The moment of greatest pomp and ceremony is always the best one for hecklers.
And so the notorious troublemaker Liberal senator Bill Heffernan
took the shot at the culminating moment of what his own leader, Tony
Abbott, described as an "absolutely momentous, historic day".
Just as the
ministers from China and Australia were setting their pens to sign a free trade
agreement in Parliament House last week, Heffernan called out: "When
are you going to put your currency on the market?
It'll
be up to Robb to persuade the Parliament that the deal is practical and fair.
And it'll be up to Labor to resist fearmongering from the union movement.
China's
commerce minister, Gao Hucheng, showed no sign of having heard the jibe, a sly
accusation that China cheats by regulating its exchange rate to give its
exports a price advantage.
Australia's
trade minister, Andrew Robb, was suffering from a case of shingles, a very
painful rash. He'd conquered depression in earlier years, as he described in
his 2011 book, Black Dog Daze. But while his mind is fine, it was now
his body he had to struggle against.
Robb didn't
need any of Heffernan's brand of help: "He's one of life's
characters," says Robb, "and you do need characters in life – but not
too many".
The Trade
Minister wasn't going to miss the signing. The deal was a decade in the making
under four prime ministers. Robb had worked hard, nine trips to China in a
year, to meet the deadline set by the two countries' leaders – Abbott and Xi
Jinping agreed on a 12-month schedule to close the deal by October last year.
Robb recalls
getting anxious about the chances for a deal with Australia's biggest trading
partner: "It was nearly September and we were really starting to run out
of time."
He'd come to
the view that the big opportunities for Australia's future lay in selling
services to the world. Three quarters of Australia's economic output is
services, not goods.
China's
market is tightly shut against foreign services and Robb wanted to open it
"but it was very unsatisfactory; there were no offerings on
services".
The Chinese
refrain: If we allow access to Australian services, then eventually we have to
give the US and Europeans the same, and they are so big they will swap us.
Then Robb
had a bit of a brainwave. "I saw Gao over a meal in September, and I said
to him, 'I've been impressed with China's Special Economic Zones'," areas
of the country where the usual regulations are suspended to allow greater
freedom to foreign trade.
The zones
had been helpful in conditioning the community to a deregulated economy, Robb
said, in China's early phase of moving from socialism to a market economy.
The zones
had helped the Chinese to experiment with various policy measures as pilot
programs.
"I said
to him, 'You ought to think of Australia as a special economic zone for
services. We've got a population of 23 million – that's smaller than some of
China's special economic zones. Then, if the Americans or the Europeans want to
claim the deal with Australia is a precedent that they should be allowed to
follow, you just say we treated the Australians as a special economic
zone.'"
Gao said
nothing in reply, says Robb. "But over the next three weeks over two
dinners I found myself sitting next to two members of the politburo," the
topmost level of the Chinese government.
"I put
the idea to both of them. Then I sat down with Gao to negotiate 10 days later
and the doors just opened on services." Beijing offered unlimited access
for Australia to build private hospitals, aged care homes, hotels and
restaurants, with 100 per cent Australian ownership.
Plus it
offered concessions on entry for Australian legal services, financial services,
education, telecommunications, tourism and travel, construction and
engineering, manufacturing services, architecture and urban planning, and
transport.
"We got
enormous opportunities that aren't there for others," says Robb.
The Chinese
also made major offers to open their markets in goods – Australian beef, dairy
and wine are seen as big winners. Overall, 85 per cent of Australian exports
are to enter China free of tariffs initially, a proportion rising to 95 per
cent when the deal is in full force.
When
Fairfax's former Beijing correspondent John Garnaut reported the reaction to
the deal, he began with this overview: "International trade experts and
diplomats have been astonished at one-sided gains made by Australia in this
week's free trade deal with China." The witch at the christening, Bill
Heffernan, did have a point. "If you want a trade deal, it should be on
the same playing field," he says. Australia's exchange rate is set by the
market; China's is set by the government.
But if you
only did trade deals on perfectly equal terms with perfectly equivalent
nations, there would be no trade deals. The modern history of world trade is
getting the achievable today rather than freezing progress in search of the
unattainable.
