Tuesday, 28 June 2016

Free Trade Agreements

are part of the modern world - whether we like it or not.
I remember the title of a doctoral thesis I once co-supervised. It was "Post World War 2 trade relations between Australia, Japan and the United States with special reference to the General Agreement on Tariff and Trade". It was being written by a student from Japan. My role in the supervision was to try and make his tortuous English readable. In doing so I kept on challenging his ideas as well. I had to or what he put on to paper simply would not have made sense in English. I can only assume that it made sense when he wrote it in Japanese - which he then translated into English. 
In doing what I did I managed to learn rather a lot about a topic I knew absolutely nothing about when I started. It was quite different from my usual areas of supervision. I don't want to repeat the experience but I am now glad I did it because Free Trade Agreements are now under discussion again.
The leader of one particular political party wants to see Downunder's Free Trade Agreements with China, Japan and South Korea dismantled. It has taken years to negotiate these. What is in them is not all advantageous to Downunder. No FTA works like that. The reality however is that if we don't have some sort of FTA agreement in place it is going to be much more difficult to do business with these countries. Other areas of the world will simply move in instead. 
Downunder is already at a disadvantage in terms of doing business with the rest of the world. Only our Kiwi friends across the pond are in a similar position. We don't have large populations and lack the buying power which makes it worth doing business with us. We are, relatively speaking, geographically isolated which makes it more expensive to get goods moving. And yes, we are expensive in the sense that our standard of living has been very high and the wages we pay are very high. Our manufacturing base has diminished largely because similar goods can be produced much more cheaply in other parts of the world. If, on top of all this, we don't have FTAs we won't do business with the rest of the world.
It is unlikely that Nick Xenophon would achieve his goal of dismantling the FTAs.  He must know that. Nevertheless he also knows that it will be an attractive idea for people who yearn for the protectionist policies of the past. His party might also gain just enough seats to be able to make waves with respect to FTAs. They might only be small waves but they could do considerable harm.
FTAs aren't perfect. They aren't some sort of panacea which makes business easy. Good business is never easy. It's hard work, especially if you want to do it with those whose language, culture and work ethic is very different from your own. It is worth noting though that both the major parties have worked on these FTAs. They know that they are an essential part of how international business is done. What we now have to do is work within them to our advantage. 

No comments: