Business slams Abbott’s FTAs

ScreenHunter_1966 Apr. 07 08.25

From The Australian today comes a stunning rebuke of Australia’s free trade agreements (FTAs) by the Australian Chamber of Commerce and Industry (ACCI), which claims that many FTAs are so poorly drafted and complex that they are next to useless in a commercial sense:

[ACCI] said that some FTAs were so poorly drafted that most Australian firms selling goods to those countries did not even claim preferences to which they were entitled, because of the cost and delays involved. He said the Korean FTA was the worst…

…unless technical elements of the Korean deal are redrafted before it is formally ratified, it will become ­“unworkable in a commercial sense”, as will the Japanese deal if its compliance clauses are not drafted in a business-friendly way…

In a recent survey, most Australian exporters told the ACCI the technicalities precluded them from understanding Australia’s FTAs to date…

In a different survey of companies Asia-wide cited by the chamber, fewer than 30 per cent of the firms responding used the concessions available to them under FTAs.

The ACCI’s concerns are similar to those raised by me last year, when I argued that complex ‘rules of origin’ (ROO) attached to FTAs raise administrative costs for businesses (including complying with paperwork requirements) and custom services in administering and auditing the ROO, undermining the benefits from the FTA. I also argued that the costs associated with ROOs will be greatest where there is a large number of FTAs each with different requirements, resulting in a ‘spaghetti bowl effect’ of increasing complexity.

When viewed alongside the fact that most of Australia’s FTAs contain big carve-outs of agriculture, it’s hard not to view the Coalition’s current trade negotiations as politically motivated rather than based on economic considerations.

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  1. >… FTAs are so poorly drafted and complex that they are next to useless in a commercial sense

    Well, how about this for a conspiracy theory: it may not make a lot of commercial sense for the majority, but it makes perfect sense for a selected few which have vested interests and are close enough to those pollies pushing for them!

    Crony capitalism, meet thy version 2.0: nepotism – I think it’s called.

    • Another term for crony capitalism is neoliberalism… cough Free Market Capitalism ergo – “”The main points of neo-liberalism include:

      THE RULE OF THE MARKET. Liberating “free” enterprise or private enterprise from any bonds imposed by the government (the state) no matter how much social damage this causes. Greater openness to international trade and investment, as in NAFTA. Reduce wages by de-unionizing workers and eliminating workers’ rights that had been won over many years of struggle. No more price controls. All in all, total freedom of movement for capital, goods and services. To convince us this is good for us, they say “an unregulated market is the best way to increase economic growth, which will ultimately benefit everyone.” It’s like Reagan’s “supply-side” and “trickle-down” economics — but somehow the wealth didn’t trickle down very much.

      CUTTING PUBLIC EXPENDITURE FOR SOCIAL SERVICES like education and health care. REDUCING THE SAFETY-NET FOR THE POOR, and even maintenance of roads, bridges, water supply — again in the name of reducing government’s role. Of course, they don’t oppose government subsidies and tax benefits for business.

      DEREGULATION. Reduce government regulation of everything that could diminsh profits, including protecting the environmentand safety on the job.

      PRIVATIZATION. Sell state-owned enterprises, goods and services to private investors. This includes banks, key industries, railroads, toll highways, electricity, schools, hospitals and even fresh water. Although usually done in the name of greater efficiency, which is often needed, privatization has mainly had the effect of concentrating wealth even more in a few hands and making the public pay even more for its needs.

      ELIMINATING THE CONCEPT OF “THE PUBLIC GOOD” or “COMMUNITY” and replacing it with “individual responsibility.” Pressuring the poorest people in a society to find solutions to their lack of health care, education and social security all by themselves — then blaming them, if they fail, as “lazy.”

      Around the world, neo-liberalism has been imposed by powerful financial institutions like the International Monetary Fund (IMF), the World Bank and the Inter-American Development Bank. It is raging all over Latin America. The first clear example of neo-liberalism at work came in Chile (with thanks to University of Chicago economist Milton Friedman), after the CIA-supported coup against the popularly elected Allende regime in 1973. Other countries followed, with some of the worst effects in Mexico where wages declined 40 to 50% in the first year of NAFTA while the cost of living rose by 80%. Over 20,000 small and medium businesses have failed and more than 1,000 state-owned enterprises have been privatized in Mexico. As one scholar said, “Neoliberalism means the neo-colonization of Latin America.”

      In the United States neo-liberalism is destroying welfare programs; attacking the rights of labor (including all immigrant workers); and cutbacking social programs. The Republican “Contract” on America is pure neo-liberalism. Its supporters are working hard to deny protection to children, youth, women, the planet itself — and trying to trick us into acceptance by saying this will “get government off my back.” The beneficiaries of neo-liberalism are a minority of the world’s people. For the vast majority it brings even more suffering than before: suffering without the small, hard-won gains of the last 60 years, suffering without end.”

      skippy… sound familiar?

  2. Our pollies (LibLab) have bought into a particularly rabid form of free trade theory and no longer have any notion of the National Interest. They just want to get something – anything signed with the firm belief that free trade always benefits Australia.

  3. Yes I was wondering why they are particularly Abbot’s FTA’s. As for Ag getting ‘special’ treatment Ag has been shafted in all FTA’s since dot 1. If something were done to fiox that it would be a great advance.

  4. sydboy007MEMBER

    Finally a group criticising FTAs that the Liberals wont be able to brush off as anti free trade.

    The sooner FTAs get called (Mis)Managed Trade Agreements the better.

    We should have a legal framework that forces the Govt to only sign an MMTA when access for our agricultural exports happens within a short time frame ie no more than 5 years. Some of the agricultural exports under the US FTA have still not had their quotas or tarriffs reduced, and it was signed over a decade ago.

    Liberals – pretending to be great economic managers but showing themselves to be absolutely woeful trade negotiators. Foreign Govt says jump, Liberals say how high and for how long.

  5. Abbott and Robb, working for the good of the country.

    An ISDS provision is being used by tobacco giant Philip Morris to challenge Australia’s decision to require plain packaging of cigarettes. Shortly before losing its case in the High Court, Philip Morris incorporated a company in Hong Kong to take advantage of ISDS provisions in an Australia-Hong Kong investment agreement.

    The Howard government successfully resisted a US demand to include ISDS provisions in the US-Australia free trade agreement and the Rudd and Gillard governments successfully resisted pressure to include them in the Malaysia-Australia free trade agreement.

    The Coalition allowed them to be included in the Korea-Australia free trade agreement and is open to including them in the 12-nation Trans-Pacific Partnership Agreement.

    “Australia appears desperate to reach a deal with Japan at any price,” said Patricia Ranald, convenor of the Australian Fair Trade and Investment Network.

    “But it shouldn’t agree to allow Japanese investors to sue our government over domestic laws.”

  6. With red lights flashing all over the place over the lack of judgment of the LNP re economic and trade policy the ‘own goal’ by the ALP in the WA senate election is even more pathetic.

    It takes a special breed of ALP union hack candidate to chase away voters in the volumes we saw on the weekend.