CEDA Report Explores the Benefits of Trade Liberalisation

On 10 November, Fragomen’s Regional Managing Partner for Asia Pacific, Robert Walsh, gave the Vote of Thanks at the launch of CEDA’s latest research report, Global Networks: transforming how Australia does business. The report examines the extent of benefits to Australia  from trade liberalisation, particularly in the wake of the China Australia Free Trade Agreement (ChAFTA).

A number of the papers in the Report note among the benefits for Australia the fact that export facilitation will not just flow to the more traditional primary industries such as agriculture. Critically, the agreement provides much deeper inroads for the sales of services into China than has been available in previous agreements. This is important because while services account for 75% of Australia’s economy, they comprise only 20% of our exports; with many of these service ‘exports’, such as the education of international students, actually delivered onshore.  The opportunity created by additional access to the Chinese market is that – even before ChAFTA – China was Australia’s largest destination for services exports.

With an expansion in trade in services comes greater need for labour mobility, and this needs to work both ways. Movement of workers gives businesses in both Australia and China the chance to make the most of the opportunities that ChAFTA presents. While the measures available for large projects (through the prospect of Investment Facilitation Agreements (IFAs)) has received the most attention, the concessions agreed by China – such as to allow trailing spouses and children to accompany Australian workers, the first time in any such agreement signed by China – makes the assignment of workers to China a more realistic proposition for small and medium enterprises. Having your own people on the ground and making local connections is critical to the long-haul commitment needed to successfully do business in China.

Several commentators in the Report also discuss the need for development of a new formal trade policy, to set parameters for the negotiation of future free trade agreements and hopefully avoid some of the issues seen during the parliamentary debate over ChAFTA. A clear trade strategy will also assist to grow Australia’s trade markets in Asia.

One of the more astute observations in the Report is the extent to which negotiation of these agreements is a diplomatic, rather than purely economic exercise, which can mean that the terms of the agreement are developed in an opaque process inconsistent with principles of open government. Of course, in the case of some of our trading partners, the extent of our diplomatic relations is our trade; and some degree of diplomatic confidentiality is critical to reaching an agreement. Nonetheless, the recommendation in the Report that trade policy and negotiations needs to be separated out from foreign policy is a sensible one that should be pursued further.

Given the apparent importance of trade in services to the Australian economy, any new trade policy must include a framework for labour mobility, both into and out of Australia. As we have seen with the IFA debate, this must include deliberate planning for the movement of workers in industries which tend to be people-intensive, but lower skilled.

For those interested in exploring this topic further, I commend CEDA’s report to you. It’s a thought-provoking read.