tag:theconversation.com,2011:/ca/topics/export-markets-12896/articlesExport markets – The Conversation2020-02-26T05:01:28Ztag:theconversation.com,2011:article/1276122020-02-26T05:01:28Z2020-02-26T05:01:28ZIt might sound ‘batshit insane’ but Australia could soon export sunshine to Asia via a 3,800km cable<figure><img src="https://images.theconversation.com/files/317035/original/file-20200225-24651-1472rmd.jpg?ixlib=rb-1.1.0&rect=29%2C22%2C4962%2C3300&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/top-view-solar-panels-cell-farm-727265005">SHUTTERSTOCK</a></span></figcaption></figure><p>Australia is the world’s <a href="https://www.theguardian.com/environment/2019/aug/19/australia-is-third-largest-exporter-of-fossil-fuels-behind-russia-and-saudi-arabia">third largest fossil fuels exporter</a> – a fact that generates intense debate as climate change intensifies. While the economy is heavily reliant on coal and gas export revenues, these fuels create substantial greenhouse gas emissions when burned overseas.</p>
<p>Australia doesn’t currently export renewable energy. But an ambitious new solar project is poised to change that. </p>
<p>The proposed <a href="https://www.suncable.sg/">Sun Cable</a> project envisions a <a href="https://www.theguardian.com/environment/2019/nov/20/billionaires-invest-in-giant-australian-solar-farm-to-supply-power-to-singapore">ten gigawatt capacity solar farm</a> (with about 22 gigawatt-hours of battery storage) laid out across 15,000 hectares near Tennant Creek, in the Northern Territory. Power generated will supply Darwin and be exported to Singapore via a 3,800km cable slung across the seafloor. </p>
<p>Sun Cable, and similar projects in the pipeline, would tap into the country’s vast renewable energy resources. They promise to provide an alternative to the export business of <a href="https://oec.world/en/profile/country/aus/">coal, iron ore and gas</a>.</p>
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Read more:
<a href="https://theconversation.com/australias-energy-exports-increase-global-greenhouse-emissions-not-decrease-them-118990">Australia's energy exports increase global greenhouse emissions, not decrease them</a>
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<p>As experts of east-Asian energy developments, we welcome Sun Cable. It could pioneer a renewable energy export industry for Australia, creating new manufacturing industries and construction jobs. Importantly, it could set our economy on a post-fossil fuel trajectory. </p>
<h2>Long-term cost benefits</h2>
<p>Sun Cable was <a href="https://www.theguardian.com/environment/2019/jul/14/just-a-matter-of-when-the-20bn-plan-to-power-singapore-with-australian-solar">announced last year</a> by a group of Australian developers. The project’s proponents say it would provide <a href="https://www.suncable.sg/">one-fifth of Singapore’s power supply</a> by 2030, and replace a large share of fossil fuel-generated electricity used in Darwin.</p>
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<a href="https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/317241/original/file-20200225-24655-1rgb5ic.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Submarine cables are laid using deep-sea vessels specifically designed for the job.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/alan_jamieson/35030875253/">Alan Jamieson/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
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<p>To export renewable energy overseas, a high-voltage (HV) direct current (DC) cable would link the Northern Territory to Singapore. Around the world, some HVDC cables already carry power across long distances. One ultra-high-voltage direct current cable <a href="https://spectrum.ieee.org/energywise/energy/the-smarter-grid/chinas-state-grid-corp-crushes-power-transmission-records">connects central China to eastern seaboard cities</a> such as Shanghai. Shorter HVDC <a href="https://www.sciencedirect.com/topics/engineering/interconnectors">grid interconnectors</a> operate in Europe. </p>
<p>The fact that long distance HVDC cable transmission has already proven feasible is a point working in Sun Cable’s favour. </p>
<p>The cost of generating solar power <a href="https://www.irena.org/newsroom/pressreleases/2019/May/Falling-Renewable-Power-Costs-Open-Door-to-Greater-Climate-Ambition">is also falling dramatically</a>. And the low <a href="https://www.irena.org/newsroom/pressreleases/2019/May/Falling-Renewable-Power-Costs-Open-Door-to-Greater-Climate-Ambition">marginal cost</a> (cost of producing one unit) of generating and transporting renewable power offers further advantage. </p>
<p>The A$20 billion-plus proposal’s biggest financial hurdle was covering initial capital costs. In November last year, billionaire Australian investors Mike Cannon-Brookes and Andrew “Twiggy” Forrest <a href="https://www.afr.com/companies/energy/twiggy-joins-cannon-brookes-in-backing-sun-cable-20191120-p53cef">provided initial funding</a> to the tune of up to A$50 million. Cannon-Brookes said while Sun Cable seemed like a “<a href="https://www.afr.com/policy/energy-and-climate/cannon-brookes-plan-to-export-aussie-solar-power-to-singapore-20190924-p52u9o">completely batshit insane project</a>”, it appeared achievable from an engineering perspective. </p>
<p>Sun Cable is expected to be completed <a href="https://www.theguardian.com/environment/2019/nov/20/billionaires-invest-in-giant-australian-solar-farm-to-supply-power-to-singapore">in 2027</a>.</p>
<h2>Bringing in business</h2>
<p>The proposal would also bring business to local high-technology companies. Sun Cable has <a href="https://5b.com.au/news/press-release-5b-sun-cable-announce-plans-worlds-largest-solar-farm-northern-territory-australia/">contracted with Sydney firm 5B</a>, to use its “solar array” prefabrication technology to accelerate the building of its solar farm. The firm will pre-assemble solar panels and deliver them to the site in containers, ready for quick assembly.</p>
<p>The Northern Territory government has also shown support, granting Sun Cable <a href="http://newsroom.nt.gov.au/mediaRelease/31259">“major project”</a> status. This helps clear potential investment and approval barriers. </p>
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Read more:
<a href="https://theconversation.com/making-australia-a-renewable-energy-exporting-superpower-107285">Making Australia a renewable energy exporting superpower</a>
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<p>Across Australia, similar renewable energy export plans are emerging. The Murchison Renewable Hydrogen Project in Western Australia will use energy <a href="https://new.siemens.com/au/en/company/press-centre/2019/murchison-renewable-hydrogen-project.html">produced by solar and wind farms to create renewable hydrogen</a>, transported to east Asia as liquid hydrogen. </p>
