Institute for International Trade

A message from the director

Dear colleagues,

The new Australian Labour Party government is prioritising trade relations. There will be strong continuities with the previous government, at least when it comes to choices over key partners and institutions. Geopolitics, and its flipside – the need to diversify from excessive China-reliance – is the bipartisan umbilical cord joining the ALP and LNP trade agendas.

India is a key part of that thrust. The Quad is the cornerstone, but India’s stance on Russia’s war of aggression in Ukraine is a festering irritant. This duality also shows up in trade relations.

On the bilateral front the Indian government surprised many Australian trade observers with the high ambition – by Indian standards – attached to our interim FTA with them. In our first feature piece Natasha Jha Bhaskar reflects on the rationale for the agreement in relation to its key features. The phase 2 negotiations will soon begin, with the aim being to further widen and deepen the market access afforded under the interim deal. So far so good.

Unfortunately, India is playing its traditional spoiler role in the WTO’s Ministerial conference, extended to today in the fleeting hopes of overcoming Indian intransigence. Australia is a strong supporter of the rules-based order encapsulated in the WTO. A key issue, as Lee Tuthill eloquently explains in our second piece, is the services that are the DNA of e-commerce and a key driver of international trade. There has been a moratorium on e-commerce duties since the WTO’s inception, and as Tuthill points out this lack of taxation has greatly expanded trade in services connected to e-commerce with huge benefits. At the time of writing India, Indonesia, and South Africa were blocking the e-commerce duties waiver. No doubt the Indians are taking this hostage in return for something else, such as continued licence to subsidise their farmers (again an interest at odds with Australia’s) but it is risky business given the manifold fragilities building up in the international trading system.

The EU’s proposed imposition of a carbon border adjustment mechanism on imports into the EU from jurisdictions that do not impose a domestic carbon price could further inflame international trade relations. The previous Australian government – and some other countries - saw this as a protectionist device and threatened retaliation. Yet the underlying problem is undeniable: as the EU tightens up its emissions trading scheme, so the prospect of its own companies relocating to non-ETS countries rises – the ‘carbon leakage’ or ‘free-rider’ problem. Through its CBAM the EU is consciously pressurising its trading partners to up their carbon emissions games. Given the urgent need to address global warming it is difficult to see alternatives. In our third piece Mike Young offers a pathbreaking set of ten principles that should govern implementation of any border adjustment mechanism addressing a global environmental problem. Mike and I will be in Europe next week to present these ideas to various groups – drop me a line if you want to meet up.

Finally, we’re delighted to welcome IIT’s new Visiting Senior Lecturer, Dr Nathan Gray, to our circle. Nathan brings significant regional experience and will add significant value to our team.

Professor Peter Draper

POLICY & ENGAGEMENT 

India-Australia Free Trade Deal Offers Australia First Mover Advantage in the World’s Fastest Growing Economy

The new Australia-India free trade agreement is New Delhi’s first deal with a developed economy in a decade. It is indicative of how Australia’s bilateral relationship with India has grown in leaps and bounds recently, particularly since the elevation of ties to a Comprehensive Strategic Partnership (CSP) in 2020.

Natasha Jha Bhaskar, General Manager of Newland Global Group, a Sydney-based Australian corporate advisory firm specialising in the Australia-India space.

Services: The DNA of e-commerce

A whole host of services contribute to the development of e-commerce and how it functions as an ecosystem. Without these services global trade in e-commerce would be impossible, yet these critical components of the system are too often overlooked, or missed entirely, to the detriment of multilateral actions that seek to develop digital trade.

Lee Tuthill visiting Fellow, The University of Adelaide, Institute for International Trade. Lee worked at the WTO from 1990 to 2021, where she specialized in GATS, telecommunications/ICT, emerging technologies and digital trade.

WORKING PAPER 

Improving border adjustment mechanisms

As the Paris Agreement allows each party to determine how fast they will seek to reduce greenhouse-gas emissions, the EU is proposing to introduce a “carbon border adjustment mechanism”, or CBAM. This paper identifies a set of principles to guide the use of CBAMs in a multilateral context.

Mike Young is an Emeritus Professor in Energy, Water and Environmental Policy at the University of Adelaide and was the Founding Executive Director of its Environment Institute.

NEWS AND EVENTS 

2022 CELIS Forum on Investment Screening (CFIS 22)

IIT’s Dr Naoise McDonagh travelled to Uppsala, Sweden in June to present at the 2022 CELIS Institute Annual Forum on Investment Screening.

CFIS 22 is Europe's first and foremost forum to discuss questions on investment screening and security. It serves to enhance the Institute's analytical capacity and facilitate the shaping of common approaches. A marketplace of ideas, CFIS 22 brings together EU officials, national experts, diplomats, academics, business leaders, think tankers, and representatives of civil society and the media from across Europe and beyond.

The theme for 2022: The Emerging Law of Investment Control in Europe: Screening, Sanctions and Subsidies

Dr McDonagh presented on the topic of sovereign-driven investment risks in the context of the EU’s new investment screening regulation. 

Pictured left to right: 
Professor Steffen Hindelang, Dr Lena Hornkohl, Dr Naoise McDonagh

IIT Titleholder - Visiting Senior Lecturer, Dr Nathan Gray 

It is with great pleasure The IIT welcomes Dr Nathan Gray to our prestigious list of Titleholders.

Dr Nathan Gray has a PhD in Asian Business and is a strategic international management and policy adviser to governments, NGO’s, international organizations, and corporations in the Asia Pacific. He has a detailed and unique knowledge of emerging corporate and government opportunities in Asia, gained through more than 20 years of experience operating in Asia-Pacific markets.

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