- takeovers of offshore companies whose Australian subsidiaries are 
valued at A$200 million (US$132 million) or more, or the applicable 
U.S. investor threshold of either A$953 million (US$629 million) or 
A$219 million (US$145 million); 
 
 
- direct investments by foreign governments or their agencies, 
irrespective of size; 
 
- acquisitions of interests in urban land that involve: 
 
-- developed non-residential commercial real estate, where the 
property is subject to heritage listing, valued at A$5 million or 
Qproperty is subject to heritage listing, valued at A$5 million or 
more and the acquirer is not a U.S. investor; 
 
-- developed non-residential commercial real estate, where the 
property is not subject to heritage listing, valued at A$50 million 
or more, or A$953 million (indexed) for U.S. investors; 
 
-- vacant urban real estate regardless of value; 
 
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-- residential real estate regardless of value; and 
 
-- proposals where any doubt exists as to whether they are 
notifiable. 
 
¶8. The FIRB uses a national interest test to examine foreign 
investment proposals. Proposals are evaluated according to their 
consistency with existing government policy and law, where these are 
taken to define important aspects of national interest (for example, 
competition policy and environmental laws). Also, national security 
interests and economic development priorities are considered. 
However, it is the Federal Treasurer, under the authority of the 
FATA, who ultimately decides whether or not an investment is 
contrary to the national interest. 
 
¶9. The 2007-08 FIRB annual report will be released in February 2009. 
 During FY 2007 (from July 1 2006 to June 30 2007) 6157 proposals 
received approval, compared with 5186 the previous year, 
representing an increase of 19%. The real estate sector recorded 
5614 approvals (18% higher than the 4755 approvals in 2005-06). 
There were 543 proposals approved in other sectors in 2006-07 
compared with 431 in 2005-06, an increase of 26%. In 2006-07, 27 
proposals, all concerning real estate, were rejected, compared with 
25 in 2005-06. 
 
¶10. Approvals in 2006-07 involved proposed investment of A$156.4 
billion (US$103 billion). This was an 82% increase on the previous 
year's approvals of A$85.8 billion (US$56 billion). The 
manufacturing sector was the largest industry sector by value, with 
investment approvals in 2006-07 of A$62.8 billion (US$41 billion), 
compared with A$13.7 billion (US$9 billion) in 2005-06. The other 
major sectors for approvals in 2006-07 were: mineral exploration and 
development, A$32.3 billion (US$21 billion); services, with 
investment approvals of A$28.9 billion (US$19 billion); and real 
estate, with approved investment proposals valued at A$21.4 billion 
(US$14 billion). Disapproved investments were negligible. 
 
¶11. The U.S. was again the largest source country for foreign 
investment in 2006-07, involving proposed investment of A$45.3 
billion (US$30 billion) representing 29% of total approved 
proposals. Singapore (12%), Mexico (11%), the United Kingdom (9%) 
and the Netherlands (8%) were the other major sources of proposed 
investment approved during 2006-07 The ranking of several of these 
countries again reflects the presence in the statistics of a small 
number of large value transactions rather than them being a 
generally prevalent and large overall source of investment in 
Australia. 
 
b) Sector-specific regulation 
----------------------------- 
 
¶12. Media: Australia's current media framework, which relaxed 
foreign and cross-media ownership restrictions, was passed in 2006 
and took effect in 2007. Under this framework, some restrictions 
were removed, but media industry remains a sensitive sector under 
the Government's foreign investment policy. Cross-media ownership is 
permitted subject to safeguards that no less than five independent 
voices remain in metropolitan markets and four in regional markets. 
Qvoices remain in metropolitan markets and four in regional markets. 
The Rudd Government has not indicated a radical change of direction 
in relation to media ownership policy. 
 
¶13. Civil Aviation: Foreign investors (including foreign airlines) 
are subject to more stringent requirements than the standard limit 
of 49% of the equity in an Australian international airline. In the 
case of Qantas, existing statutory ownership restrictions imposed 
when it was privatized (under the Qantas Sale Act 1992) are still in 
place. These limit total foreign ownership of Qantas to 49%, 
ownership by foreign airlines in aggregate to 35%, and ownership by 
an individual (including a foreign carrier) to 25%, although the 
Government, in its December 2008 Aviation Green Paper, has said it 
would consider removing the latter two caps. Under existing 
bilateral aviation agreements, the limit of 49% in any Australian 
 
CANBERRA 00000078  004 OF 014 
 
 
international carrier is based on the commercial risk that such a 
carrier's ownership structure could see it denied access to a 
foreign market. In relation to the domestic carrier market, foreign 
investors (including foreign airlines) can generally expect approval 
to acquire up to 100% of a domestic carrier (other than Qantas), or 
establish a new domestic aviation operation, unless this is contrary 
to the national interest. 
 
