Hidden ‘resources agenda’ in free trade negotiations

September 18, 2012

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A Murdoch University researcher says there is a hidden ‘resources agenda’ within Australia’s Free Trade Agreement (FTA) negotiations with Japan, Korea and China.

Dr Jeffrey Wilson from Murdoch’s Asia Research Centre said research for his newly published paper in The Pacific Review has shed light on Asian trade strategies.

“The Asia-Pacific region has become the most active area for FTA negotiations globally, rising from only three in 2000 to more than 100 completed or in-negotiation FTAs by the end of 2011,” Dr Wilson said.

For Australia, which is currently in FTA negotiations with the region’s three economic powers – Japan, China and Korea – this shift toward trade bilateralism is closely related to the global resources boom.

“Japan, China and Korea are resource-importing states whose economic health is dependent upon resource security. As a result, we’re seeing a competitive ‘race’ for FTAs with resource producers, with all three governments attempting to strike deals for preferential access to supplies.”

Dr Wilson said the Asian nations were targeting five key suppliers globally: Peru and Chile for copper; India for iron ore and bauxite; the Gulf states for oil and gas; and Australia for iron ore, coal and gas.

This strategy hasn’t yet been highly successful, however, in part because of Australian hesitancy.

“The Australian Government is reluctant to make the concessions being asked for – both in terms of investment rules for the mining industry and a ‘resource clause’ guaranteeing some form of preferential supply relationship,” Dr Wilson said.

Dr Wilson believed opinion was divided on the benefits of giving ground, noting the Minerals Council of Australia (MCA) has argued in favour of concessions for FTAs on the grounds that they will send a reputational signal to the partners that Australia is a reliable minerals supplier.

“Offering bilateral resource concessions in FTAs could make it easier to win reciprocal concessions in areas of Australian interests, such as agriculture and financial services,” Dr Wilson said.

“However, other resource partners in the region may see this as Australia ‘playing favourites with resources’, undermining efforts to negotiate FTAs with others.”

“With the pending release of the Australia in the Asian Century White Paper, this is the time to consider our position and talk about how we move national trade policy forward in the coming decades.”

‘Resource security: a new motivation for free trade agreements in the Asia-Pacific region’ has been published in The Pacific Review.

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