<p>Similarly, the planned <a href="https://asianrehub.com/">Asian Renewable Energy Hub</a> could have renewable hydrogen generated in Western Australia’s Pilbara region at 15 gigawatts. This would also be exported, and supplied to local industries.</p>
<p>These projects align with the Western Australian government’s ambitious <a href="http://www.drd.wa.gov.au/Publications/Documents/wa_renewable_hydrogen_strategy.pdf">Renewable Hydrogen Strategy</a>. It’s pushing to make clean hydrogen a driver for the state’s export future. </p>
<h2>Reliable solutions</h2>
<p>Generating and transmitting power from renewable resources avoids the energy security risks plaguing fossil fuel projects. Renewable projects use manufactured devices such as solar cells, wind turbines and batteries. These <a href="https://www.nature.com/news/economics-manufacture-renewables-to-build-energy-security-1.15847">all generate energy security</a> (a nation’s access to a sufficient, affordable and consistent energy supply). </p>
<p>Australia controls its own manufacturing activities, and while the sun may not shine brightly every day, its incidence is predictable over time. In contrast, oil, coal and gas supply is limited and heavily subject to geopolitical tensions. Just months ago <a href="https://www.aljazeera.com/news/2019/09/saudi-oil-attacks-latest-updates-190916102800973.html">in the Middle East</a>, attacks on two major Saudi Arabian oil facilities impacted 5% of global oil supply.</p>
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Read more:
<a href="https://theconversation.com/australias-fuel-stockpile-is-perilously-low-and-it-may-be-too-late-for-a-refill-96271">Australia's fuel stockpile is perilously low, and it may be too late for a refill</a>
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<h2>Renewing international links</h2>
<p>Apart from exporting electricity produced on its own solar farm, Sun Cable could profit from letting other projects export electricity to Asia through shared-cost use of its infrastructure. </p>
<p>This would encourage future renewable energy exports, especially to the energy-hungry <a href="https://asean.org/">ASEAN nations</a> (Association of Southeast Asian Nations) – Indonesia, Malaysia, the Philippines, Singapore and Thailand.</p>
<p>This would strengthen Australia’s economic relationships with its ASEAN neighbours – <a href="https://www.eastasiaforum.org/2019/12/18/grand-opportunities-for-australias-hydrogen-industry-and-for-a-strategic-regional-rebalancing/">an importantc geo-economic goal</a>. In particular, it could help reduce Australia’s <a href="https://www.australiachinarelations.org/content/understanding-australias-economic-dependence-china">growing</a> <a href="https://www.abc.net.au/news/2019-01-15/china-economy-slowdown-will-affect-australia/10716240">export dependence on China</a>.</p>
<p>However, as with any large scale project, Sun Cable does face challenges.</p>
<p>Other than raising the remaining capital, it must meet interconnection standards and safety requirements to implement the required infrastructure. These will need to be managed as the project evolves. </p>
<p>Also, since the power cable is likely to run along the seabed under Indonesian waters, its installation will call for <a href="https://www.mdpi.com/1996-1073/11/1/200/pdf">strategic international negotiations</a>. There has also <a href="https://www.alicespringsnews.com.au/2019/11/23/20bn-sun-cable-has-national-security-risks-expert-warns/">been speculation</a> from mining interests the connection could present national security risks, as it may be able to send and receive “performance and customer data”. But these concerns cannot be validated currently, as we lack the relevant details.</p>
<p>Fortunately, none of these challenges are insurmountable. And within the decade, Sun Cable could make the export of Australian renewable energy a reality.</p><img src="https://counter.theconversation.com/content/127612/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Mathews receives funding from ARC</span></em></p><p class="fine-print"><em><span>Elizabeth Thurbon receives funding from the Australian Research Council and the Academy of Korean Studies. She is affiliated with the Jubilee Australia Research Centre. </span></em></p><p class="fine-print"><em><span>Hao Tan receives funding from the Australia Research Council (ARC) Discovery Project 2019-2021; and previously received funding from the Academy of the Social Sciences in Australia under the Australia-China (CASS) Joint Action Program and from the Confucius Institute Headquarters under the "Understanding China Fellowship" in 2017.</span></em></p><p class="fine-print"><em><span>Sung-Young Kim receives funding from the Australia Research Council and has previously received funding from the Academy of Korean Studies (AKS).</span></em></p>Sun Cable could provide Australia an alternative to the export business of coal and gas, and even reduce our export dependence on China.John Mathews, Professor of Strategic Management, Macquarie Graduate School of Management, Macquarie UniversityElizabeth Thurbon, Scientia Fellow and Associate Professor in International Relations / International Political Economy, UNSW SydneyHao Tan, Associate professor, University of NewcastleSung-Young Kim, Senior Lecturer in the Department of Modern History, Politics & International Relations, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1255852019-10-31T14:46:43Z2019-10-31T14:46:43ZWe studied mercury levels in Cape monkfish off Namibia’s coast<figure><img src="https://images.theconversation.com/files/298513/original/file-20191024-170449-9j284o.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Consumers should bear in mind that the bigger the fish, the more likely that it will have a high concentration of mercury. </span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The presence of mercury in the marine environment is becoming an issue of concern. Once in the ocean mercury is <a href="https://www.ncbi.nlm.nih.gov/pubmed/14757716">converted</a> into a more toxic compound known as methylmercury. In this form it’s absorbed by the digestive tract of creatures at <a href="https://pdfs.semanticscholar.org/c178/fcd7e6fe4db6d76db9b211249f5e3d54207e.pdf?_ga=2.73234325.761941332.1571749086-1262164574.1569500172">all feeding levels</a> in the marine ecosystem. In fish, reduced swimming activity, loss of balance, and possibly death have been linked to <a href="https://www.sciencedirect.com/science/article/pii/S0022098196025907">mercury contamination</a>. Mercury has a very low rate of breakdown and excretion, which means it builds up – in a process known as bioaccumulation – through the entire food chain.</p>
<p>We conducted <a href="https://www.ncbi.nlm.nih.gov/pubmed/30301008">research</a> to establish the levels of mercury in Cape monkfish, a <a href="https://www.tandfonline.com/doi/abs/10.2989/18142320509504090">commercially important fish species</a> off the Namibian coast. This species also plays a <a href="https://link.springer.com/article/10.1007/BF00004906">key ecological role</a> in the marine ecosystem. It feeds on other fishes and so regulates various fish populations.</p>
<p>The two conditions in which we found higher levels of mercury concentration were in larger fish and in fish in deeper waters. Some fish (0.57%) had higher levels of mercury above the World Health Organisation limit of 0.5mg/kg. However, most of the fish had mercury levels still below the World Health Organisation limit of 0.5mg/kg. </p>
<p>Our findings are important because although the Cape monkfish isn’t currently a risk to humans who eat it, this may change because of future industrial development in the region. </p>
<h2>What we found</h2>
<p>Cape monkfish is an important food source in Namibia and is also exported. The European Union is Namibia’s <a href="http://www.seaflowergroup.com.na/wp-content/uploads/2018/08/Annual-Report-2017.pdf">largest</a> seafood export market. The fact that it’s a top predator increases its chance of accumulating mercury because, as <a href="https://pdfs.semanticscholar.org/f380/b3848c02678af9e18cf22aa1befcc107c8d7.pdf">research shows</a>, moving up the food chain, the mercury will accumulate and increase.</p>
<p>Cape monkfish also have long life spans: over <a href="https://www.researchgate.net/publication/258205860_Assessment_of_the_monkfish_Lophius_vomerinus_resource_off_Namibia">10 years</a>. </p>
<p>Our research compared the total mercury concentration between Cape monkfish muscle and liver tissue. We also related the mercury concentrations to the fish’s body size, depth and capture location. </p>
<p>We collected a total of 529 specimens of Cape monkfish from the three size classes; juveniles, sub-adults and adults, between 2016 and 2018. To check our laboratory results, we compared 50% of them with those obtained by the Namibian Standards Institution. </p>
<p>To establish whether the mercury concentration was spread evenly throughout a fish’s body we compared the concentration in its muscles and its liver tissue.</p>
<p>We found no significant difference in the two tissues. This implies that the muscle and liver tissues of Cape monkfish have statistically similar abilities to retain mercury. We expected significant differences because liver and muscles have different rates of metabolism. </p>
<p>The liver functions as a main storage organ and a <a href="https://www.researchgate.net/publication/258150247_Assessment_of_Aquatic_Pollution_Using_Histopathology_in_Fish_as_a_Protocol">detoxification site</a> so we expected the liver tissues to contain higher mercury concentrations than the muscle tissues. </p>
<p>We did find that juvenile fish had lower contamination than bigger and older fish. This suggests that as the fish grows, the total mercury concentration increases. It also means that older fish are more threatened by mercury compared to younger fish. </p>
<p>We also found differences in concentration based on the location of the fish. One differentiator was lines of latitude: fish caught from areas around 19⁰S, 20⁰S and 26⁰S off the coast of Namibia had higher mercury levels than those caught in other areas off the Namibian coast. This might imply that there are mercury hotspots along these latitudes where sources of mercury are high, which can be linked to elevated industrial activities especially at 20°S and 26°S which a closer to the industrial towns of Walvisbay and Lüderitz respectively.</p>
<p>The concentration of total mercury in Cape monkfish was significantly higher in deeper water, though still similar in muscle and liver tissues. </p>
<h2>What now?</h2>
<p>When buying Cape monkfish to eat, consumers should bear in mind that the bigger the fish, the more likely it is to have a high concentration of mercury. Mercury can potentially be <a href="https://www.sciencedirect.com/science/article/pii/S1470160X19305345">toxic</a> to people when consumed. These <a href="https://www.sciencedirect.com/science/article/pii/S0308814612005821">threats</a> may include renal failure, liver damage, cardiovascular diseases and even death. </p>
<p>Our findings should also be used to guide action taken by fishing companies operating around the 19⁰, 20⁰ and 26⁰S lines of latitude off the coast of Namibia. Fish caught from these areas should be screened for mercury and other heavy metals. </p>
<p><em>Johnny Gamatham and Stephanus Hamutenya also contribted to this article.</em></p><img src="https://counter.theconversation.com/content/125585/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Victoria Ndinelago Erasmus is affiliated with National Marine Information and Research Centre (NatMIRC), Ministry of Fisheries and Marine Resources, Namibia and Department of Ichthyology and Fisheries Science, Rhodes University, South Africa. </span></em></p><p class="fine-print"><em><span>Johannes Angala Iitembu for the University of Namibia. He receives funding from UNAM</span></em></p>Cape monkfish caught from some areas off Namibia’s coast should be screened for mercury and other heavy metals.Victoria Ndinelago Erasmus, PhD student, Rhodes UniversityJohannes Angala Iitembu, Senior Lecturer, Fisheries and Aquatic Sciences, University of NamibiaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1085872018-12-12T19:11:37Z2018-12-12T19:11:37ZAustralia’s Brexit strategy: a little less Britpopulism, a little more Eurovision please<p>It has been called “the Kylie effect”, after one of Australia’s most famous exports.</p>
<p>It is the path taken by Australians wanting to crack the big time in Britain. Long before pop princess Kylie Minogue hit the stage, indeed, the path was well-worn – including by bands like the Easybeats and AC/DC, and writers like Germaine Greer and Clive James.</p>
<p>Just as with talented Australians, so too with Australian businesses. They set their sights firmly on the British market. London becomes their second home. “The continent” is something that only looks inviting once they’ve made it in Old Blighty. Most of Europe remains largely unexplored territory. </p>
<p>But the slow-moving car crash of Brexit suggests Australian companies need to stop focusing only on topping the British pops and think about Eurovision. </p>
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Read more:
<a href="https://theconversation.com/the-brexit-mess-could-lead-to-a-break-up-of-a-no-longer-united-kingdom-107093">The Brexit mess could lead to a break-up of a no longer United Kingdom</a>
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<h2>Historical ties</h2>
<p>The Kylie effect – which European officials less charmingly call “Europhobia” or “Channel Fever” – remains glaringly evident in <a href="http://www.abs.gov.au/ausstats/abs@.nsf/mf/5368.0.55.006">export data</a> from the Australian Bureau of Statistics. </p>
<p>There were 5,975 companies selling goods to Britain in 2016-17. This compares with 3,040 selling to Germany, 1,764 to the Netherlands, 1,581 to France and 552 to Italy. </p>
