The results of a survey by the Australian Industry Group (Ai Group) suggest
that the potential benefits of free trade agreements (FTAs) are not being fully realized
by Australian exporters, due to excessive red tape, complex compliance regimes
and subtle protectionism.
Ai Group late last year surveyed exporting companies of various sizes across
industries, including manufacturing, construction, and food and beverages, on
the effectiveness of FTAs, with a particular focus on the US.
Five years on from the implementation of the Australia-US free trade agreement
(AUSFTA), it found that Australian exporters are still finding it tough to do
business in the US. It showed that less than half of those exporting to the
US are seeing any direct benefits from AUSFTA.
Furthermore, 87% believe the arrangement has not improved their access to US
government contracts, and three-quarters of exporters reported that AUSFTA isn't
effective in creating new export opportunities.
Companies are experiencing similar problems with FTAs with other countries, including
Chile, Singapore and Thailand and the Closer Economic Agreement with New Zealand, according to the report.
"If we consider the amount of government time and effort invested in negotiating
FTAs compared with the benefits that Australian companies are gaining from these
arrangements, the results are concerning," Ai Group Chief Executive, Heather
Ridout suggested, continuing: "The survey shows that FTAs alone do not motivate companies
to seek new export opportunities but do provide some advantages to those already
exporting to that market.”
In each of the five FTAs surveyed, the majority of companies reported no benefits
in assisting their export activities. The FTA with Chile showed the worst results, with
71% reporting no benefits, while the FTA with Thailand was the best, with 56%.
"This demonstrates that in an increasingly competitive global market where
Australian exporters are carrying the burden of a relatively high Australian
dollar, government support programs such as the Export Market Development Grants
Scheme are crucial to assisting companies explore the potential of entering
new markets,” Ridout added.
“Ai Group supports the principles of expanding free trade and recognises
the many potential benefits for companies including the reduction of import
duties, improved market opportunities, and under AUSFTA, increased labour mobility,”
she confirmed.
“It is how the government can assist companies to better
access these opportunities which we want to explore further."
The survey will constitute part of Ai Group's submission to the Productivity Commission’s
study into the effectiveness of bilateral and regional FTAs, which was announced
late last year by the government.
LAWANDTAX-NEWS.COM
