Ideas in Australian trade policy

Trade policy is, usually, whatever emerges as the possibly temporary political outcome of a competition between vested interests for government favour. It’s no use pretending that deliberation or reflection determine the outcome on a regular basis. But that’s not to say that the discourse of trade policy is based only on interest and prejudice and is free of ideas. What ideas matter to Australian trade policy? Two of the most influential sources have been: the economic analysis of trade and the Australain experience of multilateral diplomacy. Heres a thumbnail sketch. A more careful, detailed account that, however, owes nothing to my views, is available “here”:http://titles.cambridge.org/catalogue.asp?isbn=0521785251 In some countries, the ideas that emerge most often in discussion of trade policy are shared assumptions about national aspirations, the expression of power, the development of regional alliances, or claimed racial or national characteristics. These ideas don’t have much significance for Australian trade policy. Australian trade policy thinking has been strongly affected by economic analysis since the late 1960’s when the “Tariff Board” was appointed to make recommendations on assistance to manufacturing industry. Arguably, it was the development—and the the eventual failure—of Australia’s own high-protection manufacturing industry strategies of the first six decades after Federation, and loss of opportunities to ‘hide’ the protection of agriculture through manipulation of the exchange rate (after the minerals boom of the late 1960s), that gave it this character. Academics, certainly, but also bureaucrats and even Ministers were ready to consider the ‘Australian case’ for protection as a sort of social experiment that offered either lessons about the futuility of protection or an opportunity for further tinkering (depending on their viewpoint). The 1970s saw the development of techniques—many of them by Australian economists—for modeling complex networks of markets for resources and food products. The Australian Bureau of Agricultural and Resource Economics (“ABARE”:http://www.abareeconomics.gov.au/), the forerunners of the “Productivity Commission”:http://www.pc.gov.au/ as well as several academic faculties specialised in this form of economic measurement and have been a fount of world-class analysis and analysts since[1]. Multilateral diplomacy—the other source of influential ideas—had been a vector of Australia’s maturing diplomatic independence from Britain—and occasionally from the influence of the United States—since the late 1940s when Australia’s foreign Minister (H V Evatt) won Chairmanship of the new United Nations General Assembly in return for his contributions at the San Francisco conference. Its roots lie in much earlier attempts by Australian governments to assert some influence on a patronizing Imperial Cabinet during the last few decades of the British Empire. By the 1960s, Australia was already using every opportunity in forums such as the GATT—where the rule is “one country, one vote“—to assert it’s trade interests more strongly than could have been justified by it’s economic power. Of course, it didn’t hurt then, or later, that the Trade Department, which supplied the representatives in the GATT, deserved its reputation for a pugnacious, argumentative culture or that its representatives were at home in (a version of) the english language. From the early 1980’s, the creation of extensive trade data collections by the UN and WTO and increased researcher access to computers capable of solving the masses of simultaneous equations that drive credible models of global commodity markets made it possible to identify and quantify the external impacts of protection, investment and supply policies in Europe, Japan and North America on the commercial interests of the rest of the world. A combination of experience ‘working the room’ in GATT—developing alliances with other small economies—and access to new ideas and data about global impact of inappropriate supply and protection policies in Europe, Japan and North America gave rise to and sustained Australian efforts to create global coalitions of governments from the ‘rest of the world‘. The “Cairns Group“:http://www.cairnsgoup.org/ of agricultural exporters, created in 1986 with help from some Latin American economists/officials who trained in Australia has been by far the most successful of these. It has inspired some Australian-led spin-offs such as the “Global Dairy Alliance”:http://www.globaldairyalliance.org/ and the “Global Sugar Alliance”:http://www.queenslandsugar.com/page.cfm?pageid=180(the driving force behind a groundbreaking and “apparently victorious”:http://www.inquit.com/article/309/sugar-case-victory-on-eu-subsidies WTO dispute). Both the leadership (Brazil, Argentina, South Africa) and strategies of the “G-20”:http://www.guardian.co.uk/wto/article/0,2763,1106544,00.html have themselves spun-off the Australian-led Cairns Group. Australia’s multilateral trade policy successes of the past two decades—in the Uruguay Round of WTO negotiations and beyond—have faded. The G-20, which emerged in the Cancún Conference, has overshadowed it’s Cairns Group origins and the increasing economic power of giant developing economies (Brazil, India) has secured the new group a role that could well endure longer than the diplomatic ploys of the Cairns Group, provided that it finds a basis for coherence other than opposition to the EU and USA. fn1. “Here’s”:http://www.pc.gov.au/research/speeches/cs20021008/ a nice brief account of one outstanding analyst—Richard Snape—from a eulogy by the Chairman of the Productivity Commission (Gary Banks)

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