- Understanding and uptake of the benefits of trade and FTAs
Overview
3.1The Committee received a breadth of evidence considering the understanding and uptake of the benefits of trade and free trade agreements (FTAs). Business awareness of the opportunities and benefits offered by trade and FTAs was identified as being high in industries that have historically been well-engaged in trade. However, the level of awareness, and capacity to take advantage of the opportunities provided, were noted to vary considerably across different industries and by business size.
3.2It was broadly identified that the uptake and utilisation of Australia’s FTAs is high. Measurement of FTA uptake or utilisation was considered important to provide insight about current and potential users, as well as to signal areas for improvement. Some submitters were of the view that information on the level of usage of specific FTAs and for the attribution of gains to specific FTAs is limited or not available.
3.3Efforts to improve awareness of the benefits of trade and how to access them are required to fully take advantage of trade opportunities. Both government and industry stakeholders outlined an extensive range of activities currently undertaken to build awareness and capacity. Ideas for improvement in activities and approach were put forward, including an emphasis on greater government-industry collaboration.
3.4Some stakeholders discussed the level of appreciation of the value of trade to Australia within the wider community, including why it matters to Australia as a trading nation. Further, it was observed that there is a need to understand and communicate how the benefits of trade accrue to all Australians, including across geographic locations and demographics.
3.5Broader challenges and barriers to accessing the benefits of trade and FTAs are outlined in Chapter 4, and issues relevant to the ability of small and medium sized enterprises (SMEs), First Nations communities, and diaspora communities to engage in trade are discussed in Chapter 5.
Business awareness of the opportunities and benefits offered by trade and FTAs
3.6As detailed in Chapter 2, the success of many Australian industries and businesses is strongly linked to open international trade supported by FTAs. As such, many stakeholders identified a high-level of awareness of the opportunities and benefits of trade and FTAs amongst businesses within those industries.
3.7For example, the Red Meat Advisory Council (RMAC) advised that Australian red meat businesses have actively capitalised on the economic benefits generated by FTAs over the last two decades and that this has: ‘… resulted in a very high level of FTA literacy amongst those in the sector.’
3.8Similarly, the National Farmer’s Federation (NFF) described that due to a long-term exposure to international trade and a reliance on an open trade environment for ongoing profitability, Australian farmers are very aware of the economic benefits provided by FTAs. Mr Christopher Young, General Manager, Economics and Trade at the NFF elaborated in telling the Committee that:
Regarding our sector's understanding of the benefits of FTAs, it's undoubtedly very high. From producers on the ground, who recognise that their spot and forward contract prices are so often underpinned by international market access, to industry bodies like the one I work for, who dedicate time and resources to trade, it's importance is lost on very few.
3.9The Department of Agriculture, Fisheries and Forestry (DAFF) also commented that due to the export-oriented nature of the Australian agriculture sector: ‘… industry bodies and companies have a well-developed understanding of the economic benefits provided by FTAs and their ability to increase exports and provide new and commercially meaningful access to diversified markets.’
3.10GrainGrowers and the NFF both noted that trade-exposed industries have become even more acutely aware of the importance of trade in recent years as a result of rising protectionist sentiment and trade disputes, as well as the impact of the COVID-19 pandemic on global supply chains.
3.11Despite the high-level of familiarity with the benefits offered by trade and FTAs across some industries, the Committee also received evidence that awareness of the benefits of FTAs and the capacity to access them varies considerably amongst Australian businesses and communities.
3.12Trade and Investment Queensland (TIQ) cited research that indicated there is lack of awareness about FTAs and their potential to increase revenue for businesses. It added that, with regard to the three most used FTAs, businesses in agriculture, manufacturing, and consumer goods were more likely to receive benefits while the advantages for the mining and services sectors were fewer.
3.13The Australian Dairy Industry Council (ADIC) indicated that even within an industry that is highly engaged in international trade such as the dairy industry: ‘… businesses may not be aware of the FTAs in place or understand how to leverage them due to a lack of information and expertise…’
3.14AUSVEG described that the benefits of FTAs are sometimes not able to be realised due to lack of capacity or resources for exporters to promote a product in-market.
3.15Food South Australia (Food SA) noted that suppliers in the industry vary in understanding according to the size of the business, resources available, and the time that owners are able to allocate outside of producing and selling their products.
3.16The Australia China Business Council (ACBC) observed that there are differing degrees of understanding of the benefits of the China-Australia FTA (ChAFTA), with their larger corporate members having a strong understanding of the benefits and regulatory requirements in comparison to smaller businesses.
3.17The Australian Industry Group (Ai Group) specified that an underappreciated area in which businesses lack knowledge is dispute resolution provisions in FTAs, including their rights and the steps to take to enforce them, which reduces the effectiveness of the provisions to provide security to businesses engaging in international trade.
