The Coalition has further opened the immigration floodgates by permitting a “few thousand” more Indonesians working rights as part of the ‘free-trade agreement’ (FTA) hastily signed between the two nations. From The Australian:
Senator Birmingham… said the deal included provisions to grant more working holiday and working while studying visas to Indonesians.
“We want to make sure that at the professional services end there’s an effective free flow, but ultimately Australia’s sovereignty in the way in which we protect our working and visa arrangements is something that is of paramount importance to us,” Senator Birmingham told Sky News.
“There are small additional numbers that will be allowed in terms of those working visa programs”…
Asked to put a figure on the additional numbers, Senator Birmingham said: “A few thousand…
So, more low cost labour for big business, which will further undermine Australian wages and working conditions.
The fact of the matter is that immigration should never be included in FTAs to begin with. Immigration is covered in Australia’s ‘Migration Programme’, and there is little sense in negotiating away control of our sovereign borders to another nation – and in the process diluting Australian wages and working conditions – for slightly improved market access.
FTAs should be for trade and nothing else.
Moreover, where is the evidence that this FTA will benefit Australian welfare?
Because basic trade theory says that FTAs generally result in “trade diversion” – effectively a situation whereby the importing country shifts its buying from a more efficient, lower cost country whose goods are subject to a tariff towards the less efficient and higher cost FTA partner whose goods are not subject to a tariff – a situation that can be welfare destroying.
FTAs also contain complex rules of origin (ROO), which can raise administrative costs for businesses (including complying with paperwork requirements) and custom services in administering and auditing the ROO, thereby undermining any small benefits. Both these pitfalls are explained in more detail here.
These hidden costs were confirmed by research from HSBC and the Australian Chamber of Commerce and Industry, which 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.
The Productivity Commission (PC) has frequently derided the efficiency losses associated with FTAs, as well as the hidden protections embedded in some deals (e.g. extending patents and copyright protection).
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 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”.
There also seems to be a growing acceptance that the FTAs negotiated by successive Coalition governments have been over-hyped but under-delivered.
In addition to the concerns above regarding the AUSFTA, Peter Martin noted 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”.
There is currently no rigorous process in place to ensure that Australia’s maximises the benefits from FTAs and minimises their costs. On this front, the PC has been scathing, previously claiming 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”.
Once again, the Coalition has concluded a spurious FTA for political rather than economic reasons, without rigorous assessment, and without due regard for longer-term consequences.
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