Crikey | 29 November 2020

Trade deal with China was always useless, despite what our leaders wish us to believe

by Bernard Keane

Australia’s trade agreement with China — it’s not a free trade agreement (FTA), despite Coalition claims to the contrary — was borne of Tony Abbott’s desperation to appear to have an economic policy.

Having been elected on the basis of all the things he’d stop — boats, climate action, deficits — he turned to “free trade agreements” with a number of regional countries as a facade of a positive economic policy.

Such bilateral trade agreements produce little economic benefit, as the Productivity Commission (PC) has long pointed out — and certainly nothing like the absurd claims made for them by politicians.

The trade agreement with the United States concluded by the Howard government has actually been economically damaging to Australia, the PC found. And that’s before you get to the additional red tape burden required to try to access any benefits of such agreements — like labelling standards and country-of-origin rules.

That didn’t stop Abbott from wanting to sign pretty much any draft trade agreement he could find, no matter what its state, so he could wave the resulting document and claim, as he did about the Chinese trade agreement (ChAFTA), that it would bring benefits “to hundreds of thousands of businesses right around our country”. For Abbott, the entire future of the country rested on his handiwork:

Almost nothing that this government has done will make as much difference to the long-term future of our country as the China-Australia Free Trade Agreement. Again, I congratulate the minister for trade and investment for his extraordinary work. This free trade agreement will be good for jobs, good for consumers and good for growth, and it sets up our country for the future.

The Department of Foreign Affairs (DFAT), however, was less enthusiastic.

Typically, it didn’t include much detail of exactly what benefits would flow from the deal — it relied on 10-year-old modelling to assess the impact, and when required to describe its benefits in the National Interest Analysis supposed to accompany the deal, could only conclude “ChAFTA will significantly boost Australia’s economic relationship with China, our largest trading partner, and elevate the standing of the bilateral relationship overall”.

But not merely did he laud the benefits of the deal with China, Abbott called those who opposed it — or objected to its labour market provisions allowing the importation of Chinese workers — racist.

“The CFMEU [is] going around trying to sabotage a deal that will set up this country for the future,” Abbott claimed in August 2015. “A campaign of xenophobic lies is being master-minded by the CFMEU and this leader of the opposition is silent in the face of racism.”

Next month he went further, describing Labor’s criticisms of the deal as “xenophobic at best, racist at worst, a campaign of lies being peddled, principally by the CFMEU, taken up by the ACTU more generally and being connived at by members opposite, being articulated by members opposite”.

It wasn’t just Abbott. Malcolm Turnbull told Sky News that Labor was being “aggressively anti-Chinese”.

And where the Liberals went, News Corp gleefully followed. The Australian declared Abbott “vindicated for standing firm against the misleading and xenophobic campaign run against ChAFTA”. The Oz’s foreign editor Greg Sheridan attacked Bill Shorten as “absolutely disgraceful” and said he had licensed “economic vandalism” and failed to speak out against “gross xenophobic paranoia from within the broader labour movement”.

And remember this was before the high farce of Turnbull’s effort to force through the long-dormant extradition treaty with China — which Abbott had promised the Chinese regime as quid pro quo for the trade deal.

The trade deal, of course, never posed the slightest hindrance to China’s campaign to intimidate Australia. And the idea that it led to any “elevation” of the bilateral relationship is farcical. Australia is now consciously trying to reduce its reliance on trade with China, not deepen it. And even Trade Minister Simon Birmingham has admitted that the FTA has been casually broken by China. There’s nothing to government can do about it.

And for that matter, many sections of the government, and News Corp, now can’t be anti-China enough — and Chinese accusations of racism are laughed off as propaganda.

But before this blew up, were FTAs actually delivering for Australia? Let’s turn to the people who should know — Australian business.

In 2018, the right-wing employer group Australian Chamber of Commerce and Industry surveyed businesses about, among other things, free trade agreements. Did the results confirm the laudatory claims of Abbott, and the less glowing but positive claims of DFAT, about trade deals? Here are some of the conclusions:

Understanding and utilisation of trade agreements continues to be problematic apart from the China Australia Free Trade Agreement (FTA). This is confirmed in the qualitative findings. Businesses were asked about their understanding and utilisation of a list of general FTAs. The results show that the majority of businesses stated that these FTAs are not relevant to them … A significantly large number of businesses do not understand or use FTAs…

But even the ChAFTA, which 40% of business claimed at least to understand and be aware of, wasn’t delivering, as one comment from an unidentified health business illustrated:

You know, Australia signed a free trade agreement with China a couple of years ago, you know Andrew Robb went off and did this amazing stuff, been sensation, but then China has reacted by making it harder and harder to do direct trade, so we can’t sell our [health care product] directly in a store in China…

The FTA was never worth the thousands of pages it was written on. And it didn’t take a crisis in the relationship with China to show it.