Measuring uptake and utilisation of FTAs
3.18Submitters discussed the level of FTA uptake or utilisation, how utilisation is measured, and the value of having a robust measurement of utilisation with a view to determining whether Australia is accessing the full benefits offered by its FTAs. In raising FTA uptake or utilisation some submitters had a narrow concept relating to the specific use of FTAs, while others took a broader definition relating to potential export and import opportunities.
3.19The Productivity Commission described business uptake of FTAs as high with an aggregate utilisation rate of 94 per cent in 2021-22. It termed utilisation as the percentage of times the agreement is used to reduce a tariff on an imported product that is eligible for a concession. Conceptually the utilisation rate is the ratio of the value of imports that used the preference relative to the total value of imports that qualify for the preference.
3.20The Department of Foreign Affairs and Trade (DFAT) outlined that it monitors the utilisation of Australia’s FTAs through the exchange of data on preference utilisation with trading partners. It explained that:
Preference utilisation measures the total percentage of usage under one or several FTAs the value of goods for which a preference was claimed, over what might be eligible to be claimed. The residual is the value of goods for which preference was available but not claimed. Businesses in many cases have several options for preferences. The total utilisation figure reflects usage under all available preferences.
3.21Utilisation figures for select FTAs provided by DFAT are outlined in table 3.1 below.
Table 3.1Free trade agreement utilisation (per cent)
| | |
Chile | 95.7 | 95.7 |
Japan | 96 | 96 |
New Zealand | 97.7 | 97.4 |
United Kingdom | 72.3 | 49.4 |
United States | 46 | 78.3 |
3.22DFAT advised that key factors influencing FTA utilisation include the margin of preference available, specific rules of origin, and the level of integration into business processes. It added that utilisation is generally lower where a margin of preference is small such as for the United States (US) where average tariff rates offered to all members of the World Trade Organization (WTO) are 1.5 per cent (at the time of the submission) and that it often takes businesses time to start to take advantage of newer FTAs such as the Australia-United Kingdom FTA (A-UKFTA).
3.23The Productivity Commission made the point that in general increasing the utilisation rate would maximise the benefit received from FTAs, however in some cases the benefits of accessing the concession available may be outweighed by the costs involved. It also noted that the FTAs with the lowest utilisation rates are those with comparatively smaller trade values.
3.24DAFF stated that it monitors and measures the utilisation of FTAs through the collection of trade data and quota utilisation rates. It also advised that it manages 63 export quotas across several countries under which exports receive reduced tariff rate arrangements for certain products at specific volumes and that usage data for these is published online.
3.25RMAC outlined that in the red meat industry uptake of improved market access arising from FTAs is high, as indicated by consultation with members, which is confirmed by DFAT statistics on the use of tariff preferences, DAFF export data, and Australian Bureau of Statistics (ABS) data on the increase in value from export returns.
3.26The Bankwest Curtin Economic Centre (BCEC) outlined its work examining variations in trade flows between countries to estimate the change in trade value due to FTAs, taking into account external factors that influence trade flows. It found a net increase in trade flows due to the implementation of an FTA including increases in Australian exports to China by $275.4 billion, Japan by $99.1 billion and Korea by $40.7 billion compared to if there had been no FTA in place.
3.27The Committee received evidence suggesting that data and information available on the uptake and utilisation of FTAs is limited. For example, the Business Council for Sustainable Development Australia (BCSDA) identified that: ‘Currently, there is limited comprehensive data on the utilization of FTAs by Australian businesses. Existing monitoring mechanisms do not adequately capture the breadth of FTA benefits across different sectors and communities.’
3.28TIQ noted that their ability to monitor and measure the FTA utilisation is limited to tracking the movement over time of ABS data such as monthly Queensland export volumes and values at a commodity level. Analysis of this data can then provide insights into exports that may has resulted from the uptake of FTAs. For example, exports in agriculture, minerals, and education from Queensland to China increased following the commencement of ChAFTA. It also suggested that there are data gaps for trade and investment at the state and territory level.
3.29The Australian Information Industry Association (AIIA) commented that it is unclear which elements of economic or export growth can be attributed to specific FTAs and that it is not aware of any data that links FTAs and corresponding exports or inflows of capital investment into Australian technology industries. It added that it may be necessary for the Australian Government to track the benefits seen by Australian businesses attributable to FTAs to determine their effectiveness.
3.30The Northern Territory Department of Industry, Tourism and Trade (NTDITT) observed that there are significant challenges in measuring FTA utilisation because trade and investment flows are affected by a wide range of factors outside FTAs, making it difficult to isolate the direct impact of an FTA on trade growth.
3.31Food SA mentioned that some of its members have participated in government-led surveys but are broadly unaware of how FTA utilisation is monitored.
3.32Several submitters reflected on why robust measurement of FTA uptake and utilisation is important and made suggestions for how it could be improved. In doing so, most broadly made a connection between robust measurement and understanding whether an FTA is operating as intended, where support may be required, and if maximum benefit is being received. For example, AUSVEG stated that: ‘… ongoing focus is needed on tracking and measuring utilisation and uptake of these agreements, to ensure the full benefits are being realised.’
