The Australian Industry Group’s (AIG) Innes Willox has posted an article today in The Australian warning that Australia should take its time negotiating a “free trade agreement” (FTA) with China, in order to maximise potential benefits from the deal and minimise downside risks:
The potential economy wide benefits of an Australia-China free trade agreement are enormous. But so are the downsides if our negotiators are rushed by deadlines or are supine in their response to Chinese demands.
Australia’s history of securing benefits from free trade agreements is mixed at best…
Australian negotiators shouldn’t fall for the trick of playing sectors off against each other or giving away our strengths in the name of reaching a deal for a deal’s sake.
The AIG’s warning follows similar concerns raised by the Australian Chamber of Commerce and Industry (ACCI) earlier this week, which claimed that the rushed Korean FTA was so poorly drafted that it was next to useless in a commercial sense. Moreover, ACCI noted that technical problems inherent in most recent FTAs precluded Australian exporters from taking advantage of the deals, whereas in a different ACCI survey, fewer than 30% of the firms responding used the concessions available to them under FTAs.
With these concerns in mind, it is concerning that the Abbott Government has set a one-year deadline in concluding a China FTA, which suggests that the Government could forgo quality and comprehensiveness in exchange for getting a deal done. Setting a one-year deadline is also a poor negotiating strategy as it gives China an incentive to wait until close to the deadline and then pressure Australia to make commitments that it would not otherwise agree to.
The Australia-US FTA is a case in point, whereby the Howard Government accepted a sub-standard deal for political reasons, which saw large chunks of agriculture carved-out, draconian price-based safeguards protecting US horticulture (see Annex 3A), as well as complicated product ROO numbering hundreds of pages. It also included costly extensions to patent and copyright terms, which will cost Australian consumers and the government over the longer-term.
