After spending two weeks fighting a phony war over the doomed Trans-Pacific Partnership (TPP) trade agreement, Do-Nothing Malcolm kept the ‘free trade’ drivel rolling in yesterday’s address to the National Press Club:
With export trade deals that are expanding the opportunities for Australians to sell their products and services into the fastest growing markets of the world at the same time as they reduce the cost of everyday goods, putting more money back into the hands of households…
We cannot retreat into the bleak dead end of protectionism…
Political opportunists want us to turn inward and revert to higher barriers to trade and investment.
But they are doing nothing more than playing on the fears and hardships of those in our community who feel they have not shared in the benefits of globalisation and technological change.
They offer the false promise that subsidies and trade barriers – under the banner of Australian first – are the answer to protecting jobs.
But we have seen that film before. And it’s not a pretty one.
Whatever other countries may think, it is very clear that for Australia, more trade means more exports, which means more jobs and more opportunity.
Our big export deals have dramatically expanded the horizon for Australian business – large and small, regional and metro.
Those who oppose our export deals are really calling for less opportunity, diminished prosperity and fewer jobs.
We pursue even greater access to the global economy because it is good for jobs, good for investment and good for Australia.
Why would we want to limit opportunities at a time when demand for ‘made in Australia’ has never been stronger?..
Australians, in communities across our nation, are benefiting from these opportunities.
That is why, although disappointed by America’s withdrawal from the TPP, we continue to work to open more markets for our exports with negotiations underway with India, Indonesia, the EU and in due course the United Kingdom.
Here’s a novel idea, Malcolm. Before embarking on more “free trade agreements” (FTAs), how about rigorously evaluating those already concluded and putting processes in place to avoid pitfalls in the future?
Because, the available evidence suggests that the FTAs negotiated by this and past Coalition Governments have been a failure.
The Productivity Commission (PC) has previously criticised Australia’s concluded FTAs, noting:
…the Commission found little evidence that Australia’s recent bilateral agreements had provided substantial commercial benefits. The main factors that influence decisions to do business in other countries are likely to lie outside the scope of such agreements. The study concluded that while preferential trade agreements could increase national income, the net effect is likely to be modest.
The study also found that some provisions included in Australia’s recent preferential trade agreements — including investor-state dispute settlement mechanisms, government procurement requirements, intellectual property protections and provisions affecting areas traditionally the province of domestic policy, such as culture — potentially entail significant costs or risks.
More recently, the PC lamented that Australia’s trade negotiations have been “characterised by a lack of transparent and robust analysis, a vacuum consequently filled at times by misleading claims”, and has called on the “final text of an agreement to be rigorously analysed before signing”.
But wait, it gets worse.
The Crawford School of Public Policy at the ANU conducted a study of the Australia-US FTA (AUSFTA) and found that a decade after signing, the agreement has diverted more trade than it has created.
The ANU’s Peter Drysdale has also estimated that “Australia alone has suffered trade losses [from AUSFTA] the annual equivalent of the current price of around 18 Japanese, German, Swedish or French submarines through this deal”.
Peter Martin noted in July 2016 that a study commissioned by the Government “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”.
Whereas just last week, The Australian reported that the China-Australia FTA was failing to deliver as promised, weighed down by “non-tariff measures made worse by slow bureaucratic processes [which] are imposing costs and delays”.
Meanwhile, research by HSBC and the Australian Chamber of Commerce and Industry found that Australia’s FTAs have been drafted poorly and are so complex that they are next to useless in a commercial sense. As such, there has been a poor take-up rate by Australian businesses exporting to partner countries.
Senior academics also recently warned that FTAs have become less and less about opening markets and more about entrenching monopolies.
None of the above are a ringing endorsement of the Coalition’s FTA agenda, are they Malcolm?
There is a role for FTAs in Australian trade policy, but only once rigorous process are put in place to ensure that Australia maximises the benefits from FTAs and minimises their costs.
At a minimum, the PC should be engaged to assess trade deals for their equity and efficiency impacts both before and after negotiations are completed. How about it, Malcolm?