3.33BCEC described DFAT and Austrade’s measures of FTA utilisation as helping to understand which sectors and regions are benefiting and identifying areas that require additional support.
3.34The NFF outlined that: ‘Monitoring and evaluating how FTAs are used is important for both government and industry to understand its effectiveness and where our utilisation can be improved.’ It elaborated that it values aggregated commodity specific agriculture, fisheries and forestry export data in providing insights into how the industry is utilising FTAs, and into what opportunities may not be being fully captured under existing FTAs. It also added that it strongly supports adequate resourcing of the Australian Bureau of Agricultural and Resource Economics (ABARES) and the ABS to undertake value statistics and data monitoring by tariff line to ensure tariff preferences are being used.
3.35ADIC suggested that current FTA utilisation data provided by the Australian Government is limited and stated that:
… the Australian dairy industry would greatly benefit from comprehensive reporting from the government regarding the utilisation of FTAs, particularly in markets where multiple FTAs are concurrently in effect. This type of reporting would offer clear insights into which FTAs are actively utilised by exporters. Such transparency is essential for verifying whether the barriers [to trade] are influencing exporters to prioritise certain FTAs over others.
3.36BCEC outlined that obtaining detailed firm level data, such as through longitudinal surveys, would provide useful insights into the uptake of opportunities offered by FTAs, including by characteristics such as business size, industry and ownership structure. Such data would also inform measures to support businesses to increase engagement with trade and FTAs.
3.37BCSDA recommended the development of a centralised FTA utilisation dashboard to aggregate data from multiple sources, provide real-time insights, and highlight areas where utilisation is low. It added that a dedicated section within DFAT could be established to collect, analyse and report data on FTA usage to provide accurate and actionable insights, similar to South Korea's FTA Utilization Support Centre.
3.38Ai Group suggested that: ‘It is crucial for Australia’s FTA policy to include a well-organised research program that examines the utilisation, impact, and administration of FTAs.’
Raising awareness and building capacity
3.39Submitters broadly identified the need to raise awareness of the opportunities afforded by FTAs, and to build capacity if the benefits on offer are to be fully realised by Australian businesses. It was widely recognised that there is a crucial role for both government and industry bodies, including in collaboration.
3.40The Committee received evidence outlining a wide range of current activities undertaken by both government and industry bodies as well as proposals for new and enhanced activities or approaches.
Government-led activities
Consultation, outreach and engagement
3.41DFAT advised that it raises awareness of the benefits of trade and investment through its extensive range of formal consultation processes that include regular engagement with individual businesses, peak bodies, First Nations groups, labour unions and civil society groups. Some of these consultations include the Ministerial Council on Trade and Investment, the Trade 2040 Taskforce, and the Peak Bodies Deep Dive Series.
3.42DFAT also detailed that it builds awareness of Australian products in overseas markets through one-on-one meetings and seminars, as well as both hosting and attending a range of other outreach events. Domestically, it highlighted that it has been delivering FTA information sessions in rural, regional and metropolitan locations since 2015 and that the current Trade Diversification Regional Engagement Program has facilitated engagement with over 170 business since 2021.
3.43The NFF and RMAC both praised DFAT’s stakeholder consultation processes as well as their outreach and engagement activities.
3.44DAFF submitted that once an FTA is signed it holds roundtables, trade shows and roadshows, often with Austrade, to inform industry groups, farmers, and the public about the key outcomes and benefits of the agreement.
3.45Austrade explained that it delivers targeted outreach activities in collaboration with industry bodies, business chambers, partner country governments, and state and territory governments to build business understanding of opportunities and improved market access resulting from FTAs. Recent examples in relation to the A-UKFTA and Australia-India Economic Cooperation and Trade Agreement (A-IECTA) include:
- Webinars in collaboration with the United Kingdom (UK) Government and Fintech Australia.
- Webinars in collaboration with leading industry bodies in the agriculture sector in both the UK and Australia.
- Information sessions conducted with state and territory government agencies, to increase their awareness of the benefits of the A-UKFTA.
- Briefings to SMEs delivered in partnership with the Australia-UK Chamber of Commerce and DFAT.
- Delivering the ‘Taste the Wonders of Australia’ gala in New Delhi, in partnership with state governments and industry bodies.
- Through the Australian Business in Europe (ABIE) submission, the Australia-UK Chamber of Commerce drew attention to a number of events and activities undertaken with support from the Australian Government to help promote the opportunities and benefits of the A-UKFTA in the UK. It specifically mentioned that the partnership with the Australian Government and in-person engagement with the business community were key elements in the success of the events.
- Austrade also highlighted its participation in international events to showcase Australian products. For example, ProWine Mumbai 2023 where Austrade, in partnership with South Australia, Victoria, New South Wales and Western Australia governments, as well as Wine Australia, facilitated the largest Australian wine delegation to India, comprising 24 Australian wineries with over 75 labels.