<p>This is hardly surprising given Australia’s strong historical ties with Britain. We share a common language and cultural, legal and political traditions. Britain was our number one trading partner until 1966 (when Japan overtook it). It remains among our top 20 partners when most the other spots have been taken by Asian neighbours.</p>
<p>Relations with Europe haven’t been helped by some historical animosity over contentious trade issues like the extravagant agricultural subsidies paid within the European Union. These have been seen as against the interests of Australian farmers. It was once said that for the cost of the European Union’s Common Agricultural Policy you could send all the French cows around the world business class twice. </p>
<p>One reason for establishing the <a href="https://www.europeaustraliaforum.eu/">EU-Australia Leadership Forum</a> (which had its first meeting in June 2017) is to get past these issues and have a broader conversation focused on other promising areas of collaboration.</p>
<h2>Scrambled exit</h2>
<p>What happens when you impose Brexit on this scenario?</p>
<p>Britain’s withdrawal from the European Union is (as Pascal Lamy, the former director general of the World Trade Organisation, was fond of saying) a bit like separating the yolk from the white after making an omelette. </p>
<p>But the democratic process by which it was decided must be respected, even if increasing numbers of the British public realising how high the divorce bill is going to be.</p>
<p>Right now it appears there appears to be no acceptable divorce deal in place. The British government has negotiated a deal with the EU that prime pinister Theresa May says is “the best deal available”, but it is unacceptable to the majority of Parliament. </p>
<p>So May has to head back to Brussels “cap in hand” to seek a better deal. If that fails, Britain could be headed for an economically disruptive “no deal” Brexit by the end of March 2019.</p>
<p>As a result the British Treasury and the <a href="https://www.bankofengland.co.uk/report/2018/eu-withdrawal-scenarios-and-monetary-and-financial-stability">Bank of England</a> fear Britain might be plunged into its deepest recession in nearly a century. The Bank of England has warned the economy could shrink <a href="https://www.irishtimes.com/news/world/uk/shock-of-no-deal-brexit-would-be-immense-bank-of-england-1.3713720">by as much as 8%</a>, with unemployment and inflation soaring.</p>
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Read more:
<a href="https://theconversation.com/the-economic-cost-of-brexit-is-unavoidable-but-that-doesnt-mean-its-not-worth-it-107913">The economic cost of Brexit is unavoidable – but that doesn't mean it's not worth it</a>
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<h2>European identity</h2>
<p>In some ways the European Union is in a dilemma. It wants to make separation hard for British to discourage other countries to follow. At same time it doesn’t want to weaken the British economy as that could also hurt Europe and the global economy.</p>
<p>Nor is Brexit the only issue for the EU to worry about. There are big challenges in Italy, Hungary, Austria and Poland. And then there’s Russia. </p>
<p>The European project began with the best of intentions. It was set up to prevent another war between France and Germany, and to create lasting peace and economic stability in Europe. This has largely been achieved. </p>
<p>But as the project evolved it became a question of how far you take a customs union and expand it to include a common currency, central bank and foreign policy. As much as European unity is desirable, it has it limits. National identity still trumps it. As journalist Mark Kenny once noted, “Australia can enter the Eurovision song contest, but Europe can’t.”</p>
<h2>We need double dealing</h2>
<p>Though the headlines about Brexit seem pretty grim for Britain, it will continue to remain an obvious market for Australian exporters. </p>
<p>But Europe is clearly becoming more important. Indeed, according to the <a href="https://www.logistics.dhl/au-en/home/press/press-events/dhl-export-barometer-2018.html">DHL Export Barometer</a>, which surveys exporters around Australia about conditions affecting their global business prospects) 17% see Europe as their most desirable new territory. In second place is Southeast Asia (15%). Britain ranks with Indonesia and Japan (11% each). </p>
<p>As Australia has a free trade agreement by another name (a Comprehensive Economic Partnership) with Japan, and is about to sign one with Indonesia, there is a strong case now to complete deals with the European Union and Britain.</p>
<p>The true irony might be that Brexit turns our long-standing Europhobia into giving us Eurovision. </p>
<p><em>Tim Harcourt’s <a href="http://www.theairporteconomist.com/the-airport-economist-uk-special/">Airport Economist special UK episode on Brexit</a> will air on Your Money Free to Air channel 95 and on Foxtel Channel 601 at 8.30 pm on Saturday December 15th and repeated on Sunday December 16th at 1.30 pm.</em></p><img src="https://counter.theconversation.com/content/108587/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tim Harcourt attended the European Union Australia Leadership Forum held in Brussels between November 20 and 22, 2018.</span></em></p>The consequences of Brexit mean Australian exporters need to stop focusing on Britain and think more about Europe.Tim Harcourt, J.W. Nevile Fellow in Economics, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/775662017-06-01T14:03:02Z2017-06-01T14:03:02ZWhat Uganda needs to do to manufacture more and crack export markets<figure><img src="https://images.theconversation.com/files/171174/original/file-20170526-6415-v0rn2e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Ugandan worker picking tea as exports in the country grows.</span> <span class="attribution"><span class="source">Reuters/James Akena</span></span></figcaption></figure><p>Four years ago, Uganda adopted a <a href="http://npa.ug/wp-content/themes/npatheme/documents/vision2040.pdf">social and economic development plan</a> aimed at creating jobs and raising incomes. The plan acknowledges that Uganda must boost manufacturing, improve its services sector, and crack export markets to realise stronger growth. To do this, it must raise productivity. </p>
<p>Public sector reforms introduced in the last 20 years have improved government effectiveness in Uganda. But economic growth has <a href="http://www.worldbank.org/en/country/uganda/overview">slowed</a> in recent years in the face of global economic uncertainties, the high cost of credit, and adverse weather that has affected agriculture. Conflict in South Sudan, Uganda’s main export market, has also disrupted trade. </p>
