PC fires another shot at Australia’s FTAs

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By Leith van Onselen

The Productivity Commission (PC) has today released its 2014-15 Trade and Assistance Review, which fired another direct shot at Australia’s so-called Free Trade Agreement (FTA) negotiations:

The benefits of increased merchandise trade emanating from bilateral trade agreements have been exaggerated.

Different and complex rules of origin in Australia’s preferential trade agreements are likely to impede competition and add to the costs of firms engaging in trade.

The nature and scope of negotiating remits should be assessed from a national structural reform perspective before entry into negotiations, rather than primarily for export opportunities. The text of proposed trade agreements should be made public and a rigorous analysis independent of the negotiating agency published with the final text.

The Australian Government should seek to avoid the inclusion of Investors-State Dispute Settlement (ISDS) provisions in bilateral and regional trade agreements that grant foreign investors in Australia substantive or procedural rights greater than those enjoyed by Australian investors.

The history of Intellectual Property (IP) being addressed in preferential trade deals has resulted in more stringent arrangements than contained in the multilateral agreed Trade-Related Aspects of Intellectual Property (TRIPS). Australia’s participation in international negotiations in relation to IP laws should focus on plurilateral or multilateral settings. Support for any measures to alter the extent and enforcement of IP rights should be informed by a robust economic analysis of the resultant benefits and costs.

Yet again, the PC has delivered a damning assessment of Australia’s recent trade deals.

Now watch as the Turnbull Government ignores its warning altogether and proceeds with further dud agreements.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.