Real FTA work starts for business after the signing

    Chamber's News  |   | Zoe McKenzie

    When Steven Ciobo stepped up as Australia's new trade minister in April, it was easy to feel sorry for the guy filling Andrew Robb's shoes. In just over two years, Robb had concluded trade deals with China, Japan and South Korea, and near single-handedly driven the Trans Pacific Partnership to conclusion.

    But since the election, the new trade minister has leapt out of the blocks, determined to keep trade and investment at the top of the Coalition's achievements list.

    There is new energy and enthusiasm around potential deals with Hong Kong, Taiwan and Indonesia, which remains one of our most untapped trading partners. A focus on this relationship may well, among other things, provide the boost we need to develop the protein potential of Australia's north.

    With  Foreign Minister Julie Bishop, Ciobo blitzed Brussels bringing much needed momentum to talks on an EU-Australia FTA, after Robb failed to get there during his tenure. He then proceeded to charm the Brits, grabbing their attention with the promise of cheap "Aussie plonk", and setting up a working group to look at Australia-UK trade in a post-Brexit world. In a savvy move, he offered the UK some Australian trade experts to help meet its overnight need for an estimated 800 negotiators.

    But his focus must also be on making the most of the deals we have done. When a deal is signed, then the hard work must begin to ensure Australia's producers, service providers and widget makers find themselves at the front of the queue when it comes to closing deals, setting up businesses and dominating supply chains in our new FTA markets.

    This lesson was driven home during Australia's G20 presidency when the trade stream of the B20 work, led by BHP's Andrew Mackenzie, observed that while there was great support among the business community for Australia's panoply of FTAs, very few actually knew how to make the most them.

    And time is of the essence. Many benefits achieved by the FTAs provide a market advantage of up to about five years, until some later crafty country comes along and says "I'll have what she's having", and the commercial advantage is lost.

    The responsibility for seizing the FTA day is therefore shared by both government and business.

    When the China-Australia Free Trade Agreement was signed in mid-2015 the government realised that from that point forward, the majority of Australia's trade would be covered by FTAs. To that end, it had a new responsibility to inform and equip Australia's business and industries to seize the benefits of the agreements.

    Austrade was asked to develop an education program to help Australian businesses understand the importance and potential of the FTAs and the Department of Foreign Affairs and Trade devised an online portal to navigate future changes to tariff lines. Both are important tools in helping business and industry making the most of our FTAs, but they are not enough.

    The government also needs  to study and mimic the methods of the 'little countries that could' who, despite relatively small market size, achieved great results through their FTAs. Within a year of their respective FTAs coming into operation with China, Switzerland welcomed an investment boom in its banking sector and Chile turned China into the No 1 buyer of its exports, out-performing the USA.

    Critically, Australian businesses must also invest in understanding our new FTAs and making the most of the doors they open. This is particularly the case in the services sector.

    Traditionally, Coalition ministers for trade have hailed from the National Party and focused on Australia's agricultural strengths. But Andrew Robb broadened our remit and brought Australian services into the discussions, without dropping the importance of mangoes and milk powder.

    Our service providers, particularly in education, health and aged care, tourism and hospitality, as well as the gamut of professional services, now have their best opportunity to secure partnerships, alliances, and indeed, in some industries to set up 100 per cent Australian-owned and operated businesses inside our FTA markets.

    In respect of Ciobo's future FTAs the time to act is now, not when the deal is done. Trading relationships at the business-to-business level are best developed while FTAs are being negotiated to ensure their benefits are enjoyed and solidified from the day they come into effect.

    If collectively we fail to seize the benefits of Australia's FTAs, we may as well not have bothered.


    Zoe McKenzie was Andrew Robb's Chief of Staff from 2013 to 2016. She is now a consultant on trade and investment matters in the private sector.

    AFR Contributor


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