National Farmers’ Federation CEO Tony Mahar says the nation’s agricultural exports could be affected by the fallout from the US-China trade war. He adds that government complacency in negotiating free-trade agreements with Southeast Asian nations could result in Australian farm exports losing market share in the region as other nations pursue more aggressive trade negotiations. The Australian Dairy Industry Council recently told a Senate committee that the nation’s share of the global dairy exports trade has fallen from 16% to just 6% over the last two decades. From The Australian:
Mr Mahar said a blatant lost opportunity for Australian agricultural exports was parliament’s failure to sign off on a free-trade deal with Indonesia. “We desperately need parliament to ratify that agreement so it can come into force as soon as possible,” he said…
Dairy industry leaders this week warned a Senate committee that failure to ratify trade deals with Indonesia and Hong Kong could see competitors, including the EU, steal a march on Australia’s $3.4 billion dairy export market.
As usual, there is no mention of the hidden costs embedded in these deals. For example, an Indonesian FTA would further open the immigration floodgates by permitting a “few thousand” more Indonesians working rights:
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…
Therefore, an Indonesian FTA would provide more low cost labour for big business, which will further undermine Australian wages and working conditions. No thanks.
The fact is, FTAs under successive Coalition governments have been largely negotiated in secret from the public, but opened to corporations and industry groups who are free to lobby for their interests.
The problems are most pressing in non-trade areas like intellectual property, investor-state dispute settlement (ISDS) and labour market access, where the interests of corporations are most detached from ordinary citizens.
This is why the Productivity Commission (PC) has been such an ardent sceptic of FTAs, repeatedly calling for an independent and transparent analysis of the costs and benefits to Australia both before negotiations commence, and after an agreement has been signed. This view was most recently expressed in the PC’s Trade & Assistance Review, which explicitly questioned the merits of FTAs and slammed the processes underpinning them:
The Commission’s research report into Bilateral and Regional Trade Agreements (PC 2010) noted that they have brought benefits for some Australia businesses, particularly goods exporters. For example, some agricultural industries have received greater market access. On the other hand, they are costly to negotiate, are complex and place an administrative burden on businesses seeking to use them. Another concern is that they may be difficult to extend to large-scale plurilateral or multilateral agreements in the future where there is inconsistency between provisions in different agreements. In some cases, they also include clauses (such as intellectual property law changes driven by the AUSFTA, or investor-state dispute settlement procedures) that may not produce clear benefits for Australians, but carry significant risk.
Overall, the Commission concluded in 2010 that the economic benefits of bilateral trade agreements have generally been oversold and the risks have been understated. The Commission recommended that agreements should be reached only when they provide outcomes that are in Australia’s interest and they are the most cost-effective way of achieving those outcomes. The Commission further recommended that there should be more transparent and rigorous assessments of such agreements. This should encompass two elements. To ensure agreements are in the Australia’s interest, before negotiations commence, modelling should include realistic scenarios and be overseen by an independent body. After negotiations have concluded and prior to signing of the agreement, a full and public assessment should be undertaken covering all of the actual negotiated provisions. As with all areas of policy, trade agreements need to be considered on a case-by-case basis, and the balance of benefits and costs for future agreements may be different, for example because they cover a smaller share of Australian trade.
FTA negotiations require much better transparency and oversight, and must balance corporate interests with the broader public.