<p>In this context, how could Uganda go about raising its economic growth? New <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">analysis</a> offers some suggestions on how the country can shift its economy to more productive activities. Key findings noted the importance of lowering trade costs, and increasing foreign investment, domestic value addition, competitiveness of the services sector, and export promotion.</p>
<p>Growing the share of manufacturing in the economy is also necessary. Manufacturing has a unique potential to raise incomes and create many jobs for many relatively unskilled workers. Manufacturing also allows for more cost saving at higher levels of production, as well as opportunities for innovation, technological progress and learning-by-doing.</p>
<h2>Manufacturing has been stagnant</h2>
<p>Uganda’s manufacturing sector has accounted for around <a href="http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators">9%</a> of the country’s GDP for the last decade. This is higher than the East African average of around <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">7.5%</a>. But it’s still smaller than other countries in other parts of the world that have used manufacturing to drive economic growth, such as Vietnam’s manufacturing contributes <a href="http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators">15%</a> to its GDP.</p>
<p>This shows that Uganda’s progress towards changing the structure of its economy has been relatively muted. This is also seen through export diversification and sophistication metrics. Greater export diversification shows more products have become competitive enough to export, and it makes the economy more resilient by reducing reliance on a few exports. Export sophistication measures how advanced the goods and services being exported are, with the idea that more sophisticated products need improved production processes. </p>
<p>The country has achieved some export diversification (of both products and export destinations). Services exports, such as tourism, transport and construction have increased notably. But Uganda’s level of export sophistication remains <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">low</a> compared to other East African countries, with most of its merchandise exports requiring relatively little processing, such as tea and coffee.</p>
<p>Size may have something to do with Uganda’s struggle to grow its manufacturing sector. The sector is still very small and is dominated by small and medium enterprises, which make up <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">93.5%</a> of the sector. The majority of firms are sole proprietorships with annual turnovers of less than <a href="http://www.ubos.org/onlinefiles/uploads/ubos/pdf%20documents/2010%20COBE%20Report.pdf">UGX 5 million</a> (£1,140). These manufacturers are mostly engaged in end-product assembly and processing raw materials. The main activity is <a href="https://www.wider.unu.edu/sites/default/files/wp2014-021.pdf">agro-processing</a>. </p>
<p>Given their small size, firms struggle to achieve production at scale or to sufficiently raise their productivity to absorb the additional costs of <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">exporting</a>. Other challenges include difficulties sourcing high quality inputs, lack of access to finance at affordable rates, and constrained electricity access. </p>
<p>High cost of credit limits firms’ ability to invest in improved <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">technologies</a>. In turn, this means they can’t meet the quality and standards required to crack export markets.</p>
<h2>A shifting landscape</h2>
<p>But there have been some changes over the past 10 years. Notably, there has been an increase in the share of merchandise exported. This suggests a <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">shift in focus</a> from the domestic to export markets in manufacturing.</p>
<p><a href="https://theconversation.com/uganda-needs-a-caffeine-fix-insights-from-vietnams-coffee-market-success-74180">Coffee</a> has been Uganda’s dominant export product for decades. In recent years exports of tea, cocoa, fish and tobacco have <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">gone up</a>. </p>
<p>Exports of non-food commodities have also been increasing and <a href="http://atlas.cid.harvard.edu/explore/tree_map/export/uga/all/show/2014/">diversifying</a>, especially light manufacturing industries such as cement, wood and leather.</p>
<p><a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">Leather products</a> has been the highest growth product group. This growth has been enabled by upgrading the value chain. Uganda used to export mainly raw hides, but by 2015 this had changed and more domestic value addition was taking place. </p>
<p>There have been similar trends in other export goods too. While more than 90% of merchandise exports were primary products in 1995, this has now almost <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">halved</a>.</p>
<p>Export destinations have also been diversifying. In the 1990’s around 80% of Ugandan exports went to Europe. Africa is now Uganda’s most important export destination, receiving some <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">50%</a> of exports.</p>
<p>The diversification of exports as well as the discovery of export destinations indicates some progress in Ugandan firms’ ability to compete internationally. </p>
<h2>More needs to be done</h2>
<p>Ugandan firms need to start carving out niches in globalised production chains, taking advantage of goods or processes that are relatively cheaper in Uganda than elsewhere. For example, more processing of raw materials could be done domestically. This would raise the country’s <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">participation</a> in global value chains. This, in turn, would increase the transfer of technology and skills.</p>
<p>Experience has shown that participating in light manufacturing global value chains has been an entry point for low income countries to get on the first rung of global trade. </p>
<p>The government has an important role in ensuring policies are conducive for achieving greater growth. Notable initiatives include: </p>
<ul>
<li><p>Reducing transaction <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">costs</a> and upgrading logistics services. </p></li>
<li><p>Institutional support to link international firms to domestic suppliers, and to assist domestic producers with entering new export markets.</p></li>
<li><p>Promoting trade liberalisation. For example, there’s evidence that <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">protecting</a> domestic firms from the world market doesn’t lead to better productivity or competitiveness. Incentives may also be necessary to encourage domestic firms to produce for export rather than the domestic market. </p></li>
