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 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.     

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.     

The strategic effects of preferential trade agreements

Most analysts agree that the recent proliferation of Preferential Trade Agreements (PTAs) is largely the result of exasperation with multilateral trade liberalisation through the World Trade Organisation and a defensive response to the large-scale adoption of PTAs by major economies. The spread of PTAs, however, suggests that there are motivations other than economic that are inspiring these trade deals. It is becoming increasingly obvious that the use of PTAs to gain or reinforce strategic benefits, or to forestall strategic disadvantage, has been a major but largely unacknowledged driver of the recent trend towards PTAs. Three profound shifts in the international system over the past 15 years have led to the declining utility of traditional security institutions and thus the search for new forms of strategic deal-making: an enduring crisis of security institutions; the rise of new great powers; and the arrival of non-state security threats. In response, both large and small powers have resorted to a range of instruments, including strategically-driven PTAs.     

The role of US defense exports in Asia Pacific regionalism

Despite the emergence of a regional economic space, political integration in the form of institutional building has yet to take shape in the Asia Pacific. On the one hand, the area is constructed as part of a localized space articulated in terms of relatively self-contained regional economic networks. On the other hand, Asia Pacific remains fractured in geopolitical structures, relying heavily on the US to organize the region, particularly in the post-war period. This paper focuses on the nature of lagging regional political integration and examines the role that US defense trade (1989–2004), and to a lesser extent military presence, plays in this. Specifically, it shows that US geopolitical strategy, influenced heavily by a realist framework, displays a pattern of bilateral courtship where its defense trade is positively related to allies in Asia. This relationship results in stronger trans-Pacific than regional linkages, inserting an otherwise localized Asian economic space into the more diffused global US-centered geopolitical space.     

The economic impact of the Australia–US free trade agreement

The Australia–United States Free Trade Agreement (AUSFTA) came into effect in 2005. It was the second preferential trade agreement that Australia signed, after its agreement with Singapore, and marked a departure from the primacy of Australia's previous trade policy of unilateral and multilateral trade liberalisation toward preferential liberalisation. This paper assesses the economic effects of AUSFTA by applying the Productivity Commission's gravity model of trade from its Bilateral and Regional Trade Agreements review. The evidence reveals AUSFTA resulted in a fall in Australian and US trade with the rest of the world—that the agreement led to trade diversion. Estimates also show that AUSFTA is associated with a reduction in trade between Australia and the United States.     

Export of Services of Servicing Exports?

Information and communications technology has ensured that many producer services, as well as more ‘basic’ services such as transportation or insurance, are now more tradable than ever. All the indications are that this trade will increase. This has raised the international profile of service and altered governments to their potential as sources of export revenue. This is seen as one way of enhancing national (or regional) economic performance. But should this be assumed to be a panacea for improving national economic growth and restructuring? The general pattern and structure of international trade in services is examined to show that, while valuable, the direct contribution of services to national exports is actually growing relatively slowly and the pattern of trade is highly concentrated. It may actually be important to recognize and nurture the indirect contribution of services to overall national export activity. Goods production and distribution is increasingly dependent on service knowledge and skill; its export competitiveness is a function of the expertise and intellectual knowledge (mainly services) incorporated in the products, the ‘value’ of those products to consumers, and the ways in which they reach out to their markets.     

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.     

Regionalizing global trade patterns, 1981–2001: application of a new method

This paper investigates the establishment of trading regions in the global economy at the national level using a measure of trade intensity and a regional assignment algorithm that generates economically meaningful trading regions. Although there is definite regionalization in the global economy with regard to international trade, there is no evidence of an increase in the concentration of that regionalization over time. The geography of international trade is incredibly dynamic, with change related to political, historical and economic forces. Overall, trading regions have relatively few members and are increasingly a set of geographically close countries.     

On the origins of border effects: insights from the Habsburg Empire

What are the origins of border effects on trade and why do borderscontinue to matter in periods of increasing economic integration?We explore the hypothesis that border effects emerged as a resultof asymmetric economic integration in the unique historicalsetting of the multi-national Habsburg Empire prior to the FirstWorld War. While markets tended to integrate mainly due to improvedinfrastructure, ethno-linguistic networks had persistent tradediverting effects. We find that the political borders whichseparated the empire's successor states after the First WorldWar became visible in the economy from the mid-1880s onwards,already 25–30 years before the First World War. This effectof a ‘border before a border’ cannot be explainedby factors such as administrative barriers, physical geography,changes in infrastructure or patterns of integration with neighbouringregions outside of the Habsburg customs and monetary union.However, controlling for the changing ethno-linguistic compositionof the population across the regional capital cities of theempire does explain most of the estimated border effects.     

