Industry says free trade is good value

15 May, 2017 04:00 AM
nternational trade is responsible for an estimated 40pc of Australian gross domestic product last financial year.
nternational trade is responsible for an estimated 40pc of Australian gross domestic product last financial year.

DON’T listen to the rising chorus of free trade doomsayers – they do not represent the best interests of Australia’s average income earners and certainly not farmers, say Australian industry groups.

Since United States president Donald Trump’s trade-bashing election strategy helped land him in the White House early this year the National Farmers’ Federation (NFF) and other leading industry groups have been worried too much attention is being paid to anti-trade scare campaigns overseas and at home.

One in every five Australian jobs, from farmers and farm sector workers to truck drivers and university lecturers, depends on trade according to the NFF.

The protectionists’ pitch for tariffs and “local jobs first” might help win US elections and curry favour with frustrated voters in Europe, but facts compiled by the five key industry bodies argue Australians are actually better off because of tariff cuts at home and abroad.

International trade generates about 40 per cent of Australian gross domestic product (GDP), or about $662 billion last financial year.

Despite the loss of a big segment of our traditional manufacturing sector in the past two decades, tariff cuts have added up to 3.5pc to Australia’s GDP in the past two decades.

That’s worth between $2700 and almost $4000 a year in extra income to the average family.

The NFF partnered with four other industry associations, including the Business Council of Australia and the Australian Chamber of Commerce and Industry, to highlight the gains made following free trade deals with Japan, China and South Korea, and warn against complacency or the erosion of Australia’s trade gains.

“Resting on our trade achievements or letting the discussion get distracted by the wave of protectionist sentiment from North America and Europe puts at risk what we know to be a valuable part of Australia’s economy,” said NFF chief executive officer Tony Mahar.

“In particular, hearing Trump talking about re-negotiating trade deals and changing the tone of the trade conversation is a bit worrying.”

Tougher US attitudes to free trade, including quitting the Trans-Pacific Partnership (TPP), were frustrating given Australia was a significant US trade partner and both nations had long worked co-operatively on the global scene to open up trade opportunities.

“But we recognise there’s generally a lot more discussion about these issues and we need to accept and engage that sentiment with the facts,’’ Mr Mahar said.

He said if all G20 nations halved their trade barriers, Australian exports would leap 28pc and GDP would rise almost 7pc.

The flow-on benefit would likely lift wages by more than 4pc and employment about 2pc.

G20 economies include Australia, Argentina, the US, Germany, Russia, Italy, the United Kingdom, Japan, South Korea and Indonesia.

Mr Mahar’s observations coincide with Meat and Livestock Australia (MLA) seizing a chance arising from Britain’s Brexit decision to push forward a case for non-discriminatory market access for Australian beef and lamb.

MLA managing director Richard Norton said Brexit and the UK election next month had added new urgency to progress our red meat trade ambitions, given the UK’s new trade policy – including new quotas and tariffs – could be set over the next six months.

Business Council of Australia chief executive officer Jennifer Westacott said at a time when the benefits of trade were being questioned by some, it was “crucial political and business leaders constantly challenge the myths”.

“If it weren’t for open trade, Australians would be much, much poorer,” she said.

“Real per capita incomes have doubled in the past 40 years.

“The future prosperity of many farm businesses will rely on partnerships with larger companies who can help them access new export markets and transform their raw produce into value-added products with a clean, green image that competes with cheaper, lower quality products from elsewhere.”

NFF competitiveness committee chairman Dan Cooper said although the new Trump administration had moved swiftly to scuttle support for the contentious TPP, which promised to scale back tariff barriers among 12 Asian, North American and South American countries, Australia should push harder to complete new trade deals with the likes of India, the UK, the European Union and other Asian neighbours.

Just as important, however, was convincing the nation’s trade partners to prune back non-tariff barriers based on complex technical and phytosanitary rules which frequently blocked Australian food exports, or added unfair regulatory costs to meat, grain and horticultural produce traders.

NFF’s “10 trade facts” campaign argues exporting makes businesses more efficient with economies of scale to support more investment in value-adding of food, from meat processing to wine making.

Exporters also pay employees an average 11.5pc more than non-exporters and created jobs which are less likely to suffer business failure.

Mr Cooper, a graingrower from Caragabal in central New South Wales, said farmers rarely talked about free trade at the pub, but few underestimated the value to agriculture of the past 20 years’ build up in trade activity.

He said farm industry bodies and government had to work particularly hard to reaffirm the importance of those gains to the wider community, and lobby our trade partners to remove non-tariff barriers.

Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media


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