Deadlines key to setting up successful trade deals
The Australian 11 July 2019
Two Australian ideas — setting timetables for endless trade deal negotiations and having “all our irons in the fire” by running a multitude of concurrent negotiations — could deliver a key trade pact.
But why trade? As a nation that relies upon exports for its prosperity, Australia must have the best trade agreements if we are to maintain our run of 28 years of growth.
Our domestic market is small, so we need to sell our goods and services abroad. Put simply, we are a trading nation that sells our ideas, apples and iron ore for our survival and prosperity.
Few Australians would have heard of the Regional Comprehensive Economic Partnership (RCEP) until they heard Prime Minister Scott Morrison discuss it at the recent Group of 20 meeting in Japan.
Trade deals like RCEP are rarely the most exciting dinner time subject!
Yet RCEP would be the largest trade deal in history, for it covers 30 per cent of the globe’s economic output and close to half of the world’s population.
This deal would open up new opportunities for Australian exporters such as moving into the exploding Indian market.
Clinching the deal is another part of our plan to keep Australia growing.
Historically, Australia has been a canny and innovative trade leader as a middle power and these two Australian innovations now make the deal more likely.
Firstly, after almost a decade of discussions, a timetable was proposed late last year to conclude the deal by the end of this year.
While a timetable to deliver a major project may be common in the private sector, trade deals, negotiated by governments, can drag on for years without an end in sight.
When Labor was last in office, they inherited two bilateral trade deals former PM John Howard had kicked off: Japan and China.
Labor spent the six years between 2007 and 2013 unable to deliver either. The Coalition delivered both agreements within 15 months of taking government in 2013.
To generate movement, Andrew Robb, Tony Abbott’s trade minister, told me in an interview for my short book Fit for Service:
“I put Investor State Dispute Settlement and the removal of our car tariffs to the Koreans and we got the deal. Twelve hours later, the Japanese called. The Japanese did the best deal they’ve ever done. The only agreement with an agricultural nation.”
As well as removing two barriers to Australia sealing two crucial trade agreements, Robb’s prime minister, Tony Abbott, put a deadline of 12 months when he took office in September 2013.
That’s why PM Scott Morrison’s statement on timing last week in a key foreign policy speech is significant.
“This year we hope to conclude the Regional Comprehensive Economic Partnership, an agreement that includes 16 economies and accounts for about one-third of global GDP.
“To conclude the agreement when leaders meet in Bangkok in November this year, I would
urge leaders to send their trade ministers to the meeting next month in Beijing with a clear mandate to deal.”
If history is any indication, Australian-proposed timetables work.
Secondly, Australia has kept “all irons in the fire” to increase the probability of landing a trade deal.
Keeping all options on the table strengthens our negotiating position but also weakens the position of groups wanting to stop trade liberalisation.
Australia has shown there is a pathway to trade liberalisation even if one group or nation tries to slow or stop a deal.
We have shown that running bilateral and multilateral negotiations concurrently has actually delivered liberalisation in our region.
This approach of “walking and chewing gum” has been a very effective Australian trade play of recent years.
When the Trans-Pacific Partnership (TPP) was being negotiated, Australia delivered significant bilateral trade deals under the Coalition with China, Japan, Korea, Hong Kong and subsequently Indonesia.
Perhaps even more remarkably, our government, along with Japan’s Shinzo Abe, saved and ultimately delivered the TPP when US President Donald Trump walked away in 2017.
The rock band Queen named a song after our successful trade policy. It was called “I want it all.”
It has worked. Trade has kept Australia growing.
Trade Minister Simon Birmingham said in March that trade contributed “an estimated one-quarter of (Australia’s) economic growth alone over the last five years”.
RCEP is a no-brainer. The membership includes 10 out of Australia’s top 15 trading partners, accounting for over 60 per cent of Australia’s two-way trade, and over 70 per cent of Australia’s goods and services exports.
Andrew Bragg is a Liberal Senator for New South Wales