Daily Bulletin


The Conversation

  • Written by The Conversation
imageThe balance of trade positions of Australian agriculture and food manufacturing have deteriorated since FTAs with New Zealand, the United States and Thailand have come into play.Flickr/Phil Greenhalgh, CC BY

Many claims are made that Free Trade Agreements (FTAs) with select trading partners will benefit Australian agriculture. OECD statistics say otherwise.

The balance of trade positions of Australian agriculture and food manufacturing have deteriorated since FTAs with New Zealand, the United States and Thailand have come into play.

The long-standing 1983 New Zealand arrangement shows growing imports of processed food products, especially since 2000. Australian food exports to New Zealand have levelled off since 2011 with a US$600 million Australian deficit on food products in 2014. Agricultural goods have been close to balance with just over US$270 million of raw or minimally processed product flowing each way.

The net result (shown in black) has been a persistent and generally worsening deficit for Australia in its agriculture and food trade with New Zealand for the whole period.

imageAuthor developed using OECD STAN bilateral trade in goods database

The agreement with the United States came into effect in 2005. Again agricultural products are close with Australian imports of US$210 million slightly exceeding exports since 2007. Australian food exports have always exceeded imports but the surplus halved between 2004 and 2013. The basis for the almost doubling of food exports in 2014 is unclear, but meat products driven by beef herd rundown in drought affected Queensland would be part of what may be a one-off spike.

The net result (again shown in black) has been a persistent but generally narrowing surplus for Australia in its agriculture and food trade with the US since the FTA came into play. The Australian 2014 surplus of around US$2 billion appears likely to settle back to around US$700 million or less in the years to come.

imageAuthor developed using OECD STAN bilateral trade in goods database

Thailand also signed a bilateral agreement in 2005 and the result has been a generally worsening agriculture and food trade deficit.

imageAuthor developed using OECD STAN bilateral trade in goods database

The rise in Australian food product imports from over US$200 million to more than US$800 million in the decade to 2011 is pronounced, as is the subsequent levelling off. Australian agricultural and food exports to Thailand generally travelled together until 2008 but after this, agricultural exports rose markedly for three years before falling back. The rise and then fall of commodity prices explain much of this hump.

Clearly, these three FTAs have failed to deliver. There has been no improvement evident in the agriculture and food trade position under any of the three agreements. Rather, deterioration has been evident in each case.

Turning now to the world, Australia’s agriculture and food balance has been a persistent and generally growing surplus. This is the opposite effect. Australian trade performance has been better with non-agreement partners. Again commodity price effects are evident in recent years for agriculture exports.

imageAuthor developed using OECD STAN bilateral trade in goods database, Author provided

New Zealand, USA and Thailand account for about 30% of the rising food imports but only around 15% of rising food exports to the world. They also account for only around 5% of agricultural exports but 35% of imports.

Further analysis can be undertaken, but on these figures, FTA partners have clearly been able to outperform Australian enterprises. On the other hand, where no Agreements have been struck, Australian enterprises have outperformed partners to record a generally improving agriculture and food trade surplus.

How might things change with three new North Asian trade, regulation and investment agreements (Japan, Korea and China), and perhaps a Trans-Pacific Partnership? History suggests no necessary gains and trending losses on merchandise trade for both food manufacturing and agricultural industries.

It seems we should be more closely monitoring the realities of trade, not fixating on rhetoric and so far empty promises.

There is nothing “free” about these trade agreements.

Mark McGovern does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Authors: The Conversation

Read more http://theconversation.com/free-trade-agreements-fail-to-boost-australian-agriculture-and-food-manufacturing-47576

Writers Wanted

How To Find The Right Emergency Plumber Lismore

arrow_forward

Delivery rider deaths highlight need to make streets safer for everyone

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Interview with Ben Fordham, 2GB

BEN FORDHAM: Scott Morrison, good morning to you.    PRIME MINISTER: Good morning, Ben. How are you?    FORDHAM: Good. How many days have you got to go?   PRIME MINISTER: I've got another we...

Scott Morrison - avatar Scott Morrison

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Did BLM Really Change the US Police Work?

The Black Lives Matter (BLM) movement has proven that the power of the state rests in the hands of the people it governs. Following the death of 46-year-old black American George Floyd in a case of ...

a Guest Writer - avatar a Guest Writer

Business News

Nisbets’ Collab with The Lobby is Showing the Sexy Side of Hospitality Supply

Hospitality supply services might not immediately make you think ‘sexy’. But when a barkeep in a moodily lit bar holds up the perfectly formed juniper gin balloon or catches the light in the edg...

The Atticism - avatar The Atticism

Buy Instagram Followers And Likes Now

Do you like to buy followers on Instagram? Just give a simple Google search on the internet, and there will be an abounding of seeking outcomes full of businesses offering such services. But, th...

News Co - avatar News Co

Cybersecurity data means nothing to business leaders without context

Top business leaders are starting to realise the widespread impact a cyberattack can have on a business. Unfortunately, according to a study by Forrester Consulting commissioned by Tenable, some...

Scott McKinnel, ANZ Country Manager, Tenable - avatar Scott McKinnel, ANZ Country Manager, Tenable



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion