Australia's flawed approach to trade negotiations: and where do we sign?

Economists have warned for many years that preferential trade agreements (PTAs) will not necessarily increase economic welfare in Australia given the relatively small size of the economy and the country’s lack of negotiating coin. The Productivity Commission cautioned in its major report on PTAs that there seemed to be a mindset of ‘agreements for agreement’s sake’, in part because of fears of missing out on a bandwagon that has attracted Australia’s major trading partners. Political and security considerations have played an important role in shaping Australia’s approach to PTAs. When politics trumps economics in negotiations of PTAs there is a risk of a rush to premature agreement that produces sub-optimal outcomes, that undermines broader plurilateral and global negotiations, and that introduces new and undesirable distortions in trade and public policies. Various theoretical approaches to trade policymaking provide insights into why Australian governments have been willing to conclude these sub-optimal deals.     

The economic effects of PTAs

This paper gives a short history of the development of preferential trade agreements (PTAs), followed by a summary of the economics of PTAs. The paper then examines the typical coverage of recent PTAs, and assesses their likely economic effects. Political economy considerations mean that PTAs have tended to be selective in two important ways—they have tended to be preferential, even in the provisions that go beyond goods trade, and they have tended to target only those provisions that explicitly discriminate against foreigners. This selectivity means that PTAs are an inferior path to deeper economic integration. For most of the Asian region, comprehensive domestic regulatory reform dominates as an integration strategy, while PTAs deliver relatively trivial gains. Multilateral action is an intermediate strategy, and is important for delivering trade liberalisation in sensitive sectors or in highly protected economies. These results appear to be relatively robust to the size of the PTA grouping.     

Australia's trade policy dilemmas

In recent years, Australia has had a very active agenda for the negotiation of preferential trade agreements (PTAs) whose net economic benefits remain at best unclear. There has been a strong defensive element to some of this PTA activity but the Howard government also used PTAs to pursue non-economic objectives, such as the promotion of foreign policy and security interests. This article broadly outlines Australia's PTA policy and the problems and dilemmas that it has generated. More importantly, it looks ahead to consider likely scenarios for trade policy under the Rudd Labor government. Each of these scenarios has different implications for policy strategies and outcomes. This article concludes that while there could be significant pay-offs should Labor choose to pursue its traditional preferences for non-discriminatory trade arrangements, the world has changed considerably since the heydays of the multilateral trade system. A commitment to reinvigorating multilateralism will require strong political leadership, imaginative thinking, and creative diplomacy.     

Balancing Multiple Goals: Analyzing Votes on Free Trade Agreements in the U.S. House of Representatives

Despite increasing polarization in the House of Representatives, preferential trade agreements (PTAs) often pass not only with, but often because of, support from both parties. What explains these patterns? When do members cross party lines to support (or oppose) trade legislation? We argue that members are both ideologically and electorally motivated. Further, we argue that the relative balance of these incentives varies across the membership in meaningful ways. We examine House votes on 11 PTAs and find that ideology and district trade position have independent effects on support for free trade. We also find that the effect of trade position is conditioned by the ideology of the legislator; moderates are more responsive to their constituents' interests on trade.     

A trade balance: litigation and negotiation in the World Trade Organization's dispute settlement system

The establishment of the World Trade Organization (WTO) has been widely accepted as representing the legalisation of world trading rules. However, it is important to reflect on the limits of this legalisation thesis in terms of the interface between international and domestic policy processes. By locating trading disputes in a political analysis of policy implementation, it is argued that it is difficult to establish conceptually how the WTO dispute settlement system could have authority separate from and above the conventional international politics of trade policy relations. Instead, the article argues that case outcomes should be expected to be largely the product of domestic political institutions and policy processes, and how these intersect with developments in the WTO dispute settlement system. Brief studies of the Australian government's dispute settlement strategy and two high-profile WTO disputes—the US upland cotton and European Union sugar cases—serve to suggest that the authority of international trade law is not as significant as assumed by the legalisation thesis. Rather, domestic politics and institutions have an important impact on the outcome of trade disputes.     

The move to preferential trade on the Western Pacific Rim: some initial conclusions

Since? ? Research for this project has been supported by the Australian Research Council through Discovery Project Grant No. DP0453077. View all notes the turn of the century the Asia-Pacific region has become the most active location for the negotiation of preferential trade agreements (PTAs)—a dramatic change from the period before the financial crises of 1997–98. Substantial variance in scope exists among the more than 80 PTAs currently being implemented, negotiated or which are under study in the region. Those involving the United States are by far the most comprehensive. At the other end of the spectrum are those involving ASEAN and China, which are largely ‘aspirational’ in their provisions. This variance points to the range of economic and political objectives that PTAs serve. Regardless of the comprehensiveness of their coverage, the overall economic effects of the new PTAs is likely to be small given the prevailing low level of tariffs, the intervention of other factors such as fluctuating exchange rates, the proliferation of agreements (which removes the advantages they accord individual partners), and the unwillingness of governments to liberalise ‘sensitive’ sectors. Few of the agreements move substantially beyond existing WTO provisions. The proliferation of PTAs not only has tended to shift attention and resources away from negotiations at the global level but also runs the risk of fragmenting the ‘pro-liberalisation’ coalition in countries that have signed multiple agreements.     

