The recent announcement
that steel producer Arrium was moving into voluntary administration threw up a
number of comments that many of its problems arose from the alleged
international “dumping” of steel products by Asian exporters.
There is no doubt that
a glut of steel production in Asia has created issues for Arrium and for
similar local steel producers in the EU and the USA.
However, at the same
time that Arrium is experiencing difficulties, the other major Australian steel
producer in BlueScope recorded excellent results, which would suggest that
foreign competition is not the sole reason for Arrium’s problems.
Still, the media
continues to carry regular stories regarding the evils of the foreign supply of
goods, jobs and investment allegedly threatening Australian business, ownership
and jobs.
This provides a quandry
for all levels of government who welcome such foreign involvement and commit to
it in free trade agreements (FTA).
It is especially an
issue at the federal level in an election year – how to continue to promote the
strong free trade agenda while still preserving some level of protection for
legitimate local interests which may be “damaged” by that trade.
A brief summary of
relevant considerations is set out below:
- No
such thing as “total” free trade: There are many areas
where regulation is permitted in the interests of ‘fair’ trade, such as
the WTO agreements on anti-dumping and countervailing.
- Loophole
closures: Our trade remedies
regime has been subject to significant amendments in the last few years,
much of which seems to have been aimed at “closing loopholes” or providing
“further protection against unfair competition”.
- Australia’s
Tariff Concession order regime: Put simply, the TCO is
supposed to allow duty-free entry for goods for which there is no local
production of ‘substitutable’ goods.
- Australian
Quarantine measures: Our “quarantine” regime
is also subject to international pressure. Government maintains that we
have a robust and scientifically-based regime yet many of our trade
partners see our regime as being unduly restrictive and a “non-tariff
barrier” to trade.
In amongst this, there
is the task for all Australian political parties to balance legitimate
interests which can appear to be in direct competition.
Australian business wants open markets overseas
for export of Australian goods and services as well as increased opportunities
for outbound and inbound investment. It is hard to reconcile that to a
politically expedient
desire to close off parts of our economy in a way not supported by sound
policy. Perhaps the real test of policy in this area is to help those whose
lives are affected in the pursuit of trade outcomes of benefit to us all.
A final thought – there
is evidence in the US that manufacturing jobs are being reintroduced there,
turning back from China and elsewhere in Asia where production has become more
expensive and less convenient. Over time there may be a similar turn in the
wheel for other economies.
