Tarek Dale
The 2015–16 Budget includes a measure which will provide
$24.6m over two years from 2015–16 to:
... promote business understanding of the recently concluded
Free Trade Agreements in North Asia and to assist businesses to access and
maximise their benefits under these agreements.[1]
A press release by the Minister for Trade notes that the
funding will cover:
- ‘the continued roll-out of a national FTA [free trade agreement]
seminar series over the next two years’, by the Department of Foreign Affairs and
Austrade
- ‘an online dashboard-portal–including a comprehensive tariff
finder’
-
FTA kits which ‘will include fact sheets and a video
presentation’
- ‘enhanced help-desk support’
- ‘a grants program and training’, and
- ‘a promotional campaign to explain the benefits of the FTAs to
businesses and consumers, and showcase Australia as a trade and investment
destination for offshore business’.[2]
The difficulty for businesses in utilising preferential
trade agreements (PTAs—frequently referred to as free trade agreements, or
FTAs), and resulting under-utilisation, is a frequently identified issue.[3]
A survey by HSBC found that:
On average each FTA signed by Australia is used only by 19%
of Australian exporters, compared to an average of 26% among Asian exporters
using their respective markets' FTAs.
... half of the Australian respondents had limited or no
understanding of one or more of Australia's FTAs, citing complexity of trade
terms, a lack of understanding of benefits, and deals with non-strategic
markets being the key factors behind the subdued uptake.[4]
The low awareness and use of PTAs by businesses can be
difficult to measure; however an analysis of the Thailand-Australia Free Trade
Agreement (TAFTA) found that in 2010 only 10.4 per cent of eligible Australian
exports to Thailand utilised the preferential tariff rates available under
TAFTA.[5]
Following a 2015 survey of businesses, Kate Carnell, chief
executive officer of the Australian Chamber of Commerce and Industry (ACCI),
stated:
Raising awareness of all FTAs is an important first step,
followed by education for businesses explaining how the agreements can create
opportunities and save businesses money. Our research tells us there is a
strong appetite for FTA knowledge, but many businesses don’t know where to go
to find out more.[6]
ACCI has previously recommended a proactive approach by
Government to inform industry about PTAs, including that:
... the Government provide appropriate annual resourcing to
ensure that Australian industry is fully informed about the opportunities
available in the markets covered by Australian trade agreements, and how they
might utilise these agreements.[7]
[1].
Australian Government, Budget
measures: budget paper no. 2: 2015–16, p. 97. While the total
expenditure on the measure is $24.6m, the net increase in expenses is $24.2m,
with some of the funding offset ‘from within the existing resources of the
Department of Foreign Affairs and Trade’. The funding offset from within the
Department of Foreign Affairs and Trade is $0.3m (the reason the figures do not
reconcile exactly is likely rounding differences).
[2].
A Robb (Minister for Trade), $25
million to help businesses boost exports, media release, 12 May 2015,
pp. 1–2. The media release does not specify the cost of different components of
the measure.
[3].
The Productivity Commission notes in relation to different types of
trade agreements that ‘While most of these are commonly referred to as Free
Trade Agreements ... it is important to distinguish the effects of these
agreements from ‘free trade’. Free trade would require the removal of all
tariffs, quotas, subsidies and other government measures that distort trade
flows. FTAs involve preferential arrangements under which tariffs and some
other barriers to trade are lowered ... but only for those countries party to the
agreement. The barriers for other countries are not reduced by the agreement’
(Productivity Commission (PC), Bilateral
and Regional Trade Agreements, PC, Canberra, November 2010, p. 5).
[4].
HSBC, ‘Australian
companies under-utilising Free Trade Agreements, HSBC research’, HSBC
website.
[5].
P Athukorala and A Kohpaiboon, ‘Australian–Thai Trade: Has the Free
Trade Agreement Made a Difference?’, Australian Economic Review, 44(4),
December 2011, p. 461. The article examined ‘the preference utilisation rate ...
estimated as the percentage share of trade accounted for by the RoO [Rules of
Origin] certificates issued by the Thai Bureau of Preferential Trade and the
actual trade of products eligible for trade preferences’ (p. 460). TAFTA
entered into force on 1 January 2005 (Department of Foreign Affairs and Trade,
‘Thailand-Australia
FTA’, Department of Foreign Affairs and Trade website).
[6].
Australian Chamber of Commerce and Industry, Businesses
hungry for more information on free trade agreements, survey finds,
media release, 27 March 2015.
[7].
Australian Chamber of Commerce and Industry, Submission
to the Joint Standing Committee on Treaties, Report 142: Treaty tabled
on 13 May 2014–Free Trade Agreement between the Government of Australia and the
Government of the Republic of Korea (Seoul, 8 April 2014), June 2014, p. 42.
All online articles accessed May 2015.
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