New powers in the club: the challenges of global trade governance

No good deed goes unpunished: the WTO's timely response to accommodate the new powers—Brazil, India and China—at the heart of its decision‐making has produced new inefficiencies, has heightened its proclivity to deadlock, and has exacerbated disengagement and disillusionment among all its stakeholders. Particularly in the context of a major economic crisis, a reliable international institution is necessary to ensure the continued provision of freer trade—well‐recognized as the route to recovery. With the WTO's recent record to provide these necessary public goods under doubt, where do the solutions lie? This article discusses the changing role of the new powers in the WTO, and further analyses the opportunities and challenges that these developments generate. The concluding section examines possible routes to reform. While very little can, or indeed should, be done to alter the balance of power itself, it is argued that appropriate institutional reform can help the multilateral trading system retain the advances it has made on grounds of fairness and further address the concerns of efficiency that are central to the crisis that it faces today.     

The Long Sunset of Strategic Partnership: Russia's Evolving China Policy

The strategic partnership between Moscow and Beijing is arguably the greatest Russian foreign policy achievement of the post-Soviet period. In just over a decade, the relationship has grown from a barely civil interaction to one of political and strategic convergence and flourishing economic cooperation. Once divisive issues such as border demarcation and Chinese 'illegal migration' into the Russian Far East have been largely defused, while bilateral trade has tripled during the past four years. Nevertheless, despite these successes, the strategic partnership remains fragile and vulnerable to bilateral and international developments. A negative historical legacy, enduring cultural prejudices and strategic suspicions, and even commercial disagreements threaten, over time, to undermine many of the gains of the recent past. In the transformed global environment after 9/11 there are signs that Moscow is rethinking its approach towards China as part of a more general evolution in Russian strategic calculus in the Asia-Pacific region and beyond. China's emergence as the next super-power, the spectre of increased Sino-American tensions, the changing balance of power between Moscow and Beijing, and rival agendas in Central Asia all have the potential to rekindle once dormant political differences and security fears. Although the breadth of common interests means there is no early prospect of confrontation, the much-vaunted Russia–China strategic partnership may be giving way to a growing strategic divergence.     

The UN Arms Trade Treaty: arms export controls,the human security agenda and the lessons of history

The UN conference to negotiate an Arms Trade Treaty (ATT) concluded on 27 July 2012 without reaching consensus on the text of a draft treaty and saw both the US and Russia calling for more time to negotiate. The ATT process marks the latest in a series of attempts to insert human security concerns into arms export controls. The setback in July raises questions about the current level of international support for the human security agenda, as well as the relative power of different actors to shape global governance structures. This article locates the ATT negotiations in the broader history of multilateral efforts to regulate the international arms trade, from the 1890 Brussels Act to post‐Cold War initiatives. The historical record shows that such efforts are more likely to succeed if they are negotiated or imposed by major arms exporters. The introduction of human security concerns, as well as the merging of export control and arms control agendas, went some way towards reversing this trend. In particular, it created a broad international coalition of supportive states and NGOs from the global North and South. Yet disagreements over the purpose of an ATT remained. The draft ATT included human security provisions, but China, Russia, the US and a number of emerging powers ensured that state security considerations remained paramount in decision‐making on arms exports. The US was the first major actor to announce its unwillingness to sign the draft ATT in July 2012 and two alternative interpretations of US actions are considered. The article concludes by considering the options available to supporters of the ATT process following the 2012 conference and examines the notion that the ATT campaign has become an initiative ‘out of its time’, one that might have had success in the 1990s but not in current circumstances.     

Australia and India: the Indian Ocean and the limits of strategic convergence

Many Australian observers see Australia and India as ‘natural’ partners whose strategic perspectives are likely to become ever closer in coming years. This article will examine recent developments in the Australia–India security relationship and consider some possible limits to the strategic convergence of Australia and India, particularly in Indian Ocean security. It argues that Australia's challenge in coming years will be not only to address areas of common interest but to also actively engage with India on the interests and expectations of littoral states and extra-regional powers in the security of the Indian Ocean.     