 
¶14. Airports: Foreign investment proposals for acquisitions of 
interests in Australian airports are subject to examination in 
accordance with the standard notification requirements outlined 
above. In relation to the airports offered for sale by the 
Australian Government, the Airports Act of 1996 stipulates a 49% 
foreign ownership limit, a 5% airline ownership limit and cross 
ownership limits between Sydney airport (including Sydney West) and 
Melbourne, Brisbane and Perth airports apply. 
 
¶15. Telecommunications: Prior approval is required for foreign entry 
into the telecommunications sector or for investment in existing 
businesses in the sector. In 2006, the Government sold down its 
majority shareholding (51.8%) in the leading telecommunications 
company Telstra to around 18% following a successful share offer. 
The remaining 18% shareholding was transferred to the Future Fund 
(see paragraph below), a fund established since the Government 
achieving a net asset position in 2005-06. Aggregate foreign 
ownership of Telstra is still restricted to 35% of the privatized 
equity and individual foreign investors restricted to a holding of 
no more than 5% of that privatized equity. 
 
¶16. Real Estate: Foreign persons wishing to acquire an interest in 
urban land require foreign investment approval (unless exempt under 
regulation). Proposals that require approval include acquisitions 
of: 
 
- residential real estate; 
 
- vacant land; 
 
- developed commercial property valued at A$50 million (US$33 
million) or more (for commercial heritage listed properties the 
threshold is A$5 million); 
 
- residential and commercial leases where the likely term of the 
lease is more than five years (the term should include any right or 
option to renew the lease); 
 
- any profit sharing arrangement held over urban land (unless the 
asset subject to the profit sharing arrangement is developed 
commercial property valued at less than A$50 million or heritage 
listed commercial property valued at less than A$5 million); 
 
 
- shares in a company or units in a trust that holds more than half 
its total assets in urban land, except where the urban land owned 
would not normally require foreign investment approval (for example, 
developed commercial property with a value less than A$50 million); 
or 
 
- proposals where any doubt exists as to whether they are 
notifiable. 
 
¶17. Proposals by foreign investors to acquire developed residential 
real estate are examined. They normally are not approved except in 
the cases of foreign companies buying residences for their 
Australian based staff on condition that they will sell or rent the 
QAustralian based staff on condition that they will sell or rent the 
property if it is expected to be vacant for six months or more. 
 
CHANGE IN FOREIGN INVESTMENT POLICY ON REAL ESTATE 
 
¶18. On 18 December 2008, the Government announced changes to foreign 
investment screening arrangements for acquisitions of residential 
real estate by foreign persons that streamlined notification and 
 
CANBERRA 00000078  005 OF 014 
 
 
administrative arrangements. Changes of policy will come into effect 
immediately; those requiring changes to the Foreign Acquisitions and 
Takeovers Regulations 1989 will come into effect after the necessary 
amendments have been made (expected in February 2009). There are no 
changes to the Foreign Acquisitions and Takeovers Act 1975 (the 
FATA). 
 
¶19. The main changes are: (1) foreign students resident in Australia 
are no longer subject to a A$300,000 (US$198,000) limit on the value 
of an established dwelling purchased as their principal place of 
residence; (2) acquisitions by foreign-owned companies, trust 
estates and non-resident foreign persons of single blocks of vacant 
residential land are required to build a dwelling within a period of 
24 months (previously within 12 months and development expenditure 
of at least 50% of land cost); (3) the requirement that only 50% of 
new dwellings can be sold to foreign persons on an 'off the plan' 
basis has been removed provided developers market locally as well as 
overseas; and (4) foreign-owned companies can now purchase 
established dwellings for the use of their Australian based staff 
provided that they sell or rent the dwelling if it is expected to 
remain vacant for more than 6 months. 
 
¶20. From February 2009, temporary residents will not be required to 
notify proposed acquisitions of an established dwelling for their 
own residence (not for investment purposes); any new dwellings; and 
single blocks of vacant residential land (other acquisitions of 
vacant land will require notification and will normally be approved 
subject to development within 24 months). The exemption will include 
acquisitions of property by temporary residents via their trust or 
Australian incorporated company. For more information on the FIRB, 
please visit its web site (http://www.firb.gov.au/). 
 
c) Incentives for Investment 
---------------------------- 
 
¶21. Incentives that are available to investors include: 
 
- Research and development tax concessions for companies 
incorporated in Australia; 
 
 
- The Pharmaceuticals Partnerships Program (P3) offers R&D incentive 
grants to established companies in the pharmaceutical sector. Grants 
consist of payment of 30 cents per dollar spent on eligible 
increased R&D activities in Australia above a base level of 
activity. 
 