联合跨界合作演进特征及驱动机制研究

区域经济一体化发展背景下,为改善地区间贸易开放程度,提升整体竞争力和促进跨行政边界生产要素流动,欧洲、北美和东亚地区已形成多个联合跨界合作区域。传统区位理论认为边界地区不利于形成产业集聚,但联合跨界合作区域受行政边界渗透和隔绝效应的共同影响,面临"市场潜力"和"市场竞争"间博弈,因地制宜形成独特发展模式。从联合跨界合作的动因出发,对影响要素进行研究,总结了典型模式及其驱动机制。研究表明联合跨界合作需因地制宜,全面分析地区投入产出关系,根据实际情况选择适宜的空间管治模式。     

The perils of a trade-first US foreign policy

The end of the Cold War, the advent of globalisation, and new horizons in trade theory, all seem to point out to the need for a new American economic strategy. Indeed, for many they beg for the implementation of economism as the new US foreign policy doctrine. The managed trade policy (1993-1996) of forcibly opening foreign markets for the benefit of corporate America showed much of what is wrong with a trade-first agenda in foreign affairs: it accomplished nothing in terms of economic gain while creating dangerous spillovers into other foreign policy areas--such as political and security bilateral relationships--thus endangering the broader goals of US foreign policy. A foreign policy that puts trade at the top of the agenda is unwarranted, probably unsustainable, and ultimately counterproductive. Moreover, it is hardly the most important tool by which the economic wellbeing of most Americans can be enhanced. The return of low productivity figures and a slowing American economy may well rekindle calls for a policy of managed trade. Such calls must be rejected and the lessons of the recent past must be heeded.     

Drivers and difficulties in the economic relationship between Australia and the European Union: from conflict to cooperation

ABSTRACT

Economic relations between Australia and the European Union (EU) have always been strong, but they have not always been easy. They have been difficult for Australia because it associated the EU with the loss of the UK preferential export market on its entry into the then European Economic Community. And because Australia associated the EU with the original Common Agricultural Policy, which combined subsidies for agricultural production and high agricultural tariffs to make Australian agricultural exports not competitive. They have been difficult for the EU also. Australia developed a biosecurity system to protect its agricultural sector: quarantine requirements and food safety standards made the importation of EU plant and animal products too costly. Yet Australia and the EU need each other. The EU, which is Australia’s largest services trade and investment partner, supplies the business services that drive a knowledge economy and provides the credit to finance economic development. Correspondingly, the EU needs Australia both as a commercial base in Asia and as a reliable energy supplier. This article analyses the drivers and difficulties in the economic relationship between Australia and the EU as they start negotiations for a free trade agreement.     

边境区位、边境区经济合作的理论与实践--以辽宁省-朝鲜边境地区经济合作为例

欧洲和北美的实践表明,边境地区经济合作具有推动经济全球化和区域经济一体化的作用,同时,经济全球化和区域经济一体化又促进了边境地区经济合作的发展。本文从边境区位的理论分析入手,探讨了边境区位再创造问题,并分析边境区位再创造与边境区经济合作的内在联系。最后,对辽宁省和朝鲜之间边境区经济合作做了实证研究。     

SPATIAL ECONOMIC INTERDEPENDENCE IN AN URBAN HIERARCHY SYSTEM

ABSTRACT. This paper develops a model to examine the economic interaction between central places and their hinterlands. The model allows interindustry linkages and upward trade flows in an urban hierarchy system. Trade balance equilibrium between hierarchical levels is established by direct mutual interlevel trade, rather than by indirect trade via the rural sector. The economic base multipliers generally increase with city size but occasionally they could be smaller than those of lower places. A continuous urban hierarchy is formed due to their relative location within the system, not to unspecified randomness.     

台湾自由经济区演化及动力机制研究

随着经济全球化的深入发展,自由经济区在推动国民经济总体发展战略实施与经济体制改革、促进区域经济和城市化发展等方面发挥了重要作用。20世纪60年代,台湾建立了世界上第一个正式以"出口加工区"命名的经济型特区,通过不断转型升级推动了台湾的工业化和社会经济发展。本文通过文献归纳,总结了台湾经历的"出口加工区-科学工业园区-自由贸易港-自由经济示范区"四个发展阶段的特点;从目标、政策法规、管理、产业和空间结构入手,归纳出台湾自由经济区的形成演化规律;并认为要素、产业、效益、创新、政策、市场、环境各动力因素相互作用,构成推动其演化的动力机制。本研究对完善自由经济区形成演化理论探索和国内自贸区建设具有一定参考意义。     

Outstanding issues in bilateral economic relations between Australia and South Korea

This article examines and analyses the main issues in the current bilateral economic relations between Australia and South Korea, particularly focusing on the Korean perspective. Above all, the trade imbalance continuously favouring Australia has been an issue of great concern on the part of South Korea. Australia and South Korea have shown disagreement over the lopsided trade issue, regarding attitude, approach and standpoint in addressing it. While the Korean side broadly converges on the view that the bilateral trade imbalance needs to be redressed, there are four differing viewpoints on explaining the lopsided bilateral trade: (i) the Korean government's view; (ii) the Korean business sector's view; (iii) the relevance of culture; (iv) Korea's favourable perception of Australia. This paper seeks to answer an important question in the context of the two nations' economic/trade relationship: why South Korea has ever engaged with Australia on good terms, albeit with disadvantageous trade relations. In this case, the nexus of economics and politico‐security is largely in action. That is, on one plane, South Korea is ranked as an important trading partner and a major export market of Australia. On another plane, South Korea politically needs strong allies like Australia which can give an unswerving support for it in both the regional and international arenas.     

The artist’s resale right revisited: a new perspective

This paper revisits the debate concerning the legal provisions of the artist’s resale right with the aim of providing some new perspectives. Using recently released empirical studies, the paper argues that while resale right payments may be concentrated on established artists in value terms, small amounts will be paid to a large number of relatively unknown artists, particularly in the European market where lower value transactions are large in number. By drawing on the non‐economic literature on pricing art in the primary art market, the paper suggests the rationales of the resale right, often seen as invalid in the past, may actually be valid. Art dealers will be faced with complex economic impacts as the resale right is legislated.