{"id":26804,"date":"2016-05-27T06:00:12","date_gmt":"2016-05-26T20:00:12","guid":{"rendered":"http:\/\/www.aspistrategist.ru\/?p=26804"},"modified":"2023-04-12T12:51:09","modified_gmt":"2023-04-12T02:51:09","slug":"priorities-australias-regional-economic-diplomacy","status":"publish","type":"post","link":"https:\/\/www.aspistrategist.ru\/priorities-australias-regional-economic-diplomacy\/","title":{"rendered":"Agenda for Change 2016: Australia\u2019s regional economic diplomacy"},"content":{"rendered":"

\"Edited<\/p>\n

This piece is drawn from<\/span><\/i> Agenda for Change 2016: strategic choices for the next government<\/span><\/a>.<\/span><\/i><\/em><\/p>\n

Australia, as it has done in the past, has the potential to play a role in shaping the Asian economic cooperation agenda in a way that deepens regional economic linkages and lifts the growth potential of Asian economies. As the world\u2019s economic gravity continues to shift to Asia, Australia will benefit greatly from being an integral part of Asia\u2019s economic transformation.<\/span><\/p>\n

Australia is in the middle of its own economic transformation. The commodities boom of the past decade is over. China\u2019s iron ore and energy-intensive industrialisation saw Australia\u2019s terms of trade\u2014the price of Australia\u2019s exports relative to imports\u2014at an historic high in 2011. The natural resources sector and the Australian dollar both rose and then fell creating opportunities and challenges. As the dollar strengthened and productive resources shifted to the mining sector, manufacturing became less competitive and many industries suffered or shut down.<\/span><\/p>\n

The challenge for Australia is now to upgrade industry, expand quality services exports, lift agricultural productivity and establish higher value-add manufacturing. For Australia to realise its higher value-add comparative advantage and lift its living standards will require deeper engagement with Asia.<\/span><\/p>\n

The good news is that the transformation underway in Asia is complementary to achieving those objectives.<\/span><\/p>\n

China is transitioning from an investment and export-led to a consumption-driven economy. The downward growth trajectory is natural at this stage of China\u2019s economic development. But even at 6% Chinese growth will be among the highest in the region and have a larger impact than most because of the scale of China\u2019s economy.<\/span><\/p>\n

India, after a decade of underwhelming performance, is now experiencing economic growth close to 8%, making it one of the world\u2019s fastest growing economies. India is looking to cash in on its demographic dividend, turning the nation into a manufacturing powerhouse.<\/span><\/p>\n

The concluded China\u2013Australia Free Trade Agreement (ChAFTA) and the Comprehensive Economic Cooperation Agreement currently under negotiation with India can ensure that Australia is at the forefront of both countries\u2019 economic transitions.<\/span><\/p>\n

But all of Australia\u2019s bilateral initiatives need to leverage up broader reform and be deployed strategically to progress regional cooperation.<\/span><\/p>\n

Negotiations for a bilateral deal with Indonesia is now back on the agenda. Deploying Australia\u2019s diplomatic energies on India and Indonesia is a high priority, as is working with China to liberalise its economy through ChAFTA.<\/span><\/p>\n

Those bilateral deals could, at best, lead to agreements that give momentum to Australia\u2019s, India\u2019s, Indonesia\u2019s and even China\u2019s reform programs and complement regional liberalisation efforts. At worst, they will lead to narrow agreements that don\u2019t advance reform or, in China\u2019s case, miss out on the opportunity that has been offered. Narrow agreements concluded merely for diplomatic, rather than economic, reasons may benefit some producers and achieve some liberalisation but they\u2019re a missed opportunity with potentially adverse consequences. Australia\u2019s FTA with the United States, for example, did little to slow the fall in bilateral trade and<\/span> created substantial trade diversion<\/span><\/a> because it was done for narrow political reasons.<\/span><\/p>\n

The stakes for reform are high. Asia\u2019s growing middle class\u2014projected to be over 3.2 billion by 2030\u2014is mobile and consuming higher quality services and goods with its growing wealth. If growth stalls it would be a huge lost opportunity. Much slower growth could also fuel social or political instability. So prioritising those economic policy initiatives is a major element of Australia\u2019s security strategy.<\/span><\/p>\n

The priority for Australian economic diplomacy should be achieving the best outcome possible in the Regional Comprehensive Economic Partnership (RCEP). A high-quality RCEP agreement would have a high payoff for Australia and the region. The GDP of the RCEP grouping\u2014on conservative projections\u2014could be close to double that of the Trans-Pacific Partnership (TPP) in 15 years.<\/span><\/p>\n

Many RCEP members\u2014including Australia\u2014are in the middle of economic transitions that will be made easier to effect by a more open and dynamic external environment. Large neighbours committing to serious reforms and opening up of economies will not only benefit them but make it easier for others to implement domestic reforms. Some RCEP members, such as India, are coming from behind on economic and trade reform with economies that are relatively more protected from international competition. That means the gains from opening up will be large.<\/span><\/p>\n

Given the openness to less developed countries in RCEP and the special and differential treatment afforded to them, Australia has an interest in helping those countries make ambitious commitments and reach those ambitions over time.<\/span><\/p>\n

China, Indonesia and India won\u2019t be part of the TPP in the foreseeable future. That elevates the importance of RCEP for them and the rest of the region. There\u2019s real risk of trade and investment being diverted away from non-members towards the TPP grouping\u2014by design, to create incentive to join.<\/span><\/p>\n

Australia, Japan, Vietnam, Malaysia, Singapore, Brunei and New Zealand are members of both the TPP and RCEP. Australia can play a leadership role in steering the two agreements towards a broader regional agreement such as a Free Trade Area of the Asia\u2013Pacific. This will make a significant contribution to the openness and strength of not only the regional economy but also the global trading system. Asia\u2019s size and growth potential means an open and integrated Asia will be a driving force for global trade.<\/span><\/p>\n

Deepening regional economic integration and keeping Asia open for business will lift growth potential in all major Asian economies, furthering economic security and aiding the successful management of political relations.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

This piece is drawn from Agenda for Change 2016: strategic choices for the next government. Australia, as it has done in the past, has the potential to play a role in shaping the Asian economic …<\/p>\n","protected":false},"author":518,"featured_media":26806,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"footnotes":""},"categories":[1],"tags":[1712,294,433,1406],"class_list":["post-26804","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-agenda-for-change-2016","tag-diplomacy","tag-economics","tag-ftas"],"acf":[],"yoast_head":"\nAgenda for Change 2016: Australia\u2019s regional economic diplomacy | The Strategist<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.aspistrategist.ru\/priorities-australias-regional-economic-diplomacy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Agenda for Change 2016: Australia\u2019s regional economic diplomacy | The Strategist\" \/>\n<meta property=\"og:description\" content=\"This piece is drawn from Agenda for Change 2016: strategic choices for the next government. 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