Ten years after the Australia-US free trade agreement Where to for Australia’s trade policy

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  • Ten years after the Australia-US free trade agreement Where to for Australia’s trade policy

To mark the 10-year anniversary of the Australia-US FTA, this workshop examines Australia’s existing trade policy objectives and prospects for achieving them. What have been the strengths and limitations of Australia’s trade policy approach over the past decade? What are the major trade-related challenges facing Australia in the next ten years? And how might these challenges best be met?

Over the past three decades, Australia’s trade patterns have changed irrevocably. Our major trade partners have shifted – from our traditional ties to Europe and the US, to an increasing role for Japan, and now to China. China is now Australia’s top trading partner, accounting for 20% of our trade, valued at $121 billion. Japan ranks second, with a 12% share valued at $72.5 billion. And while the United States – historically one of Australia’s major trading partners – still ranks third, its share of trade is only 9%, with a value of $54 billion. The UK, which in 1901 was Australia’s top trading partner, is now sixth with a 4% share of trade valued at only $23 billion (DFAT 2012; ABS 2001). China’s ascendancy is due largely to its demand for Australian commodities, with our exports of goods to China rising from $9 billion in 2001 to $72 billion in 2012.

Yet these structural shifts are not currently reflected in the governance of Australia’s trade relations. Since WWII, when the preferential Imperial trade-blocs were dismantled, Australia’s emphasis had been on strengthening and shaping the global multilateral trading system (embodied in the WTO) – demonstrated through our leadership of the Cairns Group. Over the past ten years, this emphasis has been eclipsed by a renewed focus on preferential trade deals. Australia’s enthusiastic re-embrace of preferentialism began in 2004, with the signing of the landmark Australia-US Free Trade Agreement (AUSFTA). The significance of this deal was that it broadened the scope of FTAs from the exchange of goods and services to the institutions that define a country’s well-being, from intellectual property regulations to pharmaceutical pricing systems to government procurement arrangements and beyond. Australia has now signed seven bilateral deals (with New Zealand, Singapore, ASEAN, Thailand, Chile and Malaysia), while negotiations for a further nine are currently underway.

Now Australia is negotiating yet another FTA, this time a regional deal in the form of the Trans-Pacific Partnership Agreement (TPP). Notably, China is not a participant. Despite the controversy surrounding the TPP, and the fact that the US has explicitly ruled out further market access concessions beyond those embodied in the AUSFTA, Australia maintains its role in these negotiations. While Australia, the US and China are all members of APEC, comprehensive trade negotiations within APEC have stalled, with the US putting its emphasis on the TPP. For its part, China is promoting a series of FTAs with its East Asian neighbours, in the context of the ASEAN + Four agreement. Negotiations also continue to conclude a FTA between China and Australia.

Given that Australia’s economic and political interests lie clearly in the Asia Pacific region, and relations in particular with China loom large, the issue of the content and design of our pattern of trading relations emerges as a topic of major importance. Whether Australia’s optimal trade strategy remains with preferentialism – and with the TPP in particular – is an issue worthy of national debate.

The purpose of this workshop is to encourage and advance such a debate. Participants from a wide range of disciplines – from Political Science to Public Health, Law, Business Management and Economics – will focus their analytical attention on three key issues: what have been the strengths and limitations of Australia’s trade policy approach over the past decade? What are the major trade-related challenges facing Australia in the next ten years? And how might these challenges best be met?

The Workshop is particularly timely as it will coincide with the 10-year anniversary of the Australia-US Free Trade Agreement, and thus of Australia’s embrace of preferentialism as a trade policy strategy. A sufficient amount of time has thus passed to enable an evidence-based evaluation of the outcomes of Australia’s preferential shift, which was the source of significant controversy. Whilst advocates predicted significant economic gains for Australia, critics expressed concerns about potentially negative economic and social implications. It is only on the basis of a retrospective analysis of the outcome of such deals that today’s policymakers can make informed decisions about the best way forward for Australia’s trade policy.

