Sunday 22 Apr 2018 | 22:30 | SYDNEY
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Australian trade, investment & economy

Why DFAT is wrong on the opportunity cost of FTAs

Last month the Department of Foreign Affairs and Trade (DFAT) secretary, Peter Varghese, had this to say about Australia’s participation in the global movement toward preferential free trade agreements (FTAs): To not participate would carry with it a significant potential opportunity cost, as

Douglass North and the Trans-Pacific Partnership

Now that the terms of the Trans-Pacific Partnership (TPP) have been agreed, the participant countries have to decide whether to ratify the deal. In assessing the benefits, where might we turn for guidance on the economics? First thoughts might go to David Ricardo, father of one of the few ideas

TPP: Australia should bring in China and Indonesia

The negotiators have finally reached agreement on the Trans-Pacific Partnership (TPP). The US Congress might yet be a stumbling block, but the many US interest groups which stand to benefit will influence that outcome. Other TPP countries have to get legislative approval too. Whatever the

TPP: Not worth the risk

After marathon talks, the Trans Pacific Partnership has been sealed. The stage is now set for some fantastic battles to get this through national legislatures. I'll leave it to others to count the numbers. I've written previously about my concerns regarding the TPP, and agreements like it. I won't

Reader riposte: Australia-India nuclear deal

By Ron Walker, currently a visiting fellow at the Asia Pacific College of Diplomacy at ANU. Ron is a former DFAT officer who worked for 20 years in Australia's nuclear diplomacy. Among the positions he occupied were the first Head of the Nuclear Safeguards Branch and Chairman of the Board of

Australia's Pacific aid budget spared from serious cuts

By Jenny Hayward-Jones, Director of the Lowy Institute's Melanesia Program, and Phillipa Brant, Research Associate. The Pacific Islands region has been spared any serious impact from cuts to the Australian aid program revealed in budget documents released yesterday. Australia's bilateral program

The secretive TPP: Never again

One aspect of the Trans-Pacific Partnership (TPP) that has come under criticism is the lack of transparency in the negotiating process. Could a more transparent model be used for these kinds of negotiations? In other areas of official decision-making, recent decades have seen a big shift towards

Economic history makes a comeback

When the economy is going well, we talk about the bright future. Why is it only when it is going bust that we look to the past? The Economist recently published an interesting article on the resurgence of economic history after the global financial crisis. No-one who reads about the international

Is capital globally mobile?

The Australian Treasury has been busy. On top of its usual output, the last 18 months have included the Financial System Inquiry, hosting the G20, the 2015 Intergenerational Report and the tax white paper. All this while eliminating one-third of its workforce! But today I'd like to focus on the

Why Australia needs Austrade

Bruno Mascitelli is editor of the newly released The Austrade Story: Export and Investment Facilitation Under the Microscope. The Australian Trade Commission, or Austrade as it is commonly known, turns 30 in 2016. It came into existence in 1986 as a statutory government agency for export promotion

The TPP and intellectual property rights

Earlier posts have discussed how the Trans-Pacific Partnership (TPP) – if it comes into force – will be part of the process of setting global rules across a wide range of issues, including intellectual property rights. The just-released Harper Competition Policy Review notes the importance

Australia needs a modern and globalised tax system

The Abbott Government will shortly release a discussion paper on the Australian tax system. It will be the first step towards the much anticipated tax white paper. International factors should figure prominently in the white paper — specifically, how to ensure that Australia has a resilient tax

UK budget: A test for 'expansionary austerity'

The 2008 global financial crisis provided a rare test-bed for macroeconomics — an opportunity to sort out some old controversies. One issue dominated the debate during the recovery phase: with national budgets and official debt pushed up by the crisis, should budget austerity be imposed as a

Negative interest rates: We are flying blind

We live in strange economic times. Depositors in Denmark are paying interest to their banks and borrowers are being paid when they take out a loan. The basic principles of finance have been turned on their head. One commentator has noted that 'something economists thought was impossible is

Julie Bishop goes to Tehran

To everyone's surprise, it was announced on Monday that Australian Foreign Minister Julie Bishop intends to travel to Tehran in April 2015. The visit isn't about the nuclear negotiations with Iran. After all, while Australia would rather not see Iran go nuclear, it isn't exactly a foreign policy

A currency war would be no bad thing

The European Central Bank has finally begun to engage in quantitative easing. The euro depreciated on the news, which is good for the Europeans but bad for the rest of the world, right? It's another currency war – a zero sum game leading to, at best, nothing but debased currencies . At least that'

Australia is not meeting its IEA oil reserve targets

The plunge in the global oil price is a hot topic. Between June 2014 and January 2015, the price of crude has dropped by 57%. Most of the attention has been on the boon for consumers, with a litre of petrol in some parts of Australia now counted in cents, not dollars. But while Australia is

Why Peter Thiel is wrong about monopolies

A few weeks ago Sam Roggeveen quoted PayPal founder Peter Thiel, who argued that competition is over-rated and monopoly would enhance innovation. We shouldn't be surprised that business people are in favour of monopoly. In 1776 Adam Smith observed: People of the same trade seldom meet together,

Beyond the Boom: A response to John Edwards

Senior economic policy makers, economic analysts, academics and commentators have been concerned about the daunting challenge of structural and budget adjustment facing Australia due to the decline in mineral prices from the levels reached in the boom period of 2003-04 to 2011-12. In Beyond the

Beyond the Boom: A response to Jonathan Pincus

In a paper published recently on the Minerals Council of Australia website, Adelaide-based economist Jonathan Pincus takes issue with some of the calculations I make in my Lowy Institute Paper Beyond the Boom. He makes a number of criticisms, but the big one is of my estimate of the income gain from

Australian Customs: A bigger role to play in trade

In a new Lowy Institute Analysis launched today, Nicholas Humphries, the Australian Customs and Border Protection Service Fellow at the Lowy Institute, examines how Customs can increase Australia's trade competitiveness at a time when goods and services are increasingly produced across borders in

State-owned enterprises: A strange fixation

Mike Callaghan is spot-on in arguing that Australia's foreign investment policy needs a wider reassessment than simply looking at limits on state-owned enterprises (SOEs). Let's try to take this a bit further. This fixation with SOEs is a peculiarly American priority seen also in the Trans-Pacific

Are we measuring international trade correctly?

Perhaps the most fundamental change in international trade in recent decades has been the development of multinational 'supply chains'. The production process has been 'unbundled', with different stages of production taking place in different countries. An iPad is assembled in China, but only $10 of

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