Agreement a threat to multilateral negotiations

DESPITE the benefits of the recent free trade agreement with the US Curtin University professor Peter Kenyon said Australia was helping stifle multilateral trade negotiations.

Professor Kenyon, who is the director of Curtin’s Institute for Research into International Competitiveness, told a WA Business News forum on the Australia US Free Trade Agreement earlier this week that he was “sceptically enthusiastic” about the recent agreement.

“Enthusiastic because I think free trade is a good idea no matter what,” Professor Kenyon said.

“Sceptical because I think it’s not the best way of going about it, in that I don’t like bilateral arrangements when multilateral arrangements are first best for freeing up trade, not second best, as I think bilateral arrangements inevitably are.”

While the FTA with the US brought up issues for Australia that might not have reached the table in multilateral negotiations, US trade policy was stifling multilateral negotiations, Professor Kenyon said.

“Part of the problem I perceive is that the US is strategically negotiating bilateral agreements around the world often with political intent as much as an economic intent,” he said.

“And to that extent the US trade policy is being diverted from, no matter how much they say otherwise, pushing through on multilateral [negotiations], speeding up the process stopped at Cancun.

“I feel we [Australia] are a kind of party to the act, as it were, of possibly delaying the kind of pressure that the US might otherwise abide to push forward on multilateral trade distortion reductions through the World Trade Organsiation.”

Australia’s chief trade negotiator, Stephen Deady said he could not comment on US trade policy but he conceded that the US did appear to see FTAs as an integral part of its trade policy.

He said the current WTO round was perhaps moving to slow for some which was why the US was looking at bilateral FTAs.

“But you can’t point to anything that deflects from US commitment to the multilateral processes, at least in statements,” Mr Deady said.

“And I really don’t believe it is a diminishing of commitment or resolve to advance the multilateral system.”

However, he said bilateral agreements were a feature of the trade system today and if Australia was not involved then it could be foregoing opportunities.