The Benefits of Pursuing North Asian Free Trade Agreements
Background
In the absence of any progress through the World Trade Organisation’s Doha Round to deliver
multilateral trade agreements, many countries are progressing free trade agreements with one or
more trading partners as a means of assuring trading arrangements into the future.
As a major trading nation, it is in Australia’s interests to pursue bilateral trading arrangements with
trading partners while Doha Round continues to stall and offer no sign of successful conclusion. At
the same time, it is important to note that major trading partners are progressing their own
arrangements with other countries that may have negaitive impacts on Australia’s trading
arrangements with those countries. For example, Korea, China and Japan are about to embark on
trilateral negotiations that threatens to absorb their focus away from completing deals with
Australia.
To understand the implications of this trilateral agreement, a study is proposed to quantify the costs
of Australia not completing bilateral FTA’s with Korea, China and Japan. This study will consider the
implications of other countries completing trade agreements with these north Asian countries,
which could result in Australian export industries being seriously disadvantaged.
RIRDC has previous experience in this type of modelling research, having previously managed
development of the report “The Impact of KORUS on Australian Agriculture … and what an
Australian-Korea FTA could mean.” A copy of this report can be found at:
http://www.thecie.com.au/content/publications/KORUS_report_20_August_2007.pdf
RIRDC has also managed numerous trade-related research projects under its Global Challenges
Program.
It is envisaged that this work will be along similar lines of the KORUS impact study. Since the
completion of that report, Korea has finalised its trade agreements with the US and the EU. While
the results in the KORUS report will be dated as they were based on estimates, actual data is now
available, which will allow for more accurate assessment of impacts and the accuracy of the
modelling.
Considering the impacts on trade with China is of particular interest, especially as NZ has already
completed a free trade agreement with China and Australia now faces a distinct disadvantage in that
market as a result. In this case, reliance should not just be made on modelled figures but there are
also actual examples in the marketplace to show the disadvantages to Australian industries.
Japan is not so explicit in terms of other countries negotiating trade agreements ahead of Australia.
However, under the trilateral arrangements, China is understood to have offensive interests in
agriculture which could be considered in the context of China potentially taking Australian market
share.
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Terms of Reference
RIRDC is seeking to engage suitably qualified consultants to:
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Undertake economic modelling to quantify the possible economic impacts on Australian
industries of not undertaking bilateral free trade agreements with Korea, Japan and China.
These are to be considered:
o Individually
o In the context of a trilateral free trade agreement being established between Korea,
Japan and China.
This modelling will include analysis of the welfare implications of these trade and investment
agreements and:
o Identify trade flows between relevant countries and regions.
o Identify investment flows between countries and regions.
o Incorporate a fully integrated financial sector.
o Capture the time path of each country or region modelled.
Focus the economic modelling on impacts to the following Australian industries:
o Agricultural industry sectors agreeing to support this project (to be agreed)
o Two Australian non-agricultural industries with a strong export focus to north Asia
(to be agreed).
Deliver a comprehensive report that provides a detailed explanation of the modelling
process and the results derived from that process. In addition, provide a five to ten page
summary that can be used by funding parties to engage stakeholders in this issue.
Outputs
A comprehensive final report addressing the Terms of Reference and a summary report (4 – 6 pages)
to be used as a communications tool for key stakeholders are to be delivered.
Timeframe
Draft outputs are to be delivered by Early February 2013.
Further Information
Enquiries should be directed to:
Simon Winter
Senior Research Manager, Global Challenges
Ph
02 6282 5257
Mob 0419 720 700
Email [email protected]
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