- DAFF noted that states and territories also undertake extensive engagement activities to promote awareness and encourage businesses to take advantage of FTAs. Illustrative of this point, TIQ outlined a broad range of activities that it undertakes to promote the benefits of trade and FTAs for Queensland businesses. These include networking events, tailored advice to export-ready businesses on market entry and overcoming barriers, workshops and seminars on export opportunities and challenges, sharing insights on the competitiveness of Queensland products in certain markets based on comparative tariffs, and delivering market insight sessions for specific countries such as India.
- TIQ also explained that it: ‘… leads trade missions to and from FTA partner countries, helping Queensland businesses establish contacts and explore market opportunities firsthand.’ For example, in April 2024 TIQ and Avocados Australia delivered a Queensland Avocado Trade Mission to facilitate engagement between importers from India with Hass avocado growers and distributors across the state.
- DAFF emphasised the role of its agriculture counsellor network in promoting Australian agricultural interests abroad:
[The role of the agriculture counsellor network] includes liaising with other departments, Australian agencies in the market, industry stakeholders, international counterparts and Australian farmers and exporters to explore and develop new market openings, improve technical market access, provide on the-ground market intelligence and resolve issues when Australian agricultural goods arrive at their foreign destination.
A recent example of the on-the-ground role of the counsellor network was the work of the DAFF agriculture counsellors in New Delhi to facilitate the Australian cotton and wool industries’ engagement at Bharat Tex, India’s largest textile trade show supported by the Indian government. This demonstrated the value of the Indian market to stakeholders and advanced industry to industry connections to increase exports, including highlighting preferential access negotiated under A-IECTA.
3.51The NFF and AUSVEG offered support for the agriculture counsellor network as an initiative to promote Australia’s trade opportunities and realise the benefits of FTAs.
3.52DFAT cited the important roles played by its state and territory-based officials as well as its extensive overseas-based network in connecting with stakeholders, building awareness of trade opportunities, and promoting Australia’s trade interests abroad.
3.53On a similar note, RMAC outlined the essential contribution of trade officials across Australia’s Embassies, High Commissions, and Consulates in communicating the outcomes of FTAs in export markets, which often involves capacity building to ensure trading partners and their stakeholders are aware of new import procedures and are readily able to access the benefits of FTAs.
3.54DFAT drew attention to Australian Government support for the establishment of councils to underpin bilateral and regional relations, such as the recently commenced Centre for Australia–India Relations which focuses on facilitating greater collaboration with India, including through programs and activities to support Australian business engagement in the Indian market.
3.55DFAT also nominated Invested: Australia’s Southeast Asia Economic Strategy to 2040 as a key program to strengthen Australia’s trade and investment relationship with Southeast Asia and listed some of its initiatives including a Southeast Asia Investment Finance Facility, an Australia-Southeast Asia Business Exchange, Business Champions, Investment Deal Teams, an ASEAN-Australia Centre, and a Placements and Internships Pilot Program for Young Professionals.
Digital communications and services
3.56DFAT outlined that its website provides a range of explanatory material that summarises FTA outcomes and guides to obtaining preferential tariffs. Both the NFF and RMAC commended DFAT’s work in distilling the complex legal text contained in FTAs into a digestible format.
3.57DFAT highlighted its FTA Portal and described some of its functions:
The FTA Portal is a free online platform, that provides information about Australia’s 18 in-force FTAs. The portal provides a Harmonized System (HS) Code and tariff rate finder, combined with information on rules of origin and documentation requirements. It also describes services commitments relevant to Australian exporters and provides selected high-level market data. The Portal compares agreements where there is more than one FTA in place for a particular market, simplifying the process of choosing which FTA offers the greatest benefit for any given export to that market.
3.58Several submitters identified the FTA Portal as a highly useful resource for increasing understanding and supporting businesses to access the benefits of FTAs.The ACBC recognised the value of the FTA Portal and suggested that increased efforts should be made to promote it as a resource.
3.59Austrade showcased its Go Global Toolkit digital service that promotes the benefits of FTAs and supports uptake by: ‘…making it faster and easier for existing and aspirational exporters right across Australia to access key information to make more informed decisions about suitable international export markets.’ It added that the Go Global Toolkit includes a range of FTA guides, including specific guides on Rules of Origin and freight and shipping requirements; Market Search and Market Explorer Tools providing streamlined access to overviews of the benefits of potential overseas markets; and a Tariff Finder Tool to help identify the most favoured nation rate and preferential tariff rates under FTAs.
3.60Austrade made the point that as a digital tool the Go Global Toolkit is accessible to a wide range of stakeholders and stated that since March 2021 it has helped over 320,000 users to better understand the benefits of FTAs and how to access them.
3.61The Department of Home Affairs (DHA) outlined the Australian Border Force’s (ABF) ongoing efforts to support Australian importers to meet the obligations required to claim preferential rates of customers duty. It elaborated that information available for each FTA on the website may include FTA guides, how to claim preferential rates, documentation requirements, and circumstances for refunds of customs duty. DHA noted that each FTA is a negotiated outcome that contains different requirements and that detailed FTA guides aim to provide specific information to assist importers in utilising each FTA once in force.