In evaluating the strengths and limitations of Australia’s trade policy approach over the past decade, and grappling with questions of the best way forward, participants will focus on one or more of the following questions:

1- What have been the main outcomes of Australia’s embrace of preferential trade deals? Have the anticipated economic benefits been realised? Have the potential negative implications come to pass? The issues involved here are broad and complex, and demand interdisciplinary insights to be adequately addressed. Sub-questions include: have pharmaceutical prices in Australia risen as an outcome of the AUSFTA, and has the long-term viability of the pharmaceutical benefits scheme been compromised? Have increased intellectual property protections resulted in overall economic gains, or have they served to increase costs on consumers and publicly-funded institutions (such as universities and libraries)? Has access to the lucrative American government procurement been improved for Australian firms? How is competition between Australian and US firms for Australian government procurement contracts playing out? Have there been any significant changes to Australia’s biosecurity (quarantine) systems as a result of preferential deals? And how have preferential deals impacted on trade and investment flows between Australia and its trading partners?

2-  How does preferentialism impact on Australia’s ability to progress a less discriminatory and more democratic and development-friendly international trade regime? For example, given Australia’s historic leadership role in advocating for agricultural liberalisation multilaterally, what has been the impact of its acceptance of modest market access concessions in agriculture under the AUSFTA? How is Australia’s involvement in WTO-plus plurilateral agreements (such as the Anti-counterfeiting Trade Agreement) and in preferential trade and investment deals (such as the Australia-Hong Kong Bilateral Investment Treaty), impacting on its ability to pursue important developmental and social goals, such as the right to introduce plain packaging for cigarettes?

3-Is Australia’s current involvement in Trans Pacific Partnership negotiations a desirable way forward, or would Australia be better served by seeking involvement in China-centric trade negotiations? The recent APEC meeting in Bali makes this a timely issue, given the renewed commitments made at the meeting by the Australian Prime Minister and the United States to moving the TPP Agreement forward.

4- In what ways can trade policy help to advance Australia’s commitment to addressing climate change? For example, Australia played a major role in achieving the recent APEC statement on free trade in clean-tech goods. Should Australia seek to extend this commitment to multilateralism in the specific sector of green goods at forums like the G20, and ultimately the WTO?

5- How can trade policy serve to buttress Australia’s role in the Asian (or Asia-Pacific) Century? This will include an examination of the role of trade policy in advancing Australia’s wider concerns in the region, such as the promotion of regional economic development.

Participants

Participants include leading and emerging scholars of trade-related issues from a wide range of disciplines. Professors Ann Capling, Bryan Mercurio, John Ravenhill, Michael Wesley and Dr Maryanne Kelton will speak to the geo-strategic and geo-economic implications of trade. Professors Andrew Mitchell, Thomas Faunce and Dr Deborah Gleeson will address trade and health policy. On trade and Intellectual Property: Associate Professors Kimberlee Weatherall Hazel Moir, Anna George, and Luigi Palombi. On trade and climate change mitigation strategies: Professor John Mathews. On trade negotiations and democratic processes: Dr Patricia Ranald. On the economic impacts of PTAS: Dr Shiro Armstrong. On trade and procurement: Dr Liz Thurbon. Exciting new voices also include David Adamson, whose background in agriculture and economics informs his unique insights into the relationship between trade and biosecurity in Australia, and Ms Mitali Tyagi, Senior Counsel at the Australian Attorney General’s Department (Office of International Law) who will share her insights into the evolving relationship between preferential trade deals and Investor-State Dispute Settlement processes. We also plan to be joined by DFAT representatives.

It is planned that outcomes of the workshop will be published as a special issue of the Australian Journal of International Affairs. Negotiations with the editorial board of the Journal are currently in train.

References

Department of Foreign Affairs and Trade (DFAT) 2012: Trade at a Glance 2012, DFAT, Canberra. Available at: http://www.dfat.gov.au/publications/trade/trade-at-a-glance-2012.html

(Accessed 4 October 2012).

Australian Bureau of Statistics (ABS) 2001: Year Book Australia: Trade Since 1990. ABS, Canberra. Available at: http://www.abs.gov.au/ausstats/abs@.nsf/Previousproducts/1301.0Feature%20Article532001 (Accessed 4 Oct 2012).

Event Schedule

Supporting Documents

Contact Information

Academy of the Social Sciences in Australia

    ABN: 59 957 839 703
  • Location: 26 Balmain Crescent, Acton, ACT 2601
  • Postal: GPO Box 1956, Canberra, ACT 2601
  • +61 .2 62491788
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  • secretariat@assa.edu.au

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