In negotiating the FTA with the United States, for instance, Australia gained no worthwhile access for beef (in which we are world competitive) for the next eighteen years, but secured immediate and unrestricted access to the US market for Australia’s motor vehicle industry (one of its least-competitive industries).
If we are to close the gap between trade diplomacy and economic reality, we need to respect three lessons from experience : first, the major gains available from trade agreements depend on what we take to the negotiating table, not what we hope to take away from it; second, liberalising through trade negotiations cannot be pursued simply as an extension of foreign policy ; and third, as the Joint Standing Committee on Treaties (JSCOT) has recommended on a number of occasions, future agreements should be subject to cost-benefit analysis before ratification.
The Department of Foreign Affairs and Trade (DFAT) has defended its limited role in negotiating access to external markets on the grounds the scope for reducing Australia’s own trade barriers has been exhausted.
In the same year as this defence was published, in October 2015, the Productivity Commission (PC) reported assistance to Australian industry (that is, remaining trade barriers) exceeded $A17 billion.
Australia’s tariffs are now quite low, but the PC's assessment confirms non-tariff "behind-the-border" barriers are now the major part of those remaining barriers. These can only be removed as part of domestic reform.
In defending the secrecy with which trade policy has been conducted negotiators argue public involvement would compromise their position in trade negotiations. But there is no conflict between the need for secrecy during negotiations and a Productivity Commission involvement which introduces a public input to negotiating agenda.
Both objectives can be met by a process in which the Productivity Commission conducts a public inquiry and reports on Australia’s market opening offers before negotiations get under way. The Commission’s report would be released only when negotiations were complete, but before future agreements are ratified.
This modest change would allow the community into the debate about trade policy. It would also remove the general disquiet about secrecy during negotiations, by providing a basis for parliamentary and public scrutiny of the outcome before future agreements are ratified.
The change has been supported on several occasions by Parliamentary committees reviewing free-trade- agreements. When it was recommended again recently by the Joint Standing Committee on Treaties, trade minister Ciobo formally rejected it on the government's behalf.
The limitations of the present approach, which is now enshrined as government policy, cannot be waved aside as of little consequence. Each new negotiation provides an opportunity for economy-wide gains which enhance national welfare.
Why wouldn’t Australia seek to benefit from those opportunities, as it did in the Uruguay Round?
Bill Carmichael is former chairman at the Industries Assistance Commission
Paul Kerin is an Adjunct Professor, School of Economics at the University of Adelaide
Glenn Withers is a Professor of Economics at ANU and UNSW
Greg Cutbush is a Visiting Fellow, ArndtCorden Department of Economics at ANU
Alan Mitchell is a former Economics Editor at Australian Financial Review
Martin Richardson is a Professor of Economics at ANU
Malcolm Bosworth is a Visiting Fellow, ArndtCorden Department of Economics at ANU