3.62The ABF also has an online tool that assists businesses to identify and make informed decisions about FTAs and other preferential arrangements that are applicable to goods of a particular country.
3.63Austrade submitted that it uses a range of media and digital channels such as its website, specific interest newsletters, social media, and traditional media to promote the positive benefits of FTAs and highlight case studies of Australian export success stories. It also produces ‘marketing toolkits’ designed for government and industry stakeholders to share that depict key wins for Australian businesses through FTAs, allowing partners to select relevant case studies to promote to their business stakeholders, highlighting the potential benefits of trade and FTAs.
3.64Austrade explained the case studies: ‘… provide real-world examples of how FTAs have delivered the removal of trade obstacles and help enhance the audience’s strategic thinking and approach to new market entry.’ Several other submitters commented on the value of case studies or success stories in demonstrating tangible benefits of trade and in encouraging others to explore opportunities.
3.65DFAT also noted that it also raises awareness of the benefits of trade through publications such as Business Envoy, and through online communications tools and advocacy.
3.66Similarly, TIQ explained that it uses its website and social media to promote export success stories and share examples of businesses taking advantage of FTAs, such as showcasing the doubling of avocado exports to India.
Industry-led activities
3.67The NFF submitted that it assesses each FTA on its net benefit, and that: ‘… where an FTA is commercially meaningful for agriculture, fisheries and forestry, we will support and assist members to understand the benefits available.’
3.68Mr Warren Males, Consultant, Canegrowers, told the Committee about the organisation’s efforts to raise awareness and build capacity in the industry:
On the level of understanding the social and economic benefits presented by FTAs, Canegrowers actively works to ensure that our members, the wider industry and the broader community are well informed about the benefits and the implications of these agreements for the Australian sugar industry. We do this through advocacy and negotiation, through public statements… We educate and collaborate with our industry and local communities.
3.69Food SA described that stakeholders such as the relevant state government agencies and industry bodies hold a comprehensive understanding of the benefits of FTAs and have a responsibility to educate their members or constituents about FTA opportunities and implications. It also outlined an FTA Market Entry Project it previously ran with assistance from Austrade and suggested that the Australian Government should provide additional resources for similar programs aimed at building understanding of the benefits of FTAs and the practicalities of accessing them.
3.70The ADIC described some of its efforts to assist members to understand and benefit from FTA opportunities: ‘To assist the Australian dairy industry in navigating trade agreements for Australia’s top 10 export markets, Dairy Australia regularly publishes a Trade Agreement Comparison guide, which provides dairy product exporters with information on how Australia’s tariffs compare to other suppliers in key dairy export markets.’
3.71Similarly, AUSVEG advised that it takes considerable time to build industry capability to be able to take advantage of vegetable export opportunities. It explained that it undertakes a range of capacity building initiatives including: ‘…an online e-learning training program for aspiring exporters to understand the unique aspects of exporting prescribed fresh vegetables to international markets. One module of this online training program focuses on FTAs, how they benefit exporters and how exporters can best utilise these arrangements.’
3.72DAFF noted that some industry bodies in the agriculture sector have an on-the-ground presence in key overseas markets to help promote Australian exporters and gather insights into consumer preferences and trends.
3.73The ACBC informed that it holds industry specific roundtables to improve awareness of ChAFTA and previously held a ChAFTA training program that: ‘… saw hundreds of businesses in Australia and China trained in the technical and practical elements of the agreement.’ It has also supported research examining the benefits of ChAFTA for the Australian economy. The role of bilateral business councils and chambers of commerce is discussed further in Chapter 5.
Government and industry collaboration
3.74Submitters and witnesses widely acknowledged the key roles that both government and industry play in increasing uptake through efforts to build awareness and capacity to engage with trade and FTAs. In doing so, some emphasised the importance of government and industry work together, and the need for stronger collaboration. For example, Ai Group observed that: ‘The collaboration between industry associations and the Australian Government, is crucial in assisting businesses [to] understand and utilise Australia’s FTAs.’
3.75Likewise, the NTDITT reflected that: ‘Government and industry collaboration is essential to ensure that businesses are well-informed and equipped to navigate the complexities of international trade.’
3.76Food SA described the part of their role as the bridge between government and businesses.
3.77The NFF specified that government efforts could be enhanced by partnering with industry groups to play a greater role: ‘… government should continue to play a central role in activities to raise the awareness and understanding of Australian businesses of how to utilise the benefits of FTAs… However, the work of government could be amplified by partnering with industry organisations that are better positioned to communicate to the specific groups they represent.’
3.78The Australian Chamber of Commerce and Industry (ACCI) made a similar point:
The Australian Government should continue to collaborate with industry representatives such as ACCI and its members across the full agreement lifecycle, from ensuring that commercially-meaningful outcomes are achieved during the negotiation phase, to the development of simple resources to educate businesses and drive agreement utilisation, and to inform the government’s monitoring, troubleshooting and upgrade processes. In providing services to exporters, the Australian Government should seek a collaborative approach with private sector representative bodies to improve the reach of initiatives, align efforts to where they can best be delivered and reduce risks that Government actions “crowd out” private sector led initiatives.
