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Open trade and investment is crucial to Australia’s prosperity. It has helped fuel Australia’s enviable record of uninterrupted economic growth, created jobs, and given Australians access to cheaper and better imports such as cars, computers, and smart phones. Promoting an open global economy is an important element of Australian foreign policy.
The Liberal–National Coalition has placed a strong emphasis on securing new trade deals. The Coalition has signed bilateral agreements with China, Japan, and Korea as well as the regional Comprehensive and Progressive Agreement for Trans-Pacific Partnership (the successor to the TPP agreement abandoned by President Trump in 2017). A bilateral deal with Indonesia signed in March 2019 is awaiting ratification. The Coalition is also pursuing deals with the European Union and United Kingdom, and is participating in continued negotiations for the Regional Comprehensive Economic Partnership.
Trade Minister Simon Birmingham’s address to the Asia Society →
The Australian Labor Party believes trade is critical to Australian prosperity and says it would prioritise deals with the European Union and United Kingdom as well as concluding the Regional Comprehensive Economic Partnership. However, Labor has also questioned past trade deals, particularly on issues such as worker protections. Labor says it will seek to renegotiate parts of the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership if it wins the election.3
Labor’s policy on trade agreements →
In 2018 Australia joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the third-largest free trade zone worldwide.
There is considerable consensus between the major parties on pursuing broadly open trade and investment policies, notwithstanding some specific areas of disagreement.
In a difficult international environment, the Coalition government did well to work with other countries, notably Japan, to deliver the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after the United States withdrew from the earlier version, the TPP. Labor has supported the CPTPP and remains committed to open trade. But it has taken issue with certain elements, particularly the lack of transparency during negotiations, the waiving of requirements to test the local labour market before allowing temporary foreign workers in, and the inclusion of investor state dispute settlement (ISDS) provisions that could allow foreign firms to effectively sue the Australian Government over changes in domestic policy.
Ultimately, the economic consequences of Labor’s proposed changes in these areas will probably be marginal. But it could prove helpful in strengthening public confidence in open trade at a time when populism is driving protectionist thinking in many parts of the world. Labor has, however, signalled changes to temporary work visas, which could have more substantial implications than simply reinstating labour market testing requirements in trade agreements.
The big challenge for the party that wins government will be pursuing Australia’s economic interests in a more complex and difficult environment. The TPP almost didn’t survive the withdrawal of the United States. The CPTPP is now in place but expanding it to new members — a key original goal — will be difficult without US involvement. The Regional Comprehensive Economic Partnership offers another important prospective mega-deal involving 16 countries, including China and India. But negotiations have proven painfully difficult. Meanwhile, the entire global trading system is under enormous pressure due to the actions of the Trump administration, which could see the World Trade Organization and the global rules it embodies begin to fray. That would be detrimental to Australia’s interests as a mid-sized trading nation. Australia will need to work closely with other like-minded countries if a feasible solution is to be reached.