The Neoliberalization of Development: Trade Capacity Building and Security at the US Agency for International Development

Abstract: This paper examines recent changes at the US Agency for International Development (USAID) regarding the connections between trade liberalization, development, and security. USAID has adopted “trade capacity building” as a framework for development, and, in conjunction with new US national security discourses, now operates under the assumption that underdevelopment is a source of state weakness that produces insecurity. I argue that these changes in how USAID understands and undertakes development constitute the neoliberalization of development. In accordance with these shifts, USAID has redefined critical aspects of its development mission, undergone internal restructuring, and altered its relationship with other US state institutions and capital. The actual prospects for achieving security or development are slim, however, as the agency remains wedded to definitions of both that suggest the only acceptable role for the state lies in facilitating further neoliberalization and promoting the stability of capitalist class relations. An overview of USAID's historical development, and a closer examination of the place of food aid and food security in the agency's development work, demonstrate this.     

Northeast Asian Resource Security Strategies and International Resource Politics in Asia

Soaring prices for minerals and energy are posing a major threat to the resource security of economies in Asia. As a result, many regional governments have launched new resource security strategies in the last few years. Most recent attention to resource security in Asia has focused on debating whether the Chinese government’s resource policies are mercantilist or liberal. This China-focused debate is too narrow to fully capture the nature of resource politics in Northeast Asia, since the governments of Japan and Korea have also recently launched their own resource security strategies. This paper considers regional-level trends in Asian resource politics by examining the causes, content and implications of the resource security strategies deployed by the consumer governments in Northeast Asia. It argues that growing resource security concerns, combined with a process of competitive policy emulation, have seen the Chinese, Japanese and Korean governments each adopt mercantilist resource security strategies over the last decade. Furthermore, the competitive nature of these mercantilist strategies is acting to intensify political and economic competition for resources between the Asian region’s three main economic powers.     

东北亚地缘政治特点与中韩经贸合作趋势

本文在简述亚太及东北亚地区战略格局的基础上,分析了东北亚地区的地缘政治的两个特点,探讨评价了中韩两国经贸合作的基础、原因,取得的成绩以及存在的不足,指出了两国今后经贸合作的趋势与方向。     

Rules of engagement: America's Asia-Pacific security policy under an Obama administration

The United States’ strategy in the Asia-Pacific stands at a historic juncture. How the new Obama administration conceives and implements its Asia-Pacific policy during its first term of office will have major and enduring ramifications for America's future. The new administration must have a clear vision of its country's national security interests in the Asia-Pacific as well as a better appreciation of the evolving dynamics of the region. To this end, it should continue to underwrite its bilateral security commitments, albeit through a less threat-centric lens, and be more cognisant of the region's multilateral overtures by further anchoring US participation in regional multilateral institutions. This shift from a position of bilateral primacy to one of engaged bilateral and multilateral partnership—a ‘convergent security’ approach—is the best strategy for Washington to advance its strategic interests in the Asia-Pacific.     

Canada’s Supply Management System and the Dairy Industry in the Era of Trade Liberalization: A Cultural Commodity?

ABSTRACT

Canada’s dairy farmers have spent the last 40 years fighting to preserve their supply management system despite increases in the desire to liberalize trade through the expansion of regional free trade agreements and the targeting of agriculture in recent rounds of the General Agreement on Tariffs and Trade (GATT). How has Canada’s supply management system resisted trade liberalization thus far? Moreover, what strategies have Canadian dairy farmers used to lobby the government to preserve this system? The answer to these questions lay within the intersection of culture and economics. Canadian dairy farmers have been successful in framing Canadian dairy as a distinctly Canadian cultural commodity, and therefore framing supply management as the economic tool needed to defend this cultural commodity. In exploring this topic, this article will touch on Canada’s history of preserving cultural institutions, as well as the historical importance of Canada’s supply management system.     

Australia’s trade diplomacy and the Trans-Pacific Partnership: ‘you’ve got to row your own boat’

ABSTRACT

As part of its economic diplomacy, Australia has directed intense effort into both bilateral and plurilateral trade negotiations such as the Trans-Pacific Partnership. According to then Minister for Trade and Investment Andrew Robb, with no major multilateral trade deal in decades, you have to ‘row your own boat’ or risk missing out. With the fundamentals of trade and the nature of trade negotiations changing, trade liberalisation has become an increasingly sophisticated and difficult negotiating area. A case study of the controversial TPP shows the tensions for a middle power navigating this space. The benefits of the TPP are contested and the government faces criticism of the adverse impacts of the agreement, especially investor-state dispute settlement clauses, impact on human rights and suspicion that the TPP is motivated by geopolitical drivers. In order not to lose more than it gains in moving away from the multilateral trade system, Australia must ensure that trade agreements are consistent with WTO rules and have open and fair accession regimes as a basis for signing. Finally, there is the need for higher levels of transparency and democratic accountability than has historically applied. A new white paper is necessary to make the case for trade liberalisation.     

