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Free trade is a two-way street
08 Mar 2018 | Archive
CEO of the Australian Chamber – James Pearson.
The Australian Chamber is part of a global network of chambers of commerce representing more than six million businesses of all sizes and sectors across over 100 countries.
We work towards a world where peace, sustainable economic growth and shared prosperity are underpinned by rules-based, open multilateral trade and investment.
That’s why we welcome the signing of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Santiago, Chile this week amid the turmoil caused by governments and trading blocs threatening tariffs and countermeasures elsewhere.
The US threats to impose new tariffs on steel and aluminium have concentrated our minds on what “free trade” means.
Frequently the discussion in trade policy circles is about “modern” trade issues like services trade or digital economy issues.
But these recent threats, along with earlier tariffs imposed by India on pulses that impact on Australian exporters, highlight that old-fashioned tariff battles are still to be won.
President Trump’s announcement has triggered retaliatory proposals from other nations and trading blocs like the EU.
In a week that sees our Government trying to defend and improve market access for our exporters, and hoping to make it easier and cheaper to import from other countries in the CPTPP pact, it’s timely to consider how trade can serve our country even better.
Despite efforts to negotiate improved trading arrangements with others, Australia retains some tariffs and other trade barriers.
As the tariff debate is highlighting, tariffs are a tax on imports.
They increase the costs to Australian business and families, just as increasing US steel and aluminium tariffs will increase costs for American business and households.
While some are calling for Australia to retaliate with new tariffs, this would only make worse the negative impacts tariffs have on our economy.
But there is another way.
Just as President Trump has decided to unilaterally increase tariffs, so too can Governments unilaterally reduce tariffs and relax other trade restrictions.
The Australian Chamber would like to see governments, including our own, unilaterally phase out remaining tariffs and reduce other barriers to trade over time.
It might be unfashionable to say it, in these days when nationalism and protectionism are on the rise, but Australia benefits when we make it easier to trade and invest, and for Australians and people from overseas to visit, study or work in each other’s countries.
Retaining barriers that make this harder than it needs to be only reduces the opportunities for Australians to have the jobs, living standards and opportunities to which they aspire.