May 22nd 2004


  Buy Issue 2682
Qty:

Articles from this issue:

COVER STORY: An election winning Budget?

EDITORIAL: Child care funding and the Budget

AGRICULTURE: Sugar package, Clayton's package

NATIONAL AFFAIRS: Ethanol for strategic energy self-reliance

STRAWS IN THE WIND: More history wars / Betrayal / Guilt by association / ALP founding

COMMENT: Tougher law enforcement needed to stop drug wars

FREE TRADE AGREEMENT: Economist describes CIE report as laughable

Nature says no to same sex marriage (letter)

Vietnam human rights (letter)

Western media hypocrisy (letter)

No choice for mothers (letter)

Marriage unaffordable (letter)

Taiwan and the WHO (letter)

US economic integration defended (letter)

ECONOMY: Manufacturing decline causes foreign debt crisis

Europe's uncertain future

REPORT: More of the same at UN women's conference

COMMENT: Same-sex marriage: there are no limits

BOOKS: EMPIRE: How Britain Made The Modern World, by Niall Ferguson

BOOKS: Alger Hiss's Looking-Glass Wars: The Covert Life of a Soviet Spy, by G. Edward White

Books promotion page

survey link

FONT SIZE:

FREE TRADE AGREEMENT:
Economist describes CIE report as laughable


by Peter Westmore

News Weekly, May 22, 2004
A few weeks before Australia's Trade Minister, Mark Vaile, left to sign the Australia-US Free Trade Agreement in Washington, a report commissioned by the Federal Government into the Australia-US Free Trade Agreement has been described by a leading economist as laughable.

The Trade Minister, in releasing the report conducted by the Centre for International Economics (CIE), estimated that in ten years, the benefits of the Agreement to Australia would be $6.1 billion a year. (PM, April 30, 2004).

When the proposed agreement was unveiled, the Government said that it would be worth $4 billion a year; but since that time, most agricultural commodities have been excluded from the deal.

The Executive Director of the CIE, Andy Stoeckel, told PM that almost half of the $6 billion a year now expected could come from US investment in Australia.

However, a letter from Mr Vaile to Robert Zoellick last March made clear that under existing trade arrangements, there are few if any obstacles to US investment in Australia.

Mr Vaile said, "Consistent with its welcoming policy toward foreign investment, the Government of Australia has historically rejected very few proposals for acquisitions or arrangements by foreign investors on grounds inconsistent with national treatment, reflecting the Government's commitment to competitive markets.

"Excluding residential real estate," he added, "over the past five years the Government has only rejected four out of 2,285 proposals for investments."

In a separate letter to Mr Zoellick and Mr Randal Quarles, of the US Treasury Department, discussing specifically investment in the banking and finance sector, Mr Vaile said that since 1997, "there have been over 250 foreign investment proposals in the financial sector decided with no rejections. Of these, 14 proposals were valued between $500 million and $2 billion, and over half of the 14 involved acquisitions by major US companies."

The Minister added that Australia's policy towards investment in the finance industry was already very positive.

He said, "In total, over the three years from 2000-1 to 2002-3, almost $35 billion worth of foreign investment proposals in the financial sector that met the criteria ... were approved. Over a quarter of the total equity in Australia's banking and general insurance sectors is now owned by non-residents."

Mr Vaile added, "The Government of Australia allows 100 percent ownership of financial institutions, with some 40 foreign-owned banks along with 14 majority-owned Australian banks. There are also several foreign-owned insurance companies, money market corporations and managed funds.

"These firms operate in Australia's growing financial market, which is now rated as the fourth largest funds management market in the world."

If, as Mr Vaile said last March, there are few existing limitations on US foreign investment in Australia, it is hard to see how there will be billions of dollars of additional benefits from US investment in Australia, as the CIE report claims.

Interestingly, two prominent economists have ridiculed the CIE report.

In a submission to a Senate Inquiry into the Free Trade Agreement, Economics Professor Ross Garnaut and Bill Carmichael, former head of the Industry Commission, said that the CIE report lacked credibility.

They said the estimated benefits were "potential gains" which might have come about if the agreement had provided comprehensive access to US markets including sugar, dairy and beef. This had not occurred.

As a result, they said, the Government had "heavily overstated" the gains Australia would reap from the agreement, and created "unrealistic public expectations about the outcome for Australia,"

In a separate interview on ABC radio, Professor Garnaut said the CIE report was laughable.

He said, "Before economists are really satisfied with the results of any piece of any econometric modelling, they put it through the laugh test, and the laugh test is, can someone who knows the real world, that's meant to be described by the modelling exercise look at the results and not laugh. And I don't think that this exercise passes the laugh test."

People may wonder what is the Centre for International Economics, which produced this report.

The CIE is a private company operating out of Canberra and Sydney.

The CIE's staff have largely been trained in the US and/or recruited from the Productivity Commission, formerly the Industry Commission, the principal advisory body which has pushed for the deregulation of Australian industry.

  • Peter Westmore




























Join email list

Join e-newsletter list


Your cart has 0 items



Subscribe to NewsWeekly

Research Papers



Trending articles

NATIONAL AFFAIRS Cardinal rebuts commission's 'Get Pell' campaign

COVER STORY Anti-discrimination law validates Safe Schools

U.S. AFFAIRS First Brexit, now Trump: it's the economy, stupid!

INDUSTRY AND ENVIRONMENT Wikileaks reveals U.S, funding behind anti-coal campaign

COVER STORY QUT discrimination case exposes Human Rights Commission failings

FOREIGN AFFAIRS How the left whitewashed Fidel Castro

ANALYSIS What is possible to a Trump Whitehouse



News and views from around the world

Frequently asked questions about section 18C (Simon Breheny)

Chilean legislators kill explicit sex-ed program (LifeSite News)

France to ban people with Down syndrome from smiling (The Huffington Post)

Child abuse and family structure: What is the evidence telling us (Family First NZ)

Woolworths beats ACCC supplier mistreatment case (Eli Greenblat)

Australia set to ride the quantum computing wave (Science in Public)

Weatherill warns states could introduce carbon prices (Rosie Lewis)

Green-left legerdemain doesn't make religion relevant (Fr James Grant)

Mass murderer Castro dies unpunished (Augusto Zimmermann)

The rise of political correctness (Angelo Codevilla)



























© Copyright NewsWeekly.com.au 2011
Last Modified:
December 2, 2016, 2:36 pm