Free trade must not be impeded

As nations recover from Covid-19, free trade should be an important factor in restoring prosperity around the world. Its benefits are clear and have enabled millions of people to escape poverty in recent decades. Free trade boosts access to higher-quality and lower-priced goods and consumer choice. It fosters economic growth, investment flows, competition and efficient use of resources.

China’s inclination to misuse its economic might, through the trading system, to coerce and punish other nations, including Australia, is well established. Now the EU, a collective market of almost 450 million people and Australia’s second-largest two-way trading partner, appears to be misusing its trading relationship with Australia to express its displeasure about the Morrison government’s cancellation of the French Attack-class submarines.

Doing so is not in the economic interests of Australia or Europe, most of which had no connection with the subs deal.

Negotiations on the proposed Australia-EU free-trade agreement, already put off until November, have again been delayed until February. Trade Minister Dan Tehan was caught off-guard by the latest delay, which he heard about from The Australian, Ben Packham revealed on Saturday.

French Trade Minister Franck Riester has played down the prospects of an FTA, declaring “We can’t go on as if it was business as usual”.

Mr Tehan’s requests for talks with Mr Riester have been ignored so far.

The Morrison government is working its networks in an effort to get the talks back on track. Getting on with the agreement is in the interests of both parties. This was reinforced, Mr Tehan says, on his recent visit to Europe. The EU will use its FTA with Australia to strengthen its economic foothold in the Indo-Pacific, where much of the world’s economic activity is taking place, Mr Tehan said. For Australia, an FTA will “secure liberalised and open trade with our second-largest two-way trading partner’’. Australia wants the EU to slash tariffs of 7 per cent to 12 per cent on key exports to Europe. It also wants greater access for Australian investors in Europe.

As Josh Frydenberg told the Crawford Leadership Forum in September, strategic competition is increasingly playing out in the economic arena, blurring the lines between economics, politics and national security. Even between democratic nations, using trade as a lever or weapon must be discouraged. It will ultimately promote protectionist, inward-looking mindsets, which is in no nation’s best interests.

Source: The Australian