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.     

The Australia-US free trade agreement’s impact on Australia’s copyright trade policy

The Australia-US Free Trade Agreement (AUSFTA) required extensive changes to Australian copyright law. This paper assesses the impact of these changes one decade on. It considers, first, whether the costs and/or benefits predicted in 2004 have eventuated, finding clear evidence that AUSFTA has undesirably constrained domestic copyright policy, but no clear evidence either of the feared financial costs to society, or, importantly, the touted benefits to copyright owners. The most significant impact of AUSFTA’s copyright provisions, however, appears to have been on Australia’s copyright trade policy. Pre-AUSFTA, Australia promoted multilateral standards and mostly sought to comply with, but not exceed, international IP standards. Post-AUSFTA, Australia has pursued an approach akin to that of the US: endorsing international copyright rules that are significantly stronger, and more detailed. The paper queries whether this shift has been in Australia’s national interest, and raises interesting questions of path-dependence in policymaking and trade negotiations that warrant more, and broader attention in the literature.     

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.