- Venture capital tax concessions. Capital gains tax exemptions are 
available for non-resident investment in Australian venture capital. 
The exemptions apply to investors from the U.S., the U.K., Japan, 
Germany, France and Canada. 
 
- The Invest Australia Supported Skills (IASS) program is designed 
to encourage international firms to choose Australia as a location 
for foreign direct investment by providing streamlined immigration 
arrangements for eligible employees of an international company that 
is considering making a significant or strategic investment in 
Australia. 
 
- In November 2008, the Australian Government announced the Green 
Car Innovation Fund (GCIF) as part of the New Car Plan for a Greener 
QCar Innovation Fund (GCIF) as part of the New Car Plan for a Greener 
Future. The A$1.3 billion (US$858 million) fund will provide 
assistance over ten years to design, develop and manufacture 
low-emission, fuel-efficient cars and components in Australia. 
Grants will be allocated through a competitive selection process 
that considers the innovative, technological, commercial and 
environmental merits of each proposal. 
 
- The Tradex Scheme provides relief to persons or organizations 
through an up-front exemption from customs duty and GST on imported 
goods intended for export or to be used as inputs to exports. The 
Scheme removes the need to 'drawback' these charges after export. 
 
 
CANBERRA 00000078  006 OF 014 
 
 
- The Retooling for Climate Change program is aimed at helping 
manufacturers improve their production processes, reduce energy use 
and cut carbon emissions. Through the program, grants will be 
available for initiatives such as investment in energy efficient 
tools, small scale co-generation plants and water recycling. 
 
¶22. Hundreds of major foreign firms in most industry sectors invest 
in Australia. The Australian Federal and 
State Governments vigorously encourage investment by offering 
incentives to multinationals to set up regional headquarters for 
financial and other services, and manufacturing operations. In fact, 
Australian states often compete to secure an international firm's 
headquarters in its capital city.  Aimed initially at attracting 
information technology companies, the campaign has widened in scope 
to include manufacturing and provision of financial and 
administrative services for the Asia-Pacific region.  The Government 
touts the benefits of Australia's safe, stable business environment, 
skilled workforce, and lower facility site and operating costs in 
comparison to other regional centers, such as Singapore, Hong Kong 
and Taiwan. For more information on investment incentives see 
www.ausindustry.gov.au and www.investaustralia.gov.au 
 
------------------------------------ 
A.2 CONVERSION AND TRANSFER POLICIES 
------------------------------------ 
 
 
¶23. The Australian dollar is a fully convertible currency.  The 
government does not maintain currency controls or limit remittance, 
loan and lease payments. Such payments are processed through 
standard commercial channels, without governmental interference or 
delay. 
 
---------------------------------- 
A.3 EXPROPRIATION AND COMPENSATION 
---------------------------------- 
 
¶24. Private property can be expropriated for public purposes in 
accordance with established principles of international law.  Due 
process rights are established and respected, and prompt, adequate 
and effective compensation is paid. 
 
--------------------------------- 
A.4 DISPUTE SETTLEMENT PROCEDURES 
--------------------------------- 
 
¶25. The Free Trade Agreement between the United States and Australia 
establishes a dispute settlement mechanism for disputes arising 
under the Agreement. In the first instance disputes are to be 
settled through consultation between the parties. Where these 
consultations are not effective in resolving the dispute, the 
Agreement provides for an arbitral panel to consider the matter. The 
dispute settlement mechanism provides for compensation for breaches 
of the agreement, which may include requiring the breach to be 
corrected, trade compensation to be provided, or monetary 
compensation in lieu of trade compensation. The FTA does not allow 
private investors to directly challenge government decisions; 
however, individual investors are able to raise concerns about their 
treatment by the Australian Government with the United States 
Government (or vice versa). 
 
¶26. Property and contractual rights are enforced through the 
Q26. Property and contractual rights are enforced through the 
Australian court system, which is based on English Common Law. There 
have been no investment disputes involving foreign companies in 
recent years. Australia is a member of the International Center for 
the Settlement of Investment Disputes. 
 
¶27. Australia has an established legal and court system for the 
conduct or supervision of litigation and arbitration, as well as 
alternate dispute processes. The traditional approach to commercial 
dispute resolution involves litigation, arbitration and more modern 
methods of alternative dispute resolution. Australia is a world 
leader in the development and provision of non-court dispute 
 
CANBERRA 00000078  007 OF 014 
 
 
resolution mechanisms. It is a signatory to all the major 
international dispute resolution conventions and has organizations 
that provide international dispute resolution processes. 
 
