Formal trade policy needed to guide future negotiations

“The release of details of the Trans-Pacific Partnership (TPP) late last week, which is already drawing criticism, is a timely example of where a formal trade policy that sets the parameters for all negotiations, coupled with a more transparent negotiation process, could help reduce uncertainty,” CEDA Chief Executive Professor the Hon. Stephen Martin said when releasing Global networks: transforming how Australia does business.

“While governments trumpet the economic benefits of FTAs that will flow to Australia, whether in trade access or increased employment opportunities, a criticism is that these agreements are negotiated in secret.

“It is often overlooked that these significant agreements have to be ratified through parliament with little time to assess for unintended consequences, and as always with complex agreements, the devil is often in the detail, not the headline.

“An overarching trade policy for Australia that sets out how agreements fit within a single strategic economic framework would provide some certainty that each agreement is negotiated within certain parameters and with a certain direction in mind.”

Professor Martin said such a trade policy should include a component that provides direction on the future of Australia’s trade liberalisation measures and ensure that appropriate governance protocols are part of the FTA approval process.

“Another area that has drawn criticism with the TPP is the clause around foreign companies being able to sue Australian governments if they introduce laws they say have harmed their investments,” he said.

“While there appears to be some exceptions in the TPP for tobacco control laws, our research has found that FTAs should not include any investor-state dispute settlement clauses because they erode national sovereignty and they can create significant liabilities for the Australia government.”

Professor Martin said the other important aspect with any future trade negotiations was to ensure that these agreements do not create issues with key trading partners outside or excluded from an agreement.

“Put simply, these agreements must be about trade not foreign policy,” he said.

“Technological advances in the last 20 years, which are likely to continue at an even faster pace in coming decades, have rapidly changed how business is done across the globe

“This technology revolution has opened up new opportunities, networks and trading partners.

“In a global economy we need to be, in the words of Prime Minister Malcolm Turnbull a nimble and smart economy, and we need to rethink what trade policy options can open up new opportunities.”

Professor Martin said another option raised in CEDA’s latest research was for the Federal Government to consider free movement of workers agreements with key countries, such as the one Australia currently has with New Zealand.

 “Just as the Trans-Tasman Travel Arrangement enabled free movement of workers and expanded the pool of skills available in both Australia and New Zealand, Australia could benefit from actively seeking the free mobility of labour between other appropriate countries,” he said.

“Obviously Australia would need to proceed with caution but this type of agreement does have potential to deliver benefits.
“Singapore, given its relative closeness to Australia and its role as a regional hub, would be a good example of where this type of agreement could have benefits for both countries.”

The CEDA research report Global networks: transforming how Australia does business can be downloaded here.

Speakers in Melbourne include: Victoria University Vice-Chancellor Professor Peter Dawkins; REA Group CEO Tracey Fellows, Efic Managing Director and CEO, Andrew Hunter; and Commonwealth Bank Managing Director, Industrials, Food, Beverage and Agriculture, Peter McGregor.

Speakers in Perth include: DFAT WA State Director Andrea Gleason, Geoff Raby and Associates Founder and former Australian Ambassador to China, Dr Geoff Raby and UNSW Australia Business School JW Nevile Fellow in Economics and The Airport Economist, Tim Harcourt.

The report was launched in Melbourne and Perth (9 November) with events also in Sydney (11 November) and Adelaide (13 November).