Free trade focus

Australia's prosperity has been built on our open, export oriented economic model, heavily reliant upon our ability to trade with the rest of the world.

With a relatively small population on a large resource-rich continent, we are dependent on overseas demand for our exports to maintain our high standard of living.

Over the decades, Australia has exported huge amounts of commodities including wheat, wool, gold, iron ore, coal, nickel and gas, amongst many other products.

In recent years there has been a growing emphasis on the export of services, including educational, legal, accounting and other professional services.

Australia also has a vibrant and innovative manufacturing sector that seeks out niche markets around the world.

Exporters in Australia have been struggling to maintain competitiveness in recent times due to the high cost of doing business here, exacerbated by an economy-wide carbon tax that none of our overseas competitors pay, and by the high Australian dollar.

It is hard to imagine any scenario where a future Australian government would reverse the decision to float the Australian dollar and so its value is largely beyond the influence of government.

However, there are other things that government can do to support exporters and in turn generate and increase economic security.

The Coalition has pledged to repeal the carbon tax and to actively pursue preferential trade agreements to remove or reduce barriers to other markets for our exporters.

This will be a continuation of the trade policies pursued by the Howard government which sought out opportunities for regional and bilateral Free Trade Agreements (FTAs) to open new markets and enhance established markets.

The record of trade negotiations under Labor since 2007 has been disappointing, particularly since 2010.

Simon Crean was appointed by Kevin Rudd as Trade Minister in December 2007 and immediately signaled his intention to focus on the big multilateral trade negotiations known as the Doha Round.

There is no argument that a successful conclusion of the Doha Round would yield the greatest benefit to Australia.

However the negotiations had become gridlocked and in the absence of any reasonable prospect of a successful conclusion it would have been prudent to follow the example of the Howard government and pursue the opportunity to further liberalise trade through a series of FTAS.

Regrettably this was not the case, although Simon Crean, to his credit, took a more active interest in bilateral FTAs in the second half of his time as Trade Minister until June 2010.

Julia Gillard's post-Rudd reshuffle saw her close supporter, Craig Emerson, appointed to the role.

It was a surprising choice, given Craig Emerson has made clear on many occasions his opposition to bilateral FTAs.

Yet the Prime Minister has never explained why she appointed a person philosophically opposed to FTAs to the role of Trade Minister and the result is that very little progress has been made on a number of vitally important trade negotiations.

Two of the most important are China and South Korea.

Australia and New Zealand both began negotiating an FTA with China in 2005.

New Zealand concluded its agreement in 2008 and its exporters now enjoy reduced or zero tariffs on many products, whereas Australians are subject to relatively high tariffs on the same goods.

When Prime Minister, Kevin Rudd announced the start of negotiations for a FTA with South Korea in March 2009.

Since that time the United States has completed its agreement with South Korea, while little progress has been made on Australia’s negotiations.

This is a major issue for Australian beef producers in particular as South Korea is one of their most important markets and the US the biggest competitor.

The head of the Australian Agricultural Company, David Farley, this week urged the Gillard government to urgently conclude Australia’s FTA with South Korea as beef exports from Australia faced the “very real risk of being detrimentally impacted”.

One of the key sticking points is Craig Emerson’s refusal to include in any negotiations provision for Investor-State Dispute Settlement (ISDS) in trade agreements, which nations such as South Korea have requested.

These clauses allow investors to begin dispute settlement action directly against foreign governments, as opposed to the World Trade Organisation framework that mediates disputes only between governments.

The reason for the Gillard government’s intransigence on this issue is reported to be a fear that companies will use such provisions to take the government to court over its decision to mandate plain packaging for tobacco, for example.

This is unacceptable as the government is putting its political fortunes ahead of the interests of exporters and their employees.

The Coalition would, as a matter of course, put ISDS clauses on the negotiating table and then negotiate ISDS provisions on a case-by-case basis. It is also vital that we repair relations with Indonesia that have been damaged as a result of the government's ban on live cattle exports, which is still causing harm to our animal export industry.

The appointment of Kelvin Thomson, an outspoken opponent of the animal export sector,to the role of parliamentary secretary for trade, hardly inspires any confidence that the government is serious about our important export industries.

The Coalition is committed to expanding our exports and jobs growth through strategic bilateral and regional FTAs within an overall foreign policy framework focused on economic diplomacy.