Pressing the free trade case amid growing protectionism

For a policy that has brought prosperity and choice to billions around the world, free trade has few friends at present.  In the first round of the French presidential elections, held last Sunday, around half of all voters backed anti-free trade parties led by Marine Le Pen on the nationalist right and George Melenchon on the communist-backed left.

Across the Atlantic, President Trump, who completes his first 100 days in office on Saturday, has been mercifully mellow when it comes to trade — at least compared with his campaign rhetoric — although he still managed to cap his 100 days by slapping 20% tariffs on Canadian lumber.  The tariffs are nothing new (Bush imposed tariffs of 27% on Canadian lumber in 2002) but the hyperbole doesn’t augur well for a smooth renegotiation of NAFTA, due to commence shortly.

So, it was a shot in the arm to hear Australian Trade Minister Steve Ciobo announce the first steps toward a free trade agreement with Hong Kong.  At first blush, one might wonder what there is to liberalise in Milton Friedman’s free-trade pin-up, since Hong Kong charges no tariffs on imports or exports. The goal for Australia apparently would be to lock in regulatory settings that guarantee openness for Australian exports of legal, accounting, financial and education services.

But Ciobo also needs to push forward free trade negotiations with India, which appear to be languishing.  Former prime minister Tony Abbott set a 12-month deadline to complete three North Asian FTAs.  Abbott explained “Officials can string things out forever. By setting a timeline to get it done, we showed the Chinese, Koreans and Japanese we meant it … I knew we needed to drive these negotiations from the top, otherwise they would linger on forever. Ultimately all politics is personal and I knew we needed to make the negotiations personal to conclude the deals. The 12-month deadline was a big part of that.”

With the deadline set, then trade minister Andrew Robb delivered in spades.  Now, Turnbull and Ciobo must secure an FTA with India.  Once a newly energized Britain is out of the EU, it will be a powerful competitor.  Australia must press its advantage now.