<li><p>Easing credit constraints to help firms move away from cheap, obsolete technologies. With improved <a href="http://www.theigc.org/wp-content/uploads/2017/01/Sherpherd-et-al-2016-paper.pdf">technologies</a> firms can produce higher quality goods that meet export market standards and quality.</p></li>
<li><p>Developing common standards and mutual recognition agreements within the East African Community.</p></li>
<li><p>Free zones or special economic zones, where improved infrastructure and services could be provided, could achieve success in the short- to medium-term.</p></li>
</ul>
<p>Countries such as China and Vietnam have shown that taking these kinds of measures can transform economies. With a strong manufacturing base, a more competitive services sector, and greater value chain participation, Uganda can begin to realise its ambition of creating an economy that produces more jobs and raises incomes.</p><img src="https://counter.theconversation.com/content/77566/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sarah Logan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Uganda needs to boost manufacturing and exports to realise the ambitions listed in its social and economic development plan.Sarah Logan, Economist, International Growth CentreLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/329632014-10-23T02:32:46Z2014-10-23T02:32:46ZAustralia shouldn’t sacrifice food safety standards for free trade<figure><img src="https://images.theconversation.com/files/62320/original/wx4vpykg-1413860080.jpg?ixlib=rb-1.1.0&rect=7%2C3%2C2649%2C1813&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australia's reputation for strict farming standards helped its beef industry weather the BSE crisis.</span> <span class="attribution"><a class="source" href="http://commons.wikimedia.org/wiki/File%3ACSIRO_ScienceImage_1678_Cattle_in_yard.jpg">Malcolm Paterson/CSIRO/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, we review Australian trade policy over the years and look at where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>A combination of dumb luck, geographical isolation and a zealous stance on quarantine has kept Australia relatively free of the many pests and diseases that can be spread by international agricultural trade. As a result, it has been spared many of the health threats and extra farming costs – not to mention irreversible damage to native wildlife – that come with the arrival of these pests, or with changes to food safety.</p>
<p>Strict food safety standards are often seen as market protectionism or barriers to trade, rather than what they also are: important <a href="http://www.wto.org/english/tratop_e/sps_e/sps_e.htm">protection measures</a> for the consumers who will eat the food. Yet within the current round of <a href="https://theconversation.com/au/topics/free-trade-scorecard">trade negotiations</a> it is likely that the United States will continue to put pressure on Australia to water down its regulations. </p>
<p>While Australia’s current regulations are not perfect, it is important that any discussions about reforming them are conducted with an eye first and foremost on the health and safety of Australians, and are not unduly influenced by trade concerns.</p>
<h2>Australia’s clean reputation</h2>
<p>More than 70% of Australian agricultural income is from exports. Consequently, our exports must meet importing countries’ expectation of being “free” of pests and residues – meaning that no living pests (plant, animal, or disease-causing microbes) are found in the product, and that any chemical residues are within <a href="http://www.codexalimentarius.org">agreed international limits</a>.</p>
<p>Australia has an excellent <a href="http://www.agriculture.gov.au/agriculture-food/food/publications/national_food_plan/white-paper/3-3-building-on-australias-reputation">international reputation</a> for clean and green production. Because we are free of many trade-hampering pests, and because we specialise in low-input, low-output production systems, this freedom has allowed Australia’s process for regulating chemical use in agriculture, veterinary products and humans, to differ from many other countries. </p>
<p>In many cases, this has raised the costs an individual farmer faces when using chemicals, and given them <a href="http://www.springer.com/life+sciences/entomology/book/978-94-007-7801-6?detailsPage=chapter">fewer choices for how to manage crops and livestock</a>. But for some industries this combination of costs and choices has slowed the rate at which pests develop resistance to chemicals, and as a result total production costs are lower than their international competitors. It has also helped those same farmers meet international safety standards and maintained the pristine reputation of their products. </p>
<p>One Australian tactic has been to use <a href="https://theconversation.com/would-you-like-superbugs-with-that-animal-antibiotic-use-and-human-health-5878">separate antibiotics for humans and animals</a>. Countries that do not do this, such as the United States, can suffer much higher rates of drug failure. </p>
<p>As shown below, Australia and the United States use antibiotics at about the same rate, yet the resistance level is more than 30% higher in the latter.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=384&fit=crop&dpr=1 600w, https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=384&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=384&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=483&fit=crop&dpr=1 754w, https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=483&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/62226/original/c9vhxjpb-1413789541.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=483&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Relationship between total antibiotic consumption (doses per 1000 population per day) and Streptococcus pneumoniae resistance to penicillin.</span>
<span class="attribution"><span class="source">safetyandquality.gov.au</span></span>
</figcaption>
</figure>
<p>Australia’s relative pest- and disease-free status gives its exporters a significant market advantage, and allows them to demand a price premium amid increasing public awareness about food safety. For example, in 2004 and 2005 Australia dominated the lucrative Japanese market for beef and veal when Japan halted US imports in response to the <a href="http://en.wikipedia.org/wiki/Bovine_spongiform_encephalopathy">BSE outbreak</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=322&fit=crop&dpr=1 600w, https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=322&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=322&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=404&fit=crop&dpr=1 754w, https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=404&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/62227/original/8vzrp7gh-1413789651.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=404&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Japanese beef imports, showing how Australia profited when the BSE outbreak caused confidence in US beef to slump.</span>
