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Economic diplomacy brief: Corporate Australia puts its stamp on foreign policy

Business group submissions for the Foreign Policy White Paper will provide the first big test of the Australian Government's 'economic diplomacy' rhetoric.

Photo: Flickr/Phil Norton
Photo: Flickr/Phil Norton

When the federal government embraced the concept of economic diplomacy back in 2014, the key pitch was that listening more to business would take foreign policy beyond traditional 'peace and security' to 'peace and prosperity'. With the country's peak business groups having provided submissions for the Australian Government's Foreign Policy White Paper, that rhetoric now faces its first big test.

The calls for a strong domestic economy (read: a lower corporate tax rate and less regulation) to be the basis of a strong export economy might seem like the usual boilerplate. But dig deeper and it's apparent that corporate lobbyists have produced an eclectic mix of ideas that don't necessarily provide easy answers for the White Paper team to take up the 2014 pitch.

Taking care of business

Take new institutions, which can often be seeded in the fine print of an influential white paper. The Australian Chamber of Commerce and Industry has placed its bets on a new Australian Centre for International Trade, which would link business to research and educational institutions to foster debate on trade.

Meanwhile, the Minerals Council of Australia, with the longest and most research-heavy of these submissions, aimed at the heart of national decision-making with support for a National Economic and Security Council, which would bring together ministers, security officials and top business executives. Executives will apparently provide the financial insight instead of the usual econo-crats.

Meanwhile the Business Council of Australia would remake the institutional landscape. It backs an independent Australia-China Commission (modelled on the US Fulbright Commission) to build better bilateral links; a Foreign Investment Advisory Council to bring together officials responsible for promotion and regulation of investment; a formal role for the Department of Foreign Affairs and Trade in any relevant domestic policy; and a new regional security forum in addition to the existing East Asia Summit and the ASEAN Regional Forum.

By contrast, Australian Industry Group is comparatively modest on this front by concentrating its institution-building on a more formal national brand to be used by business, investment, tourism and education, and which would be mandatory for an agency using federal funds for international purposes (state agencies and industry associations would be encouraged to use the brand). Chamber of Commerce has also taken up this theme by backing the existing 'Australian Made, Australian Grown' logo, while the Business Council simply favours a regular coordination meeting with the states.

Focus on Asia

The business groups have generally come down quite strongly in favour of making Asia the focus of foreign policy, due to both its proximity and expected economic growth. Support for US rebalancing to Asia receives a strong but secondary level of attention. Australian Industry Group stands out here, by acknowledging Asian economic growth but remaining geographically neutral.

The Minerals Council wades deepest into the prospects of US-China conflict after noting that the Asia Pacific 'is irrevocably part of Australia's destiny as a nation'. It says the White Paper should provide 'guidance on how Australia expects our relationships with both the United States and China to evolve over the next decade or more, and sketch out what influence we may have unilaterally or in concert with others in helping to support their relationship. In doing this, it would be valuable to acknowledge that there is strategic competition and growing rivalry between our security and economic partners.'

The Business Council says international security has become more important to business, that Australia should 'double down' on its engagement with Asia and that the Indo-Pacific is 'Australia's home and future'. But it warns that we should not forget to enhance links with other regions. Chamber of Commerce emphasised the 'untapped opportunity' the Indian Ocean provides.

These diverse ways of viewing the same global landscape have led to some quite different recommendations on how to implement foreign policy.

The Business Council says the Australian Government should use the new model of the wide-ranging Comprehensive Strategic Partnership with Singapore to create new relationships with India, Indonesia and Papua New Guinea, even though they have more diverse economies and societies than Singapore. It also says more attention should be given to the Asia Pacific Economic Cooperation (APEC) forum and the Indian Ocean Regional Association (IORA). The Minerals Council, meanwhile, prioritises conventional trade negotiations with India and Indonesia; wants a low-emission coal power plant initiative to underline Australia's importance as a regional energy supplier; and emphasises the need to engage with China's Belt and Road infrastructure initiative, a recommendation that is at odds with the Australia's current cautious stance. Chamber of Commerce also backs engagement with the Belt and Road initiative.

Many routes to trade expansion

Trade strategy produces the most disparate collection of responses from the business groups, underlining the big challenge facing the White Paper in this field. The Minerals Council backs virtually every available option without clear prioritisation: it argues for supporting the one recent multilateral success (the World Trade Organization's Trade Facilitation Agreement) in regional developing countries; continuing the recent focus on bilateral agreements; somehow realising aspects of the Trans-Pacific Partnership; accelerating both the Regional Comprehensive Economic Partnership (RCEP) and the Pacific Agreement on Closer Economic Relations (PACER); and supporting broader Asia Pacific trade architecture.

The Business Council also takes a slice of everything, with slightly more enthusiasm for RCEP (minus PACER); its ambition of applying the Comprehensive Strategic Partnership strategy to India, Indonesia and PNG; and a recommendation to grab some low-hanging fruit from the likes of Hong Kong and post-Brexit Britain.

The Chamber of Commerce and Australian Industry Group give more attention to structural rather than geographic trade architecture, with both highlighting the need to devote more attention to the rules for e-commerce and protection of data in cross-border business. Rather than focusing on new agreements, Australian Industry Group says more attention should be devoted to making sure business understands existing agreements, and that participation in global value (or supply) chains is equally important as trade barrier reduction. The Chamber of Commerce argues for more formal business consultation on new trade agreements, independent assessment of whether they are worthwhile and doing away with the single-undertaking approach to sealing a trade deal.

While the business groups variously favour DFAT having more say in domestic policy to advance international interests, Australian Industry Group's submission underlines how complex this might be in practice by extending the DFAT gamut to innovation and research policy, the Entrepreneurs Programme, and structural adjustment policy.

Different approaches on foreign investment

The Business Council, the Minerals Council and Chamber of Commerce share a common concern about growing restrictions and different thresholds for inward foreign investment, especially in agriculture and land. But even so, the Business Council wants the new Foreign Investment Advisory Council, the Minerals Council wants better statistics on the contribution made by foreign-owned business and the Chamber of Commerce wants separate processes for dealing with security and competition issues.

In sharp contrast, Australian Industry Group focuses much more on ensuring Australian business can operate abroad, with suggested measures including more Export Market Development grants, an offshore investment award and more DFAT action against impediments to companies operating offshore.

As the development aid program again comes under fiscal and nativist political pressure, business is giving relatively strong support to this arm of soft power. The Business Council opposes any more cuts and encourages more spending in sync with improvements in Australia's budgetary position. Australian Industry Group supports Australia's capacity-building approach to aid, in contrast to favouring domestic industry, but does also argue that aid programs should be aligned with industries that match Australia's domestic strengths so that 'behind the border' barriers to Australian exports can be reduced. Chamber of Commerce emphasises fiscal consolidation at home over more aid spending, wants more focus on aid for trade and would roll all international climate change spending into the overall aid calculation.

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