G20 and Free Trade
There’s a lot of talk around about the impending Free Trade Agreement with China, which is due to be signed at the G20 meeting in Brisbane this weekend. One number floating around claims it is worth $18 billion to the Australian economy over the next decade, but who really stands to benefit?
Let’s get things straight: ‘Free Trade Agreement’ is about as big a misnomer as you can get outside of military jargon. There really is no such thing. All that occurs (be it with the USA, South Korea or Japan) is that Australia renews its terms of trade with another country in a bilateral agreement. That’s about as good as it gets, and we’re not always on the winning side. Nor are we necessarily consulted.
For the FTA with China, one aspect that has a lot of Australian’s nervous is the amount of access our northern giant may receive for non-residents purchasing residential properties (currently unable to do so) and for the importation of labour. It doesn’t take much to realise what the latter could do to wages in Australia, especially if they somehow have to flaunt the current awards structure. Gina Rhinehart will love it.
As for the former, today it was revealed that Sydney house prices jumped 15% in the last financial year. Certainly, any enhanced foreign investment in residential property will largely impact Sydney and Melbourne markets, however
The sleeping giant is certainly any deal done on investment on businesses involved with primary production. China has been shopping the world of late as State-owned enterprises (SOEs) buy up all manner of resources in Africa and Asia. There may be short-term benefits for Australian companies through greater access to China for dairy, wine and other foods, however the long-term effects have called in to question Australia’s food security. It’s not difficult to see why Barnaby Joyce and the rest of the Agrarian Socialists are crying foul as their Coalition partners potentially ‘sell the farm’.
Finally, this FTA is further convenient for China as we lay our signature on the deal right in front of Barack Obama. During his address at our parliament in 2011, The Prez announced a ‘pivot’ to re-focus America’s strategic defenses on Asia. Understandably this infuriated the Chinese who had been maintaining a watching brief on goings-on in the region - aside, of course, from a couple of skirmishes with the Vietnamese, Koreans and Japanese over a few islands here-and-there. They certainly didn’t expect the US Pacific Fleet to push west at the same time.
As a result, Australia is now facing up to the reality it is being squeezed between the world’s two largest economies. This has a long time to play out, but in the meantime, we’re going to have to deal with the fall-out from this weekend’s FTA.