IIT Newsletter - September 2021
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September 2021
Institute for International Trade
A message from the director
Last week was eventful, with the establishment of AUKUS catching many, not least French politicians and officials, by surprise. While the proposed construction of nuclear-powered submarines in Adelaide would be a boon to the city and State, as well as addressing important long term security concerns, the repercussions on the trade front are as yet uncertain. Most immediately reports that France is mobilising support within the EU to block the proposed free trade agreement with Australia hint at potential fallout, although whether EU member states would sacrifice their trade interests over this remain to be seen. More likely the well-known obstacles to concluding the deal, such as data governance and geographic indications, will prove decisive.
Perhaps more interestingly, the day after the new alliance was announced China signalled its intention to join the CPTPP by lodging a formal application. As much of the subsequent media coverage highlighted this was no doubt in part a gambit to drive a wedge amongst Western allies, with an eye on Japan in particular. Nonetheless, it is unlikely China’s application will succeed since Japanese trade officials have long signalled their concerns over China’s economic governance model being incompatible with CPTPP disciplines in some key domains, notably vis a vis the industrial subsidies/SOEs nexus. A number of other CPTPP members share these concerns, including Australia, which has the additional concern that it has been subjected to a sustained economic coercion campaign emanating from Beijing. Furthermore, all CPTPP signatories are holding out hope, perhaps diminishing, that the US will re-join CPTPP.
In this light our first three pieces reflect on Australia’s trade relations with China, as well as alternatives to the Chinese market – diversification in short. In the first two, a group of former DFAT officials unpack key metrics pertaining to Chinese trade coercion, then proffer a set of suggestions for how Australia might recalibrate its trade diplomacy vis a vis China and the region. In the third IIT Visiting Senior Lecturer Dr Lauren Johnston makes the case for elevating the Indian Ocean Rim up Australia’s trade radar. India obviously looms large in the Indian Ocean and Australia’s trade diplomacy, and so in the fourth piece Natasha Jha Bhaskar reflects on the Modi government’s evolving economic reform strategy and how that chimes with Australia’s diversification imperative.
We haven’t forgotten that the WTO remains the foundation of the global trading system. Hence, we are pleased to welcome Lee Tuthill as our latest Visiting Fellow. She brings enormous expertise in the services/digital trade nexus – an arena that is defining the future of trade. So don’t forget to sign up for our TIISA network conference on trade and the digital transformation of services. Also, watch out for our dedicated newsletter highlighting IIT staff appearances at next week’s WTO Public Forum.
Best regards,
Professor Peter Draper
POLICY & ENGAGEMENT
Economic Coercion by China: The impact on Australia's merchandise exports (working paper)
In 2020, Australia’s trade with China was hit by the rapid deterioration in the bilateral relationship. Resulting coercion tactics by China against Australian exports is estimated to have cut A$6.6 billion over July 2020 to February 2021 from exports to China, primarily affecting eight commodities. This paper quantifies losses and assesses diversification efforts to date.
Mike Adams, former Department of Foreign Affairs and Trade (DFAT) economist, Ron Wickes, former Director of the Trade Analysis Section of DFAT and Nicolas Brown, former head of DFAT’s branch responsible for analysis and strategic advice on trade.
GEOSTRATEGIC TENSIONS MANIFESTING AS TRADE CONFLICT
While there is little chance of getting back to the positive bilateral relationship of just five years ago, this brief argues that trade can support a revival of mutually beneficial and broad-based trade and investment relations with China. This need not be at the cost of broader strategic interests and could in fact enhance them.
By Mike Adams, former Department of Foreign Affairs and Trade (DFAT) economist, Ron Wickes, former Director of the Trade Analysis Section of DFAT and Nicolas Brown, former head of DFAT’s branch responsible for analysis and strategic advice on trade
CHINA: THE ELEPHANT IN THE ROOM AT AUSTRALIA'S AFRICA WEEK
This article takes a long-term view to Australia’s trade strategy. It argues that the lack of almost any debate on Australia’s ties with Indian Ocean Africa may be short-sighted for three reasons, relating to demographics, economics and politics. It discusses each in turn, suggesting that now is the time to implement a strategy to engage a region where the next demographic boom is occurring.
By Dr Lauren A. Johnston, Visiting Senior Lecturer, Adelaide University Institute of International Trade and Founding Director, New South Economics
INDIA'S REFORM MOMENTUM WILL DEFINE ITS ECONOMIC FUTURE
India’s relationship with economic reforms has been a complicated one. Nevertheless, Narendra Modi has been driving reforms that are having modernising India’s economy, while regional geopolitics has many looking to India as a China-diversification option. This article assesses India’s reforms and what they can offer the India-Australia trade relationship.
By Natasha Jha Bhaskar, General Manager of Newland Global Group
IIT WELCOMES LEE TUTHILL AS OUR NEWEST VISITING FELLOW
Lee Tuthill worked at the WTO from 1990 to 2021. At WTO she specialized in GATS, telecommunications /ICT, emerging technologies and digital trade. Before joining the WTO, Ms. Tuthill worked at the U.S. International Trade Commission, Office of Economics, covering all aspects of what was, at that time, the GATT. She covered WTO e-commerce discussions since their inception in 1998 and continues to keep abreast on how ICT and e-commerce trends relate to the GATS and other WTO agreements.
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EVENTS
TIISA 2021 CONFERENCE: TRADE AND THE DIGITAL TRANSFORMATION OF SERVICES
PhD Workshop: 8-9 November 2021
Conference: 10-12 November 2021
The hybrid TIISA Annual Conference is on the theme of “Trade and the digital transformation of services”. The COVID-19 crisis has seen an acceleration of the digital transformation of services and a rise in remote delivery of services both within and across borders. There is consequently an impetus to update trade policy and regulatory frameworks to unleash the potential for the digital transformation to support sustainable growth and job creation all over the world. Against this backdrop we invite papers covering, but not limited to, the following topics:
- The digital transformation of services and the WTO rule book
- The digital transformation of services: lessons from free trade agreements and digital economy agreements
- Digital transformation, services trade and jobs
- Innovation, entrepreneurship and the development of new digital services
- Regulatory impact on data-driven innovation in (digital) services (e.g. data and privacy protection, GDPR)
- The role of competition and competition policy in shaping global digital services markets
- Sector studies of digital transformation and trade (e.g. finance, telecom, media, health, education
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