Fairfax’s Peter Martin has done a good job today exposing the Coalition’s lie that it has boosted exports via the signing of so-called “free trade agreements” (FTAs):
Here’s another lie. Our trade agreements boost exports. Malcolm Turnbull and Scott Morrison said so repeatedly during the campaign on the basis of next to no evidence, rebadging their agreements with Japan, Korea and China “export agreements”…
There’s no evidence that South Australia or any other state will “benefit enormously from the free trade agreements the Coalition has signed”, in large part because the Coalition has ensured there isn’t.
It refused outright to commission a cost-benefit analysis on the giant Trans-Pacific Partnership deal it signed in February which is yet to be ratified. More than a decade after it negotiated the US-Australia Free Trade Agreement it hasn’t looked back to find out what happened. A prospective study it did commission on the new Japan, Korea and China agreements found that taken together they will boost our exports 0.5 to 1.5 per cent, while boosting our imports 2.5 per cent, which means they will send our trade balance backwards.
Rather than being “export agreements”, the deals for which we have data are better described as import agreements. In every case for which we have clear evidence, our trade agreements seem to have boosted imports more than exports…
A huge chunk of the traders surveyed by the Australian Chamber of Commerce and Industry don’t use them.
“In my experience, they have been a waste of time, particularly Thailand. The paperwork to qualify was so onerous it wasn’t worth the effort,” says one member.
I will also point out that the Crawford School of Public Policy at the ANU conducted a study of the Australia-US FTA, and found that a decade after signing, the agreement has diverted more trade than it has created:
Enough time has now passed and there is enough data to update the Productivity Commission’s model to estimate the effect of AUSFTA on trade. What this shows is that the agreement was responsible for reducing — or diverting — $53.1 billion of trade with the rest of the world by 2012. Imports to Australia and the United States from the rest of the world fell by $37.5 billion and exports to the rest of the world from the two countries fell by $15.6 billion over eight years to 2012.
Beyond that, there is no evidence that the agreement has been associated with an increase in trade between the two countries, or with the creation of efficient low-cost trade. In fact, the trade diversion from other partners suggests that Australia–US trade would have fallen even further without AUSFTA…
Deals that are struck in haste for primarily political reasons carry risk of substantial economic damage.
As I keep arguing, there is only one way to deliver better outcomes on FTAs: engage the Productivity Commission to analyse trade negotiations for their equity and efficiency impacts both before and after negotiations are completed.
In trade negotiations, process matters.