<span class="attribution"><span class="source">Department of Agriculture</span></span>
</figcaption>
</figure>
<p>As food can be contaminated anywhere from paddock to plate, each stage of the process needs to be monitored. Although consumers’ preference for safe food may not always translate to higher prices, their refusal to buy food identified as potentially unsafe can be immediate and catastrophic for any exporting country that is identified (<a href="http://www.foodsafetynews.com/2012/07/spanish-produce-paid-a-price-for-europes-o104-outbreak/#.VDNvOvmSz2E">even incorrectly</a>) as a source. </p>
<h2>Watering down regulations?</h2>
<p>Australia has a clear interest in maintaining the integrity of its regulations for plant and animal health and food safety. But its more stringent regulations have long been in the sights of our trading partners, who would prefer that our high standards be “harmonised” with their less stringent ones, to “facilitate trade”. </p>
<p>With Australia now embarking on increased economic integration with the US thorough the <a href="https://theconversation.com/au/topics/free-trade-scorecard">Trans-Pacific Partnership</a> negotiations, the question of Australia’s stringent food safety standards will no doubt be a key topic of discussion.</p>
<p>The United States has often argued that, in the absence of international standards of chemical use, <a href="http://1.usa.gov/1wpSP2O">American standards</a> should be used. In 2007, this approach led Canada to lower its standards <a href="http://www.canada.com/topics/bodyandhealth/story.html?id=2fa3e7f8-9c83-4ea9-ad60-c13b548fe688">to match US settings</a>. </p>
<p>The United States is currently grappling with the issue of updating its <a href="http://www.fda.gov/Food/NewsEvents/ConstituentUpdates/ucm415132.htm">food standards</a>, and is struggling to balance the need for public safety with private costs. So far, the goal of <a href="http://www.businessweek.com/ap/2014-09-19/fda-tweaks-food-safety-rules-due-next-year">minimising private costs seems to be winning</a>. </p>
<p>Bringing chemical and food standards into line with the United States is clearly in America’s interest. But there is little evidence that harmonising Australia’s more stringent standards with America’s less stringent ones would benefit Australia, either economically or socially. </p>
<p>Meanwhile, Australia is in the midst of a <a href="http://www.agriculture.gov.au/SiteCollectionDocuments/agriculture-food/first-principles-review-cost-recovery-apvma.pdf">drive to reduce red tape</a>, while also pledging to subsidise access to <a href="http://www.agriculture.gov.au/agriculture-food/ag-vet-chemicals/improved-access-agvet-chemicals">farming and veterinary chemicals</a>, and to review its food safety settings, both <a href="http://www.agriculture.gov.au/bsg/biosecurity-reform/cost-recovery-reviews">domestically</a> and <a href="http://www.thefishsite.com/fishnews/24076/eu-adopts-proposals-to-improve-health-tackle-antimicrobial-resistance">overseas</a>.</p>
<p>It is true that higher regulatory standards can often cost more. But the economic and social consequences of leaving Australians open to new and unknown food safety risks are likely to be much worse.</p>
<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32963/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>In the past David Adamson has received funding from the CRC's for Tropical Pest Management (1994-1999) and the Emerging Infectious Diseases CRC (2009). He is currently part of a COST-ACTION proposal looking at the evaluation metrics of one-health issues.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. In this Free Trade Scorecard series…David Adamson, Senior Research Officer, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/328142014-10-14T19:32:36Z2014-10-14T19:32:36ZStaying engaged on every front: Australia’s trade policy strategy<p><em>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. This is the first article in the <a href="https://theconversation.com/au/topics/free-trade-scorecard">Free Trade Scorecard</a> series, in which we review Australian trade policy over the years and where we stand today on the brink of a number of significant new trade deals.</em></p>
<hr>
<p>Is Australia enhancing its economic and geo-political interests by negotiating free trade agreements (FTAs) or is it simply mindlessly engaging in world trade policy? While many commentators believe the latter to be true, Australia’s approach is more thoughtful and calculating than it is given credit for in popular media and the academic community.</p>
<p>Australia is engaged in several bilateral and regional negotiations. The most notable are the mega-regional processes led by the US and China – the Trans Pacific Partnership (<a href="http://www.dfat.gov.au/fta/tpp/">TPP</a>) and Regional Comprehensive Economic Partnership (<a href="http://www.dfat.gov.au/fta/rcep/">RCEP</a>), respectively. This is the most desirable way forward both economically and politically.</p>
<p>Australia would not be better served by focusing its trade policy on the region or adopting a Sino-focused policy. The choice of TPP or Asia and the US or China is a false dichotomy; the implications of “choosing” are too complicated to predict with any certainty. The choice is rather <em>how</em> and <em>on what terms</em> to participate in the different fora. </p>
<h2>Australia and its place in the world</h2>
<p>As a starting point, it must be remembered that Australia’s choices are limited. Australia is not the prize, nor is it in a position of power in any forum. It is a middle power increasingly dependent on world trade and investment, especially <a href="https://www.dfat.gov.au/trade/negotiations/trade_in_agriculture.html#aae">exports of agricultural products</a>.</p>
<p>Recent events such as the global financial crisis (and its ongoing effects) and the high value of the dollar have challenged Australia’s economy and significantly increased the importance of securing stable export markets. Australia is in no position to dictate trade terms. Instead, this nation must seek gains within the framework established by the larger players.</p>
<p>Of course, the optimal solution would be for Australia to seek these market opportunities through the World Trade Organisation (WTO). But <a href="http://global.oup.com/academic/product/termites-in-the-trading-system-9780195331653?cc=us&lang=en&">Jagdish Bhagwati’s call</a> to eliminate the “termites (FTAs) in the trading system” is long outdated. Focusing exclusively on the multilateral negotiations would be to ignore reality to the detriment of Australia.</p>
<p><a href="https://theconversation.com/wto-struggles-across-the-line-in-new-era-of-policy-malaise-21123">The Doha Round</a> is all but technically dead. FTAs are steadily eroding the state of equal opportunity for Australian exporters. Like it or not, the real game is being played outside the WTO.</p>
