Opinion Pieces

Free trade is the best protection

Daily Telegraph 27 January 2017

Australia is a trading nation. As President Trump removes the United States from the Trans Pacific Partnership, or TPP, we must remain committed to free trade.

Free trade fuels Australian jobs and families, gives us better products and underwrites the national budget. Free and open markets allow Australians to export beyond our small domestic market. Frighteningly, our economy would be 25 per cent smaller without exports.

Now is the time to think global not local. The opportunities surrounding us have never been greater. By 2030, the Asian middle class will be three billion strong.

We should not be fooled by Trump who probably still believes in free trade. He is a deal maker and he just wants the sort of trade deals we already have with China, Korea and Japan.

There are four reasons why we must remain committed to free trade, with or without the TPP:

First, free trade is more important to Australia than the USA.  

Trade as a share of GDP is 28 per cent in the US, but 41 per cent in Australia.  

Second, trade creates a better life with more options.

Trade opens up markets for our exporters, puts downward pressure on the cost of living, expands the variety of goods and services that are available to consumers, and lowers input costs for Australian businesses.

For example a Toyota Yaris is now $800 cheaper and a Subaru Forester is $1000 cheaper because of our trade deal with Japan.

Third, trade delivers more jobs and opportunities for Australia. That's why the farmers, sugar cane growers and winemakers want the TPP deal regardless of Trump’s actions.

For example, under the deal tariffs on red meat in Japan and Mexico would be reduced. We'd have better access for sheep meat, wool, cotton, wine and dairy into Pacific countries such as Mexico and Canada where we have no trade agreement today.

As Mitchell Taylor of Taylor’s Wines said: “Taylors Wines supports the TPP and all (free trade agreements) as they enable us as a family business to access key export markets.”

Where we already have trade deals, there are great examples of Australian products landing on tables in Beijing and Tokyo.  

Australian exports of fresh table grapes to China doubled in the first six months of the China deal. Fresh table grapes had a tariff of 13 per cent heading in to China - that tariff has been reduced to 7.8 per cent and will be abolished by 2019.

Our exports of fresh oranges to China increased twofold over the same period. Fresh oranges faced a tariff of 11 per cent heading in to China - that tariff has been reduced to 8.6 per cent and disappears in 2023.

Fourth, we have tried protectionism. It doesn't work. It leads to less choice and higher prices. In the 1970s, Australia’s economy was almost crippled by protection.

Australia cannot afford to wait for great and powerful friends such as the US to show the way. We have to row our own boat. Whatever happens with the TPP, we have to continue pursuing bilateral trade deals with our major trading partners. In dismissing the significance of Trump’s actions yesterday, the Canegrowers Association CEO Dan Galligan said:

"We are waiting to see what opportunities Brexit might give us to reinvigorate the old trade alliance with the UK. In trade, when one door shuts another opens."

With or without the US, free trade is our future.

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