Home' Ausmarine : March 2010 Contents These words I have heard on many occasions over the last
couple of years and I have written some articles about the
implications of free trade -- Australia has nothing to fear when
it comes to free trade agreements. Trade liberalisation is
something we all should be striving for. The realities of life are,
however, quite different, especially in the seafood industry.
We in Australia can literally import any rubbish food items we
desire, without fear of being prosecuted. Cheap fillets of fish, from
various parts of the world packed in factories with substandard
hygiene requirements, prawns from the depths of Vietnam and the
Philippines you wouldn't serve to your worst enemy, find good
traction in Australia and its supermarket shelves. I can't remember
how many times CEOs from various companies have asked me to
shed some light on some of the unsavoury practices of the
producers of cheap products flooding into Australia.
Of course, free trade is the ultimate commercial business
arrangement between countries -- if the playing field is even and
not littered with hurdles and traps for unsuspecting participants.
Our first free trade agreement was with New Zealand in 1983,
then Singapore in 2003, the United States coming on board in
2005 and a number more are under negotiation or consideration.
Agreements have significant impacts on many industry sectors,
both good and bad. The US agreement is giving Australian
exporters and manufacturers access to a huge market for goods and
services, many of which have become duty free.
There are, however, local laws, food regulations and a host of
other hidden requirements which make a mockery of the phase
"free trade". In Australia (by luck), the relative calm in the global
financial storm made us more cautious and economic growth has
slowed sharply as we had never seen a global financial crisis of this
magnitude or duration before.
Australia is part of the global financial system; and in one way
or another, none of us have been able to escape some of its effects,
especially in the export business. Our asset markets have been
significantly buffeted with share prices (ASX 200) down
substantially from the high days just a short time ago. If you think
about what has happened in our financial markets you shake your
head in disbelief. How can anyone successfully hedge currency if
they are an exporter?
The financial avalanche washed around the globe in no time.
Borders were nonexistent and it looked to me that there was no
control anywhere! Everyone I spoke to in Australia or overseas was
aghast and couldn't understand. With such difficulties everywhere,
companies who relied on the export markets had their work cut
out for them! Exporting in such trying times needs guts, and
regardless of how well you think you are protected things can go
wrong. Companies pulling out of contracts or hiding behind
import laws were a sudden fact of life.
President Obama's government, under severe pressure from
within, was contemplating trade barriers. What did anyone expect
with an unemployment rate in the US at ten percent-plus? Letters
of credit were hard to come by, with large seafood companies
going into administration and payments to overseas suppliers last
on the list. The economic momentum in Australia had already
been slowing for some 18 months. This slowing has not been an
accidental response to slowing global growth or the shakeout in
the global financial system; rather it has been a deliberate cooling,
engineered by the Reserve Bank of Australia through progressive
increases in interest rates. But the way I see it, the relative
perceived calm in the financial system needs to be carefully
monitored and too many increases in bank interest rates will in the
end be counterproductive to the wellbeing of Australia. This is also
the case with the strong Australian dollar. Interest rate increases
attract short-term money from around the world looking for a
profitable harbour, pushing our dollar higher with negative effects
for exporters and commodities.
Open market access for everybody would be a wonderful way of
pushing commerce around the globe and breaking down barriers --
as long as everybody plays by the same set of rules! This
unfortunately doesn't happen. In the Doha round of talks just
recently, trade ministers and delegates from most of the
industrialised countries tried to achieve a positive outcome in their
quest for a solution which will help everyone, but at this stage it is
just wishful thinking.
We should do everything possible to build an open market
system with the European Union (EU), China and Japan. Not
just a Clayton's facade which can be dismantled with the stroke
of a pen and at a moment's notice, making the real barriers
appear and making it difficult for us to export and compete in
The festering of Europe is not a myth but a reality. We have
been trying to dismantle it for the last two years (with little
success) as Europe is still a large market for seafood from Australia.
With 27 countries and close to 500 million people, it is a big
market indeed, but difficult to penetrate for some items.
Leading economists state that Australia has some of the
leading agriculture producers in the world. We have little to fear
from free trade agreements. They give us access to a larger pool of
customers and increase the attractiveness of our products. That
assertion might be right, as long as all of us work on a level
playing field. Then we would truly be able to assert that there is
nothing to fear!
Disclosure: Member of the Baird family or companies in the Baird
Publications group own shares in Clean Seas.
A column of personal opinion by one of Australia's leading
fishing industry entrepreneurs. Hagen Stehr AO of Port Lincoln.
You have nothing to fear!
March 2010 AUSMARINE
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