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Friday 18 Aug 2017 | 13:32 | SYDNEY
Friday 18 Aug 2017 | 13:32 | SYDNEY

Australia's election: The trade debate

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COMMENTS

1 November 2007 10:07

The Lowy Institute hosted a debate on trade policy on Wednesday (an mp3 of the event is here) that was genteel by Australian parliamentary standards. There was plenty of disagreement and the odd partisan jab, but Trade Minister Warren Truss (Nationals) and the Labor Party opposition trade spokesman Simon Crean (right of picture) were gentlemanly and polite throughout.

As to substance, the standout feature was the differing perspectives on the utility of bilateral free trade agreements (FTAs). The Liberal-National Government has made such agreements a feature of its 11 years in office, and Truss boasted that several more — with Japan, China, ASEAN, GCC, South Korea, India and Malaysia among others — were in various stages of negotiation.

Truss defended this emphasis on FTAs on what he called positive and negative grounds. The positive value of FTAs was in the liberalization of trade with individual partners, which expanded the market for Australian goods. The negative value of FTAs, said Truss, lay in the fact that if we didn’t sign them, someone else would, disadvantaging Australia in the process. Revealingly, when Truss referred at one point to other countries signing FTAs, he called them preferential trade agreements, which is really what they are.

Truss’ negative defence of FTAs suggests Australia is engaged in an international FTA race. This must break the hearts of liberal economists, who would probably see this as a race to the bottom that will leave the world with a mess of preferential deals that actually set back trade liberalisation. But it’s hard to escape the logic of Truss’ argument that if we don’t sign such deals, others will. 

Crean said he was all for FTAs, but that they shouldn’t clash with the principles of multilateralism, a fine idea that will be very hard for any Government to achieve with larger FTA partners like Japan. The Doha round of World Trade Organisation negotiations was still the main game, Crean said, and some of the Government’s FTA proposals damaged the ultimate goal of getting agreement on Doha. Crean also called for ‘industry plans in strategic sectors’, which he insisted wasn’t protectionism but is surely still a way for governments to pick winners.  

A footnote: both men talked about exporting as if it was an end in itself. But basic economics tells us the main reason to export is that it allows you to buy imports. Is it politically incorrect to say this? Do politicians see imports as emblematic of greed and debt, and do they therefore avoid the subject?

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