Not everyone agrees on the benefits of FTAs in the first place
Australia is resilient enough to weather the weakening of the Chinese economy, the Nobel prize-winning economist Paul Krugman has said, but he poured cold water on the benefits of the
free trade agreement between the two countries.
Krugman supports free trade, but was sceptical of the benefits of bilateral agreements such as the one between China and Australia.
They were often misleadingly pitched as something that must be done “for the national good”, he said. “It isn’t really – it’s not going to have any major impact on GDP per capita.”
He suggested the Australia-China deal could well be, like the Trans Pacific Partnership, mostly about entrenching the power of monopolies. “Free trade –which on the whole I’m a supporter of – is being used to cover fields that really are not about that at all.”
Krugman also opposed the
TPP currently being negotiated, of which Australia’s trade minister, Andrew Robb, is an
ardent advocate. It was “not really a trade agreement”, Krugman said, as trade in the Pacific area was “already pretty free in most things”.
Rather, he argued the TPP was mostly about “intellectual property rights and dispute settlements procedures”, for which there were “very clear negative argument that it hurts consumers”.
“If Australia is having problems with selling stuff to the rest of the world it has a pretty straightforward answer, namely it’s got a floating currency. The Aussie dollar goes down and pretty much takes care of itself, so Australia really doesn’t need to worry about that.
The Australian Productivity Commission has also been critical of FTAs
- Preferential trade agreements (FTA) add to the complexity and cost of international trade through substantially different sets of rules of origin, varying coverage of services and potentially costly intellectual property protections and investor-state dispute settlement provisions.
The emerging and growing potential for trade preferences to impose net costs on the community presents a compelling case for the final text of an agreement to be rigorously analysed before signing. Analysis undertaken for the Japan-Australia agreement reveals a wide and concerning gap compared to the Commission's view of rigorous assessment.
- http://www.pc.gov.au/research/recurring/trade-assistance/2013-14/trade-assistance-review-2013-14.pdf