Australia Studies Benefits Of Free Trade Deals

by Mary Swire, Tax-News.com, Hong Kong

06 May 2010

The Australian Trade Minister, Simon Crean, has confirmed that the Department of Foreign Affairs and Trade (DFAT) has lodged its submission to the Productivity Commission’s review of Australia’s free trade agreements (FTAs).

On November 27, 2009, the Australian government requested that the Productivity Commission undertake a study into the impact of bilateral and regional FTAs on trade and investment barriers, and on Australia's trade and economic performance, including their contribution to efforts to boost Australia's engagement in the evolving regional economic architecture.

In undertaking the study, the Commission is to consider a broad range of issues, including the contribution of bilateral and regional FTAs to reducing trade and investment barriers and safeguarding against the introduction of new barriers. The Commission will examine the impact of FTAs on Australia's trade and economic performance, in particular any impact on trade flows, behind-the-border barriers, investment returns and productivity growth.

In the course of the study, the Commission is due to consult widely with the business sector, government agencies and other interested parties. It is required to issue its final report within 12 months.

DFAT’s submission discusses in detail the benefits achieved through Australia’s FTAs with the Association of Southeast Asian Nations (ASEAN), Chile, New Zealand, Singapore, Thailand and the United States. The submission also points to the potential of FTAs currently under negotiation with China, Japan, Malaysia, South Korea, the Gulf Cooperation Council, and the Trans Pacific Partnership, to deliver significant additional benefits.

Crean noted the significant contribution FTAs have made to Australia’s economic prosperity. “Trade is a vital component of Australia’s strong economy and trade liberalization is a sure-fire way to create jobs, boost productivity and lift real wages. Let’s not forget that one in five Australian jobs is trade-related,” he said.

“Australia’s comprehensive and high quality FTAs can be building blocks for multilateral and regional trade liberalization,” he added. “We have shown ourselves to be capable of pursuing our objectives in the Doha Round while at the same time negotiating FTAs which support these objectives.”

“My department’s submission recognizes the government’s activism on all trade fronts: at the multilateral level through the World Trade Organisation, via our participation in regional institutions such as the Asia-Pacific Economic Cooperation and through our pursuit of bilateral and regional FTAs, to create a self-reinforcing network of trade commitments to the benefit of Australian exporters, a cascade effect,” he concluded.

Specific FTA gains included in the submission are the removal by the Singapore-Australia FTA of restrictions on the number of wholesale banking licences available to Australian banks in Singapore, and the access granted for the first time for Australian business to the United States federal and state government procurement markets through the Australia-US FTA. In addition, the Australia-ASEAN-New Zealand FTA will eliminate tariffs on 96% of current Australian merchandise exports to ASEAN countries by 2020, with most of the liberalization achieved over the next few years.

It is said in the submission that Australia is committed to negotiating high quality, comprehensive agreements, even if such agreements can take longer to negotiate. The countries covered by Australia’s concluded FTAs accounted for 28% of Australia’s total two–way trade in goods and services in 2008–09. If Australia successfully concludes the FTAs currently under negotiation, this figure will rise to approximately 65%.

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