Andrew Robb
is one of the quiet achievers of the Abbott government. The ministers who get
most attention are bombastic and self-important. Robb, softly spoken and with a
mild, bumbling manner, is one of its unsung heroes. In a year and a half, he
concluded free trade agreements with all three of Australia's biggest markets –
China, Japan and South Korea.
This week,
still suffering from shingles, Robb headed to India to work on the next big
bilateral deal. Dosed up on morphine, he had a session with the Prime
Minister, Narendra Modi, his fourth in the course of the negotiations which the
two governments hope to finish by Christmas.
"The
neurosurgeon said I've got the pain covered and I can function, but the only
cure is to rest," says Robb. "I've got too much to do. Fortunately I
sleep really well on planes."
Many in
Australia are deeply suspicious of market opening, and for good reason. It's a
disruptive process. Yet Australia is one of the great case studies in how
market opening can raise a country's overall prosperity.
Australia
tore down its towering tariff walls, and discovered that it could prosper much
better without them.
"Postwar
Australia and NZ were standouts as the most protected economies in the
world," says Ken Henry, the former Treasury secretary. Now they are among
the most open.
As Andrew
Robb says, "after these three deals, Australia's average tariff will go
from 2.7 per cent" – already negligible – "down to close to 1 per
cent, because most of our tariffs will slide to zero".
Apart from
"hub" countries that are city entrepots, like Singapore, rather than
full countries, "it's hard to think of anywhere other than NZ that will
have freer trade", says Robb.
And, says
Ken Henry, that's a very good thing: "The experience of liberalisation has
been unambiguously positive in economic terms," he says.
And today,
when there is a growing despair at the Abbott government's refusal to
countenance broad economic reform, the burden of economic renovation is falling
on trade, the one moving part.
The Abbott
government experienced some uncomfortable truth-telling this week from the
International Monetary Fund.
The
government is forecasting that economic growth will accelerate to 3.5 per cent,
back to its long-run trend. The IMF disagreed. It's stuck around the current
level of 2.5 per cent, says the fund, without some serious reforms.
Abbott
prefers to hyperventilate about marginal matters, like the Q&A sideshow,
than confront the demands of tax reform, for instance.
But he does
advocate trade reform and Ken Henry makes the point that even with a general
reform stasis, trade can set in train the forces for wider economic
rejuvenation:
"The
liberalisation of protection for goods and services was an important driver of
broader economic reform, including ultimately labour market reform, in both
Australia and New Zealand" in the 1980s and 1990s. All elements of
business have to become more efficient, and that includes labour."
And here is
a test for the Labor Party. It was Labor under Hawke and Keating who began the
great opening of the Australian economy. Labor today continues to support trade
liberalisation. It supported the Japan deal and the South Korean deal. As trade
spokeswoman Penny Wong sums up: "Looking at the past 20-odd years of
economic growth in Australia, you would have to say trade liberalisation has
been one of the important drivers of more jobs, better wages and more choices
for Australian consumers."
Labor's
ability to defend this policy will be tested. First is the China deal, which is
not yet done. It will go before two parliamentary committees and then sit in
the house for 15 days. At this point, probably in November, Labor will have the
power of life or death over the deal. The Greens are opposed, so the deal will
die in the Senate without Labor's support.
Labor has
serious questions, legitimate ones, about the ability of Chinese workers to
enter Australia under the deal, and the investor state dispute settlement
clauses.
It'll be up
to Robb to persuade the Parliament that the deal is practical and fair. And
it'll be up to Labor to resist fearmongering from the union movement.
Next will be
the 12-nation US-led deal, the Trans Pacific Partnership or TPP. Obama this
week won the key authority from the US Congress that he needs to conclude
negotiations.
But the deal
is big, complex and secret. Says the Liberals' Bill Heffernan: "If an MP
wants to know what's in it, you have to go down to the Department of Foreign
Affairs and Trade and sign a four-year confidentiality agreement just to see
what the deal was – you still can't see what it is" in its latest
iteration.
The secrecy
is a serious problem for most of the countries involved. Yet even with all the
problems and fears, Australia has been a great historic winner in opening
itself to compete with the world.
Peter Hartcher is the political editor
Sydney Morning Herlad
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