Published today in The Weekend Australian Newspaper.
Few countries have benefited more from trade over decades than Australia. Indeed, our standard of living is only possible thanks to the nation’s ability to export and import the good and services that have seen Australia emerge as one of the world’s most robust economies.
But trade is not just a benefit for Australia. Trade is the world’s growth engine. It supports job creation, raises living standards and secures the resources necessary for peaceful and inclusive economic development. More than ever before, the power of trade is essential to help alleviate poverty and to grow resilient economies.
It has therefore been a great privilege for me, along with business leaders from China, the US and Russia, to Chair the B20 Trade Taskforce which presented its findings at this week’s B20 Summit in Sydney. The Taskforce made a number of recommendations to the G20 on topics such as making trade easier and faster; removing protectionist measures; supporting global supply chains; and creating 21st century trade agreements.
Removing trade red tape and making trade more efficient can have enormous pay-offs for participating countries in terms of greater economic growth, more competitive businesses and more jobs. That is why the Taskforce’s first recommendation calls on G20 economies to implement without delay the World Trade Organisation Bali Agreement which would help local businesses reach new markets, more easily, and create valuable new job opportunities for Australians. Globally, this measure alone could support over 15 million jobs and increase GDP by nearly $1 trillion across the G20 economies.
Secondly, the Taskforce calls on governments to tackle some 1500 non-tariff, or ‘murky protectionist’ barriers,that have been added by G20 countries since 2008. To curb this trend, we ask that the G20 standstill agreement on tariffs be expanded explicitly to cover non-tariff measures. And we go further. We ask that G20 economies wind back and remove those measures that have been put in place. After all, they are to trade what cholesterol is to a human artery.
The Taskforce’s third recommendation addresses an irreversible dynamic in modern trade - global supply chains. Unbeknown to many is the fact that, globally, 40 per cent of the content of total final exports were sourced from imports. This is double the level of the 1990s and is forecast to reach 60 per cent in 2030. The benefits that accrue from embracing this change through targeted infrastructure investment and other policy settings that drive domestic integration with global supply chains are enormous. Indeed, the potential impact on global GDP is six times higher than removing remaining tariffs, or some $2.2 trillion more in GDP across G20 economies, and tens of millions of more jobs.
Finally, the Taskforce focuses on the importance of maintaining momentum on trade agreements and ensuring that these are sufficiently flexible to be truly trade liberalising. To borrow from the IT industry, business would like to see agreements that are based on an ‘open architecture’, where we can keep the door open for other countries to join.
In the meantime, bilateral agreements are helping to tie Australia even closer to the economic dynamism of North Asia. When I joined the Prime Minister’s business delegation to the region earlier this year, I saw first-hand the positive response from concluding trade agreements with Japan and South Korea, and the new opportunities being created for Australian businesses of all sizes. The Government is to be congratulated for finalising deals with these vital markets, and hopefully with China to follow.
This week’s B20 Summit was also an important reminder about the need for business and government to work together if we’re serious about generating economic growth.
The value of the B20 goes beyond the practical recommendations. We are given an opportunity to advise leaders about where they can best target their advocacy to enable businesses – large, medium and small - to be more competitive, increase trade, unlock growth and create jobs. This is an incredible opportunity for every G20 country and it must be grasped with both hands.
But we don’t underestimate the challenges in pursuing significant domestic reforms – in any country. But true, job-creating, long-term growth depends on it. As a developed nation, Australia must lead by example if it is to convince other G20 countries to move down this path. I believe we are heading in the right direction. The government is changing the conversation, engaging with business and putting the spotlight squarely on productivity and what we have to do as a nation to be more competitive and to create the jobs of the future.
There is a keen sense of the size of the prize that awaits Australia by leveraging an ambitious trade agenda, and one enabled by essential domestic reform. Long-term job creation, job security, wages growth and higher living standards will all flow from sustained economic growth. With the right policies in place, there is no reason why Australia’s strong economic performance over nearly 25 years cannot be continued. If we can use this leadership to persuade our trading partners to make similar reforms, the benefits will be all the greater – not just for Australia, but the global community.
Let’s keep the conversation going.