Performance Requirements and Incentives to Support Local Industry 
Development 
 
a) Selling to the Government 
---------------------------- 
 
¶28. Australia has not signed the GATT/WTO Agreement on Government 
Procurement, which means that it is not bound by conditions 
prohibiting specification of locally made product in tenders. 
However, the Australian Government procurement policy framework is 
non-discriminatory. That is, potential suppliers will not be 
discriminated against on the basis of their degree of foreign 
affiliation. The Free Trade Agreement with the United States 
prohibits the use of local preference arrangements and offsets, 
except in certain circumstances. Notable exceptions to the rule 
include preferences applying to local small to medium sized 
enterprises (SMEs). At the Federal level, there is a minimum target 
of 10% SME participation in all government procurements. 
Non-discriminatory treatment applies to most central government 
departments and 33 central government enterprises. A number of 
items, mainly relating to military equipment procurement by the 
Australian Department of Defence, have been exempted from the 
Agreement. A number of entities of regional governments are also 
subject to the Agreement. 
 
¶29. The non-discrimination principle applies above certain 
thresholds. For central government procurement, the 
thresholds are A$87,000 (US$57,000) for goods and services and 
A$9.57 million (US$6.3 million)) for construction services. For 
regional government entities, the thresholds are A$679,000 
(US$448,000) for goods and services and A$9.57 million) (US$6.3 
million) for construction services. 
 
b) Special Arrangements for Information and Communications 
Technology (ICT): 
 
¶30. The ICT Management Consultants multi use list (ICT MUL) was 
established to enable Australian Government agencies to improve the 
quality of their ICT business case development and benchmarking, 
corporate governance, and ICT project management and delivery. A 
Multi-Use List (MUL) is a list of pre-qualified potential suppliers 
of nominated goods and/or services, who have satisfied the 
conditions for inclusion. A MUL is a procurement tool available 
under the Commonwealth Procurement Guidelines and is intended for 
use in more than one procurement process. Australian Government 
departments and agencies can require inclusion on an MUL as a 
condition for participation in an open tender or as the basis for 
selecting participants in a select tender process for nominated 
goods or services. Inclusion on an MUL does not guarantee any 
potential supplier that an agency will include them in a select 
tender process. 
 
¶31. For ICT contracts of A$20 million (US$13 million) and above, 
Australian Government agencies subject to the Financial Management 
and Accountability Act 1997 (FMA Act) are to include a minimum 
Qand Accountability Act 1997 (FMA Act) are to include a minimum 
target level for SME participation ranging between 10-20% of the 
contract value, depending on the proportion of hardware and 
software/services (10% for hardware, 20% for software/services). 
This policy supplements the Commonwealth Procurement Guidelines 
target of a minimum 10% SME spend generally. Any SME participation 
stemming from ICT contracts of A$20 million and above will count 
towards the achievement of the agency wide 10% target. All publicly 
available business opportunities relating to the central government 
are notified on the AusTender website. Businesses can register their 
interest profile on the site and will receive automatic notification 
of the latest opportunities. See the AusTender website for more 
information (https://www.tenders.gov.au/federal/index.sht ml). 
 
--------------------------------------------- --- 
 
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A.5 PERFORMANCE REQUIREMENTS AND INCENTIVES 
--------------------------------------------- --- 
 
 
--------------------------------------------- --- 
A.6 RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
--------------------------------------------- --- 
 
¶32. As a general rule, foreign firms establishing themselves in 
Australia are accorded national treatment. They do not have to seek 
government permission to establish and own businesses unless their 
proposed activity meets tests established in law and regulation that 
trigger notification/review by the FIRB. These FIRB requirements are 
a matter of public record and are available upon application to 
FIRB. 
 
 
¶33. Firms may, if they wish, seek "naturalization" (conversion to 
full Australian status, as opposed to foreign status). To be 
naturalized, a firm must be at least 51% Australian-owned; its 
articles of association must provide that a majority of its board be 
Australian citizens; and it must reach an agreement with the 
Government regarding the exercise of voting powers in respect of the 
firm's business in Australia. The only practical advantage of 
naturalization is relief from the requirement that the FIRB be 
notified of proposed investment activities. Australian law protects 
patents, trademarks, designs, copyrights and integrated circuit 
layout rights. 
 
--------------------------------- 
A.7 PROTECTION OF PROPERTY RIGHTS 
--------------------------------- 
 
¶34. Australia is a member of the World Intellectual Property 
Organization (WIPO), the Paris Convention for the Protection of 
Industrial Property, the Berne Convention for the Protection of 
Literary and Artistic Works, the Universal Copyright Convention, the 
Geneva Phonogram Convention, the Rome Convention for the Protection 
of Performers, Producers of Phonograms, and Broadcasting 
Organizations, the Patent Cooperation Treaty, the WIPO Copyright 
Treaty 1996 (WCT), and the WIPO Performances and Phonograms Treaty 
1996 (WPPT). The treaties protect copyright in the online 
environment. 
 