The abandonment of procurement-linked strategic activism in Australia: standing still with room to move

In this paper I examine the extent to which preferential trade agreements (PTAs) limit the Australian government's ability to use public procurement for local industry development ends. I do so not only by examining Australia's PTA obligations, but also by examining how other governments with similar obligations—such as Korea—are using public purchasing policies to promote local industrial advancement. I find that the PTA obligations of the Australian and Korean governments leave them both significant scope to use public purchasing strategically. Interestingly, however, Australian policymakers have been standing still in the room that remains, and even abandoning PTA-compliant procurement-linked development policies. South Korean policymakers on the other hand have been capitalising on every inch of space left open to them—and even experimenting with new forms of strategic public purchasing that nonetheless comply with their international obligations. I conclude by offering some suggestions as to how we might explain these countries’ radically different approaches to procurement policy, despite their very similar international obligations.     

Europe,the rise of Asia and the future of the transatlantic relationship

This article examines how, in a global strategic context presided by the rise of Asia and the US rebalance towards that region, Europeans are contributing to transatlantic burden‐sharing—whether individually or through the EU/NATO. As Asian powers reach westward and the US shifts its strategic priorities eastward, classical geostrategic delimitations become gradually tenuous. Particularly important are the ‘middle spaces’ of the Indian Ocean, central Asia and the Arctic, in that they constitute the main avenues of communication between the Asia–Pacific and the European neighbourhood. The article seeks to understand how evolving geostrategic dynamics in Europe, the ‘middle spaces’ and the Asia–Pacific relate to each other, and how they might impinge on discussions on transatlantic burden‐sharing. It is argued that the ability of Europeans to contribute to a more equitable transatlantic burden‐sharing revolves around two main tenets. First, by engaging in the ‘middle spaces’, Europe's key powers and institutions are helping to underpin a balance of power in these regions. Second, by stepping up their diplomatic and economic role in the Asia–Pacific, strengthening their security ties to (US) regional allies and maintaining an EU‐wide arms embargo on China, Europeans are broadly complementing US efforts in that key region. There are a number of factors that stand in the way of a meaningful European engagement in the ‘middle spaces’ and the Asia–Pacific, including divergent security priorities among Europeans, the impact of budgetary austerity on European defence capabilities and a tendency to confine foreign policy to the immediate neighbourhood. The article discusses the implications of those obstacles and outlines some ways in which they might be overcome.     

Diversifying Australia’s Indo-Pacific infrastructure diplomacy

Infrastructure is an emerging component of Australian diplomacy. In recent years, many infrastructure and connectivity (I&C) programs have been launched in the Indo-Pacific, designed to close the ‘infrastructure gaps’ that plague the region. Competition amongst these, particularly between US and Chinese offerings, has posed a dilemma for Australian foreign policy. Australia has struggled to articulate a policy on China’s Belt and Road Initiative that balances strategic concerns against economic opportunities; while enthusiastic engagement with US alternatives risks perceptions of ‘choosing’ sides between the region’s two main powers. Yet the contemporary marketplace for Indo-Pacific I&C is much broader, with programs recently launched by many governments and regional organisations. These presents an opportunity for Australia to diversify its infrastructure diplomacy, particularly through engagement with the Asian Infrastructure Investment Bank, cooperation with Japan and new avenues for commercial diplomacy. By engaging with a wider range of I&C partners and institutions, Australia can better integrate itself with the emerging infrastructure systems of the Indo-Pacific.     

Australia,the United States and a 'China growing strong': Managing conflict avoidance

How to deal with a rising China constitutes one of the most seminal challenges facing the ANZUS alliance since its inception a half a century ago. Australia must reconcile its geography and economic interests in Asia with its post-war strategic and historic cultural orientation towards the United States. It must succeed in this policy task without alienating either Beijing or Washington in the process. The extent to which this is achieved will shape Australia's national security posture for decades to come. Three specific components of the 'Sino-American-Australian' triangle are assessed here: the future of Taiwan, the American development of a National Missile Defence (NMD), and the interplay between Sino-American power balancing and multilateral security politics. The policy stakes for Australia and for the continued viability of ANZUS are high in all three policy areas as a new US Administration takes office in early 2001. The article concludes that Australia's best interest is served by applying deliberate modes of decision-making in its own relations with both China and the US and by facilitating consistent and systematic dialogue and consultations with both of those great powers on key strategic issues.