The Future of Australian Trade Policy – Craig Emerson

Today in Sydney, the Trade Minister Craig Emerson delivered a speech on the future of Australia’s trade policy.

The speech affirmed the Australian Government’s commitment to trade liberalisation at home and abroad, and reset Australia’s trade policy around five principles. Emerson, a former adviser in the Hawke Government advocates a return to the trade principles of the Hawke-Keating era.  These are outlined below.

The Minister outlined his commitment to conducting a review of Australia’s future trade policy framework to be released at the end of the first quarter of 2011. A Productivity Commission report on Australia’s existing approach to trade policy will provide input into that review.

A full copy of the speech is available here.

The five principles of Australia’s trade policy

  • Unilateralism.
  • Non-discrimination.
  • Separation.
  • Transparency.
  • Unifying principle of trade policy as an indivisible part of overall economic reform.

Prospective trade negotiations for the next year

“The coming year can be one during which the Doha Round of Multilateral Trade Negotiations can be brought to a successful conclusion, the Trans-Pacific Partnership of nine APEC economies can be advanced ahead of the US-hosted November APEC meeting in Honolulu, a trade agreement with Korea can be finalised, an agreement with Japan can be advanced, deadlocked negotiations with China can be unlocked, further liberalisation with countries like Indonesia and Malaysia and the Gulf states can be progressed and perhaps negotiations with India and a number of Latin American countries can be commenced.”

Average applied tariffs in APEC

According to the Minister, ‘among Australia’s key trading partners in the APEC region, which account for 44 per cent of global trade and 70 per cent of Australia’s exports, average applied tariffs have been lowered over the last quarter of a century from more than 25 per cent to around 5 per cent’.

Work to be done

“Nevertheless, it is true that substantial trade barriers remain in place for agriculture in a number of APEC economies and much work remains to be done in reducing behind-the-border restrictions on services exports.”

Emerson on Labor’s Economic Philosophy

“At its essence, Labor’s guiding philosophy of economic reform has been a commitment to markets and competition – a commitment reaffirmed by Julia Gillard as Prime Minister. Of course there can be a role for government intervention to correct for market failure, including anti-competitive behaviour and inadequate private incentives for research and development. But the presumption must be that competition is good, more competition is better and markets are better than governments in allocating scarce resources among competing commercial uses.”

“Reviving productivity growth through a new economic reform program is core business for the Gillard government.”

“Domestic economic reform is essential to lifting productivity growth and through it the international competitiveness of Australian businesses”

Hawke-Keating Governments’ five principles Emerson wants to return to;

  1. “As Trade Minister, I want to reconnect with the Hawke-Keating governments’ first guiding principle in economic reform that competition is good, and dispense with the bargaining chip approach to the remaining Australian tariffs.”
  2. “The second guiding principle of the Hawke-Keating era was that of non-discrimination. It is incorrect to suggest that the Hawke and Keating governments pursued only global trade liberalisation. Those governments negotiated bilaterally as well. But in doing so, they did not seek preferential access to markets, only an opportunity to compete.”
  3. “The third great Labor principle of the Hawke-Keating era was to maintain a clear separation between trade policy and foreign policy.”
  4. “The fourth Labor principle of trade policy could be titled the “no-bull principle” or less provocatively, the transparency principle. Studies, commissioned by advocates of particular bilateral trade deals, will inevitably report enormous potential gains to both countries. Modellers are handed the assumptions by government officials and the computer models produce the results sought. This process is best described as an expensive farce designed to hoodwink the public.”
  5. “The fifth and greatest principle is the grand unifying principle: that trade policy and microeconomic policy are as one; that they, in harmony with sound fiscal policy, constitute an economic reform program designed to lock in and increase prosperity and provide the dignity of work for all those who seek it.”