<p>While a return to multilateralism is likely at some point in the future, the timing is uncertain and the outcomes will be based on the templates established in recent FTAs. If Australia wishes to influence the future of the WTO it must participate in the FTAs of today.</p>
<h2>A multi-pronged trade strategy</h2>
<p>Most modern FTAs not only focus on tariffs but also on eliminating other forms of barriers to trade. The mega-regional providing the most innovations and rule-making - not only in terms of trade barriers but also “fair” trade - is the TPP. </p>
<p>To the US, the value of the TPP will be in its ability to expand the coverage, scope and depth of FTAs to include rules on a variety of areas including state-owned enterprises, environment and regulatory coherence of standards. I propose the ultimate aim is to garner consensus in order to make it easier to bring these innovations and rules into the multilateral system. It is in Australia’s interests to play a role in developing such norms. </p>
<p>Until Japan joined the negotiations in 2013, the potential economic gains to the US from the TPP were miniscule. The US already has FTAs in place with most negotiating partners and the economics of the TPP were quite simply unimportant. </p>
<p>The economic insignificance of the agreement to the US can be contrasted to the potential gains to Australia. The TPP could offer Australia incremental but increased access to the US and Canadian agricultural markets. Australia will also likely see increased export opportunities to Japan. </p>
<p>Even though Australia did not gain much market access for agricultural products in its recent <a href="https://theconversation.com/fta-opens-japanese-doors-for-australian-business-28861">FTA with Japan</a> – which has attracted considerable criticism – Australian exporters should temper their disappointment with the knowledge that further gains should come from the TPP. The Australia-Japan FTA must be viewed not as a standalone agreement but as a mere entrée providing initial morsels in anticipation of the main course to follow. </p>
<p>In this regard, Australia will gain when Japan and the US offer reciprocal concessions. The strategy, therefore, appears to be to wait for the US to pay for more substantial gains. </p>
<h2>We can do more than one deal at once</h2>
<p>It is important to note that while China was initially sceptical of (if not hostile to) the TPP, it has softened its views. There is no evidence to suggest it is seeking to punish TPP members. In fact, <a href="https://theconversation.com/bar-set-low-for-a-do-no-harm-china-australia-fta-32038">Australia-China FTA</a> negotiations have pushed on throughout the TPP negotiations and Australia is included in the RCEP negotiations.</p>
<p>Australia does not have to choose China or Asia over any other negotiating partner. New Zealand, Malaysia, Brunei, Vietnam and Singapore are similarly negotiating both the TPP and RCEP.</p>
<p>Turning to the RCEP, there is little reason to believe this agreement will offer any innovations on rule-making. it is also doubtful that it will produce significant market access opportunities. What the RCEP does offer is strategic engagement and geopolitical value in the region most important to Australia’s trading and diplomatic future. </p>
<p>Australia is not solely focusing on mega-regional trade agreements. Of late, Australia’s bilateral focus is squarely on the near-abroad - recent FTAs include <a href="http://www.asean.fta.govt.nz/">ASEAN-NZ</a> (2009), <a href="http://www.dfat.gov.au/fta/mafta/">Malaysia</a> (2012), <a href="http://www.dfat.gov.au/fta/kafta/">Korea</a> and <a href="http://www.dfat.gov.au/fta/jaepa/">Japan</a> (both 2014). Negotiations with China remain ongoing but may conclude soon, while talks with India and Indonesia are at an embryonic stage.</p>
<p>All of these countries are negotiating multiple agreements with several countries. In the process, they have been or continue to erode Australia’s position and export market. Australian FTAs are for the most part not about rules formation – they are standard agreements with market access at the core.</p>
<h2>The end game</h2>
<p>Australia has behaved reasonably and thoughtfully in formulating and executing its trade strategy. Its main aim is clearly to secure market access. Deeper regional economic engagement is not just desirable but necessary for Australia to maintain (and potentially increase) its export markets. </p>
<p>Australia’s recent negotiations are in line with this objective. To date, Australia has secured preferential access to three of its biggest trading partners – the US, Japan and Korea. Upon completion of the Australia–China FTA all its significant export markets will be covered.</p>
<p>These agreements provide Australia with significant preferences over competitor countries to all important export markets. No other country, with the exception of Canada, will have better or more complete coverage of its important markets. </p>
<p>At the same time, Australia has to understand the potential significance of being involved in regional negotiations of geo-political interests as well as the importance of innovations and rule-making being negotiated into the TPP. This is not to say that Australia agrees with or would advocate for the American agenda on innovations and rules. However, being involved will at a minimum allow Australia’s position to be considered, debated and potentially be included in the final form. </p>
<p>Australia must continue to stake out its best position now and into the future in order to protect export opportunities and influence future WTO negotiations. The only way of achieving this is to engage in all forms of arrangements.</p>
<p>It could be that Australia is simply pursuing “mindless engagement” without a clear sense of the key economic objectives, but the evidence does not point in that direction. Australia is benefiting strategically and economically by engaging in all types of trade negotiations.</p>
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<p><em>This article draws on research prepared for the 2014 Workshop “Ten Years since the Australia-US Free Trade Agreement: Where to for Australia’s Trade Policy?”, sponsored by the Academy of the Social Sciences in Australia and Faculty of Arts and Social Sciences, UNSW Australia.</em></p><img src="https://counter.theconversation.com/content/32814/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bryan Mercurio does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ten years on from the Australia-US Free Trade Agreement, Australia is entering another round of negotiations towards the new and controversial Trans-Pacific Partnership. This is the first article in the…Bryan Mercurio, Professor and Vice Chancellor’s Outstanding Fellow of the Faculty of Law, Chinese University of Hong KongLicensed as Creative Commons – attribution, no derivatives.