Greg Ansley: Oz rethinking value of bilateral deals

Sir Robert Muldoon (L) and Malcolm Fraser's mutual loathing overshadowed 1980s trade talks. Photo / NZ Herald

Thirty years after officials began seriously negotiating the ground-breaking transtasman closer relations agreement, Australia is having doubts about the value of bilateral trade deals.

A Productivity Commission report late last year criticised the nation's drive to seek country-to-country pacts, heightened during conservative former Prime Minister John Howard's 11 years in power.

This period saw new agreements with the United States, Singapore, Thailand, Chile and - jointly with New Zealand under CER - the Asean bloc.

Canberra is at present trying for further deals with China, Japan, South Korea and Malaysia, among others.

But the tide may now turn back to a greater emphasis on the Doha round of world trade talks, and a more critical approach to bilateral negotiations.

The commission concluded that bilateral deals had been oversold to Australians without producing major benefits, and that other approaches - including a stronger Doha focus - could be better.

Trade Minister Craig Emerson, in a speech to the Lowy Institute, indicated that Prime Minister Julia Gillard's Labor Government might accept the commission's main thrust.

He said the year ahead could see the Doha round successfully concluded, progress made on the nine-member Transpacific Partnership, a deal struck with Korea and another with Japan advanced, the deadlock on talks with China broken, and other moves made to liberalise trade.

But he warned: "Actual progress on some may be disappointing and, frankly, Australia will pursue negotiations with those partners who are genuine about liberalisation.

"As Trade Minister, I am interested in results for our country and the global trading system, not in appearances of looking busy, mired in interminable processes that simply enable us to say that negotiations are proceeding.

"Nor am I 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."

Emerson's views came as 1980 Cabinet discussions on CER - Canberra's model for all following deals - were released by the National Archives of Australia.

These show similar concerns were held three decades ago for Australia's national interests and the need to ensure there were clear advantages in replacing the lumbering, bureaucratic and misnamed Australia New Zealand Free Trade Agreement, by then 34 years old.

Canberra was especially concerned that any new agreement would not be used by Wellington as a means of dodging an overhaul of its troubled economy, and that gains and losses would be evenly spread.

Cabinet discussions followed earlier talks between the late New Zealand Prime Minister Sir Robert Muldoon and his Liberal Australian counterpart Malcolm Fraser, whose mutual loathing added a new layer to the negotiations.

The ground for the discussions had been laid by meetings between officials, who spelled out the basic framework for the negotiations and the concerns that needed resolution.

"Any move towards a CER between Australia and New Zealand would not be a substitute for policies addressing the fundamental problems apparent and emerging in the New Zealand economy," the minutes of the Cabinet discussion say.

Subject to this, and to a deal in which the benefits were reciprocal, the Cabinet considered that a new agreement with Wellington wouldbe in the national interest.

There were complex issues to be addressed, among them tariff reductions and the products to be included, New Zealand's reluctance to end its system of import licensing, and the likely political pressure from worried farm sectors - wheat and wine in New Zealand, dairy and horticulture in Australia.

Wellington also wanted finance and investment to be included, against Canberra's concern that preferential treatment for New Zealand would conflict with its most-favoured nation commitments, particularly its Nara agreement with Japan.

But a background paper from trade officials said a mutually beneficial deal could be struck - as it finally was when the agreement was signed two years later, coming into force in 1983 - although New Zealand would gain more.

The paper did, however, conclude that New Zealand companies could be hammered by larger Australian rivals in their domestic market and that "solutions would need to be found".