Less secrecy at the FTA table

27 Jul, 2015 02:00 AM
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Trade Minister Andrew Robb.
The scope for removing domestic impediments to trade is very far from exhausted
Trade Minister Andrew Robb.

OPINION: AUSTRALIA is relying on free trade agreements as a major boost to national productivity.

Trade Minister Andrew Robb describes critics of his approach to free trade negotiations as "anti-free-trade groups".

"They are the same groups ... who are always there. They are anti-trade; they want the world to stay as it is."

The Business Council of Australia strongly supports Robb's conduct of trade policy and has challenged the Productivity Commission to design "a model preferential trade agreement which could then provide a useful benchmark to measure FTAs against".

The criticism which Robb complains about results from the secrecy surrounding his negotiations and the limited accountability for the outcomes which follows from that.

Robb argues that public involvement would compromise his negotiating position. However, there is an uncomplicated form of governance that meets the minister's need for secrecy during negotiations and the Business Council's search for a model against which to judge future FTAs.

There are two sources of national gain from trade negotiations. One results from greater access to foreign markets. This is the lesser of the two. It is also the Department of Foreign Affairs and Trade's (DFAT) only goal in negotiations. At present our negotiating agenda is simply a market-access wish list. The second, and larger, gain requires Australia's negotiating agenda to be consciously structured to open markets for our least competitive activities - including those protected by "behind-the-border" barriers.

In all trade negotiations - whether in multilateral, regional or bilateral form - each participating country provides access to its own markets in return for access to the markets of the other participating countries.

When we fail to consciously structure our own market-opening offers to improve domestic efficiency, by reducing the barriers protecting our less competitive industries, we forgo the major gains from negotiations.

Mr Robb and the DFAT do not take issue with this. To do so would deny the logic behind engaging in international trade. Instead, they have either ignored the issue all together, or argued that Australia now has few or no barriers left to remove, having exhausted the scope for further reform by the unilateral reductions in the 1970s, 1980 and 1990s.

Removing impediments

The facts, however, do not support the notion that we have exhausted the scope for domestic reform. The Productivity Commission (PC) has reported that government assistance to industry was over $17 billion in 2013-14. There is also an unknown quantum of impediments to trade in non-border forms. And one need only reflect on Prime Minister Abbott's fortress Australia policy on dumping to recognise that the scope for removing domestic impediments to trade is very far from exhausted.

The change Abbott proposes to existing arrangements on dumping will require potential importers to satisfy the responsible minister (in advance) that their imports will be at prices that fully absorb costs in the country of origin - an impossible condition to meet.

These arrangements will make it more difficult for industries relying on imported inputs to remain competitive. And the negative effect on our economy's performance can be gauged by the frequency with which dumping action against our Asian trading partners is taken now, under existing dumping procedures.

Australia already has form in this area. Austrade encourages Australian producers to export at prices that cover marginal costs. When our Asian partners do that we call it dumping. When we do it we call it marginal pricing.

The policy stand-off between DFAT and the PC needs to be resolved, because of the implications for national productivity.

Going back to Robb's concern about secrecy, there is no conflict between his need for secrecy during negotiations and a process that introduces transparency and a public input to our negotiating agenda. Both can be met by governance arrangements in which the PC conducts a public inquiry on Australia's market-opening offers before negotiations get under way.

The PC's inquiry procedures provide for wide public participation. Its inquiry would allow all interested parties - and not just those with privileged access to negotiators - an opportunity to influence the offers our officials take to the negotiating table.

Under these governance arrangements, the PC's report following its inquiry would be released only when negotiations are complete. It would thus provide a public input to Australia's market-opening offers and, subsequently, a basis for parliamentary and public scrutiny of the outcome for Australia. These arrangements would preserve secrecy during negotiations, while providing a public input to our negotiating agenda and a basis for parliamentary and public scrutiny of the outcome before future agreements are ratified.

Why is this so difficult for Andrew Robb, his departmental advisers and the BCA to accept?

Bill Carmichael is a former chairman of the Industries Assistance Commission.

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READER COMMENTS

Jock Munro
27/07/2015 5:32:22 AM

Andrew Robb is a full member of the condescending urban political elite and is a true believer in the market and has no issue with the destruction of Australian agriculture by cheap imports and the sale of our farms and agri business to foreigners including state owned entities.
Agribusiness
27/07/2015 10:37:31 AM

Openness and transparency is always the best policy. The more people a policy impacts, then the more that principle should apply. There are many ways to consult, even with legal restrictions (by conveying what principles are under negotiations, not the detail). Broad based agreement on principles is far more likely to result in all-party support...hard to achieve that without consulting with genuine endeavour.
Rob Moore
27/07/2015 11:39:58 AM

We are meant to put our faith in these people??? I spoke at length to a youngish fellow from the ACCC who sat on the panel that approved the JBS takeover of Primo( last year+ the Andrews Meats t/o). I was staggered at how little this fellow knew about all things -meat beef and marketing. He had never heard of the PSA (Packers&Stockyard Act) of the US that was delivering two+ time for their prod /over us! He didn't know that JBS DOUBLED (+119% in fact) -their NET profit globally in 2014! etc etc. If people like that are overseeing TPPneg- we're all STUFFED- big time.The ignorance is sickening
newbroom
27/07/2015 1:15:35 PM

Ignorance and fact free zone commentators. the FTA has just again been endorsed by NFF, ACCI (Chamber of Commerce and Industry) and Minerals Council. It still needs to be fully ratified and debated in parliament. Scribbling about unrelated matters or pushing barrows unrelated to FTA is tiresome, unhelpful and a complete distraction. This indicates inability to articulate anything meaningful. Abuse of personalities is also a cheap and unnecessary way to go.
wtf
27/07/2015 2:01:07 PM

Newbroom with a comment like that us sound suspiciously like your on the public payrole? I noticed u support freign investment, is that because u work for a dept dependant on stamp duty?
Victor
27/07/2015 2:30:39 PM

Andrew Robb's failure to provide any transparency is in complete contrast to the United States. All Australians are entitled to know what is being negotiated and the Productivity Commission has the resources to review the draft. What is Andrew Robb scared of and whose narrow interests is he serving?
newbroom
27/07/2015 3:52:29 PM

wtf, way off mark as usual. Your aim is about as scrambled as your logic and ability to understand what is good for the country. I am fiercely independent and on no payroll of government but I do understand trade and investment.
genazzano
27/07/2015 4:20:45 PM

Jock 100% correct
genazzano
28/07/2015 7:58:28 AM

The TPP: "Deal Isn't About Trade, It's About Corporate Control
genazzano
28/07/2015 8:01:31 AM

TPP - it's is mostly not about trade - Only 5 of the 29 chapters are about traditional trade - Julian Assange
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