In these times of growing global economic uncertainty and mounting trade tensions, countries such as Australia need to stand up for the principle of free trade and shore up the foundations of the global trading system.
Trade and economic growth go hand-in-hand. Since the end of World War II, it has been the growth in global trade that has driven increased living standards around the world.
In 1945, exports accounted for about 5 per cent of global gross domestic product. Today that figure is 25 per cent.
Similarly, those countries that have embraced the opportunities of global trade and opened their economies have seen the most dramatic improvement in their fortunes.
It was China’s embrace of economic opening and trade from the late 1970s onwards that propelled its development and lifted hundreds of millions of Chinese citizens out of poverty.
But the proposition linking growing trade with rising prosperity is under threat — from protectionist sentiments, increasing trade tensions and deadlock within the multilateral trading system of the World Trade Organisation.
Australia has been a huge beneficiary from the liberalisation of the global economy.
The ability to trade freely around the world on the basis of transparent and predictable rules has delivered us improved living standards, better jobs, higher wages and greater choice.
This is why it is important for Australia to stand up for the global trading system and play our part to maintain and improve its liberal and open character.
Australia has concluded two important free trade agreements in the past year with Indonesia and Hong Kong. Parliament’s Joint Standing Committee on Treaties has just reviewed both agreements.
The agreement with Indonesia has the potential to transform our economic relationship and lift it to a level that better reflects the strategic importance of our countries to one another.
Australian grain and citrus growers, cattle producers, mining equipment providers and vocational education suppliers all stand to benefit from improved access to the Indonesian market that the agreement provides.
But beyond this, and as the name implies, the Indonesia-Australia Comprehensive Economic Partnership Agreement goes on to lay the foundations for comprehensive economic co-operation with our largest northern neighbour.
It will support Indonesia’s own economic growth by supporting Indonesian capacity in key areas and position Australia as an economic partner of choice.
It will improve the business and investment environment.
It will provide a vehicle to tackle emerging issues in trade such as non-tariff barriers, the digital economy, connectivity, competition policy and regulatory transparency.
Indonesia is one of Australia’s highest priority international relationships and this agreement will help expand our ties in a part of the relationship that historically has been underdone.
This is why the Joint Standing Committee on Treaties has recommended that we take action to implement the Indonesia agreement as soon as possible.
Australia’s FTA with Hong Kong reflects quite a different set of issues and considerations.
Australia’s economic and trading relationship with Hong Kong, one of Asia’s most open economies, is already well-established and advanced.
The Australia-Hong Kong Free Trade Agreement largely codifies existing trade and market access arrangements, providing certainty into the future.
It also modernises the treatment regime for foreign investors, making investor state dispute settlement mechanisms more transparent and more constrained, and improving safeguards for governments wishing to adopt legitimate public policy measures in areas such as tobacco control.
On its merits, the agreement with Hong Kong will support our trade and commercial interests and is firmly in Australia’s national interests.
But it would not be realistic to consider the agreement in isolation from the political protests that have been under way in Hong Kong for several months.
In considering this agreement, JSCOT heard from witnesses about the ongoing civil disturb-ances and political instability in Hong Kong.
The committee supports a peaceful resolution of these issues within the framework of “one country, two systems” and Hong Kong’s institutions.
We also recognise that the preservation of Hong Kong’s unique status under the Basic Law, with which it enjoys a high measure of autonomy, is in Australia’s national interest.
This agreement has been negotiated and concluded with Hong Kong’s government and, as such, it reaffirms Hong Kong’s unique identity in this respect.
By ensuring this agreement enters into force we can help buttress and safeguard the political and economic autonomy Hong Kong presently enjoys.
While the committee recommended we take steps to implement the FTA with Hong Kong, the timing of the agreement’s entry into force, once legislative amendments and regulations are passed, will necessarily take into account the political situation in Hong Kong at that time — as it should.
Securing better access to export markets for Australian producers is one of our best forms of protection against global economic headwinds.
These FTAs do just that.
Dave Sharma is chairman of the Joint Standing Committee on Treaties and the member for Wentworth. First published on 11 October 2019. Reprinted with permission.