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Fix FTA fine print, says business

The Australian, Canberra

Fix FTA fine print, says business

By Rowan Callick

7 April 2014

Clinching further free trade agreements will not reap the anticipated billions of dollars of benefits for Australian firms unless the deals are better drafted, the Australian Chamber of Commerce and Industry has warned Trade Minister Andrew Robb.

Mr Robb returned to negotiations in Tokyo yesterday after a five-hour session on Saturday with Japan’s Agriculture Minister Yoshimasa Hayashi, hoping to finalise an economic partnership agreement just in time for Tony Abbott to announce it alongside his counterpart Shinzo Abe this evening. Mr Robb then heads for South Korea — where a deal was agreed last December — and on to China, where talks remain at an earlier stage.

The Prime Minister is visiting all three countries — Australia’s top three trading partners — over the next week.

Bryan Clark, director of trade and international affairs at ACCI, which represents a large proportion of small and medium exporters, said that some FTAs were so poorly drafted that most Australian firms selling goods to those countries did not even claim preferences to which they were entitled, because of the cost and delays involved. He said the Korean FTA was the worst, in terms of the process needed for companies to claim preference, that Australia had concluded.

The chamber has sent a letter to Mr Robb saying that unless technical elements of the Korean deal are redrafted before it is formally ratified, it will become ­“unworkable in a commercial sense”, as will the Japanese deal if its compliance clauses are not drafted in a business-friendly way.

“Poorly drafted administrative arrangements can negate the years of negotiations and liberalisation on offer if they result in a commercially unusable agreement,” the chamber wrote.

However, the ACCI applauded Mr Robb for releasing the full text of the Korea FTA, so that the compliance obstacles were exposed, and could still be tackled.

Mr Robb has asked the ­Department of Foreign Affairs and Trade to review the chamber’s concerns.

In a recent survey, most Australian exporters told the ACCI the technicalities precluded them from understanding Australia’s FTAs to date.

The most positive response from exporters was for the ASEAN-Australia-New Zealand FTA, of which just 22.6 per cent said they had read the text and understood it.

In a different survey of companies Asia-wide cited by the chamber, fewer than 30 per cent of the firms responding used the concessions available to them under FTAs.

“The devil,” said Mr Clark, “is in the detail.”

For instance, to export to ­Malaysia, he said, exporters had to instruct Customs officers there which set of protocols they were seeking to use — because Australia and Malaysia shared a range of trade agreements broader than their bilateral FTA. By the end of this year there could be five deals, and thus five sets of such protocols. If the exporter confuses one set with another, the preference will be struck out by Malaysian Customs.