Seizing Australia’s competitive advantage

The current multilateral trade system is "in deep trouble", according to the latest report from the Committee for Economic Development of Australia (CEDA), Global networks: transforming how Australia does businessThe report examines the impact of digital transformation on the effectiveness of trade agreement regimes, and identifies opportunities for Australia to gain from the free movement of ideas and people.

According to the report, “In the face of rapidly changing global markets, the trade system is in deep trouble. The current multilateral system of trade governance may be too slow and cumbersome to remain relevant”.

The report states that the arguments of protectionism versus free trade have become stale and irrelevant. Markets for goods, money and labour are already integrating across borders and beyond the control of national jurisdictions, accelerated by communications, technological innovation and consumer demand.

Meanwhile, global production is still outpacing global trade. Trade in services, in particular, critically needs liberalisation, but negotiations are far too slow at a time when the service and knowledge-driven economy is already a reality. With technological change threatening to radically upend traditional approaches to business, it is more important than ever that Australia is open to the evolution of the global economy.

CEDA states that the next phase of trade liberalisation should position Australia as a key contributor to global value chains and allow the nation to form key links with the sources of future innovation.

The report suggests that it would be helpful if Australia published a formal trade policy strategy that included, among other things, options for multilateral, bilateral and non-discriminatory reductions in trade barriers.

The CEDA report makes several recommendations:

  1. A new trade policy statement
    1. A formal trade policy statement that sets out how individual agreements fit within a single strategic framework.
    2. Clear differentiation between Australia’s free trade and foreign policy objectives.

  2. Free-trade agreements that strengthen policy
    1. Rules of origin, and other administrative aspects of these agreements, need to be streamlined and harmonised to reduce costs and complexity for business.

  3. Strategic engagement and simplified labour exchange
    1. Australia should seek to adapt the Trans-Tasman Travel Agreement to one with Singapore, that is, replicate the spirit of the agreement as one that is not a prescriptive and detailed agreement between governments, but a set of procedures independently implemented by both governments working together towards a common aim.
    2. After achieving a free-travel agreement with Singapore, Australia should seek to extend these arrangements with other suitable countries.

Commenting, Tarah Barzanji, engagement manager at strategy advisory business AlphaBeta, said: “The globalisation of labour is not a new phenomenon. For at least 50 years, many companies have viewed their labour pool as global. But while the physical mobility of labour is nothing new, we are now adding virtual workers into the mix. Australia needs the right policy settings to both retain our highly skilled labour and attract high skilled labour from abroad.”

For more information, read Global networks transforming how Australia does business.