Australia’s trade minister Steven Ciobo delivered a speech in Hong Kong, one of the world’s freest economies, on Monday (19 March) to advocate open trade and investment.
Protectionism was “shooting yourself in the foot” and “wealth-destroying”, Ciobo argued, adding that globalisation has been “immensely successful”.
He said “a trade war serves no one”, without singling out the U.S. and its president Donald Trump’s administration, which explicitly embraces a protectionist approach and imposed tariffs on imported steel and aluminum recently.
“Trade and investment’s capacity to create wealth has been shown time and again, and nowhere is this clearer than here in Hong Kong,” said Ciobo.
As a fierce advocate and a firm believer in global free trade, Ciobo urged to continue an active free trade agreement (FTA) agenda in his speech on Monday.
“The FTAs…are practical steps towards achieving our ultimate objective of global trade liberalization.”
Australia has been actively taking steps towards inking a FTA with Hong Kong. Back in May 2017, Ciobo and his Hong Kong counterpart Greg So were in talks aimed at establishing a FTA to foster better market access for bilateral trade in services.
Through the FTA, Australia is hoping to secure a guarantee on Hong Kong’s zero tariff arrangement for Australian goods while Hong Kong wants Australia to reduce its 2.5 percent average import fee.
Australia’s trade relationship with Hong Kong is currently governed by Hong Kong’s obligations under the World Trade Organization (WTO) Agreement. Although Hong Kong currently maintains a tariff-free import regime, it has the capacity to increase tariffs to any level on many Australian products without breaching its WTO commitments.
Currently, Hong Kong is Australia’s leading business base in North-east Asia. In 2016-17, the city was Australia’s 12th largest trading partner, with total two-way trade in goods and services worth $19.5 billion, and is Australia’s fifth-largest source of foreign investment, with a stock of $100 billion at the end of 2016, according to the figures provided by Australian-Consulate General Hong Kong to Harbour Times.
Besides the FTA, Australia is also seeking a double tax agreement (DTA) with Hong Kong.
Ciobo cited the FTA that China and Australia entered into in 2015, describing it as “the highest quality trade agreement China has ever concluded” and saying the FTA helped open the door wider to more trade.
“The result is an all-time high of $175 billion in two-way trade in 2016-17,” said Ciobo.
“China…is a great example of what happens when reform and trade liberalization are allowed to take place… China’s bold economic reforms have lifted hundreds of millions of people out of poverty.”
Free trade has allowed goods and services to be cheaper, Ciobo argued with examples of Australian prices for electronics, cars and flights and wages surging by 50 percent over the past two decades.
Meanwhile, he praised both the global and regional efforts to uphold free trade and openness, citing APEC, the East Asia Summit, the G20.
Ciobo also mentioned challenges arising from globalisation, namely artificial intelligence and automation, which are the two forces that lead to job losses.
He called for better policy-making decisions for those who lost their jobs due to automation.
The minster said the Australian government has addressed the challenges through social security safety nets, industry transition programs and responsive education systems.
“[AI and automation] should be embraced intelligently by policyholders, rather than resisted,” said Ciobo.
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