Trade & International Business

Trade has become dominated by global supply chains. Products are increasingly “made in the world”, rather than manufactured in a single country. Similarly, services are delivered through cross border supply and the internet.

Australia is geographically distant from many major markets.

Those regions we regard as our trade neighbours are also being targeted by other competitors. This means Australia cannot rely on reputation as our defining competitive characteristic. We must continue to strive to reduce costs and increase innovation in order to maintain and grow our globally competitive position.

As a major global trading nation, Australia is heavily reliant on both import and export of goods and services and with a skilled workforce increasingly engaged in global business, all elements of the Australian economy are exposed to international competition. Our domestic economy is too small for many businesses to survive unless they are globally focused and globally competitive.

Australia has reached a near critical mass of agreements covering our major trading partners, and as such, trying to cling on to the remaining trade barriers makes no sense. Australia should take unilateral action to reduce its remaining barriers outside of Preferential Trade Agreements (PTA). This will advance the Australian economy through lower costs across all industries, assisting with further productivity gains, through competition and stimulating innovation.

While the Federal Government has been actively improving trade and investment liberalisation, there are costs to business of overlaying trade agreements across countries where there are multiple PTAs in force. The risk is that the competing rules of each PTA, unless harmonised, increase the complexity of trading arrangements.

This results in greater costs for commercial trading companies in understanding and complying with the administrative requirements of each PTA. In some cases the compliance burden overwhelms the advantages of the agreement.

Multilateral efforts are the only way to secure truly global agreements and address many of the issues of production subsidies and non-tariff measures. The World Trade Organisation (WTO) should be supported as the pre-eminent body for managing a rules-based global trading system.

The Asia-Pacific Economic Cooperation aspiration of the Free Trade Area of the Asia Pacific has come to fruition, with the successful negotiation of the Transpacific Partnership Agreement and the Regional Comprehensive Economic Partnership.

Australia now needs to pursue equivalent trade deals in the region from Asia to Africa bounded by the Indian Ocean. The government should develop and resource proposals for a Free Trade Area of the Indian Ocean given the significant opportunities to Australian business in this region which stretches from Australia to Africa.

It is time to embrace opportunities with our closest geographic partner – Indonesia. The Australian Chamber is engaged in strengthening the Indonesia-Australia Closer Economic Partnership (IA-CEPA) through forging business relationships. This model of direct business engagement to assist in shaping the future relationship is a model that can be deployed to assist other bilateral relationships. Business must be at the centre of our trade and investment liberalisation efforts. Business must be supported to ensure that the anticipated benefits flow to our nation.

Recommendations:

9.1 Unilaterally eliminate tariffs and other barriers to trade and investment.

9.2 Continue efforts in the WTO to progress trade and investment liberalisation at “critical
mass” scale.
 
9.3 Seek plurilateral liberalisation as “stepping stones” towards a complete WTO outcome.
However, such an approach needs to: 
  • Align to WTO rules and processes
  • Align with international treaties Australia has signed such as the International Convention on the Simplification and Harmonization of Customs Procedures (revised Kyoto Convention)
  • Include business in the negotiation process
  • Be cautious of conflicting compliance arrangements caused by overlapping and competing trade agreements
9.4 Prosecute the development of a Free Trade Area of the Indian Ocean to match our pacific regional interests.

9.5 Restore the Expert Market Development Grant scheme to $200 million per annum and streamline and improve the scheme’s administration.
 
9.6 Restore Tradestart’s previous funding and delivery models.

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