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Productivity Commission urges caution on free trade agreements

The Australian, Canberra

Productivity Commission urges caution on free trade agreements

By Rowan Callick, Asia-Pacific editor

14 December 2010

The Productivity Commission has released a report backing Trade Minister Craig Emerson’s critique of many free trade agreements.

Dr Emerson last Friday told the Lowy Institute he was not interested "in collecting trophies for the national mantelpiece, empty vessels engraved with the words ’free trade agreement’, if they are nothing of the sort and of token value to our country".

The commission said in its 392-page report that "businesses have provided little evidence that Australia’s bilateral and regional trade agreements have generated" commercial benefits.

"While many elements of the current approach" to trade deals appeared sound, deficiencies included:

Selection of partner countries was not prioritised or co-ordinated strategically.

Inadequate assessment of other options before embarking on bilateral regional agreements.

The results of modelling were used to oversell the benefits of bilateral deals.

Consultation was inadequate, especially once negotiations had started.

Parliament was often not well placed to affect the outcome of talks.

The commission said bilateral regional free trade agreements should not guarantee investors special provisions "over and above those already provided by the Australian legal system", such agreements should not include intellectual property provisions as a matter of course, and the government should be cautious about including labour standards and exclusions for cultural matters.

It wants bilateral deals to be subject to independent analysis once they are completed and before they are signed.

Some government agencies warned the commission that "could damage Australia’s credibility as a negotiating partner and provide an opportunity for interest groups to lobby to unpick the agreement".

The commission insisted that the extra transparency involved in such an examination was appropriate, and good deals "should be sufficiently robust to withstand such scrutiny".