Australia's flawed approach to trade negotiations: and where do we sign?

Abstract

Economists have warned for many years that preferential trade agreements (PTAs) will not necessarily increase economic welfare in Australia given the relatively small size of the economy and the country’s lack of negotiating coin. The Productivity Commission cautioned in its major report on PTAs that there seemed to be a mindset of ‘agreements for agreement’s sake’, in part because of fears of missing out on a bandwagon that has attracted Australia’s major trading partners. Political and security considerations have played an important role in shaping Australia’s approach to PTAs. When politics trumps economics in negotiations of PTAs there is a risk of a rush to premature agreement that produces sub-optimal outcomes, that undermines broader plurilateral and global negotiations, and that introduces new and undesirable distortions in trade and public policies. Various theoretical approaches to trade policymaking provide insights into why Australian governments have been willing to conclude these sub-optimal deals.

Keywords:

• AUSFTA
• Australian trade policy
• intellectual property rights
• investor-state dispute settlement
• preferential trade agreements

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. The authors would like to thank the participants for their helpful comments, particularly Dr Elizabeth Thurbon and Emeritus Professor Linda Weiss. An earlier version of this paper was presented at an Academy of Social Sciences in Australia workshop on Ten Years Since the Australia-US Free Trade Agreement, University of New South Wales, 25–26 September 2014.

2. The TPP is currently being negotiated by 12 members of the Asia-Pacific Economic Cooperation forum: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States and Vietnam. Note that in this section we are distinguishing plurilateral (involving three or more parties) from global negotiations.

3. The authors are not aware of any studies that analyse the impact of campaign donations on the trade policy preferences of Australia’s major political parties. Nonetheless, it is interesting to note that in 2012–13, Village Roadshow contributed $315,000 to the Liberal Party and $22,000 to the Australian Labor Party. Village Roadshow has a strong commercial interest in strengthening copyright rules, which is a major feature of the TPP (Source: http://www.abc.net.au/news/interactives/tables/aec-political-donations-table/).