¶35. IP Australia is the Australian government agency responsible for 
registrations of patents, trademarks and designs. Contact details 
for IP Australia are: Tel: 61-2 6283-2999; Fax: 61-2 6283 7999; or 
http://www.ipaustralia.gov.au/. For copyright matters contact the 
Copyright Law Branch, Attorney-General's Department at: Tel 61-2 
6250-6313; Fax 61-2 6250-5929; or at http://www.ag.gov.au/. 
 
a) Patents, Trade Secrets, Designs: 
----------------------------------- 
 
¶36. Patents are available for inventions in all fields of technology 
and are the principal system for protecting ownership of any device, 
substance, method or process that is new or inventive. They are 
protected by the Patents Act of 1990, which offers coverage for 20 
years, subject to renewal. An application for patent in Australia 
provides international priority rights if applications follow in 
overseas jurisdictions within 12 months. 
 
¶37. In 2006, legislation aimed at preventing unauthorized access to 
material protected by copyright was passed by the Australian 
Qmaterial protected by copyright was passed by the Australian 
Parliament. The legislation implemented the technological protection 
measures scheme in the Australia-United States Free Trade Agreement 
(AUSFTA). Technological protection measures (TPMs) are technical 
locks, such as passwords or encryption, used by copyright owners to 
prevent unauthorized access to and use of their material. These laws 
complement other copyright reforms including measures to target 
piracy. 
 
¶38. Under the United States-Australia Free Trade Agreement, the 
 
CANBERRA 00000078  009 OF 014 
 
 
Australian government agreed to provide measures to prevent the 
marketing of a generic version of a pharmaceutical before the patent 
on that product expired.  Australian regulations provide five years 
of protection of test data submitted to regulatory authorities for 
marketing approval of new pharmaceutical products and ten years of 
protection to undisclosed data submitted with an application for 
marketing approval for a new agricultural product, when that 
approval is given in combination with the marketing approval of 
certain additional uses of the same product. 
 
¶39. Design features, such as shape or pattern, can be protected from 
imitation by registration under the Designs Act of 1906 for up to 16 
years. An important aspect of a design is that it must be applied 
industrially. Registration cannot be granted for a design that is 
purely artistic. Only the owner of the design can make an 
application for registration. 
 
b) Trademarks 
------------- 
 
¶40. Trademarks may be protected for ten years and renewed 
indefinitely, upon request by registration under the Trademarks Act 
of 1995. Once used, trademarks may also, without registration, be 
protected by common law; however registration with IP Australia does 
make enforcement easier. It is wise for any U.S. exporter intending 
to market a product in Australia to check with the Trademarks Office 
at IP Australia to ensure that its mark or name is not already in 
use. 
 
c) Copyrights 
-------------- 
 
¶41. Copyrights are protected under the Copyright Act of 1968, which 
has been amended by the U.S. Free Trade Implementation Bill 2004 and 
the Copyright Amendment Act 2004 and Copyright Amendment Act 2006, 
to meet the obligations of the U.S-Australia Free Trade Agreement. 
Works do not require registration, and copyrights automatically 
subsist in original literary, artistic, musical and dramatic works, 
film and sound recordings. Copyright protection is for the life of 
the author plus 70 years. For sound recordings and films, protection 
is 70 years after publication. The Australian Copyright Act provides 
protection and against video piracy and unauthorized third-country 
imports. Amendments to the original Copyright Act of 1968 contained 
in the Copyright Amendment Act 2006 are related to: time-shifting, 
format-shifting and space-shifting; certain non-commercial 
activities of libraries, educational institutions and cultural 
institutions; use of copyright by people with a disability; parody 
and satire; the Copyright Tribunal; technological protection 
measures; unauthorized reception of encoded broadcasts and criminal 
penalties. 
 
----------------------------------------- 
A.8 TRANSPARENCY OF THE REGULATORY SYSTEM 
----------------------------------------- 
 
¶42. Australia subscribes to the 1976 declaration of the Organization 
for Economic Cooperation and Development (OECD) concerning 
international investment and multinational enterprises. The 
instruments cover national treatment and investment incentives and 
disincentives, and spell-out voluntary guidelines for the conduct of 
Qdisincentives, and spell-out voluntary guidelines for the conduct of 
multinational enterprises in member countries. Australia also 
subscribes to two OECD codes of liberalization, one covering capital 
movements and the other invisible transactions. 
 
¶43. Both Australian law and government practices foster transparency 
and favor competition. Taxation policy does not generally impede the 
efficient mobilization and allocation of investment, although there 
are a number of differences between the U.S. and Australian tax 
systems that have potential implications for business. Businesses 
are advised to seek counsel from accounting and law firms familiar 
with the tax policies of both countries. 
 
