Tony touts trade
There’s been a honey pot of handshaking between the happy leaders of Australia, Japan and Korea. We now have the Japan Australia Economic Partnership Agreement (JAEPA), on the go since 2007, and the Korea Australia Free Trade Agreement (KAFTA), which began in 2008. So what’s the deal with China, with whom we began negotiating in 2005?
The PM’s primal instinct is to blame the previous government, but the truth is that trade agreements are very complex negotiations. Given that China’s trade with Australia, at $125.2 billion in 2012, is just short of double that of Japan’s ($69.2 billion for 2012–13) and four times the size of that with Korea, at $30.46 billion in 2012–13, it’s understandable that it might take longer.
With so-called free-trade agreements (FTAs), it’s important to realise that they are not actually what we call them. Rather than FTAs, they’re more like tariff mates rates for favourite neighbours. For example, the JAEPA will knock about $1000 off the price of a Japanese car in Australia, while Japanese import tariffs on Australian beef will decrease 6 percentage points in the first year and then further over time – to 23.5% over 15 years, according to The Australian.
The Korean deal is a bit truer to it’s name, with highlights such as the 300% trade barrier on chipping potatoes lifted immediately, along with the 15% tariff on Australian wine.
Equal opportunity investor
The greatest challenge when it comes to the China Australia FTA (CHAFTA or CAFTA with a soft C?) appears to centre on investment access and protections for both sides. Remember when US policy and security paranoia informed the Gillard government’s decision to bar Huawei Technologies from bidding for National Broadband Network contracts?
Press reports intimate that Tony’s tout to China this time is raising the amount of foreign investment that requires scrutiny by the Foreign Investment Review Board from the current $248 million to $1 billion – as it has been included in the Japanese and Korean agreements. For the nitty gritty on investment regulations, read more here.
In the company of a veritable who’s-who of Australian bankers and business leaders, Tony wants “greater investment access” too, the details of which are so far pretty sketchy or may have been lost in translation. However, the gist of the PM’s attitude toward China is that it will offer that nation the same treatment afforded Japan, Korea, Thailand and the US. In short, he’s offering equal-opportunity investor status to China – and expecting it in return. If such level-headed reciprocity clears the way to closer economic ties with our biggest trading partner, bring it on – and get those kids off to Chinese lessons.