3.79The BCSDA responded that there is room for improvement in coordination and outreach efforts between the Australian Government, state and territory governments, and industry bodies, to ensure comprehensive engagement in the promotion of FTAs. Consequently, it advocated for: ‘… the establishment of a National Trade Promotion Council, bringing together representatives from federal, state, and territory governments, industry bodies, and key business stakeholders. This council could coordinate trade promotion activities, share best practices, and ensure a unified approach to leveraging FTAs.’
Areas for improvement
3.80The Committee received suggestions for new and enhanced activities to raise awareness and build capacity amongst Australian businesses to capitalise on the benefits offered by trade and FTAs.
3.81The NTDITT observed the need for enhanced support from the Australian Government, including funding for education and outreach to expand the reach of workshops, seminars, and online resources to assist businesses to better understand and leverage FTAs effectively. It elaborated:
There is a need for more targeted education and outreach programs to raise awareness among Northern Territory [NT] businesses, particularly [SMEs], about the specific opportunities and advantages provided by [FTAs]. While the understanding of the social and economic benefits provided by [FTAs] is present in the [NT], there is a clear need for ongoing efforts to enhance this understanding and support the utilisation of these benefits.
3.82Similarly, the BCSDA recommended that to increase engagement and bridge knowledge gaps the government should implement targeted educational campaigns and outreach programs, as well as tailored resources focusing on the specific benefits of FTAs for different sectors.
3.83The NTDITT made several further recommendations to improve awareness and capacity around FTAs in the NT and more broadly:
- Develop comprehensive programs that guide businesses through the process of utilising FTAs and include practical tools, case studies, and success stories to demonstrate the tangible benefits of FTAs.
- Expand capacity-building initiatives such as low-cost micro-credential courses for industry associations, trade interlocutors, and freight forwarders to provide training on FTA provisions, compliance requirements, and market entry strategies.
- Enhance support for targeted trade missions that consider the needs and opportunities of different regions and specific sectors where the NT has a competitive advantage.
- Increase staffing levels of Austrade and DFAT in the NT from the current one and two representatives to provide greater resources to focus on trade and investment support for NT businesses.
- The AIIA suggest that the government could overcome a lack of FTA awareness and information to support uptake in the industry by conducting targeted briefing and roundtables with its members.
- Ai Group suggested that the government should develop a long-term, comprehensive strategy for educating businesses about FTAs.
Appreciation of the importance of trade
3.86As outlined in Chapter 2, the benefits of trade for Australia are significant and broadly accepted. As described above, there is a high-level of understanding of FTAs and appreciation of the benefits of trade within industries that participate in international trade as well as within the regions and communities where those are located.
3.87Several submitters reflected on the level of understanding and appreciation of the economic and social benefits of trade to Australia amongst the public, with some also observing why it matters and why it may be increasingly important.
3.88DFAT referred to the Lowy Institute Poll 2024 Report which found that Australians hold strong support for the contribution of open trade to Australia with 80 per cent saying that it is good for their standard of living, 77 per cent that it is good for the economy, 76 per cent that it is good for businesses, and 71 per cent that it is good for creating jobs.
3.89Mr Christopher Young, NFF suggested that the public appreciate the importance of trade:
In terms of the community aspect… Australians are fairly well-versed in the importance of international trade… from a production side they probably recognise the importance of industries like ourselves—commodity sectors. Similarly, they're exposed to [FTAs] on the purchasing side, and that's probably where the general community have their largest exposure—on the goods and services that they purchase, which are ultimately coming to us via trade arrangements.
3.90On the other hand, some indicated that amongst the public the significance of trade and FTAs to trade-exposed sectors, regional communities, and the national economy may not be fully understood or appreciated. For example, Ms Annabel Mactier, Policy Manager, Trade and Supplychains at GrainGrowers stated that:
In regional areas there's definitely a very strong understanding of the importance and how farmers and the broader regional communities have benefited from [FTAs]. I think that is very widely understood, but there is a need for a greater understanding of the importance for Australia. We're not a niche industry; we're incredibly important to Australia's economy.
3.91Likewise, Mr Warren Males, Consultant at Canegrowers told the Committee that:
… the benefits of trade for our industry are indisputable, and they're very significant… But the understanding of that across the wider community is, I think, more limited. In the wider community—that being outside of agricultural communities and outside of the mining communities—the knowledge of the benefits of trade is perhaps not as great as we would like to see it.
3.92Professor Richard Pomfret commented that the public has a limited understanding of FTAs and linked it to how they are covered by the media: ‘Among the Australian public, the level of understanding of these agreements is low, largely because media present them in terms of market access and largely about avoiding tariffs, without asking why two economies with zero tariffs almost across the board – [For example,] Australia and Singapore – would sign an FTA.’
