Australian Trade and Tourism Minister — and “Minister for the Gold Coast” — Steve Ciobo has been desperate to emulate his predecessor Andrew Robb and nail a “big” free trade agreement.
Robb ticked the China, Japan and South Korea FTA boxes, happily taking full credit for collective decades of frustrating, painstaking work by Australian bureaucrats for talks started by governments of yore. You can’t say that Ciobo hasn’t been trying, but the the big ones left in Asia — Indonesia and India — have been particularly elusive. So now he’s spreading the love as far and as wide as he can.
This wasn’t always the case. Australia’s first FTA was inked with New Zealand in 1983 then, for 20 years nothing until Singapore in 2003 as the wealthy 10% of the world tried to force the rest of the (developing) world to open their markets to their rapacious capital via a multilateral global deal. Still, as senior trade negotiators will admit, during this time 90% or more of significant barriers were pulled down.
When Robb exited stage right to work for the Chinese in 2015 and bereft, it seems, of any new ideas, Ciobo and his department have become obsessed with FTAs. But he has struggled.
Indian agreement elusive
Last month the government slipped out a report by Peter Varghese, the immediate past chief of Department of Foreign Affairs and Trade, who prior to that was Australia’s India envoy on the stalled comprehensive economic cooperation agreement.
After commissioning Varghese’s report in 2017, Turnbull warmed up Australia’s business community for some bad news. “It may be that the conclusion will be reached that the parties are too far apart to enable a deal to be reached at this time,” he said. Unsurprisingly, Varghese’s report concluded that the negotiating positions of Australia and India are “too far apart”. One get what one pays for.
But perhaps the bigger question is, does India really care? Its trade with Australia is booming with the two-way trade in goods and services between the two countries soaring value from $6.8 billion in 2003-04 to $24 million in 2016-2017.
Similarly, the Indonesia-Australia Comprehensive Economic Partnership Agreement deal where talks commenced in 2010 (like the India deal, under a Labor government), will be no easier. Talks ground to a halt in 2016 and the hard truth is that Indonesia simply does not see Australia as being nearly so important as we see it, hardly a basis for a meeting of the minds.
Australian trade with Indonesia has been relatively undercooked compared with other much smaller countries in the region such as Thailand, Malaysia and Singapore — unsurprising given Indonesia competes with Australia for major export markets such as China in big ticket sectors like mining and agriculture. Senior diplomats have admitted privately to Crikey that the Indonesian deal is as much strategic as it is economic, so don’t hold your breath.
Failing to make headway on the big ones, Ciobo has instead opted for some low hanging fruit. It’s unclear if anyone noticed when he landed an FTA with Peru in February (two-way trade about $500 million ) after just six months of talks, or in 2017 when he inked the Pacific Agreement on Closer Economic Relations (PACER) with eight very small Pacific nations including Cook Islands, Kiribati, Nauru, Niue, Samoa, Solomon Islands, Tonga and Vanuatu.
In July, the first round of FTA talks with the European Union were held and the DFAT website lists an FTA with the Brexiting UK (which can’t even start talks until its ugly divorce from the rest of Europe) as “prospective”. Just to lay the groundwork, mind you, Ciobo jetted across to London in March, flying over a raft of countries he has not visited in Asia but with whom Australia conducts more trade than it does with mother England. He has also, bewilderingly, started FTA talks with Hong Kong as its increasingly clear the former UK colony is being melded into mainland China but he does like to drop in.
As one senior figure said, dismissively, Australia’s overwhelming focus on FTAs is nothing but a “try-hard attempt to feel better about themselves”.
Still, just maybe, Ciobo has been kissed on the arse by a rainbow. In a global environment where the gloves have come off between the US and China, Australia’s number one and number three trade partners, two-way agreements may well be actually back in vogue, to protect interests that hitherto didn’t seem to need protecting. If that’s what’s needed, some results would be handy.