¶44. The Australian Taxation Office and the Internal Revenue Service 
 
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have a simultaneous audits agreement to investigate suspected 
non-compliance with tax laws of both countries. The U.S. - Australia 
Double Taxation Treaty affects business investment between the two 
countries. The Treaty, effective since 1983, applies to federal 
income tax of the U.S., excluding accumulated earnings tax, personal 
holding company tax and Australian income tax. Separate agreements 
apply to gift and estate taxes. 
 
¶45. Australia and the United States revised the Treaty in September 
2001 to provide a competitive tax treaty for companies located in 
Australia by reducing the rate of dividend withholding tax on U.S. 
subsidiaries and branches of Australian companies. The treaty 
revision also prevents double taxation of capital gains derived by 
U.S. residents from interests in Australian entities while retaining 
Australian taxation rights. The Controlled Foreign Corporation and 
Controlled Foreign Trusts legislation provides for taxing income 
that accrues to corporations or trusts, arranged after residency is 
established. 
 
--------------------------------------------- --------- 
A.9 EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
--------------------------------------------- --------- 
 
 
¶46. Australia has a well-developed, deep and sophisticated financial 
market, regulated in accordance with international norms. The 
Australian stock exchange is the 8th largest in the world and the 
Australian dollar is the world's 6th most traded currency. In terms 
of global turnover, Australia's foreign exchange market is the 
seventh largest in the world, and the Australian dollar/U.S. dollar 
is the fourth most traded currency pair globally (BIS, Triennial 
Central Bank Survey in 2007). The stock and commodities exchanges 
have corresponding arrangements with other world exchanges. Credit 
is allocated on market terms and several foreign banks operate 
successfully in Australia. 
 
----------------------- 
A.10 POLITICAL VIOLENCE 
----------------------- 
 
¶47. As in all liberal democracies, political protests (e.g., 
rallies, demonstrations, marches, public conflicts between competing 
interests) form an integral, though generally minor, part of 
Australian cultural life. Australian protests cover the broad range 
of current issues and interests: ethnic and aboriginal concerns, 
pro- and anti-right wing demonstrations, community and environmental 
issues and denunciations of government policies, to name a few. Such 
protests, while often vociferous, rarely degenerate into violence. 
 
--------------- 
A.11 CORRUPTION 
--------------- 
 
¶48. Australia maintains a thorough system of laws and regulations 
designed to counter corruption. In addition, the government 
procurement system generally is transparent and well regulated, 
thereby minimizing opportunities for corrupt dealings. Accordingly, 
corruption has not been a factor cited by U.S. businesses as a 
disincentive to investing in Australia, or to exporting goods and 
services here. Non-governmental organizations interested in 
monitoring the global development or anti-corruption measures, 
Qmonitoring the global development or anti-corruption measures, 
including Transparency International, operate freely in Australia. 
Australia is perceived internationally as having low corruption 
levels, as demonstrated by Transparency International's Corruption 
Perception Index 2008, which ranked Australia ninth, ahead of the 
U.K., Canada and the U.S. in terms of nations perceived as having 
low levels of corruption. 
 
¶49. Australia is an active participant in international efforts to 
end the bribery of foreign officials. Legislation to give effect to 
the anti-bribery convention stemming from the OECD 1996 Ministerial 
Commitment to Criminalize Transnational Bribery was passed in 1999. 
Legislation explicitly disallowing tax deductions for bribes of 
 
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foreign officials was enacted in May 2000. At the federal level, 
enforcement of anti-corruption laws and regulations is the 
responsibility of the Attorney General's Department. 
 
¶50. The Australian Transaction Reports and Analysis Centre (AUSTRAC) 
aims to make the financial environment hostile to money laundering, 
the financing of terrorism, other major crime and tax evasion. 
AUSTRAC was established under the Financial Transaction Reports Act 
1988 (FTR Act) and continues in existence under the Anti-Money 
Laundering and 
Counter-Terrorism Financing Act 2006 (AML/CTF Act) which authorizes 
the collection, analysis and dissemination of certain financial 
information to deter money laundering and terrorism financing, other 
major crime and tax evasion. The Attorney-General's department has 
continued to work on the second tranche of anti-money laundering and 
counter-terrorism financing reforms, which will extend the 
legislative regime to ensure that Australia's anti-money laundering 
and counter-terrorist financing framework complies with 
international standards set by the international Financial Action 
Task Force. 
 