3.93The Australian Automotive Dealers Association (AADA) made the point that understanding the benefits of FTAs is not a factor in consumer purchasing decisions:
While car dealers have a good understanding of the benefits derived from FTAs due to their contractual agreements with OEMs [original equipment manufacturers], consumers typically don’t consider country names and subsequent tariffs or taxes that may apply when making purchasing decisions. Instead, purchasing decisions are informed by factors such as vehicle price, brand reputation, performance, technology, safety, and environmental features.
Due to the nature of customs duties and tariffs being indirect taxes, consumers are often unaware of their application on a purchase that they make.
Why appreciation of the importance of trade matters
3.94Several stakeholders explained why it is important for the Australian public to have a strong appreciation for the benefits of trade, often drawing a link to safeguarding Australia against rising geopolitical tensions and protectionist sentiment.
3.95BCEC observed the need for a strong understanding of the benefits of trade in the context of a changing international environment: ‘With increasing geo-political tensions and an increase in protectionist behaviour by some nations…, it is important that all members of the Australian community understand the impact that FTAs, and trade more broadly, have on their lives and the interdependence of our connected economies.’
3.96Mr Christopher Young, NFF explained to the Committee that:
…the global trading framework, which these FTAs exist within, is under pressure. The geopolitical, institutional and monetary stability which have served our sector very well is being challenged. While… the understanding of the benefits of FTAs is high within our sector, it is imperative that we all, particularly against these global challenges, continue to promote their benefits to the broader community and fend off any creeping protectionist tendencies.
3.97GrainGrowers noted that following a period of trade liberalisation, the COVID-19 pandemic and the Russian invasion of Ukraine have contributed to substantial increases in protectionism, particularly for grain. More recently, it observed that in the 2024 US election both presidential candidates had policies advocating forms of trade restrictions in response to public sentiment, reflecting a broader shift away from seeing the benefits of trade.
3.98In relation to rising protectionism and a shift away from the global consensus on the benefits of trade, Mr Zachary Whale, General Manager, Policy and Advocacy at GrainGrowers said that: ‘For Australia that doesn't work. Our economy cannot survive without healthy exports. I think that is a good message that we should all try to get across to the broader public.’ Ms Annabel Mactier, GrainGrowers added that: ‘Strategically, there's importance for all of us—the government and industry as well—to be promoting the benefits and communicating that. Otherwise, we could see a rise in anti-trade sentiment because of a lack of understanding of the benefits not just for big business but for individual farmers…’
3.99Mr Christopher Young, NFF explained the need to be aware of how the message about the importance and benefits of trade can be simplified: ‘… trade arrangements can be technical in nature and we probably don't do ourselves any favours by repeating them in a technical way. We can make sure that we communicate, simply and clearly, why trade is so very important for the country.’
3.100Both the BCEC and the ACBC referred to research conducted by BCEC and commissioned by the ACBC that ChAFTA elevated the average Australian household disposable income by $2,600 in 2022-23.
3.101Dr Daniel Kiely, Senior Research Fellow, BCEC, explained the value of their research in contributing to increased recognition of the benefits of trade and FTAs:
The likes of the reports that we do and the demonstration of the impacts that this has at, say, the household level is really important. I think it's important for households to understand how trade impacts and benefits them and how it can inform the media and public debates around this.
3.102Referring to the same research, Mr Patrick Mayoh, NSW President of ACBC told the Committee that:
… a message we're trying to get out is the benefits of trade with China are helping Australian households in very material ways… in a general sense, people understand that free trade is helping them, but in a more granular sense they don't. So they don't understand what kinds of products and in what material ways it's helping their bottom line, so that's what we're trying to do.
3.103The Productivity Commission submitted that it is unaware of studies on the public or businesses’ understanding of the social and economic benefits provided by trade and FTAs. In response to being asked whether such information would be useful, Prof Alex Robson, Deputy Chair of the Productivity Commission told the Committee that:
Certainly, there is a broad view in Australia about the benefits and costs of trade with the rest of the world, and that view and counterviews play out in the public debate. But it might be worth having a formal survey or study and updating it regularly around the public's and businesses' view of these kinds of things; how that would be designed and who would do it are all questions for government. But I think it would be beneficial. It's always good to have more information rather than less when you're making government decisions.
3.104Several stakeholders mentioned the value of case studies and recognition programs highlighting success at the business and industry level to demonstrate and build awareness of the benefits of trade and FTAs. Ms Annabel Mactier, GrainGrowers nominated the substantial gains to the Australian industry and communities from the temporary removal of the tariff on chickpeas in India (which saw prices for growers rise nearly $100 per tonne to record highs) as an example of the type of success stories that should be communicated to demonstrate the benefits of trade.
Distribution of the benefits of trade
3.105Several submitters suggested that while it is well established that trade and FTAs are beneficial in aggregate, there are gaps in the understanding of how these benefits are allocated across different parts of the economy and society.
