Leading academics at the Australian National University’s “Asia Pacific School of Economics and Government”:http://apseg.anu.edu.au/default.php seem to be grasping at straws in their attempts to criticise Australian negotiation of free trade agreements. As some of the country’s top trade economists, they command serious attention on this subject. So far, however, their public criticisms haven’t been backed by evidence of harm to Australian interests from the current agreements (with New Zealand, Singapore and prospectively with the USA and Thailand) or from global FTA trends. I’ve previously criticised Ross Garnaut’s extraordinary claim[⇒ related story] that negotiation of the Australia-US FTA adversely impacted Australia’s recent trade performance (which Ross describes in lugubrious terms). Now his colleague Chris Findlay takes up the cudgels against work on an FTA negotiation with China. The joint Australia-China investigation of a proposed FTA is not going to address the issues of importance to Australian exporters, Findlay told “Radio Australia”:http://www.abc.net.au/ra/newstories/RANewsStories_1085786.htm bq. “FTA’s are inevitably bureaucratic processes, they involve extra rules, they involve decision making by bureaucracies, they run the risk of introducing more discretion into decision making,” he said. “I think that’s the last thing we want to see the Chinese doing, investing more resources into a bureaucratic process.” The second proposition is true as it applies to trade regulation. But the sweeping generalization in the first proposition is not supported by the evidence of the other FTAs to which Australia is a party. FTAs such as we have with New Zealand or Singapore and we may soon have with Thailand and the USA reduce bureaucratic (and political) discretion in bilateral trade, replacing the discretion with enforceable rules and the ‘bound’ removal of barriers that are the products of discretionary action. One of the most important reasons for examining, over the next two years, whether there exists sufficient understanding between China and Australia to begin an FTA negotiation is to determine whether the Chinese (in particular) are willing to agree to allow the market to work in a ‘less fettered’ way without the level of discretionary intervention both at the border and in internal commercial regulation that is allowed even by China’s membership of WTO.
Peter Gallagher is student of piano and photography. He was formerly a senior trade official of the Australian government. For some years after leaving government, he consulted to international organizations, governments and business groups on trade and public policy.
He teaches graduate classes at the University of Adelaide on trade research methods and the role of firms in trade and growth and tweets trade (and other) stuff from @pwgallagher