------------------------------------ 
A.12 BILATERAL INVESTMENT AGREEMENTS 
------------------------------------ 
 
¶51. The Australian Government supports the negotiation of 
comprehensive Free Trade Agreements (FTAs) that are consistent with 
the World Trade Organization rules and guidelines and which 
complement and reinforce the multilateral trading system. Australia 
has Free Trade Agreements with the United States, Thailand, 
Singapore, Chile, and has reached agreement on a multilateral one 
with New Zealand and the countries of the Association of Southeast 
Asian States (ASEAN), all of which contain chapters on investment. 
See section A.1.a for details on U.S. specific investment 
arrangements. Australia also has a longstanding Free Trade Agreement 
with New Zealand called the CER (Closer Economic Relations). While 
this agreement does not contain a specific section on investment, 
both countries have undertaken significant liberalization of their 
investment regimes vis-`-vis the other party. Both countries agreed 
in early 2005 to investigate the possibility of adding an investment 
chapter to the agreement. Australia is currently negotiating 
agreements with the Gulf Cooperation Council (GCC), Malaysia, ASEAN, 
China and Japan, all which are expected to contain undertakings 
relating to investment liberalization. In November 2008, Trade 
Minister Crean announced that Australia will participate in 
negotiations for a Trans-Pacific Partnership Agreement (TPP).The TPP 
will expand on the current Trans-Pacific Strategic Economic 
Partnership Agreement between Brunei Darussalam, Chile, New Zealand 
and Singapore, which entered into force in 2006. The United States 
and Peru have also announced their intent to join the TPP 
negotiation. In addition, Australia is considering entering FTA 
negotiations with Indonesia and India, and in December 2008 
concluded preparatory talks with Korea. 
Qconcluded preparatory talks with Korea. 
 
--------------------------------------------- ---- 
A.13 OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
--------------------------------------------- ---- 
 
¶52. Australia provides foreign investment insurance to its firms 
investing abroad through the Export Finance and Insurance 
Corporation (EFIC). The U.S. Overseas Private Investment Corporation 
(OPIC) does not extend coverage to Australia, which is not a 
high-risk or developing country. 
 
---------- 
A.14 LABOR 
---------- 
 
¶53. Australia's unemployment rate stood at 4.5% in December 2008, 
seasonally adjusted, slightly up after reaching a 33-year record low 
earlier in the year. Unemployment is forecast to increase in 2009 
due to the impact of the global financial crisis. As of September 
2008, Australia had experienced 17 years of uninterrupted economic 
 
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expansion underpinned by a gradual shift to more flexible labor 
market arrangements. The Rudd government is currently replacing the 
previous WorkChoices legislation; and in late 2008 introduced the 
Fair Work bill. This aims to create ten minimum conditions for 
employees and reinstate unfair dismissal protections. The Rudd 
government also plans to reduce the number of awards that govern the 
pay and conditions of millions of Australian workers, but has 
pledged not to disadvantage employees or increase costs for 
employers. Under the Fair Work bill, unions and employers will be 
required to enter genuine negotiations where there is majority 
support from workers. 
 
¶54. In the year to August 2008, annual average weekly earnings in 
Australia grew by a sustainable 3.3%, above the core inflation rate 
of 5.0% for the year to September 2008. Real wages have grown by 
over 15% over the last ten years reflecting generally above-average 
productivity growth. A major economic challenge facing Australia in 
2009 is the likely increase in unemployment due to the effects of 
the global economic crisis and the drop in global commodity prices. 
 
¶55. In terms of industrial unrest, in the year ended September 
quarter 2008, 189.8 working days per thousand employees were lost 
due to strikes, an increase of 138% over the year to September 2007. 
The 172 industrial disputes during the year ended September 2008 
were 21 more than in the previous year. 
 
 
¶56. Other Federal laws set specific employment conditions. For 
instance, the Superannuation Guarantee (Administration) Act 1992 
supplements Australia's pension system. This compulsory, 
defined-contribution pension fund differs significantly from the 
U.S. Social Security system since it is privately run, and firms and 
their employees choose which investment company or companies will 
administer the funds. From July 1, 2002, employers were required by 
law to contribute a minimum of nine% of each employee's base salary 
into that employee's superannuation account and employees can choose 
to make additional contributions. For more information on 
superannuation, see (http://www.ato.gov.au/super/default.asp.) 
 
¶57. In 2001, the Government established the General Employees 
Entitlements Redundancy Scheme (GEERS), a taxpayer-funded insurance 
scheme, in response to growing community concerns about the loss of 
employee entitlements after several companies collapsed. GEER is a 
basic payment scheme established to assist employees who have lost 
their employment due to the liquidation or bankruptcy of their 
employer and who are owed certain employee entitlements. The scheme 
covers capped unpaid wages, annual and long service leave, capped 
payment in lieu of notice and capped redundancy pay. Employees 
currently stand ahead of unsecured creditors, but behind lenders 
with fixed security in the creditors' queue following a company 
collapse. 
 
