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NEWS
A thorn in the side for exporters
Free trade agreements come at a cost, says FCAI chiefSigning up to free trade agreements with other nations has been a mixed blessing for Australia. It has helped open up markets for our primary industry products, but has provided our manufacturing industry precious little succour.
FTAs were firmly in the gunsights of FCAI chief Tony Weber yesterday, during the announcement of final sales figures for 2013.
"What we really need are export markets," Weber told journalists attending the event. "I have to say, over the last 25 years, one area where the government has failed is [to] actually open up true market access right around the world, either through the removal of tariffs or non-tariff barriers that have hindered the domestic industry."
In Weber's view, sustainable manufacturing in Australia is viable through "a combination of what you can sell domestically and what you can export."
"That's why I make the point that [exporting] is something that has not taken over, like it should have done in the last 25 to 30 years – and that has been a real hindrance to domestic production."
The FCAI has been "actively participating in that area for a long time," in dialogue with the federal government, Weber said, but those talks don't seem to be bearing fruit.
"It's obviously a key issue for us," Weber continued. "We do talk to the trade department, we talk to ministers regularly about this, and we always raise that issue, in broader discussions about the future of the industry."
"Government always says it's a very difficult issue, and... we acknowledge that is a difficult issue. But when the negotiations in free trade agreements take place, I think the important element is not just to talk about the tariff rate, but also the non-tariff barriers that restrict trade."
In a subsequent Q&A session, Weber amplified on his comments and did concede that the government was learning from past mistakes.
"I think the government is very aware that what happened previously didn't actually lead to market access – so that was a mistake. I think there is a much greater focus [now] on actually removing those non-tariff barriers. We certainly hope that occurs."
Unfortunately, the lessons learned won't wipe the slate clean of past mistakes. So, for instance, nothing is being done about the current FTA with Thailand, which has opened up the Australian market to companies such as Isuzu Ute, Toyota, Honda, Mazda (and Ford), Nissan and Mitsubishi, importing from manufacturing bases there.
"That's not a focus at the moment, as I understand," Weber said. "Most of the work is around the Korean [FTA]... but we certainly have been raising with the government the need to actually – if possible – re-open those discussions, because it's so vital.
Weber believes the government is in negotiations with two other countries (one of which is definitely Japan). Word from the Department of Foreign Affairs and Trade is that there have been intersessional talks with Japan, but the last formal meeting promulgated was conducted in June of 2012.
Among the nations that have entered into FTAs with Australia, South Korea and Japan are the two principal sources of imported vehicles for the local market. The FTAs with those countries would make vehicles from there more affordable here, but wouldn't necessarily open up opportunities for export, even with non-tariff trade barriers removed. South Korea has been reluctant to buy Japanese-badged cars in the past or the present, and the Camry and Aurion built in Australia would be simply too large for the Japanese market.
Thailand is the major problem for Australian exporters – or 'exporter', with effect from 2017. Ford tried to sell the Territory in Thailand, but the cost of the SUV there was exorbitant, effectively blocking any chance of volume sales. Even if the government can revisit the FTA with Thailand, it will be too late for Holden and Ford, and since Toyota already builds the Camry in Thailand, it won't help Toyota Australia either.
Given the Thai Toyota plant would be the likely source of Camry in the event that Toyota Australia shut up shop in Altona, the FTA with Thailand would benefit Toyota Australia anyway, keeping landed cost of the Camry lower than the landed cost of mid-size Japanese and Korean rivals of similar specification.
But the prospect of Toyota Australia becoming a full-line importer remains a distant prospect for the moment – if for no other reason than the Thai plant would have to find 100,000 extra units of capacity to supply Australia and Altona's export markets in the Middle East.
The Middle East is actually one of the other places where the FCAI is encouraging DFAT to do some haggling. For the present, Weber says, the Gulf countries levy a five per cent tariff on imported cars, yet some imported cars don't incur that slug. The FCAI would like to see that particular tariff dropped for cars imported from Australia too.
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Written byKen Gratton
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