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FTAs Badly Failing Australia
By Michael Cebon | December 11, 2008
The Australian Parliamentary Library has released a Background Note analysing Australia’s bilateral Free Trade Agreements (FTAs) which shows how clearly destructive they have been (although the analysis is only from an economic perspective). It starts by noting that FTAs aren’t really that much about trade anyway:
Research suggests that FTAs offer little in the way of trade liberalisation and a shift to more liberal trade policies, particularly in agricultural trade. Rather, FTAs are used more often to promote other non-economic, diplomatic and regional interests
The report notes that thanks to the:
- Thai-Australia FTA, Australia’s trade deficit with Thailand has risen from $711 million to $3.5 billion.
- Singapore-Australia FTA, Australia’s trade deficit with Singapore has more than doubled, rising from $3 billion in 2004 to $6.4 billion in 2007
- US-Australia FTA, “exports to the US fell while US imports increased. Manufactured exports fell across most categories in line with the decline in exports. Australian exports of motor vehicles fell by more than 200 per cent from their peak in 2004. Exports of vehicle parts also fell sharply from their peak of $286 million in 2003 to $131 million in 2007. . . Australia’s $13.6 billion trade deficit with the US in 2007 is the highest trade deficit Australia has recorded with any trading partner.”
The report ends with a scathing assessment of the impacts of Australia’s FTAs:
The FTAs were followed by higher Australian trade deficits and a much slower rate of reciprocal export growth, as well as trade diversion as products were sourced from countries with which Australia has zero tariffs.
The potential risks of the current FTA model adopted by Australia are clear: structural trade imbalances leading to higher trade deficits favouring the FTA partner country, long phase-in periods for free trade (in particular agricultural trade), and negative impacts on the Australian economy which are related to trade diversion.
The anticipated gains for Australian exporters have fallen well short of estimates. Given the growing importance of FTAs in the Asia-Pacific economy, policymakers need to evaluate FTA models and their importance relative to the region’s most significant multilateral project, APEC.
So Mr Rudd (& Mr Crean), why are we negotiating more of these agreements?
Topics: Australian Trade Policy, Global Economics |
December 23rd, 2008 at 11:25 pm
Because they can’t go down in history as a group of politicians that didn’t find a way to screw Australia, can they?
January 14th, 2009 at 5:44 pm
Even at the time, nobody credible was expecting financial benefits to come to Australia from those FTAs. The FTAs were essentially a defacto part of strengthening relationships with those foreign powers.
(Terrible value for money though. Anyone sane would have just gifted the leaders with a fancy clock or an expensive painting or something.)
February 10th, 2009 at 4:00 pm
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