¶58. The Australian Government is nominally a party to all 
International Labor Organization (ILO) conventions. The Government 
QInternational Labor Organization (ILO) conventions. The Government 
does not regard ratification of ILO conventions as a high priority. 
 
 
----------------------------------------- 
A.15 FOREIGN TRADE ZONES/FREE TRADE ZONES 
----------------------------------------- 
 
¶59. The Tradex Scheme allows an importer to gain an up-front 
exemption from Customs duty and GST on imported goods that are 
intended for export. The goods may be exported in the same condition 
as imported, subjected to a process or treatment after importation, 
then exported or incorporated in other goods which are exported. 
Export may be carried out by the importer or a third party. The 
goods must be exported within 12 months of importation, although 
approval can be sought to extend this period. 
 
----------------------------------------- 
A.16 FOREIGN DIRECT INVESTMENT STATISTICS 
----------------------------------------- 
 
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Levels of investment 
-------------------- 
 
¶60. The level of foreign investment in Australia increased by 
A$201.8 billion (US$133 billion) in 2007 to reach A$1.66 trillion 
(US$1.1 trillion) at 31 July 2008. Portfolio investment accounted 
for A$1.01 billion (US$667 million) (61%), direct investment for 
A$377 billion (US$226 billion) (23%), other investment liabilities 
for A$206.8 billion (US$136 billion) (12.5%) and financial 
derivatives for A$69.4 billion (US$46 billion) (4.2%). Of the 
portfolio investment liabilities, debt securities accounted for 
A$628.7 billion (US$45 billion) (62.5%) and equity securities for 
A$377.8 billion (US$227 billion) (37.5%). The leading investor 
countries at 31 July 2008 were as follows. 
 
Country           Level of       Level of    percentage of 
                  investment     investment   total 
                  A$ billions    US$        investment 
                                 billions 
 
United States     445.9          294   27 
United Kingdom    410.4          271   25 
Japan              57.5           38   3 
New Zealand        42.8           28   3 
Hong Kong SAR      41.7           28   3 
Netherlands        34.3           23   2 
Germany        31.6        21   2 
Switzerland        30.0           20   2 
 
¶61. The level of Australian investment abroad reached A$987 billion 
(US$651 billion) in 2007, an increase of A$125 billion (US$83 
billion) on the previous year. Direct investment abroad accounted 
for A$323.6 billion (US$214) (33%), portfolio investment for A$441.5 
billion (US$291 billion) (45%), other investment for A$119.3 billion 
(US$78) (12%), reserve assets for A$30.5 billion (US$20 billion) 
(3%) and financial derivatives for A$72.1 billion (US$48) (7%). 
Equity has been the main form of Australian investment abroad during 
the past decade. At A$608.0 billion (US$401), equity represented 62% 
of the total level of investment in 2007. The leading destination 
countries in 2007 were as follows. 
 
Country           Level of       Level of    percentage of 
                  investment     investment   total 
                  A$ billions    US$         investment 
                                 billions 
 
United States     403.4          266   40.9 
United Kingdom    127.8           84   13.0 
New Zealand        70.8           47     7.2 
Germany      37.1           24               3.8 
Netherlands        35.3           23    3.6 
Japan              35.1           23    3.6 
 
Flows of investment 
 
------- 
Inflows 
------- 
 
 
¶58. Foreign investment in Australia recorded a net inflow of A$151.9 
billion (US$100 billion) for the year ended 31 December 2007, a 
decrease of A$20.5 billion (US$13 billion) over the previous year. 
The leading investor countries were the United States - A$49.4 
billion (US$326 Billion) or 32.5%, the United Kingdom - A$27.7 
billion (US$18 billion) or 18.2%, Japan - A$8.7 billion (US$ 6 
billion) or 5.7%, Belgium - A$6.2 billion (US$4 billion) or 2.4% and 
Hong Kong - A$3.6 billion (US$2 billion) or 2%. 
QHong Kong - A$3.6 billion (US$2 billion) or 2%. 
 
Outflows 
-------- 
 
 
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¶59. Australian investment abroad recorded a net outflow of A$125.5 
billion (US$ 83 billion) for the year ended 31 December 2007, a 
decrease of A$44.9 billion (US$ 30 billion). The leading destination 
countries were the United States - A$62.2 billion (US$41 billionO or 
50%, Germany - A$11.6 billion (US$8 billion) or 9.2%, France - A$9.5 
billion (US$6 billion) or 7.6% and Canada - A$3.8 billion (US$2 
billion) or 3.1%. Portfolio divestment from Japan of A$6.4 billion 
(US$4 billion) occurred over 2007. 
 
CLUNE