3.106Building on its findings of the benefits of ChAFTA to the average Australian household, the BCEC observed that while it is clear that trade contributes to overall economic growth and job creation in Australia much less known about how benefits differ across jurisdictions and between households. It explained that in its research the increase in household income as a result of ChAFTA differs significantly across states and territories, indicating a difference in how the benefits generated by trade are allocated across geographic locations.
3.107The BCEC elaborated that given Australia’s ongoing reliance on open global trade:
It is crucial to precisely quantify the benefits of FTAs to households and individuals residing across the various states and territories as these benefits depend on the trade intensities of local jurisdictions and the local area socio-economic characteristics. This ensures that the social and economic benefits of FTAs are appreciated by the broader community and draws broader support to policies that aim to maximise the benefits.
3.108As a result, BCEC concluded that: ‘A survey of representative households and individuals across demographic groups about their perceptions of the impact of FTAs on their personal financial conditions would be informative to enhance the understandings on heterogeneous impacts of FTAs.’
3.109The NTDITT also commented on the uneven distribution of benefits from trade: ‘While [FTAs] can bring overall economic growth, the benefits are not evenly distributed across all regions and communities. Many rural and remote regions are not experiencing the same level of economic uplift, leading to disparities.’
Committee comment
3.110The individuals, businesses, and industry groups across sectors that have long-relied on open trade for their ongoing success are undoubtedly well-aware of the benefits offered by trade and free trade agreements (FTAs). These sectors make vast economic and social contributions to Australia through trade and have lead the way in securing Australia’s position as a highly successful trading nation.
3.111While the benefits received through trade by Australian businesses are significant and the level of engagement with FTAs is generally considered to be high; evidence indicates that there are areas where awareness of the benefits of FTAs or the ability to capitalise on them remains low. This means that Australian businesses are not making the most of the opportunities available and that Australia is not fully realising the benefits offered by trade.
3.112The Committee is of the view that having a clear measure of the level of uptake or utilisation of FTAs is essential to understanding where opportunities might be, whether opportunities are being capitalised on, whether agreements are working effectively, and where support efforts may need to be focussed. To this end, evidence suggests that some stakeholders do not consider the current level of information available on uptake and utilisation to be sufficient. Further, it appears that some stakeholders differ in their views on what demonstrates uptake or utilisation of an FTA and on what type of information would be useful.
3.113The Committee acknowledges and commends the work of the Department of Foreign Affairs and Trade (DFAT), and Austrade, for their wide-ranging efforts to promote trade opportunities for Australian businesses. Likewise, industry bodies and other similar organisations undertake many activities to better equip their members to take advantage of international trade. The Committee agrees that there is an important role for industry bodies, supported by and in collaboration with government.
3.114Digital tools and services that can encourage and simplify engagement in trade for businesses are essential as they are able to reach the widest possible audience. Although some submitters referred to existing tools and services favourably, many appear to not be well-aware of them and more should be done to promote their use. At the same time, there is considerable value in direct outreach activities and support programs, including targeted and tailored to specific locations, industries, and business types. These activities should be continued and expanded, in partnership with state and territory governments and industry groups where appropriate.
3.115The Committee considers that the public largely appreciates that trade and FTAs make a positive contribution to Australia. However, much of the public may not have an in depth understanding of how the economic and social benefits of trade accrue to the national economy, businesses, and individuals. This is more likely to be the case outside of the regions and communities that receive the largest and most observable benefits from trade. Although all individuals as consumers directly benefit from trade through access to a wider range of goods and services at lower prices, these benefits are generally not visible or actively considered in consumer decisions.
3.116The Committee recognises that a global rise in protectionist sentiment poses a significant challenge for Australia as a trading nation. It is essential that all Australians are encouraged to understand and appreciate the importance of trade to ensure that Australia is not left vulnerable to a domestic shift in attitudes against open trade. This would no doubt have negative effects for Australia.
3.117Research such as that submitted by Bankwest Curtin Economic Centre (BCEC) is crucial to demonstrate how open trade directly benefits all Australians, as well as to show how benefits may be unevenly distributed and how this may influence attitudes towards trade across sections of the community. Further research into the attitude of Australians towards the benefits of open trade, including across demographics and geographic locations would be valuable for government, policy makers, and others to proactively respond to changes over time.
Recommendations
3.118The Committee recommends that the Australian Government, in collaboration with stakeholders, explore options for more information and data to be made publicly available on the uptake and utilisation of Australia’s free trade agreements.
3.119The Committee recommends that the Australian Government continue to support and collaborate with industry bodies in efforts to build awareness and capacity for Australian businesses to engage with international trade and free trade agreements.
3.120The Committee recommends that the Australian Government develop an overarching strategy for building awareness and capacity for Australian businesses to engage with international trade and free trade agreements.
3.121The Committee recommends that the Australian Government support research to better understand the Australian community’s attitude toward trade and their perception of the economic and social benefits, including across different demographics and geographic locations.