Modern trade treaties go far beyond negotiations about actual trade. ‘Economic partnership’ or ‘comprehensive trade’ agreements deal as much in regulatory politics as in tariffs and quotas. Negotiators must better identify the national interest, which fully accounts for Australia’s domestic situation.
But Australian trade negotiators have enjoyed a period of substantial autonomy over the development of trade agreements. Low levels of public interest in trade policy and a multi-stakeholder business environment have allowed negotiators to pick and choose arguments in support of selective notions of the national interest.
The government’s grandiose economic promises to Australian businesses create expectations of tangible negotiating positions that support actual business activity. But business use of trade agreements is suboptimal. The Economist Intelligence Unit surveyed senior executives from 800 companies across eight economies in the Asia Pacific region. Only 19 per cent of Australian businesses reportedly used the various trade agreements. This is well below the regional average of 26 per cent.
The sole economic objective of trade negotiations is to increase net national welfare. This is measured by consumer-based aggregate wins and losses over the length of a deal. As a result of free trade, consumers receive lower prices due to reduced tariffs and improvements in the range of products available domestically. But free trade can also involve substantial changes to domestic regulations, such as intellectual property rights (IPR).
The USA and the European Union call for stronger IPR systems, which tilt the playing field in the interests of a small number of major corporations. These systems will not provide any benefit for Australia’s inventors, innovators and creators. IPR systems are not in Australia’s — or indeed the world’s — interest.
Australian consumers are also rarely consulted about the content of trade treaties. There is rarely public debate of the real issues and little evidence that any of the concerns have been taken on board by negotiators. When the Joint Standing Committee on Treaties delivered a report to the government on the Anti-Counterfeiting Trade Agreement, the response demonstrated an unwillingness to consider consumer and intermediary concerns.
Australian state governments are increasingly impacted by free trade agreements. The Australia–New Zealand economic cooperation program and the Singapore–Australian Free Trade Agreement are examples of extensive cooperation between the Commonwealth and states and territories. Internal reforms can be as difficult as the international commitments.
The Commonwealth–State Standing Committee on Treaties is one possible avenue for enhanced cooperation among Australian governments. But state trade ministers only meet on an ad hoc basis. Coordination in this area will be instrumental in pushing the internal work across the federation that may be required to agree and implement future trade deals.
Trade negotiators must consult more broadly to meet the needs of stakeholders. The national trading reality fails to correspond to the selective notion of the national interest recently pursued by Australian trade negotiators. There is a strong case for improved consultations with business towards a better focussed and more practical negotiating agenda.
Business use rates suggest that the agreements do not always meet industry needs. For their part, consumers have scant input into a process that will increasingly impact them directly. And unless current practice is revised, states and territories will find themselves implementing trade deals about which they were only superficially consulted.
As three of Australia’s leading economic commentators noted, the world could learn from Australia’s experience with the Productivity Commission and its predecessors. Bodies like the commission can manage effective trade consultations and agenda-setting processes separate to negotiations, and ensure improvements in net national welfare. It would be useful for Australia to follow its own advice better.
Broad consultation on complex and sensitive international economic integration agreements will be hard. But the implications of failing to consult — with business, consumers, civil society and within the federation — will be worse. Without an improved process, it is difficult to see how Australia can maximise its position in an increasingly complex world.
Annmarie Elijah is Associate Director of the Centre for European Studies, the Australian National University.
Hazel Moir is an Adjunct Associate Professor at the Centre for European Studies, the Australian National University.
Andrew Willcocks is an Australian lawyer and PhD Candidate at the Centre for European Studies, the Australian National University.
A longer version of this article is available here on the ANU Centre for European Studies website.