How to take advantage of FTAs
Playing politics
In addition to economic benefits, there are also clear political benefits to FTAs, which begs the question: How much of an FTA is for political, rather than economic, gain?
Willox admits that the process is tinged with politics. “It is an achievement of government to have an FTA. It is politically advantageous to put that notch on the belt. No government wants to be seen as protectionist,” he explains.
MacMillan is more pragmatic and believes that government motivations are pure. “I don’t think anyone enters into an FTA lightly. There’s so much work, it is so resource-intense to negotiate an FTA, so I think they’re based on merit,” he says. “It’s more about the process and the outcome than photo opportunity after the signing.”
The future of free
At the moment, Australia has six FTAs, five with countries—Chile, New Zealand, Singapore, Thailand, and USA—and one with a region, ASEAN. We are currently at the negotiation stage with China, Japan, Korea and Malaysia, and three multilateral parties: the Gulf Cooperation Council, Pacific nations, and the Asia-Pacific Economic Cooperation (APEC) countries. Feasibility studies have been completed for India and Indonesia, and Minister for Trade Simon Crean hints that his department will look into European and African nations in the near future.
In addition to these is the global one, the Doha Round (see The Doha Roundabout), on which the Federal Government places particular importance. “Doha is the priority, especially in 2010, with the instructions from G20 world leaders to conclude this year,” says Crean. But it is in the collective power of bilateral, multilateral and global FTAs where Australia will benefit most, he believes. “What is crucial is the quality of FTAs and what they set out to achieve. These are processes that complement each other, and they are all aimed at achieving trade liberalisation and greater regional economic integration.”
Willox believes Australia leads the way in this regard. “We’re at the vanguard of negotiations and we’re setting the tone for other agreements,” he says. “All the new FTAs being negotiated are signs the global economy is flattening out. Australia has to stand fast and not fall prey to behind-the-border barriers and backdoor protectionism. These agreements are good if everyone else is playing, and it sees a levelling out of the playing field. That’s where the advantage is.”
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